Form 4: Kenneth Dart Reports Flutter Entertainment Total Return Swap

Kenneth Dart, a 10% owner of Flutter Entertainment plc, reported entering into a Total Return Swap referencing 843,712 shares of common stock.

Summary

• Kenneth Bryan Dart, a 10% owner of Flutter Entertainment plc, reported a transaction involving a Total Return Swap (TRS).
• The TRS references 843,712 notional shares of Flutter Entertainment plc Common Stock.
• The transaction date for the derivative security was March 10, 2026.
• The reference price for the swap is $106.4970 per share.
• The swap is scheduled to terminate and be cash-settled on March 2, 2028.
• Under the terms, Mr. Dart is obligated to pay the counterparty any decrease in the market price below the reference price and will receive payments for any increase above the reference price.
• Mr. Dart is required to pay monthly interest to the counterparty based on SOFR and is entitled to receive payments equal to any dividends paid on the referenced shares.
• Following this transaction, Mr. Dart indirectly beneficially owns 4,238,110 derivative securities.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral event for Flutter Entertainment plc, as it represents a derivative transaction by a significant shareholder rather than a direct company operational or financial update. For the reporting person, it reflects a continued, albeit indirect, economic interest in the company's performance.

Positives

• The Total Return Swap allows Kenneth Dart to gain economic exposure to the potential upside of Flutter Entertainment plc shares without direct ownership, which can offer flexibility.
• Mr. Dart is entitled to receive payments from the counterparty equal to any dividends paid on the referenced shares during the term of the Swap, providing a dividend-equivalent income stream.
• The continued significant economic interest of a 10% owner like Kenneth Dart can be viewed as a positive signal of confidence in Flutter Entertainment plc's future performance by other investors.

Negatives

• Kenneth Dart is exposed to downside risk, as he is obligated to pay the counterparty any decrease in the market price of the referenced shares below the reference price of $106.4970 per share.
• Mr. Dart is required to pay monthly interest to the counterparty on the financing leg of the Swap at a rate based on SOFR, incurring ongoing costs regardless of the stock's performance.

Risks

• Market Price Volatility: Kenneth Dart is exposed to the risk of the market price of Flutter Entertainment plc Common Stock falling below the reference price of $106.4970, which would result in an obligation to pay the counterparty.
• Interest Rate Risk: The monthly interest payments on the financing leg of the Swap are based on SOFR, meaning an increase in SOFR could lead to higher financing costs for Mr. Dart.
• Counterparty Risk: There is inherent counterparty risk associated with the Total Return Swap, where the ability of the counterparty to fulfill its obligations (e.g., paying for market price increases or dividends) is a factor.

Future Outlook

The Total Return Swap is structured to terminate and be cash-settled on March 2, 2028, indicating a defined timeframe for this specific derivative position.

Industry Context

StockSavvy.ai notes that Total Return Swaps are a common financial instrument used by large shareholders and institutional investors to gain economic exposure to a company's stock performance, including dividends, without directly owning the underlying shares. This allows for flexibility in portfolio management and can be used for hedging or speculative purposes, while still requiring disclosure under SEC regulations for significant beneficial owners.

Comparison to Industry Standards

• The use of Total Return Swaps by significant shareholders is a standard practice in the financial industry for managing exposure to equity positions. This allows for participation in price appreciation and dividend income without the complexities of direct share ownership, such as voting rights or certain regulatory filing requirements for physical shares.
• The structure, including a reference price, termination date, and interest payments based on a benchmark like SOFR, aligns with typical market terms for such derivative contracts.

Related Party Transactions

• LBS Limited is the direct party to the Total Return Swap and holds the 'notional' shares. Kenneth Bryan Dart, the reporting person, is the owner of LBS Limited and may be deemed to beneficially own the reported securities through this entity, though he disclaims beneficial ownership except to the extent of his pecuniary interest.

Stakeholder Impact

• Shareholders of Flutter Entertainment plc may note the continued economic interest of a significant 10% owner, Kenneth Dart, in the company's performance through this derivative instrument.

Next Steps

• The Total Return Swap is scheduled for cash settlement on March 2, 2028, at which point the final payments based on the market price relative to the reference price will be made.

Key Dates

Keywords

Flutter Entertainment, FLUT, Total Return Swap, TRS, SEC Form 4, Kenneth Dart, Beneficial Ownership, Derivative Securities, Gaming Industry, Betting Industry