425: Galaxy Digital Outlines Reorganization and Nasdaq Listing Plans in Shareholder FAQ

Galaxy Digital is seeking shareholder approval for a reorganization and U.S. listing on Nasdaq, aiming to simplify its structure and enhance access to capital markets.

Summary

• Galaxy Digital Holdings Inc. (GDHL) is proposing a reorganization and domestication, including a re-domiciliation from the Cayman Islands to Delaware, subject to shareholder approval at a special meeting on May 9, 2025.
• The reorganization involves creating a new Delaware-incorporated holding company, Galaxy Digital Inc. (Pubco), which will become the successor public company.
• Outstanding GDHL ordinary shares will be converted into Class A common stock of Pubco on a one-for-one basis.
• Michael Novogratz will transfer control of the general partnership interests of GDH LP to Pubco, but will retain effective control through his ownership of Class B common stock.
• Class B common stock will grant voting rights but no economic rights at the Pubco level, mirroring the existing Class B limited partnership units of GDH LP.
• Novogratz is expected to own approximately 59.9% of Pubco's voting power after the reorganization.
• Pubco will remain listed on the Toronto Stock Exchange (TSX) after listing on Nasdaq, but may choose to delist from the TSX in the future.
• The company expects the reorganization and Nasdaq listing to reduce complexity, improve communication with U.S. shareholders, align its structure with its U.S. headquarters, increase trading liquidity, and improve flexibility for future capital needs.
• Shareholders are advised to consult their tax advisors regarding potential tax implications of the reorganization and Nasdaq listing.

Sentiment

Score: 7

Explanation: The document conveys a positive outlook regarding the reorganization and Nasdaq listing, emphasizing the potential benefits for shareholders and the company's future growth. However, it also acknowledges potential risks and uncertainties, preventing a higher sentiment score.

Positives

• The reorganization aims to reduce complexity and restrictions associated with being a non-U.S. listed company.
• The Nasdaq listing is expected to improve communication with U.S. and retail shareholders.
• Aligning the company's structure with its U.S. headquarters is seen as a positive step.
• Increased trading liquidity through access to deeper U.S. capital markets is anticipated.
• The reorganization will move all voting rights to the publicly traded company.
• The company expects improved flexibility for future equity and debt capital market needs.

Negatives

• Shareholders may need to transfer their shares from the TSX to Nasdaq if they wish to trade on the U.S. exchange.
• There may be minor stock price differences between Nasdaq and TSX due to currency conversion rates or short-term market disparities.
• The company acknowledges potential risks and uncertainties that could affect the success of the reorganization and Nasdaq listing.

Risks

• Failure to obtain shareholder and stock exchange approvals could prevent the completion of the reorganization.
• Changes to the proposed structure may be required due to applicable laws or regulations.
• The company may face challenges in meeting and maintaining Nasdaq listing standards.
• The reorganization could disrupt current plans and operations.
• Changes in applicable laws or regulations could adversely affect the company.
• Economic, business, and competitive factors could negatively impact the company.
• Events impacting the cryptocurrency and AI/HPC industry, including potential regulation, are outside of the company's control.
• The company's business may not grow as expected, or its addressable market may be smaller than anticipated.
• Technological challenges, cyber incidents, or exploits could pose risks.
• Difficulties in obtaining financing for AI and HPC initiatives could hinder progress.

Future Outlook

Galaxy Digital anticipates that the reorganization, domestication, and Nasdaq listing will create shareholder value by reducing complexity, improving communication, aligning its structure, increasing trading liquidity, and improving flexibility for future capital needs.

Management Comments

• Michael Novogratz will continue to ultimately effectively control the operations of GDH LP by virtue of his ownership of the shares of Class B common stock.

Industry Context

This move reflects a broader trend of cryptocurrency companies seeking access to larger capital markets and greater regulatory clarity by listing on major U.S. exchanges. Companies like Coinbase have already paved the way, and Galaxy's listing would further legitimize the digital asset space.

Comparison to Industry Standards

• Coinbase's Nasdaq listing serves as a benchmark for Galaxy Digital, demonstrating the potential for increased valuation and investor interest.
• The Up-C structure is a common method used by companies going public, allowing existing owners to maintain control while accessing public markets, similar to structures used by companies like GoDaddy and Spotify.
• Galaxy's reorganization and listing aim to achieve similar benefits in terms of access to capital and investor base as seen with other crypto-related companies that have gone public.

Stakeholder Impact

• Shareholders will receive shares of Class A common stock of Pubco and may benefit from increased trading liquidity and access to U.S. capital markets.
• Employees may benefit from the company's improved financial position and growth prospects.
• The reorganization and Nasdaq listing could enhance the company's reputation and attract new customers and partners.
• The company's improved access to capital could strengthen its relationships with suppliers and creditors.

Next Steps

• GDHL shareholders will vote on the proposed reorganization and domestication at the special meeting on May 9, 2025.
• If approved, GDHL will redomicile from the Cayman Islands to Delaware.
• Galaxy Digital Inc. (Pubco) will become the successor public company and list on Nasdaq.
• Current GDHL shareholders will receive shares of Class A common stock of Pubco.
• The company will notify OTC trading venues of the Nasdaq listing.

Key Dates

Keywords

Nasdaq listing, reorganization, domestication, Galaxy Digital, shareholder meeting, Pubco, Michael Novogratz, TSX, Class A common stock, Class B common stock, GDHL, GDH LP, voting rights, capital markets, cryptocurrency