SCHEDULE: Katapult to Acquire Aaron's & CCFI; HHCF Restructures Stake

Katapult Holdings, Inc. announced a merger agreement to acquire Aaron's and CCFI, alongside a significant restructuring of HHCF Series 21 Sub's investment, including a preferred stock repurchase and warrant exercise.

Summary

• Katapult Holdings, Inc. (the "Issuer") entered into a Merger Agreement on December 11, 2025, to acquire Aaron's Intermediate Holdco, INC. and CCF Holdings LLC through two separate mergers.
• Immediately prior to the Aaron's Merger, the Issuer will issue 943,580 shares of its Common Stock to Aaron's MIP Holders in exchange for Aaron's MIP Units.
• Concurrently, HHCF Series 21 Sub, LLC ("HHCF Sub") and Katapult entered into a Side Letter to restructure HHCF Sub's investment.
• Under the Side Letter, HHCF Sub will sell all 65,000 shares of Katapult's Preferred Stock back to the Issuer, which will be repurchased at their "Liquidation Preference" plus accrued dividends.
• The purchase price for the preferred stock will be paid by the issuance of a new debt instrument from Katapult Intermediate Holdings III LLC (or a subsidiary).
• HHCF Sub will exercise its Warrants on a cashless basis for shares of Katapult Common Stock, resulting in no outstanding Warrants held by HHCF Sub.
• The Director Nomination Agreement between HHCF Sub and Katapult will terminate.
• HHCF Sub, along with related entities and Lane Risser, beneficially owns 928,202 shares, representing 19.99% of Katapult's common stock.
• An additional 5,192,862 shares issuable upon conversion of Preferred Stock are excluded from current beneficial ownership until stockholder approval is obtained, due to a 19.99% beneficial ownership limit.

Sentiment

Score: 7

Explanation: The filing indicates strategic expansion through mergers and a significant capital restructuring. While the mergers present growth opportunities, the increase in debt and the contingency of stockholder approval for preferred stock conversion introduce elements of risk and uncertainty. The overall sentiment leans positive due to strategic growth, but with notable complexities.

Positives

• Katapult is expanding its business through the acquisition of Aaron's and CCFI, potentially increasing market share and operational scale.
• The restructuring of HHCF Sub's investment simplifies the capital structure by repurchasing preferred stock and exercising warrants.
• The termination of the Director Nomination Agreement could streamline corporate governance.

Negatives

• The acquisition introduces integration risks associated with merging Aaron's and CCFI into Katapult's operations.
• The issuance of a new debt instrument to HHCF Sub for the preferred stock repurchase will increase Katapult's debt burden.
• The conversion of a significant portion of preferred stock (5,192,862 shares) is contingent on "Requisite Stockholder Approval," creating uncertainty and potential for future dilution if approved.

Risks

• The completion of the Mergers is subject to customary conditions, meaning there's a risk they might not close.
• The conversion of 5,192,862 shares of Preferred Stock into Common Stock is subject to "Requisite Stockholder Approval" under Nasdaq listing rules, posing a risk of non-conversion if approval is not obtained.
• The issuance of a new debt instrument increases the company's leverage and financial obligations.
• Integration risks associated with the acquisition of Aaron's and CCFI.

Future Outlook

Katapult Holdings, Inc. is pursuing strategic growth through the acquisition of Aaron's and CCFI, which is expected to expand its operational footprint. The restructuring of HHCF Sub's investment, including the conversion of warrants and the repurchase of preferred stock, indicates a shift in the capital structure and investor relations. The future conversion of a substantial block of preferred stock into common stock is contingent on stockholder approval, which will impact future share count and potential dilution.

Industry Context

This acquisition suggests a consolidation or expansion strategy within the consumer finance or lease-to-own sector, where Katapult operates. The restructuring of a significant investor's stake, including the conversion of preferred shares and warrants, is a common event in companies undergoing strategic shifts or capital structure adjustments, often aimed at simplifying the cap table or providing liquidity to early investors.

Comparison to Industry Standards

• The 19.99% beneficial ownership cap before stockholder approval is a standard Nasdaq listing rule to prevent a change of control without shareholder consent.
• Acquisitions like the one described are common growth strategies in competitive industries, aiming for increased market share and operational synergies.
• The use of convertible preferred stock and warrants as investment vehicles, followed by their restructuring into common equity or debt, is a typical financing lifecycle for growth companies.

Management Changes

Corporate Governance

Related Party Transactions

• HHCF Sub, a significant beneficial owner, is engaging in a transaction with the Issuer involving the repurchase of its preferred stock and the cashless exercise of its warrants.
• The payment for the preferred stock repurchase will be a new debt instrument issued by a subsidiary of Katapult.

Stakeholder Impact

• Shareholders: Potential dilution from the issuance of 943,580 shares to Aaron's MIP Holders and the future conversion of 5,192,862 preferred shares (if approved). The strategic acquisitions could enhance long-term value.
• Creditors: Increased debt burden due to the new debt instrument issued to HHCF Sub.
• HHCF Sub: Converts its preferred equity and warrants into a combination of common stock (from warrant exercise) and a new debt instrument, altering its risk/reward profile with Katapult.
• Aaron's MIP Holders: Will receive 943,580 shares of Katapult Common Stock as part of the merger.

Next Steps

• Consummation of the Mergers (Aaron's Merger and CCFI Merger) subject to customary conditions.
• Aaron's MIP Holders to assign/transfer Aaron's MIP Units to the Issuer, and the Issuer to issue 943,580 shares of Common Stock to Aaron's MIP Holders.
• HHCF Sub to sell Outstanding Preferred Shares to the Issuer, and the Issuer to repurchase them.
• Issuance of a new debt instrument by Katapult Intermediate Holdings III LLC (or a subsidiary) to HHCF Sub.
• HHCF Sub to exercise Warrants on a cashless basis.
• Termination of the Director Nomination Agreement.
• Obtain Requisite Stockholder Approval for the conversion of 5,192,862 shares of Preferred Stock.

Key Dates

Recommendation

The filing details a significant strategic acquisition for Katapult Holdings, Inc., which could drive future growth. However, the transaction also involves an increase in debt and potential future dilution from preferred stock conversion, contingent on stockholder approval. The restructuring of a major investor's stake adds complexity. Given the mix of growth potential and associated risks, a 'hold' recommendation is appropriate until more clarity emerges on the integration of the acquired entities and the outcome of the stockholder vote.

Keywords

Katapult Holdings, Aaron's, CCFI, Merger Agreement, Schedule 13D/A, Preferred Stock, Warrants, Debt Instrument, Stockholder Approval, Corporate Governance, HHCF Series 21 Sub, Acquisition