10-K: Pagaya Technologies Ltd. Outlines Share Structure, Warrant Details in SEC Filing

Pagaya Technologies Ltd. details its share capital structure, including Class A and Class B ordinary shares, preferred shares, and warrants, in a recent SEC filing.

Summary

• Pagaya Technologies Ltd.'s authorized share capital includes 666,666,666 Class A ordinary shares, 166,666,666 Class B ordinary shares, and 6,666,666 Class A preferred shares.
• As of December 31, 2023, Pagaya had 5,000,000 Class A preferred shares, 49,390,936 Class A ordinary shares, and 12,652,310 Class B ordinary shares outstanding.
• Class A ordinary shares have one vote per share, while Class B ordinary shares have ten votes per share.
• Class B ordinary shares can only be issued to the founders of Pagaya or their permitted transferees.
• Class B ordinary shares are convertible into Class A ordinary shares at any time at the option of the holder, and automatically convert under certain conditions, including when the founders and permitted owners hold less than 10% of the total outstanding ordinary share capital or on the fifteenth anniversary of the merger agreement.
• Pagaya may issue and redeem redeemable securities as determined by its board of directors.
• Holders of Class A and Class B ordinary shares are entitled to dividends and liquidation rights in proportion to their shareholdings.
• Pagaya has public warrants and private placement warrants outstanding, each exercisable for one Class A ordinary share.
• Public warrants are redeemable by Pagaya for cash under certain conditions, including when the Class A ordinary share price reaches $18.00 or $10.00 per share.
• Private placement warrants are not redeemable by Pagaya while held by the initial purchasers or their permitted transferees.
• The terms of the warrants may be amended with the consent of at least 50% of the then outstanding public warrants and, solely with respect to any amendment to the terms of the private placement warrants, at least 50% of the then outstanding private placement warrants.
• Pagaya is required to hold an annual general meeting of shareholders no later than fifteen months after the previous annual general meeting.
• A quorum for a general meeting requires at least two shareholders present in person or by proxy who hold or represent at least 33 1/3% of the total outstanding voting power of its shares, or 25% if the meeting was initiated by the board and Pagaya qualifies as a foreign private issuer.
• Certain actions require a special majority vote, including extraordinary transactions with a controlling shareholder, terms of employment of a controlling shareholder, and certain compensation-related matters.
• The Pagaya Articles provide that unless Pagaya consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the Securities Exchange Act of 1934, as amended.
• The Pagaya Articles also provide that, unless Pagaya consents in writing to the selection of an alternative forum, the competent courts in Tel-Aviv, Israel shall be the exclusive forum for (i) any derivative action or proceeding brought on behalf of Pagaya, (ii) any action asserting a breach of a fiduciary duty owed by any of Pagayas directors, officers or other employees to Pagaya or its shareholders or (iii) any action asserting a claim arising pursuant to any provision of the Pagaya Articles, the Companies Law or the Israeli Securities Law.

Sentiment

Score: 6

Explanation: The document is factual and descriptive, outlining the company's share structure and warrant details. It does not express a strong positive or negative sentiment, but the dual-class structure and potential for dilution are worth noting.

Positives

• The document provides a clear overview of Pagaya's share structure and the rights associated with each class of shares.
• The details on warrant redemption terms offer transparency to investors.
• The document outlines the governance structure of the company, including shareholder meeting requirements and voting rights.

Negatives

• The dual-class share structure concentrates voting power with the founders, potentially limiting the influence of other shareholders.
• The redemption terms for public warrants could lead to forced exercise or redemption at a disadvantageous time for holders.
• The exclusive forum provisions may limit shareholders' ability to bring claims in a judicial forum of their choosing.

Risks

• The dual-class share structure concentrates voting power with the founders, potentially limiting the influence of other shareholders.
• The redemption terms for public warrants could lead to forced exercise or redemption at a disadvantageous time for holders.
• The exclusive forum provisions may limit shareholders' ability to bring claims in a judicial forum of their choosing.
• The document mentions that the warrants may expire worthless if certain conditions are not met.

Future Outlook

The document does not contain specific forward-looking statements about future financial performance, but it does outline the terms and conditions of the company's securities, which will impact future capital structure and potential dilution.

Industry Context

The document provides insight into the capital structure of a technology company operating in the financial services sector, which is relevant to understanding the company's funding and governance.

Comparison to Industry Standards

• The dual-class share structure is a common feature among technology companies, particularly those that have recently gone public, such as Google (Alphabet) and Facebook (Meta).
• The use of warrants is also a common practice in SPAC mergers, which Pagaya underwent.
• The specific terms of the warrants, such as the redemption triggers and cashless exercise options, are typical of those found in SPAC-related securities.
• The exclusive forum provisions are becoming more common in corporate charters, although their enforceability is still being tested in courts.

Stakeholder Impact

• Shareholders should be aware of the dual-class share structure and its implications for voting power.
• Warrant holders should understand the redemption terms and potential for dilution.
• Potential investors should consider the exclusive forum provisions and their impact on legal recourse.

Next Steps

• Pagaya may issue and redeem redeemable securities as determined by its board of directors.
• Pagaya may call the public warrants for redemption for cash under certain conditions.
• Pagaya is required to hold an annual general meeting of shareholders no later than fifteen months after the previous annual general meeting.

Key Dates

Keywords

share capital, ordinary shares, preferred shares, warrants, voting rights, redemption, corporate governance, Israeli law, shareholder meetings, exclusive forum