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Shift4 Payments, INC
NYSE
8-K: Shift4 Payments Issues $1 Billion in Mandatory Convertible Preferred Stock
Sentiment:
8-K Filing
5 May 2025 4:35 PM
Shift4 Payments completes a public offering of 6.00% Series A Mandatory Convertible Preferred Stock, raising $1 billion to fund acquisition and for general corporate purposes.
Capital raise
Shift4 Payments issued 10,000,000 shares of 6.00% Series A Mandatory Convertible Preferred Stock.
The offering generated $1 billion in aggregate liquidation preference.
The company intends to use the net proceeds from the offering, along with additional debt financing of up to $1,735.0 million, to fund the acquisition of Global Blue Group Holding AG and for general corporate purposes.
Summary
- Shift4 Payments, Inc. has successfully issued 10,000,000 shares of its new 6.00% Series A Mandatory Convertible Preferred Stock, raising $1,000,000,000 in aggregate liquidation preference.
- The offering included the full exercise of the underwriters' option to purchase an additional 1,250,000 shares.
- The Series A Mandatory Convertible Preferred Stock ranks senior to the company's Class A, Class B, and Class C common stock regarding dividends and asset distribution upon liquidation.
- Dividends will accumulate at a rate of 6.00% per annum and are payable quarterly in arrears on February 1, May 1, August 1, and November 1, beginning August 1, 2025, and ending on May 1, 2028.
- The company may elect to pay dividends in cash, shares of Class A Common Stock, or a combination thereof.
- Each share of Series A Mandatory Convertible Preferred Stock will automatically convert on or about May 1, 2028, into between 0.9780 and 1.2224 shares of Class A Common Stock, subject to anti-dilution adjustments.
- The company intends to use the net proceeds from the offering, along with additional debt financing, to fund the acquisition of Global Blue Group Holding AG and for general corporate purposes.
- If the Global Blue merger is terminated, the company may redeem all of the Series A Mandatory Convertible Preferred Stock.
- The Series A Mandatory Convertible Preferred Stock has voting rights on certain amendments and business combination transactions.
- If accumulated dividends are not paid for six or more dividend periods, the preferred stockholders have the right to elect two directors to the company's board.
Sentiment
Score: 7
Explanation: The sentiment is neutral to positive. The company successfully raised a significant amount of capital, but the offering also introduces potential dilution and increased leverage.
Positives
- The offering provides Shift4 Payments with significant capital to pursue its acquisition of Global Blue and other strategic initiatives.
- The mandatory convertible structure is attractive as it will eventually convert to equity.
- The dividend rate of 6.00% provides a steady return for investors.
- The potential for increased conversion rate in the event of a Make-Whole Fundamental Change protects investors in certain scenarios.
- The voting rights granted to preferred stockholders in specific situations provide them with a degree of influence over company decisions.
Negatives
- The company's ability to elect to pay dividends in stock could dilute existing shareholders.
- The potential redemption of the preferred stock if the Global Blue merger is terminated could create uncertainty.
- The preferred stockholders do not have the right to vote on an as-converted basis with holders of Class A Common Stock on matters on which holders of Class A Common Stock are entitled to vote.
- The company's ability to redeem the preferred stock if the Global Blue merger is terminated could create uncertainty.
Risks
- The success of the Global Blue acquisition is critical to the company's strategy, and failure to complete the merger could negatively impact the company.
- The company's ability to generate sufficient cash flow to pay dividends on the preferred stock is subject to business and economic risks.
- The conversion rate of the preferred stock is dependent on the price of the Class A Common Stock, which is subject to market volatility.
- The company's reliance on debt financing to fund the acquisition increases its leverage and financial risk.
- The company's business is subject to intense competition and rapidly changing technology.
Future Outlook
The company intends to use the net proceeds from the offering, along with additional debt financing, to fund the acquisition of Global Blue Group Holding AG and for general corporate purposes, including repayment of debt, other strategic acquisitions and growth initiatives.
Industry Context
This offering reflects a trend of companies utilizing hybrid securities like mandatory convertibles to raise capital, balancing the need for immediate funding with the potential for future equity conversion. This is particularly common in industries undergoing consolidation or strategic shifts, such as the payments technology sector.
Comparison to Industry Standards
- Comparable companies like Fiserv, Global Payments, and Adyen have also utilized debt and equity financing to fund acquisitions and growth initiatives.
- The 6.00% dividend rate is within the typical range for mandatory convertible preferred stock offerings, reflecting the current interest rate environment and the company's credit profile.
- The conversion premium of approximately 25% is also standard for these types of securities, providing potential upside for investors while minimizing immediate dilution for existing shareholders.
- The use of proceeds for acquisitions and general corporate purposes is consistent with industry practices, as companies seek to expand their market share and invest in new technologies.
Stakeholder Impact
- Shareholders may experience dilution upon conversion of the preferred stock.
- Employees may benefit from the company's growth and strategic initiatives funded by the offering.
- Customers may benefit from improved products and services resulting from the acquisition and investments.
- Suppliers may see increased business opportunities as the company expands.
- Creditors may face increased risk due to the company's increased leverage.
Next Steps
- The company will proceed with the acquisition of Global Blue Group Holding AG.
- The company will manage the conversion of the preferred stock into Class A Common Stock on or about May 1, 2028.
- The company will monitor the price of its Class A Common Stock to determine the optimal method of paying dividends on the preferred stock.
Key Dates
- February 16, 2025: Date of the Transaction Agreement between Shift4 Payments and Global Blue Group Holding AG.
- April 30, 2025: Date of the Underwriting Agreement among Shift4 Payments, Shift4 Payments, LLC and Goldman Sachs & Co. LLC, Citigroup Global Markets Inc. and Wells Fargo Securities, LLC.
- April 30, 2025: Date of filing of the registration statement on Form S-3ASR with the SEC.
- May 1, 2025: Underwriters exercised in full their option to purchase up to an additional 1,250,000 shares of Series A Mandatory Convertible Preferred Stock.
- May 5, 2025: Closing date of the offering and filing of the Certificate of Designations with the Delaware Secretary of State.
- August 1, 2025: Beginning date for quarterly dividend payments.
- September 30, 2025: Potential date for Acquisition Non-Occurrence Event if the Global Blue merger has not closed.
- February 16, 2026: Extended potential date for Acquisition Non-Occurrence Event if the End Date is extended pursuant to the transaction agreement for the merger.
- May 1, 2028: Scheduled Mandatory Conversion Date.
Keywords
Mandatory Convertible Preferred Stock, Shift4 Payments, Global Blue, Public Offering, Acquisition, Dividends, Conversion, Preferred Stock, Debt Financing, Merger
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Shift4 Payments, INC
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
4 June 2025 9:29 PM
Proxy Statement Supplement
- The previously announced restructuring transactions, which aimed to simplify the company's organizational and capital structure (Up-C Collapse and TRA waiver), have been terminated.
- The termination occurred because a key condition for the restructuring was not met, indicating a failure to achieve a significant strategic objective previously communicated.
Capital raise
16 May 2025 5:03 PM
Debt Offering Announcement
- Shift4 Payments, LLC and Shift4 Payments Finance Sub, Inc. completed the issuance and sale of 680 million aggregate principal amount of 5.500% Senior Notes due 2033 (the Euro Notes) and $550 million aggregate principal amount of 6.750% Senior Notes due 2032 (the New 2032 Notes and, together with the Euro Notes, the Notes).
Capital raise
15 May 2025 4:20 PM
Pro Forma Financial Information
- Shift4 issued 10,000,000 shares of 6.00% Series A Mandatory Convertible Preferred Stock, raising $1,000,000,000.
- Shift4 LLC expects to incur a new seven-year $1,000 million senior secured term loan B facility.
- Shift4 LLC and Shift4 Payments Finance Sub, Inc. are offering 680 million aggregate principal amount of 5.500% senior notes due 2033 (the Euro Notes) and $550 million in aggregate principal amount of their 6.750% senior notes due 2032.
Capital raise
8 May 2025 5:25 PM
Debt Offering Announcement
- Shift4 Payments is issuing €680 million in 5.500% senior notes due 2033.
- Shift4 Payments is issuing $550 million in additional 6.750% senior notes due 2032.
- The company intends to use the proceeds, along with other financing sources, to fund the acquisition of Global Blue and repay existing debt.
Capital raise
5 May 2025 4:35 PM
8-K Filing
- Shift4 Payments issued 10,000,000 shares of 6.00% Series A Mandatory Convertible Preferred Stock.
- The offering generated $1 billion in aggregate liquidation preference.
- The company intends to use the net proceeds from the offering, along with additional debt financing of up to $1,735.0 million, to fund the acquisition of Global Blue Group Holding AG and for general corporate purposes.
Capital raise
30 April 2025 9:24 AM
Capital Raise Announcement
- Shift4 Payments is launching an underwritten public offering of 7,500,000 shares of Series A Mandatory Convertible Preferred Stock.
- The company expects to grant underwriters a 30-day option to purchase up to 1,125,000 additional shares to cover over-allotments.
- Shift4 intends to raise up to $1,735.0 million in additional permanent debt financing.
Capital raise
30 April 2025 7:13 AM
8-K Filing
- Shift4 is proposing to issue $750.0 million Series A Mandatory Convertible Preferred Stock via an underwritten public offering.
- Shift4 expects to grant to the underwriters a 30-day option to purchase up to an additional 15% of shares of Mandatory Convertible Preferred Stock at the public offering price, less underwriting discounts and commissions, solely to cover over-allotments.
- Shift4 and/or Shift4 LLC intend to obtain certain permanent debt financing, both secured and unsecured, of up to $1,735.0 million in order to finance a part of the cash consideration payable by Shift4 to consummate the Merger with Global Blue in lieu of leveraging the Bridge Facilities.
Capital raise
29 April 2025 4:05 PM
Quarterly Report
- Shift4 Payments, LLC (directly or through Shift4 and/or one or more of its subsidiaries) also intends to pursue a permanent financing arrangement with the Commitment Parties, as contemplated by the Debt Commitment Letter, which may include a combination of senior unsecured and/or unsecured notes, mandatory convertible or perpetual preferred equity and/or a senior secured term loan B facility (the Permanent Financing), in each case, on terms and conditions to be set forth in the definitive documentation for such Permanent Financing.
Delay expected
29 April 2025 4:05 PM
Quarterly Report
- Merger Sub announced an extension of the Expiration Time of the Offer until one minute after 11:59 p.m., New York City time, on May 6, 2025.
Better than expected
29 April 2025 7:14 AM
Earnings Release
- The company is raising its full-year guidance for gross revenue less network fees and adjusted EBITDA by $10 million on both the low and high end.
- Shift4 Payments experienced record payment volumes, gross revenue less network fees, and adjusted EBITDA in Q1 2025.
Better than expected
19 February 2025 4:06 PM
Annual Report
- The company's end-to-end payment volume increased by 51% to $164.8 billion for the year ended December 31, 2024.
- Gross revenue less network fees increased by 44% to $1.35 billion.
- Adjusted EBITDA increased to $677.4 million, compared to $459.9 million in the previous year.
- The company released a valuation allowance against certain deferred tax assets, resulting in an income tax benefit of $296.1 million.
Capital raise
19 February 2025 4:06 PM
Annual Report
- Shift4 Payments, LLC, entered into a commitment letter with Goldman Sachs Bank USA (GS), pursuant to which GS has committed to (i) provide Shift4 Payments, LLC with 364-day bridge loan facilities in an aggregate principal amount of $1.795 billion (the Bridge Facilities), consisting of (x) a senior secured 364-day bridge loan facility in an aggregate principal amount of $1.0 billion (the Senior Secured Bridge Facility) and (y) a senior unsecured 364-day bridge loan facility in an aggregate principal amount of $795.0 million (the Senior Unsecured Bridge Facility), in each case, subject to customary conditions, and (ii) to backstop an amendment to, or replacement of, Shift4 Payments, LLCs existing $450.0 million senior secured revolving credit facility (the Backstop Revolving Facility and, together with the Bridge Facilities, collectively, the Facilities) in order to, among other things, permit the consummation of the transactions contemplated by the Transaction Agreement, the incurrence of the Bridge Facilities and any other permanent financing issued in lieu thereof or to refinance the loans thereunder, in each case, subject to customary conditions.
Capital raise
18 February 2025 4:22 PM
Merger Announcement
- Shift4 expects to finance the acquisition with cash on hand and a 364-day $1.795 million bridge loan facility entered in connection with the transaction.
Better than expected
12 November 2024 4:29 PM
Quarterly Report
- The company's revenue and payment volume growth exceeded expectations.
- The company released a valuation allowance against deferred tax assets, resulting in a significant tax benefit.
- The company's net income attributable to Shift4 Payments, Inc. increased to $53.8 million.
Better than expected
12 November 2024 7:04 AM
Quarterly Report
- The company exceeded expectations with record payment volume, strong revenue growth, and increased profitability.
- Shift4 raised its full-year guidance, indicating confidence in continued performance.
- The company's adjusted EBITDA and free cash flow were better than anticipated.
Capital raise
15 August 2024 5:27 PM
Debt Offering Announcement
- The document details the completion of a $1.1 billion senior notes offering.
- The company received net proceeds of approximately $1,087.9 million.
- The proceeds will be used for general corporate purposes, including debt retirement, acquisitions, and stock repurchases.
Capital raise
12 August 2024 8:40 PM
Debt Offering Announcement
- Shift4 Payments is raising $1.1 billion through a private offering of senior notes.
- The notes are being offered to qualified institutional buyers and certain persons outside the United States.
- The proceeds will be used for general corporate purposes, including potential debt repayment.
Capital raise
12 August 2024 8:25 AM
Debt Offering Announcement
- Shift4 Payments is proposing to offer $1.1 billion aggregate principal amount of senior notes.
- The offering is a private placement to qualified institutional buyers and certain persons outside the United States.
Better than expected
8 August 2024 6:29 PM
Quarterly Report
- The company's revenue, payment volume, and subscription growth all exceeded expectations.
- The company's net income and adjusted EBITDA also showed significant improvement compared to the prior year.
Better than expected
8 August 2024 7:02 AM
Quarterly Report
- The company's Q2 results exceeded expectations, leading to an increase in full-year guidance.
- The company's end-to-end payment volume, gross revenue, and adjusted EBITDA all showed significant year-over-year growth, surpassing previous estimates.
- The company's organic revenue growth was strong at 24%, with an expected acceleration in the back half of the year.
Better than expected
9 May 2024 5:51 PM
Quarterly Report
- The company's revenue, payment volume, and adjusted EBITDA all exceeded expectations, indicating strong financial performance.
- The company's growth in subscription revenue and international expansion are positive indicators for future performance.
Better than expected
9 May 2024 7:13 AM
Quarterly Report
- The company's Q1 results exceeded expectations with a 50% increase in end-to-end payment volume and a 36% increase in adjusted EBITDA, indicating better than expected performance.
Better than expected
29 February 2024 4:06 PM
Annual Results
- The company's gross revenue increased by 29%, and end-to-end payment volume increased by 52%, both exceeding expectations.
Delay expected
27 February 2024 7:05 AM
Quarterly Report
- The company experienced delays in closing enterprise deals and the timing of certain multi-billion-dollar gateway migrations, which slightly impacted gross revenue less network fees.
Better than expected
27 February 2024 7:05 AM
Quarterly Report
- The company's key financial metrics, including end-to-end payment volume, gross profit, and adjusted EBITDA, all exceeded expectations, demonstrating strong growth and profitability.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.