Item 1.01. Entry into a Material Definitive Agreement.
Silver Lake Investment
Convertible Notes
As previously disclosed, on August 1, 2022, Global Payments Inc. ("Global
Payments") entered into an investment agreement (the "Investment Agreement")
with Silver Lake Partners VI DE (AIV), L.P. and Silver Lake Alpine II, L.P.
(collectively, "Initial Silver Lake Purchasers"), relating to the issuance to
the Initial Silver Lake Purchasers of $1.5 billion in aggregate principal amount
of 1.00% convertible senior notes due 2029 (the "2029 Notes"). On August 8,
2022, SLA II Galaxy Holdings, L.P. and SLP VI Galaxy Holdings, L.P. (the "Silver
Lake Purchasers" and, together with their affiliates, "Silver Lake"), each
executed a joinder to the Investment Agreement (the "Joinder") to assume the
obligations of the Initial Silver Lake Purchasers to purchase all of the 2029
Notes, and each Silver Lake Purchaser agreed to become a "Purchaser" under the
Investment Agreement, and to be fully bound by, and subject to, all of the
provisions of the Investment Agreement applicable to a "Purchaser". The
transactions contemplated by the Investment Agreement (including the issuance of
the 2029 Notes) closed on August 8, 2022.
As previously disclosed, on the terms and subject to the conditions set forth in
the Investment Agreement, Global Payments has agreed to increase the size of
Global Payments' board of directors (the "Board") in order to appoint to the
Board, promptly following the closing contemplated by the Investment Agreement,
one individual designated by the Silver Lake Purchasers that is mutually agreed
with Global Payments.
In connection with the 2029 Notes issuance, on August 8, 2022, Global Payments
entered into an indenture (the "Indenture") between Global Payments and U.S.
Bank Trust Company, National Association (the "Trustee"). The 2029 Notes bear
interest at a rate of 1.00% per annum. Interest on the 2029 Notes is payable
semi-annually in arrears on February 15 and August 15 of each year, beginning on
February 15, 2023, to the holders of record on the preceding February 1 and
August 1, respectively. The 2029 Notes mature on August 15, 2029, subject to
earlier conversion or repurchase.
The 2029 Notes are convertible at the option of the holder at any time after the
date that is eighteen months after the issuance of the 2029 Notes (or earlier,
upon the occurrence of certain corporate events) until the scheduled trading day
prior to the maturity date. The 2029 Notes are convertible into cash and shares
of Global Payments' common stock based on an initial conversion rate of 7.1089
shares of common stock per $1,000 principal amount of the 2029 Notes (which is
equal to an initial conversion price of approximately $140.67 per share),
subject to customary anti-dilution and other adjustments upon the occurrence of
certain events. In addition, if certain corporate events that constitute a
"Make-Whole Fundamental Change" (as defined in the Indenture) occur, then the
conversion rate will in certain circumstances be increased for a specified
period of time. Upon conversion, the principal amount of, and interest due on,
the 2029 Notes are required to be settled in cash and any other amounts may be
settled in shares, cash or a combination or shares and cash at Global Payments'
election.
The 2029 Notes are not redeemable by Global Payments. If certain corporate
events that constitute a "Fundamental Change" (as defined in the Indenture)
occur, any holder of the 2029 Notes may require that Global Payments repurchase
all or any portion of the principal amount of the 2029 Notes held by such holder
at a purchase price of par plus accrued and unpaid interest to, but excluding,
the "Fundamental Change Repurchase Date" (as defined in the Indenture). The
definition of Fundamental Change includes certain change of control transactions
involving Global Payments and certain de-listing events with respect to Global
Payments' common stock.
The Indenture includes customary "events of default," which may result in the
acceleration of the maturity of the 2029 Notes under the Indenture. The
Indenture also includes customary covenants for convertible notes of this type.
The foregoing summaries of the 2029 Notes and the Indenture do not purport to be
complete and are subject to, and qualified in their entirety by the full text of
the Indenture and the 2029 Notes, which are filed as Exhibits 4.1 and 4.2,
respectively and incorporated by reference.
Capped Call Transactions
On August 8, 2022, in connection with the issuance of the 2029 Notes, Global
Payments entered into privately negotiated capped call transactions (the "Capped
Call Transactions") with certain financial institutions (the "Option
Counterparties"), pursuant to capped call confirmations in substantially the
form filed as Exhibit 10.1 to this Current Report on Form 8-K. The Capped Call
Transactions cover, subject to customary adjustments, the number of shares of
common stock initially underlying the 2029 Notes. The Capped Call Transactions
are expected generally to increase the effective conversion premium of the 2029
Notes to a cap price that will be determined at the end of the Hedging Period
(as defined below), and reduce the potential dilutive effect on Global Payments'
common stock upon conversion of the 2029 Notes or, at Global Payments' election
(subject to certain conditions), offset any cash payments Global Payments
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is required to make in excess of the aggregate principal amount of converted
2029 Notes, as the case may be, with such reduction and/or offset subject to a
cap based on the cap price. The strike price of the Capped Call Transactions
will initially be $140.6687 per share. The cap price of the Capped Call
Transactions will be determined at the conclusion of a hedging period under the
Capped Call Transactions that will commence on August 9, 2022 and is expected to
conclude on August 25, 2022 (subject to customary provisions providing for
extension in the event of certain market disruption events) (the "Hedging
Period"). The aggregate upfront premiums paid by Global Payments in respect of
the Capped Call Transactions will be $300 million.
In connection with establishing their initial hedge positions in respect of the
Capped Call Transactions, Global Payments expects that the Option Counterparties
or another designated financial institution will purchase shares of Global
Payments' common stock and/or enter into various derivative transactions with
respect to Global Payments' common stock during the Hedging Period. This
activity could increase (or reduce the size of any decrease in) the market price
of Global Payments' common stock during that period. In addition, the Option
Counterparties or another designated financial institution may modify their
hedge positions by entering into or unwinding various derivative transactions
with respect to Global Payments' common stock and/or purchasing or selling
Global Payments' common stock or other securities in secondary market
transactions during and following the conclusion of the Hedging Period and prior
to the maturity of the 2029 Notes (and are likely to do so in connection with
any conversion of the 2029 Notes). This activity could also cause or avoid an
increase or a decrease in the market price of Global Payments' common stock or
the 2029 Notes.
The Capped Call Transactions are separate transactions entered into by Global
Payments with each Option Counterparty, are not part of the terms of the 2029
Notes and will not affect the holders' rights under the 2029 Notes. Holders of
the 2029 Notes will not have any rights with respect to the Capped Call
Transactions.
The foregoing summary of the Capped Call Transactions does not purport to be
complete and is subject to, and qualified in its entirety by the full text of
the form of capped call confirmation relating to the Capped Call Transactions,
which is filed as Exhibit 10.1 and incorporated by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of the Registrant
The information related to the issuance of the 2029 Notes contained in Item 1.01
of this Current Report on Form 8-K is incorporated by reference.
Item 3.02. Unregistered Sale of Securities
As previously disclosed, on August 1, 2022, Global Payments entered into the
Investment Agreement pursuant to which Global Payments agreed to issue and sell
$1,500,000,000 in aggregate principal amount of the 2029 Notes in a private
placement. The 2029 Notes were issued on August 8, 2022, in reliance on the
exemption from registration provided by Section 4(a)(2) of the Securities Act of
1933, as amended. Global Payments relied on this exemption from registration
based in part on representations made by the Silver Lake Purchasers in the
Investment Agreement.
The information contained in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
4.1 Indenture, dated as of August 8, 2022, between Global Payments Inc.
and U.S. Bank Trust Company, National Association, as trustee, related
to 1.00% Convertible Senior Notes due 2029
4.2 Form of 1.00% Convertible Senior Notes due 2029 (included in
Exhibit 4.1)
10.1 Form of Capped Call Confirmation
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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Forward Looking Statements
This communication contains "forward-looking statements" as that term is defined
under the Private Securities Litigation Reform Act of 1995 and other securities
laws, regarding Global Payments, including, but not limited to, statements about
the strategic rationale and benefits of the investment by Silver Lake in the
form of $1.5 billion in aggregate principal amount of 1.00% convertible senior
notes due 2029 and the effects of entering into the Capped Call Transactions
(collectively, the "Proposed Transactions"). You can generally identify
forward-looking statements by the use of forward-looking terminology such as
"anticipate," "believe," "continue," "could," "estimate," "expect," "explore,"
"evaluate," "forecast," "intend," "may," "might," "plan," "potential,"
"predict," "project," "seek," "should," "targeted," "will," or "would," or the
negative thereof or other variations thereon or comparable terminology. These
forward-looking statements are based on Global Payments' current plans,
objectives, estimates, expectations and intentions and inherently involve
significant risks and uncertainties, many of which are beyond Global Payments'
control. Although we believe the expectations reflected in any forward-looking
statements are based on reasonable assumptions, we can give no assurance that
our expectations will be attained, and therefore actual results and the timing
of events could differ materially from those anticipated in such forward-looking
statements as a result of these risks and uncertainties, which include, without
limitation, risks and uncertainties associated with: significant transaction
costs and/or unknown or inestimable liabilities; the occurrence of any event,
change or other circumstance that could give rise to the termination of the
definitive agreements relating to the Proposed Transactions, as applicable;
failure to realize the expected benefits of the Proposed Transactions, as
applicable; risks related to future opportunities and plans for Global Payments,
including the uncertainty of expected future regulatory filings, financial
performance and results of the combined company following completion of the
acquisition of EVO Payments, Inc.; disruptions from the Proposed Transactions,
making it more difficult to conduct business as usual or maintain relationships
with customers, employees or suppliers; the diversion of management's attention
from ongoing business operations; effects relating to the announcement of the
Proposed Transactions or any further announcements or the consummation of the
Proposed Transactions on the market price of Global Payments' common stock; the
risk of potential stockholder litigation associated with the Proposed
Transactions, including resulting expense or delay; Global Payments' ability to
settle the par value and interest of the 2029 Notes in cash, the potential
impact of settling any other amounts due in cash or Global Payments' common
stock and the use of the proceeds and benefits thereof; and other risks and
uncertainties affecting Global Payments, including those described from time to
time under the caption "Risk Factors" and elsewhere in Global Payments'
Securities and Exchange Commission ("SEC") filings and reports, including Global
Payments' Annual Report on Form 10-K for the year ended December 31, 2021 and
its other SEC filings and reports. Moreover, other risks and uncertainties of
which Global Payments is not currently aware may also affect its forward-looking
statements and may cause actual results and the timing of events to differ
materially from those anticipated. Global Payments cautions investors that such
forward-looking statements are not guarantees of future performance and that
undue reliance should not be placed on such forward-looking statements. The
forward-looking statements made in this communication are made only as of the
date hereof or as of the dates indicated in the forward-looking statements and
reflect the views stated therein with respect to future events as at such dates,
even if they are subsequently made available by Global Payments on its website
or otherwise. Global Payments disclaims any obligation to update or supplement
any forward-looking statements to reflect actual results, new information,
future events, changes in its expectations or other circumstances that exist
after the date as of which the forward-looking statements were made.
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