GREENSKY, INC. Item 8.01 Other Events.
As previously disclosed, onSeptember 14, 2021 ,GreenSky, Inc. , aDelaware corporation ("GreenSky"), entered into an Agreement and Plan of Merger (as amended or otherwise modified from time to time, the "Merger Agreement"), by and among The Goldman Sachs Group, Inc., aDelaware corporation ("GS Group "),Goldman Sachs Bank USA , a bank organized under the laws of theState of New York ("GS Bank "), andGreenSky Holdings, LLC , aGeorgia limited liability company and subsidiary of GreenSky ("GreenSky Holdings "). OnNovember 5, 2021 , Glacier Merger Sub 1, LLC, aDelaware limited liability company and wholly owned subsidiary ofGS Bank ("Merger Sub 1"), and Glacier Merger Sub 2, LLC, aGeorgia limited liability company and wholly owned subsidiary ofGS Bank ("Merger Sub 2"), became party to the Merger Agreement through the execution of a joinder agreement to the Merger Agreement. Upon the terms and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, (i) GreenSky will be merged with and into Merger Sub 1 (the "Company Merger"), with Merger Sub 1 surviving the Company Merger as a wholly owned subsidiary ofGS Bank , and (ii) Merger Sub 2 will be merged with and intoGreenSky Holdings (the "Holdings Merger" and, together with the Company Merger, the "Mergers"), withGreenSky Holdings surviving the Holdings Merger as a subsidiary ofGS Bank and Merger Sub 1. OnNovember 9, 2021 , GreenSky filed a definitive proxy statement with theSecurities and Exchange Commission ("SEC") in connection with the Mergers which also constitutes a prospectus ofGS Group (the "Proxy Statement/Prospectus"). Since the initial filing of the Proxy Statement/Prospectus, four complaints have been filed in federal courts inDelaware ,Georgia andNew York by purported GreenSky stockholders against GreenSky and the members of the GreenSky board of directors in connection with the Mergers:Jeweltex Manufacturing Inc. Retirement Plan v.GreenSky, Inc. , et al., Case No. 1:21-cv-04800 (filedNovember 19, 2021 ) (N.D. Ga.); Carlisle v.GreenSky, Inc. , et al., Case No. 21-cv-01655 (filedNovember 23, 2021 ) (D. Del.); Taylor v.GreenSky, Inc. , et al., Case No. 1:21-cv-04876 (filedNovember 29, 2021 ) (N.D. Ga.); and Trantham v.GreenSky, Inc. , et al., Case No. 21-cv-10333 (filedDecember 3, 2021 ) (S.D.N.Y.) (collectively, the "Federal Stockholder Litigation"). The complaints in the Federal Stockholder Litigation include allegations that, among other things, the Proxy Statement/Prospectus omitted certain material information in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14a-9 promulgated under the Exchange Act, rendering the Proxy Statement/Prospectus false and misleading. Additionally, onNovember 9 ,November 20 ,November 24 andNovember 29, 2021 , four purported GreenSky stockholders sent demand letters alleging similar insufficiencies in the disclosures in the Proxy Statement/Prospectus (such letters, the "Demand Letters", and together with the Federal Stockholder Litigation, the "Litigation Matters"). The plaintiffs in the Federal Stockholder Litigation seek various remedies, including an order enjoining the defendants from proceeding with the Mergers unless the defendants disclose allegedly material information that was allegedly omitted from the Proxy Statement/Prospectus, rescinding the Mergers in the event that they are consummated or awarding rescissory damages, declaring that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act and the related rules and regulations thereunder, awarding costs, including attorneys' and expert fees, and granting such other and further relief as the court may deem just and proper. GreenSky believes that the claims asserted in the Litigation Matters are without merit and no additional disclosures are required under applicable law. However, in order to avoid the risk of the Litigation Matters delaying or adversely affecting the Mergers and to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, GreenSky has determined to voluntarily make the following supplemental disclosures to the Proxy Statement/Prospectus, as described in this Current Report on Form 8-K. Nothing in this Current Report on Form 8-K shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the disclosures set forth herein. To the contrary, GreenSky specifically denies all allegations in the Litigation Matters that any additional disclosure was or is required. These supplemental disclosures will not change the consideration to be paid to stockholders of GreenSky in connection with the Mergers or the timing of the Special Meeting of Stockholders (the "Special Meeting") of GreenSky, which is scheduled to be held virtually, via live webcast, onDecember 10, 2021 , at10:00 a.m., Eastern Time . The Special Meeting can be accessed by visiting www.virtualshareholdermeeting.com/GSKY2021SM. The GreenSky board of directors, acting upon the unanimous recommendation of a special committee composed of independent directors of the GreenSky board of directors, continues to recommend that you vote "FOR" the proposals to be voted on at the Special Meeting described in the Proxy Statement/Prospectus.
Supplemental Disclosures to the Proxy Statement/Prospectus in connection with
the Litigation Matters
The following disclosures in this Current Report on Form 8-K supplement the
disclosures contained in the Proxy Statement/Prospectus and should be read in
conjunction with the disclosures contained in the Proxy Statement/Prospectus,
which in turn should be read in its entirety. All page references are to the
Proxy Statement/Prospectus and terms used below, unless otherwise defined, shall
have the meanings ascribed to such terms in the Proxy Statement/Prospectus.
The disclosure in the section entitled "The Mergers-Certain Unaudited Financial
Information", beginning on page 73 of the Proxy Statement/Prospectus, is hereby
amended as follows:
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The table and related footnotes after the first full paragraph on page 76 are
amended and restated by replacing such table and related footnotes in their
entirety with the following:
Fiscal year ended December 31,
Terminal
($ in millions) 2022E 2023E 2024E 2025E Year
EBIT (1) $ 169 $ 186 $ 196 $ 202 $ 205
Taxes (41 ) (46 ) (48 ) (49 ) (50 )
Depreciation and amortization 12 12 13 13 14
Capital expenditures (16 ) (16 ) (16 ) (16 ) (16 ) Change in finance charge reversal liability 35 30 11
7 7
Change in restricted cash (34 ) (36 ) (17 ) (11 ) (11 )
Unlevered free cash flows (2) $ 126 $ 131 $
139
(1) EBIT, a non-GAAP financial measure, refers to adjusted EBITDA, less
equity-based compensation and depreciation and amortization.
(2) Unlevered free cash flows were not calculated for fiscal year 2021.
The disclosure in the section entitled "The Mergers-Opinion of J.P. Morgan, GreenSky's Financial Advisor", beginning on page 76 of the Proxy Statement/Prospectus, is hereby amended as follows:
The following table and related footnote are added as a new paragraph after the fourth paragraph on page 79 under the subheading "Public Trading Multiples Analysis":
The results of the analysis for each of the selected companies were as follows:
2022E P/E
American Express Company 17.4x
Synchrony Financial 9.2x
Discover Financial Services 9.8x
Capital One Financial Corporation 8.9x
Alliance Data Systems Corporation 6.8x
LendingClub Corporation NM (1)
(1) NM means not meaningful because the applicable multiple is greater than 20.
The fourth sentence of the second full paragraph on page 80 under the subheading "Discounted Cash Flow Analysis" is amended and supplemented by replacing such sentence in its entirety with the following: The unlevered free cash flows and the range of terminal values were then discounted to present values as ofDecember 31, 2021 using a discount rate range of 11.0% to 13.0%, which was chosen by J.P. Morgan based on an analysis of the weighted average cost of capital of GreenSky and based on J.P. Morgan's experience and judgment. The disclosure in the section entitled "The Mergers-Opinion of Piper Sandler, GreenSky Special Committee's Financial Advisor", beginning on page 82 of the Proxy Statement/Prospectus, is hereby amended as follows: The table after the last paragraph on page 87 continuing on page 88 under the subheading "Comparable Company Analyses" is amended and restated by replacing such table in its entirety with the following: Stock Price / (1)(2) Total
Enterprise Value / (1)(2)
Market LTM 2021E 2022E LTM 2021E 2022E
Capitalization EPS EPS EPS EBITDA EBITDA EBITDA
Company ($B) (x) (x) (x) (x) (x) (x)
Upstart Holdings Inc. 21.6 NM NM NM NM NM NM
SoFi Technologies Inc. 11.9 NM NM NM NA NM NM
OneMain Holdings Inc. 7.5 5.5 5.2 6.3 NA NA NA
LendingClub Corp. 2.9 NM NM 24.6 46.4 NA 13.0
LendingTree Inc. 2.1 NM NM 35.5 NM 18.0 13.1
Enova International Inc. 1.2 2.4 4.8 5.9 NA NA NA
CURO Group Holdings Corp. 0.7 5.0 11.3 7.2 4.5 7.8 6.0
Oportun Financial Corp. 0.7 NM 12.8 9.6 NA NA NA
OppFi Inc. 0.1 1.5 11.5 10.6 NA 2.5 1.9
Elevate Credit Inc. 0.1 5.2 NM 5.5 3.4 6.5 4.5
(1) NM means not meaningful because the applicable multiple is greater than 50 or
negative.
(2) NA means not available.
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The table after the second full paragraph on page 88 under the subheading "Comparable Company Analyses" is amended and restated by replacing such table in its entirety with the following:
Stock Price / Most Recent Quarter
Tangible Tangible Total Return on Return on
Market Book LTM 2021E 2022E 52-WeekDividend Total Common Equity/ Risk-Based Average Average Net Income Efficiency
Capitalization Value EPS EPS EPS High Yield Assets Tangible Assets Capital Ratio Assets Equity Margin
Ratio
Company ($B) (%) (x) (x) (x) (%) (%) ($B) (%) (%) (%) (%) (%)
(%)
JPMorgan Chase & Co. 478 235 10.7 11.3 13.3 95.5 2.3 3,684 5.60 17.14 1.28 16.86 28.5
57.4
Bank of America Corporation 345 190 13.7 12.7 13.2 94.1 2.1 3,030 6.17 15.11 1.22 13.43 24.1 69.6 Citigroup Inc. 143 91 7.2 7.0 8.8 87.8 2.9 2,328 6.86 15.63 1.06 12.22 18.9 64.7 Wells Fargo & Co. 188 131 12.2 10.9 12.3 89.0 1.7 1,946 7.48 16.84 1.39 14.13 5.7 75.7 The Toronto-Dominion Bank (1) 118 200 9.7 10.6 10.8 92.1 3.8 1,345 4.44 18.52 0.83 14.59 32.7 56.6 Royal Bank of Canada (1) 145 251 12.2 11.5 11.6 96.2 3.3 1,338 4.37 16.71 1.04 18.17 26.7 55.9 Morgan Stanley 190 261 13.9 14.0 14.4 98.7 2.7 1,162 6.47 20.00 1.21 13.02 22.8 67.7
(1) Financial data for Royal Bank of Canada and The Toronto-Dominion Bank as of
or for the period ending
assets of Royal Bank of Canada and The Toronto-Dominion Bank were adjusted by
the exchange ratio of Canadian dollars to
2021 of 0.79.
The table and related footnotes after the second paragraph on page 89 under the subheading "Analysis of Precedent Transactions" are amended and restated by replacing such table and related footnotes in their entirety with the following:
Transaction Equity Value / (1)(2)
LTM NTM One-Day
Net Net Book Implied
Income Income Value Premium
Announcement Date Target Acquiror (x) (x) (%) (%)
August 2021 Service Finance Truist Financial Corporation NA NA NA NA
Company, LLC (3)
June 2021 EnerBank USA (3) Regions Financial Corporation 12.6 NA 302 NA
January 2021 Cardtronics plc NCR Corporation NM 24.5 519 (5.1)
November 2019 Asta Funding, Inc. Stern Group, Inc. 18.2 NA 96 17.6
May 2019 Total System Global Payments Inc. 37.4 25.5 NM 9.6
Services, Inc.
March 2019 Worldpay, Inc. Fidelity National Information Services, Inc. NM 24.4 354 13.6
January 2019 Repay Holdings, LLC Thunder Bridge Acquisition, Ltd. NM NA 550 NA
January 2019 First Data Fiserv, Inc. 18.2 16.3 511 29.6
Corporation
November 2017 America's Financial Finbond Group Ltd. 4.1 NA NA NA
Choice, Inc.
October 2017 Planet Payment, Inc. Franklin UK Bidco Limited 9.7 25.0 568 18.1
October 2017 Spirit Kimho Consultants Co. Ltd 7.3 NA NA NA
International, Inc.
April 2017 MertzCo, Inc. CardConnect Corp. 17.9 NA NM NA
January 2017 UniRush, LLC Green Dot Corporation 11.2 NA NM NA
July 2016 Oak Mortgage Republic First Bancorp, Inc. 3.3 NA 141 NA
Company, LLC
June 2016 Higher One Holdings, Blackboard Inc. 33.3 22.4 221 37.3
Inc.
March 2016 FTS Holding FinTech Acquisition Corp. NM NA 617 NA
Corporation
February 2016 CollectorSolutions, JetPay Corporation 16.3 NA NA NA
Inc.
(1) NM means not meaningful for Transaction Equity Value / LTM Net Income because
the applicable multiple is greater than 50 or negative. NM means not
meaningful for Transaction Equity Value / Book Value because the applicable
percentage is greater than 750 or negative.
(2) NA means not available.
(3) Included due to non-traditional banking model focused on home improvement
loan programs.
The third sentence of the second paragraph on page 90 under the subheading "Net
Present Value Analyses" is amended and supplemented by replacing such sentence
in its entirety with the following:
Piper Sandler selected these price to earnings and tangible book value multiples
based on Piper Sandler's review of, among other matters, the trading multiples
of selected companies that Piper Sandler deemed to be comparable to GreenSky and
GS Group , respectively.
The following language is added as a new sentence after the third sentence of the second paragraph on page 90 under the subheading "Net Present Value Analyses":
Consistent with its ordinary practice, Piper Sandler employed the Duff &
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The following language is added as a new sentence after the second sentence of the second paragraph on page 91 under the subheading "Net Present Value Analyses":
Consistent with its ordinary practice, Piper Sandler employed the Duff &Phelps Cost of Capital Navigator and its experience and judgement in determining an appropriate discount rate forGS Group .
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regardingGreenSky and GS Group including, but not limited to, statements related to the proposed acquisition of GreenSky and the anticipated timing, results and benefits thereof, statements regarding the expectations and beliefs of the board of directors of GreenSky, GreenSky management, the board of directors ofGS Group orGS Group management, and other statements that are not historical facts. Readers can generally identify forward-looking statements by the use of forward-looking terminology such as "outlook," "potential," "continue," "may," "seek," "approximately," "predict," "believe," "expect," "plan," "intend," "poised," "estimate" or "anticipate" and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as "will," "should," "would," "likely" and "could". These forward-looking statements are based on GreenSky's andGS Group's current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties, many of which are beyond GreenSky's orGS Group's control. 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 GreenSky's andGS Group's ability to complete the proposed acquisition on the proposed terms or on the anticipated timeline, or at all, including: risks and uncertainties related to securing the necessary regulatory and shareholder approvals and satisfaction of other closing conditions to consummate the proposed acquisition; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement relating to the proposed acquisition; risks related to diverting the attention of GreenSky and/orGS Group management from ongoing business operations; failure to realize the expected benefits of the proposed acquisition; significant transaction costs and/or unknown or inestimable liabilities; the risk of litigation in connection with the proposed acquisition, including resulting expense or delay; the risk that GreenSky's business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; risks related to future opportunities and plans for GreenSky's business, including the uncertainty of financial performance and results ofGS Group following completion of the proposed acquisition; disruption from the proposed acquisition, making it more difficult to conduct business as usual or for GreenSky to maintain relationships with bank partners, other funding sources or purchasers of receivables related to, or economic participations in, loans originated by GreenSky's bank partners, merchants, sponsors of merchants, consumers, suppliers, distributors, partners, employees, regulators or other third parties; effects relating to the announcement of the proposed acquisition or any further announcements or the consummation of the proposed acquisition on the market price of GreenSky common stock orGS Group common stock; the possibility that, ifGS Group does not achieve the perceived benefits of the proposed acquisition as rapidly or to the extent anticipated by financial analysts or investors or at all, the market price ofGS Group common stock could decline; regulatory initiatives and changes in tax laws; market volatility and changes in economic conditions; and other risks and uncertainties affectingGreenSky and GS Group , including those described from time to time under the caption "Risk Factors" and elsewhere in GreenSky's andGS Group's SEC filings and reports, including GreenSky's Annual Report on Form 10-K for the fiscal year endedDecember 31, 2020 and Quarterly Reports on Form 10-Q for the fiscal quarters endedMarch 31, 2021 ,June 30, 2021 andSeptember 30, 2021 ,GS Group's Annual Report on Form 10-K for the fiscal year endedDecember 31, 2020 and Quarterly Reports on Form 10-Q for the fiscal quarters endedMarch 31, 2021 ,June 30, 2021 andSeptember 30, 2021 , and future filings and reports by either company. In addition, the trajectory and future impact of the COVID-19 pandemic remains highly uncertain and can change rapidly, and the extent of the pandemic's continuing and ultimate impact onGS Group , GreenSky, GreenSky's bank partners and merchants, borrowers under the GreenSky® consumer financing program, loan demand (in particular, for elective healthcare procedures), legal and regulatory matters, consumers' ability or willingness to pay, information security and consumer privacy, the capital markets, the economy in general and changes in theU.S. economy that could materially impact consumer spending behavior, unemployment and demand for products ofGS Group and GreenSky are highly uncertain and cannot be predicted with confidence at this time. Moreover, other risks and uncertainties of which GreenSky orGS Group are not currently aware may also affect each company's forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated. Readers of this communication are cautioned that forward-looking statements are not guarantees of future performance. 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 GreenSky orGS Group on their respective websites or otherwise. Except as otherwise required by law, neither GreenSky norGS Group undertakes any obligation, and each expressly 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. --------------------------------------------------------------------------------
Participants in the Solicitation
GreenSky,GS Group and their respective directors and certain of their executive officers and other employees may be deemed to be participants in the solicitation of proxies from GreenSky's stockholders in connection with the proposed acquisition. Information about GreenSky's directors and executive officers is set forth in GreenSky's Annual Report on Form 10-K for the year endedDecember 31, 2020 , which was filed with theSEC onMarch 10, 2021 , and in its proxy statement on Schedule 14A for the 2021 Annual Meeting of Stockholders, which was filed with theSEC onApril 28, 2021 and subsequent statements of beneficial ownership on file with theSEC . Information aboutGS Group's directors and executive officers is set forth inGS Group's Annual Report on Form 10-K for the year endedDecember 31, 2020 , which was filed with theSEC onFebruary 22, 2021 , and in its proxy statement on Schedule 14A for the 2021 Annual Meeting of Stockholders, which was filed with theSEC onMarch 19, 2021 and subsequent statements of beneficial ownership on file with theSEC . Additional information regarding the persons who may, under the rules of theSEC , be deemed participants in the solicitation of GreenSky's stockholders in connection with the proposed acquisition, including a description of their direct or indirect interests, by security holdings or otherwise, are set forth in the registration statement on Form S-4 and proxy statement/prospectus filed with theSEC and other relevant materials to be filed with theSEC when they become available.
Additional Information and Where to Find It
In connection with the proposed acquisition,GS Group filed with theSEC a registration statement on Form S-4 for theGS Group common stock that will be issued in the proposed acquisition, which was declared effective by theSEC onNovember 9, 2021 .GS Group has filed with theSEC its prospectus and GreenSky has filed with theSEC its definitive proxy statement in connection with the proposed acquisition, and the definitive proxy statement has been mailed to the stockholders of GreenSky for a Special Meeting of GreenSky's stockholders to approve the proposed acquisition. Each ofGreenSky and GS Group may also file other relevant documents with theSEC regarding the proposed acquisition. This communication is not a substitute for the registration statement, the prospectus, the definitive proxy statement or any other document that GreenSky orGS Group may file with theSEC with respect to the proposed acquisition. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE PROSPECTUS, THE DEFINITIVE PROXY STATEMENT, ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THESEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT GREENSKY, GS GROUP AND THE PROPOSED ACQUISITION. Investors and security holders will be able to obtain copies of these materials (if and when they are available) and other documents containing important information about GreenSky,GS Group and the proposed acquisition, once such documents are filed with theSEC free of charge through the website maintained by theSEC at www.sec.gov. Copies of documents filed with theSEC by GreenSky will be made available free of charge on GreenSky's investor relations website at investors.greensky.com. Copies of documents filed with theSEC byGS Group will be made available free of charge onGS Group's investor relations website at goldmansachs.com/investor-relations/.
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made inthe United States absent registration under theU.S. Securities Act of 1933, as amended, or pursuant to an exemption from, or in a transaction not subject to, such registration requirements.
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