Business Context and Reporting Period
This Form 8-K Current Report, dated May 7, 2021, discloses a material definitive agreement entered into by Repay Holdings Corporation (the "Company"). The filing details the execution of a Merger Agreement to acquire BT Intermediate, LLC, the parent company of BillingTree, a provider of omni-channel integrated payments solutions for healthcare, credit unions, and energy industries.
Key Financial Metrics and Transaction Terms
The filing outlines the financial structure of the proposed acquisition rather than the Company's standalone operating results for a specific period.
- Total Consideration: Approximately $503.25 million.
- Cash Component: Approximately $275 million.
- Equity Component: 10,051,302 shares of Class A common stock ("Acquisition Shares").
- Share Valuation Basis: The number of shares was calculated based on the average daily VWAP for the twelve-day trading period prior to the agreement execution.
- Lock-Up Period: The Seller is restricted from transferring Acquisition Shares for 180 days following closing.
Material Changes and Transaction Structure
The transaction is structured as a two-step merger intended to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code, unless the Seller elects otherwise.
- First Merger: A wholly-owned subsidiary ("Merger Sub") will merge with the Target (BT Intermediate, LLC), with the Target surviving.
- Second Merger: Unless a "Tax Election" is made by the Seller, the surviving Target will immediately merge into another wholly-owned subsidiary ("Buyer"), with Buyer surviving.
- Tax Election: The Seller may elect to treat the transaction as a taxable sale, in which case the Second Merger will not occur.
- Termination Date: The agreement includes customary termination rights if the closing does not occur by August 31, 2021.
Guidance, Risks, and Contingencies
The filing does not provide updated financial guidance or management commentary on future earnings projections. Key contingencies and risks include:
- Regulatory Approval: Closing is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1975.
- Closing Conditions: The transaction is subject to the satisfaction or waiver of other customary closing conditions.
- Post-Closing Adjustments: The agreement includes provisions for adjustments related to working capital, cash, indebtedness, and transaction expenses.
- Registration Rights: A concurrent Registration Rights Agreement requires the Company to file a resale registration statement for the Acquisition Shares and assist the Seller with up to two non-marketed underwritten offerings.
Investor Verification Checklist
- Verify the final closing date and whether the transaction closes before the August 31, 2021 termination deadline.
- Confirm whether the Seller exercises the "Tax Election," which would alter the transaction structure and tax implications.
- Monitor the status of the Hart-Scott-Rodino (HSR) antitrust waiting period.
- Review the definitive Merger Agreement (Exhibit 2.1) for specific representations, warranties, and indemnification terms.
- Assess the impact of the $275 million cash outlay on the Company's liquidity and debt covenants.