Loandepot, Inc. current report, 11 February 2021

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loanDepot, Inc. Form 8-K Summary

Business context and reporting period

loanDepot, Inc. filed this Current Report on February 16, 2021, reporting events occurring primarily on February 11, 2021, in connection with the company’s initial public offering of Class A common stock. The Class A common stock trades on the New York Stock Exchange under the symbol LDI.

Key financial and capital markets information

  • The IPO was priced at $14.00 per share.
  • The initial offering covered 3,850,000 shares: 2,394,000 shares sold by the company and 1,456,000 shares sold by the Parthenon Stockholders.
  • Underwriters received a 30-day option for up to 577,500 additional shares. The option was fully exercised, and total shares sold increased to 4,427,500.
  • Based on the offering price, total gross offering value was approximately $62.0 million before underwriting discounts, commissions and offering expenses. The filing does not provide net proceeds.
  • The company sold 2,753,100 shares in total, implying approximately $38.5 million of gross proceeds before offering costs. The Parthenon Stockholders sold 1,674,400 shares, implying approximately $23.4 million of gross proceeds.
  • The company issued 121,368,600 shares of Class D common stock to the Parthenon Stockholders in exchange for equity interests in LD Holdings Group LLC and 201,422,212 shares of Class C common stock to certain continuing members.
  • The filing does not provide revenue, profit, cash flow, margins, debt, liquidity balances or other operating performance metrics.

Material changes versus the prior comparable period

  • The filing does not present comparative financial statements or operating results.
  • Material corporate changes included completion of the IPO, adoption of an amended and restated certificate of incorporation and bylaws, and entry into registration rights, stockholders, tax receivable and amended LLC agreements.
  • The IPO resulted in a new public Class A equity structure, while Class C and Class D shares were issued to continuing equity holders and the Parthenon Stockholders.

Management, compensation and other material agreements

  • Anthony Hsieh continued as Chairman and Chief Executive Officer under a three-year initial employment term, with a base salary of $850,000 and a target annual bonus of 250% of base salary.
  • Patrick Flanagan became Chief Financial Officer under a three-year initial term, with a base salary of $600,000 and a target annual bonus of 150% of base salary.
  • Jeff DerGurahian became Executive Vice President and Chief Capital Markets Officer under a three-year initial term, with a base salary of $600,000 and a target annual bonus of 150% of base salary.
  • Jeff Walsh became Senior Executive Vice President and Chief Revenue Officer under a three-year initial term, with a base salary of $750,000 and a target annual bonus of 200% of base salary.
  • The employment agreements provide for potential severance, healthcare continuation, bonus payments and accelerated vesting of equity awards upon specified covered terminations, including in connection with a change in control.
  • The agreements include confidentiality, non-competition, non-solicitation and non-disparagement provisions. The filing states that the summaries are qualified by the complete agreements filed as exhibits.

Guidance, outlook, risks and unusual items

The filing provides no financial guidance, operating outlook or management forecast. Key items for investors include the company’s newly public capital structure, tax receivable agreement obligations, governance and transfer provisions under the stockholders and LLC agreements, potential executive severance obligations, and dilution or voting implications associated with the Class C and Class D common stock. The filing does not quantify potential tax receivable agreement payments or other contingent obligations.

Most important facts to verify

  • Review the IPO prospectus for the use of proceeds, underwriting discounts, offering expenses, capitalization, dilution and risk factors.
  • Review the tax receivable agreement for potential future payment obligations to LD Holdings Group LLC members and other parties.
  • Review the amended certificate of incorporation, bylaws, stockholders agreement and LLC agreement for voting rights, exchange rights, governance provisions and transfer restrictions.
  • Confirm the final share counts and ownership percentages after the fully exercised underwriters’ option and the Class C and Class D issuances.
  • Review the complete executive employment agreements for severance triggers, change-in-control payments, equity acceleration and bonus provisions.