Business Context and Reporting Period
This Form 8-K Current Report, filed on June 14, 2021, covers events occurring on June 9 and June 14, 2021, for Clarivate Plc. The filing details the entry into material definitive agreements for two concurrent public offerings: an Ordinary Shares Offering and a 5.25% Series A Mandatory Convertible Preferred Shares Offering. The transactions were closed on June 14, 2021, with Citigroup Global Markets Inc. acting as the representative underwriter.
Key Financial Metrics and Capital Structure
The filing outlines the following capital raising activities and terms:
- Ordinary Shares Offering: The Company issued and sold 28,846,154 ordinary shares. Additionally, Selling Shareholders sold 9,615,384 ordinary shares. Underwriters exercised an option to purchase an additional 5,769,230 ordinary shares. The total ordinary shares sold in the offering were 38,461,538 (plus the option shares).
- Convertible Preferred Shares Offering: The Company issued and sold 12,500,000 5.25% Series A Mandatory Convertible Preferred Shares with a liquidation preference of $100.00 per share. Underwriters exercised an option to purchase an additional 1,875,000 shares.
- Proceeds: The filing states the Company will not receive proceeds from the sale of ordinary shares by the Selling Shareholders. Specific gross proceeds to the Company from the new issuances are not explicitly quantified in the text provided.
- Dividends: Preferred shares carry a cumulative annual dividend rate of 5.25% of the $100.00 liquidation preference, payable quarterly starting September 1, 2021.
Material Changes and Terms
The filing reports significant changes to the Company's capital structure and shareholder rights:
- Conversion Terms: The convertible preferred shares will automatically convert on June 1, 2024, into between 3.2052 and 3.8462 ordinary shares per preferred share, subject to adjustments. This could result in the issuance of up to 55,289,125 ordinary shares.
- Dividend Restrictions: While preferred shares are outstanding, no dividends may be paid on ordinary shares unless all accumulated and unpaid preferred dividends are paid. Similarly, the Company is restricted from repurchasing ordinary shares unless preferred dividends are current.
- Liquidation Preference: In a liquidation event, preferred shareholders are entitled to $100.00 per share plus accumulated unpaid dividends before any distribution to ordinary shareholders.
- Voting Rights: Preferred shareholders generally lack voting rights but gain the right to elect two additional directors if dividends are not paid for six or more periods.
Outlook, Risks, and Contingencies
Management commentary and contingencies are tied to the pending acquisition of ProQuest:
- ProQuest Acquisition Contingency: If the ProQuest acquisition is terminated or fails to consummate on or prior to November 8, 2021, the Company has the option to redeem all convertible preferred shares.
- Redemption Risk: The mandatory conversion date is expected to be June 1, 2024, but redemption may occur earlier if the ProQuest deal fails.
- Dividend Payment Risk: Dividends are cumulative but payable only when declared by the Board. Failure to pay for six periods triggers enhanced voting rights for preferred holders.
Key Facts for Investor Verification
- Verify the total gross proceeds received by Clarivate Plc from the issuance of new ordinary and preferred shares, as the specific dollar amount is not stated in this summary text.
- Confirm the status of the ProQuest acquisition, as its failure by November 8, 2021, triggers a redemption option for the preferred shares.
- Review the Statement of Rights (Exhibit 3.1) for specific anti-dilution and make-whole adjustment formulas affecting the conversion ratio.
- Assess the impact of the 5.25% cumulative dividend obligation on future cash flows and the restriction on ordinary share dividends.
- Monitor the potential dilution from the conversion of up to 55,289,125 ordinary shares upon the mandatory conversion date in 2024.