Business Context and Reporting Period
AlTi Global, Inc. filed this Form 8-K on February 22, 2024, reporting proposed strategic investments by Allianz Strategic Investments S.à r.l. and CWC AlTi Investor LLC, an affiliate of Constellation Wealth Capital. The filing does not report quarterly or annual operating results.
Key Financial and Capital Structure Terms
| Transaction | Principal terms |
|---|---|
| Allianz | $250 million total: $140 million of Series A Cumulative Convertible Preferred Stock and $110 million for 19,318,580.96 newly issued Class A common shares at $5.69 per share. Allianz will also receive warrants for 5,000,000 Class A shares exercisable at $7.40 per share. |
| Constellation initial closing | $115 million of Series C Cumulative Convertible Preferred Stock and warrants for 1,533,333 Class A shares. |
| Constellation additional investment | AlTi may require an additional $35 million of Series C Preferred Stock between May 1 and September 30, 2024, with warrants for an additional 466,667 Class A shares. |
| Potential supplemental Allianz investment | Allianz may purchase up to an additional $50 million of Series A Preferred Stock through February 22, 2029, for strategic international acquisitions. |
| Preferred dividends | Series A and Series C Preferred Stock carry cumulative, compounding dividends at 9.75% annually, subject to the terms and adjustments described in the filing. Series A dividends are generally payable 50% in additional preferred stock and 50% in Class A common stock; Series C dividends may be paid in cash or added to stated value. |
| Debt amendment | The Third Amendment to the Credit Agreement permits the proposed investments, increases the applicable margin by 0.50% during the temporary covenant-waiver period, limits revolving-facility proceeds to general working capital, waives the leverage and interest-coverage ratios for the quarters ending March 31 and June 30, 2024, and adds minimum EBITDA and minimum liquidity requirements for those periods. |
The filing does not provide current revenue, net income, operating cash flow, cash balance, margins, debt outstanding, or liquidity amounts.
Material Changes Versus the Prior Comparable Period
- The proposed transactions would materially increase AlTi’s preferred equity and common-equity capitalization, subject to closing conditions and stockholder approvals.
- The transactions include substantial potential dilution from common shares, preferred-stock conversions, preferred-stock dividends, and warrants.
- Allianz would receive rights to nominate two directors to a nine-member Board, while Constellation would receive rights to designate one Board observer and one Transaction Committee observer.
- The Company intends to establish a Transaction Committee with approval authority over specified mergers, acquisitions, investments, dispositions, and related financings. Transactions of $175 million or more generally require approval by at least three members, including the Allianz designee.
- The Credit Agreement will operate under temporarily modified financial covenants and higher pricing during the waiver period. Certain asset-sale proceeds must be used to repay the term loan and may reduce the $40 million revolving-facility commitment block.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- The Allianz closing was expected in the second quarter of 2024; the Constellation initial closing was expected on or before March 31, 2024. Neither transaction was stated to have closed as of the filing date.
- Closing depends on regulatory approvals, stockholder approval of the required 20% issuance and charter amendment, voting agreements from holders representing 35% of the outstanding Class A and Class B common stock, a Credit Agreement waiver permitting strategic use of proceeds, establishment of the Transaction Committee, and other customary conditions.
- Either party may generally terminate the Allianz Investment Agreement if closing has not occurred by August 22, 2024, subject to a possible three-month regulatory-approval extension.
- Allianz’s Series A Preferred Stock has a $1,000 per-share liquidation preference, a conversion price initially set at $8.70, and a maximum beneficial ownership cap generally increasing from 19.9% to 24.9% after the required stockholder approval.
- Series C Preferred Stock is generally convertible at an initial $8.70 conversion price and includes redemption, put, change-of-control, and cash-settlement provisions. Constellation’s voting rights are subject to a 7.5% voting cap.
- Allianz will be subject to lock-up, standstill, transfer, and ownership restrictions, while receiving governance, information, registration, and preemptive rights.
- The securities are intended to be issued in private placements under Section 4(a)(2) of the Securities Act and will not initially be registered for public sale.
- Future international acquisitions are a stated use of proceeds, but the filing does not provide a specific acquisition target, transaction value, expected return, or timing.
Most Important Facts for Investors to Verify
- Whether the Allianz and Constellation transactions closed, and the actual amounts and securities issued.
- Whether the required stockholder approvals, voting agreements, regulatory approvals, charter amendment, and Credit Agreement waiver were obtained.
- The Company’s post-closing share count, fully diluted ownership, warrant overhang, and potential preferred-stock conversion dilution.
- The actual dividend, redemption, conversion, and cash-settlement obligations under the Series A and Series C Preferred Stock.
- Compliance with the revised minimum EBITDA, minimum liquidity, leverage, and interest-coverage requirements.
- Current debt balances, interest expense, liquidity, and required term-loan repayments, which are not quantified in this filing.
- The terms and financial impact of any strategic acquisitions funded with the proposed capital.