Item 1.01 Entry into a Material Definitive Agreement.
On January 28, 2022, Block, Inc. (formerly known as Square, Inc.) ("Block")
entered into the Fifth Amendment to Revolving Credit Agreement, among Block, the
lenders that are party thereto, and Goldman Sachs Bank USA, as administrative
agent (the "Revolver Amendment"). The Revolver Amendment amends the Revolving
Credit Agreement, dated as of May 1, 2020 (as amended by the First Amendment to
Revolving Credit Agreement, dated as of May 28, 2020, the Second Amendment to
Revolving Credit Agreement, dated as of November 9, 2020, the Third Amendment to
Revolving Credit Agreement, dated as of January 28, 2021, and the Fourth
Amendment to Revolving Credit Agreement, dated as of May 25, 2021), among Block,
the lenders that are party thereto, and Goldman Sachs Bank USA, as
Administrative Agent, to permit certain existing obligations of Afterpay Limited
and its subsidiaries, including the SGX Notes (as defined below), to remain
outstanding as of and after the completion of the Transaction (as defined
below).
The foregoing description of the Revolver Amendment does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Revolver Amendment, a copy of which is filed as Exhibit 10.1 and incorporated
herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On January 31, 2022 (Pacific Standard Time)/February 1, 2022 (Australian Eastern
Daylight Time), Block completed its previously announced acquisition of all
ordinary shares of Afterpay Limited, an Australian public company limited by
shares and listed on the Australian Securities Exchange ("Afterpay" and such
shares, "Afterpay Shares"), pursuant to a court-approved scheme of arrangement
under Part 5.1 of Australia's Corporations Act 2001 (Cth) (the "Scheme" and such
acquisition, the "Transaction"), as contemplated by the Scheme Implementation
Deed (the "Deed"), dated as of August 1, 2021 (Pacific Daylight Time)/August 2,
2021 (Australian Eastern Standard Time) (as amended by the Amending Deed, dated
as of December 6, 2021 (Pacific Standard Time) / December 7, 2021 (Australian
Eastern Daylight Time)), by and among Block, Afterpay and Lanai (AU) 2 Pty Ltd,
an Australian proprietary company limited by shares and an indirect wholly owned
subsidiary of Block ("Block Acquirer").
Upon the implementation of the Scheme, all Afterpay Shares issued and
outstanding as of 12:00 a.m. on January 21, 2022 (Pacific Standard Time) / 7:00
p.m. on January 21, 2022 (Australian Eastern Daylight Time), the record date for
the Scheme, were transferred to Block Acquirer, and the holders of such Afterpay
Shares ("Scheme Participants") became entitled to receive, for each such share,
either (a) where such Scheme Participant was a Share Elected Shareholder (as
defined in the Deed), 0.375 shares of Block's Class A common stock ("New Block
Shares"); or (b) where such Scheme Participant was a CDI Elected Shareholder (as
defined in the Deed), 0.375 CHESS Depositary Interests, each representing an
ownership interest in a share of Block Class A common stock ("New Block CDIs").
In connection with the Transaction, 113,387,895 New Block Shares (including
shares underlying 95,377,954 New Block CDIs) were issued to or for the benefit
of Scheme Participants.
Equity awards held by non-employee directors of Afterpay vested in full and, if
timely exercised (in the case of Afterpay stock options), participated in the
Scheme on the same basis as other Afterpay Shares. Outstanding equity awards of
Afterpay and its subsidiaries held by employees were generally treated as
follows: (i) a portion of each Afterpay award vested such that the vested
portion of the award equals the number of months of the total applicable vesting
period that had elapsed through January 10, 2022 divided by the total number of
months in the vesting period, (ii) the vested portion of each Afterpay award
received New Block Shares or New Block CDIs (less any exercise price in the case
of Afterpay stock options), and (iii) upon the implementation of the Scheme, the
unvested portion of each Afterpay award was forfeited and will be replaced by a
Block award of the same character in a manner that preserved its value and
vesting schedule and generally on the same terms and conditions except that, for
administrative convenience, certain converted Block awards will have vesting
dates that align with the vesting dates of other equity awards previously
granted to Block employees.
The foregoing description of the Transaction, the Scheme and the Deed does not
purport to be complete and is qualified in its entirety by reference to the full
text of the Deed, a copy of which is filed as Exhibit 2.1 and Exhibit 2.2 and
incorporated herein by reference.
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Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Afterpay is a party to the trust deed (the "Trust Deed"), dated as of March 12,
2021, by and between Afterpay and the Hongkong and Shanghai Banking Corporation
Limited as trustee. The Trust Deed governs Afterpay's A$1.5 billion Zero Coupon
Convertible Notes due 2026 (the "SGX Notes"). The SGX Notes have a maturity date
of March 12, 2026 and do not bear interest. As described under Item 2.01 hereof,
on January 31, 2022 (Pacific Standard Time) / February 1, 2022 (Australian
Eastern Daylight Time), Afterpay became an indirect, wholly owned subsidiary of
Block, and remains a party to the Trust Deed.
On December 21, 2021 (Australian Eastern Daylight Time), Afterpay issued a
notice of change of control (the "Relevant Event Notice") to holders of the SGX
Notes following approval of the Scheme by Afterpay shareholders on December 14,
2021 (Australian Eastern Daylight Time). Within 60 days of the delivery of the
Relevant Event Notice, the holders of the SGX Notes may require Afterpay to
redeem some or all of their SGX Notes at 100% of their principal amount, and
Afterpay is required to redeem such SGX Notes 10 business days after the end of
such 60-day period, which redemption date will be March 4, 2022 (Hong Kong
Time).
The foregoing description of the Trust Deed and the SGX Notes does not purport
to be complete and is qualified in its entirety by reference to the full text of
the Trust Deed, a copy of which is filed as Exhibit 4.1 and is incorporated
herein by reference.
The information set forth under Item 1.01 is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
As described in Item 2.01 of this Current Report on Form 8-K, Block issued
113,387,895 shares of Block Class A common stock (including shares underlying
the New Block CDIs) to or for the benefit of Afterpay shareholders in connection
with the Transaction. The shares were issued in reliance on the exemption
afforded by Section 3(a)(10) of the Securities Act of 1933, as amended (the
"Securities Act").
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
In accordance with the terms of the Deed, Block's board of directors (the
"Board") increased the size of the Board from twelve to thirteen directors and
appointed Sharon Rothstein, former director of Afterpay, to the Board as a
Class III director, effective as of immediately following the closing of the
Transaction on January 31, 2022 (Pacific Standard Time) / February 1, 2022
(Australian Eastern Daylight Time). Other than the Deed, there is no arrangement
or understanding between Ms. Rothstein and any other persons pursuant to which
Ms. Rothstein was selected as a director.
Ms. Rothstein, age 64, has served as an Operating Partner at Stripes, LLC
("Stripes"), a growth equity firm, since October 2018. Prior to joining Stripes,
Ms. Rothstein served as Executive Vice President, Global Chief Marketing
Officer, and subsequently, as Executive Vice President, Global Chief Product
Officer of Starbucks Corporation from April 2013 to February 2018. Prior to
joining Starbucks, Ms. Rothstein held senior marketing and brand management
positions with Sephora, Godiva, Starwood Hotels and Resorts, Nabisco Biscuit
Company and Procter & Gamble. Ms. Rothstein currently serves on the boards of
directors of Yelp Inc., InterContinental Hotels Group PLC and a number of
privately-held companies. She previously served on the board of directors of
Afterpay until the closing of the Transaction. Ms. Rothstein holds a Bachelor of
Commerce from the University of British Columbia and an M.B.A. from the
University of California, Los Angeles. Ms. Rothstein was selected to serve on
the Board because of her marketing expertise and global operations experience.
Ms. Rothstein will receive Block's standard remuneration for non-employee
directors in accordance with Block's Outside Director Compensation Policy, as
described in the proxy statement relating to Block's 2021 annual meeting of
stockholders filed with the Securities and Exchange Commission on April 29,
2021. Ms. Rothstein has also executed Block's standard form of indemnification
agreement.
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Item 7.01 Regulation FD Disclosure.
On January 31, 2022, Block issued a press release announcing the completion of
the Transaction and the appointment of Ms. Rothstein to the Board. A copy of the
press release is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
The information furnished pursuant to Item 7.01 on this Form 8-K, including
Exhibit 99.1 attached hereto, shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, nor shall it be
deemed incorporated by reference into any other filing under the Securities Act
or the Exchange Act, except as expressly set forth by specific reference in such
a filing.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Financial statements of the acquired business are not included in this Current
Report on Form 8-K. Such financial statements will be filed by amendment not
later than 71 calendar days after the date that this Current Report on Form 8-K
is required to be filed.
(b) Pro Forma Financial Information.
Pro forma financial information relative to the acquired business is not
included in this Current Report on Form 8-K. Such pro forma financial
information will be filed by amendment not later than 71 calendar days after the
date that this Current Report on Form 8-K is required to be filed.
(d) Exhibits
Exhibit
Number Description
2.1 Scheme Implementation Deed, dated as of August 2, 2021, by and among
Block, Inc., Lanai (AU) 2 Pty Ltd and Afterpay Limited (incorporated
by reference to Exhibit 2.1 to Block's Current Report on Form 8-K,
filed on August 2, 2021).*
2.2 Amending Deed, dated as of December 7, 2021, by and among Block,
Inc., Lanai (AU) 2 Pty Ltd and Afterpay Limited (incorporated by
reference to Exhibit 2.1 to Block's Current Report on Form 8-K, filed
on December 7, 2021)
4.1 Trust Deed, dated as of March 12, 2021, by and between Afterpay and
the Hongkong and Shanghai Banking Corporation Limited as trustee.
10.1 Fifth Amendment to Revolving Credit Agreement, dated as of
January 28, 2022, among Block, Inc., the lenders party thereto and
Goldman Sachs Bank USA, as Administrative Agent.
99.1 Press Release issued by Block, Inc. on January 31, 2022.
104 Cover Page Interactive Data File, formatted in inline XBRL.
* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. Block agrees to furnish supplementally to the U.S. Securities
and Exchange Commission a copy of any omitted schedule or exhibit upon request.
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