Item 1.01. Entry into a Material Definitive Agreement.
On April 14, 2022 DigitalBridge Group, Inc., a Maryland corporation
("DigitalBridge" or the "Company"), DigitalBridge Operating Company, LLC, a
Delaware limited liability company and DigitalBridge's operating company
("DBOC") and DigitalBridge Digital IM Holdco, LLC, a Delaware limited liability
company and wholly owned subsidiary of DBOC ("Purchaser"), entered into an
Agreement of Purchase and Sale (the "Purchase Agreement") with affiliates of
Wafra, Inc., a Delaware corporation (collectively, "Wafra"). DigitalBridge,
DBOC, and certain of DBOC's subsidiaries previously entered into a series of
agreements with Wafra on July 17, 2020, pursuant to which, among other things,
Wafra made an investment in DigitalBridge Management Holdings, LLC, a Delaware
limited liability company and subsidiary of DigitalBridge ("DBMH"), which
operates the Company's digital investment management business, as more fully
described in the Current Report on Form 8-K filed by DigitalBridge on July 23,
2020 (the "Strategic Minority Investment"). Subject to the terms and conditions
of the Purchase Agreement, at closing (i) Purchaser will pay or cause to be paid
consideration to Wafra in the amount of $390,000,000 in cash, less certain
adjustments for a net cash payment of $388,517,055, and 57,741,599 shares of the
Company's Class A common stock, par value $0.01 ("Common Stock"); (ii) Purchaser
will acquire Wafra's 31.5% membership interest in DBMH; (iii) with certain
limited exceptions, Wafra will sell or forego its right to invest in, or receive
carried interest from, future investment management products; and (iv) Wafra's
carried interest in DigitalBridge Partners II, L.P. will be reduced from 12.6%
to 7% (collectively, the "Transactions"). Wafra will retain its investment in
and, except as provided above, its allocation of carried interest from, existing
investment management products.
The Purchase Agreement also provides that Purchaser will pay Wafra an earnout
based on FEEUM (as defined in the Purchase Agreement) raised during the period
from December 31, 2021 to December 31, 2023 as follows: (i) $125 million if at
least $6 billion of FEEUM is raised; (ii) $100 million if at least $5 billion
but less than $6 billion of FEEUM is raised; and (iii) $90 million if at least
$4 billion but less than $5 billion of FEEUM is raised. Any portion of the
earnout that is earned from December 31, 2021 to December 31, 2022 will be paid
on March 31, 2023 (the "First Earnout Payment"), and any remaining portion of
the earnout that is earned through December 31, 2023 shall be paid on March 31,
2024 (the "Second Earnout Payment" and, together with the First Earnout Payment,
the "Earnout Payments" and each an "Earnout Payment"). Purchaser may, at its
option, elect to pay up to 50% of the First Earnout Payment and/or the Second
Earnout Payment in Common Stock.
At the Closing, the Company, Wafra and/or certain of their affiliates, as
applicable, will enter into (i) an amended and restated carried interest
participation agreement (the "Amended and Restated Carried Interest
Participation Agreement"), (ii) a termination agreement (the "Termination
Agreement"), (iii) a registration rights agreement (the "Registration Rights
Agreement") and (iv) an amended and restated warrants (the "Amended and Restated
Warrants"), each in the form attached to the Purchase Agreement.
The Amended and Restated Carried Interest Participation Agreement will amend
certain carried interest rights, information rights, and covenants granted to
Wafra in connection with the Strategic Minority Investment.
Pursuant to the Termination Agreement, the following documents, each dated July
17, 2020 and as defined in the Termination Agreement, will be terminated as of
the Closing except to the extent otherwise provided in the Termination
Agreement: (i) the Investor Rights Agreement; (ii) the Investment Agreement;
(iii) the Carry Investment Agreement; (iv) the Ganzi Acknowledgement Letter; (v)
the Jenkins Acknowledgement Letter; and (vi) the Specified / Warehouse
Investment Side Letter.
The Registration Rights Agreement will provide Wafra six demand registration
rights and certain piggyback registration rights, as described in further detail
in the Registration Rights Agreement. The Registration Rights Agreement will
also require the Company to file a shelf registration statement
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registering Wafra's Registrable Securities (as defined in the Registration
Rights Agreement) within six months of Closing.
As previously disclosed, in connection with the Strategic Minority Investment on
July 17, 2020, the Company issued to Wafra five warrants (each, a "Warrant," and
collectively, the "Warrants") to purchase up to an aggregate of 26,760,000
shares of Common Stock, with staggered strike prices for each Warrant ($2.43,
$3, $4, $5 and $6 per share, respectively) that are exercisable until July 17,
2026. Pursuant to the Purchase Agreement, upon Closing, the Warrants will be
amended and restated to increase the Beneficial Ownership Limitation (as defined
in the Warrants) to 9.8% and provide for a net cash settlement (at the Company's
or Wafra's election) upon the exercise of the Amended and Restated Warrants if
such exercise would result in Wafra beneficially owning in excess of 9.8% of the
issued and outstanding shares of Common Stock.
The Purchase Agreement contains customary representations and warranties from
each of Purchaser and the Wafra parties thereto which will survive until the
applicable statute of limitations, and each party has agreed to indemnify the
other with respect to these and certain other obligations under the Purchase
Agreement. Each party has agreed to customary covenants, including to use
commercially reasonable efforts to consummate the transaction as soon as
reasonably practicable. In addition, upon Closing, DigitalBridge will name Adel
Alderbas (Wafra's Chief Investment Officer) as a senior advisor to DigitalBridge
and Mr. Alderbas will remain in such position until the date that is three years
from the Closing.
The Closing is subject to customary conditions, including expiration of the
waiting period applicable to the transaction under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. The Purchase Agreement provides certain
termination rights for each of Purchaser and Wafra, including in the event the
Closing has not occurred by July 31, 2022 (the "Outside Date"). The Outside Date
will automatically extend for additional thirty day periods (but not beyond
October 31, 2022) if all conditions to closing, other than those conditions
relating to (i) regulatory approval and (ii) the absence of governmental laws or
orders enjoining or prohibiting the transaction, have been satisfied.
The foregoing description of the Purchase Agreement does not purport to be
complete and is qualified in its entirety by reference to the Purchase Agreement
(including the form of Amended and Restated Carried Interest Participation
Agreement, form of Termination Agreement, form of Registration Rights Agreement
and form of Amended and Restated Warrants, each attached as an exhibit thereto),
a copy of which is being filed as Exhibit 2.1 hereto and is incorporated herein
by reference.
Item 8.01 Other Events.
On April 18, 2022, the Company issued a press release announcing the signing of
the Purchase Agreement described above and the Company's transition to a
corporation taxed as a conventional C-Corp and election not to remain a
corporation taxed as a real estate investment trust ("REIT"). A copy of this
press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and
incorporated by reference herein.
In addition, on April 18, 2022, the Company made available a transaction summary
and REIT update presentation on the Company's website at www.digitalbridge.com.
A copy of the presentation is attached as Exhibit 99.2 to this Current Report on
Form 8-K and is incorporated herein by reference.
Cautionary Statement regarding Forward-Looking Statements
This current report may contain forward-looking statements within the meaning of
the federal securities laws. Forward-looking statements relate to expectations,
beliefs, projections, future plans and strategies,
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anticipated events or trends and similar expressions concerning matters that are
not historical facts. In some cases, you can identify forward-looking statements
by the use of forward-looking terminology such as "may," "will," "should,"
"expects," "intends," "plans," "anticipates," "believes," "estimates,"
"predicts," or "potential" or the negative of these words and phrases or similar
words or phrases which are predictions of or indicate future events or trends
and which do not relate solely to historical matters. Forward-looking statements
involve known and unknown risks, uncertainties, assumptions and contingencies,
many of which are beyond our control, and may cause actual results to differ
significantly from those expressed in any forward-looking statement. Factors
that might cause such a difference include, without limitation, whether the
Transactions will be completed within the time frame and on the terms
anticipated or at all, whether the Company will realize any of the anticipated
benefits from the Transactions, whether the Company's investment management
business will continue to grow at the rate anticipated, whether the Company will
be able to utilize existing tax attributes as contemplated, and other risks and
uncertainties, including those detailed in the Company's Annual Report on Form
10-K for the year ended December 31, 2021, and its other reports filed from time
to time with the U.S. Securities and Exchange Commission ("SEC"). All
forward-looking statements reflect the Company's good faith beliefs, assumptions
and expectations, but they are not guarantees of future performance. The Company
cautions investors not to unduly rely on any forward-looking statements. The
forward-looking statements speak only as of the date of this current report. The
Company is under no duty to update any of these forward-looking statements after
the date of this current report on Form 8-K, nor to conform prior statements to
actual results or revised expectations, and the Company does not intend to do
so.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being filed with this Current Report on
Form 8-K.
Exhibit No. Description
2.1 Agreement of Purchase a n d Sale, dated
as of April 14, 2022, by and among DigitalBridge Digital
IM Holdco, LLC, Wafra Stra tegic Holdings LP ,
W-Catalina ( B) LLC, W-C a talina (S) LLC,
W-Ca talina ( C) LLC, and , solely with
respect to certain sections, DigitalBridge Group, Inc.
and DigitalBridge Operating Company, L LC
99.1 Press Release, dated April 18, 2022
99.2 Presentation, dated April 18, 2022
104 Cover Page Interactive Data File (embedded within the Inline
XBRL document)
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