8-KOther EventsExhibits & Filings

GOLDMAN SACHS GROUP INC 8-K Report, Corporate Update (Mar 23, 2016)

Filed March 23, 2016For Securities:GSGS-PAGS-PCGS-PDGSCE

Summary

On March 23, 2016, Goldman Sachs Group, Inc. (GS) completed a series of internal corporate reorganizations involving its capital securities subsidiaries. Specifically, Goldman Sachs Capital II merged into Goldman Sachs Capital IV, and Goldman Sachs Capital III merged into Goldman Sachs Capital V. The surviving entities, now renamed Goldman Sachs Capital II and Goldman Sachs Capital III, primarily hold preferred stock of the parent company and are wholly owned by GS. These mergers resulted in the conversion of existing "Apex" securities and common securities of the predecessor entities into new Apex and common securities of the surviving entities. Goldman Sachs then directly exchanged a significant portion of these Apex securities for shares of its own Series E and Series F preferred stock, which were subsequently cancelled. The company also entered into new guarantee agreements for the surviving entities, providing a junior subordinated guarantee for Apex payments.

Key Highlights

  • 1Completion of internal mergers: GS Capital II merged into GS Capital IV (renamed GS Capital II), and GS Capital III merged into GS Capital V (renamed GS Capital III).
  • 2Surviving entities (GS Capital II and GS Capital III) now hold preferred stock of the parent company and are wholly owned by Goldman Sachs.
  • 3Conversion of 'Apex' securities: Existing Apex and common securities were converted into new Apex and common securities of the surviving entities.
  • 4Direct exchange of Apex for preferred stock: Goldman Sachs exchanged approximately $497.2 million of GS Capital II Apex and $174.6 million of GS Capital III Apex for its own Series E and Series F preferred stock, respectively.
  • 5Cancellation of preferred stock: The Series E and Series F preferred stock received in the exchange were cancelled and reverted to authorized but unissued shares.
  • 6New guarantee agreements: Goldman Sachs entered into new junior subordinated guarantee agreements for the Apex securities of the surviving entities.
  • 7Market-making transactions: The filing also notes the issuance of Apex securities in market-making transactions under an automatic shelf registration statement.

Frequently Asked Questions

The primary purpose of these transactions was to simplify Goldman Sachs' capital structure by consolidating its capital securities vehicles and to directly hold its own preferred stock within these entities. This is an internal restructuring to streamline operations and capital management.

For holders of the Apex securities, the mergers resulted in their existing securities being converted into new Apex securities of the surviving entities (GS Capital II and GS Capital III). The filing states that these mergers did not affect the rights of the Apex holders. Goldman Sachs also provided new guarantee agreements for these securities.

By exchanging its own preferred stock for the Apex securities held by its subsidiaries, Goldman Sachs effectively converted these instruments closer to its direct balance sheet. The cancellation of this preferred stock indicates a reduction in the amount of its own equity securities that were being held indirectly through these capital vehicles.

While this filing focuses on corporate structure changes, such reorganizations can have implications for financial reporting and regulatory capital. The direct exchange for and cancellation of preferred stock could reduce certain reported liabilities or adjust capital ratios, but a detailed financial impact assessment would require reviewing subsequent financial statements and disclosures.