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Rocket Companies, Inc. 8-K Report, Material Agreement (Mar 10, 2025)

Filed March 10, 2025For Securities:RKT

Summary

Rocket Companies, Inc. has announced a significant restructuring initiative to simplify its organizational and capital structure. The core of this initiative is the "Up-C Collapse," which will eliminate the company's existing Up-C structure. This change will result in all common stock classes having one vote per share and reduce the number of common stock classes from four to two. Post-restructuring, public stockholders will retain their current Class A common stock, while significant stockholders like Mr. Daniel Gilbert and other Rock Holdings Inc. shareholders will directly hold common stock in Rocket Companies, Inc., rather than through limited liability company interests. This move aims to enhance equity liquidity, improve the company's ability to use its stock for acquisitions, and create a more transparent corporate profile.

Key Highlights

  • 1Simplification of organizational and capital structure through an 'Up-C Collapse'.
  • 2Elimination of the existing Up-C structure, where Class D stock held by Mr. Gilbert and RHI had ten votes per share without economic rights, while Holdings LLC Units had economic rights without voting rights.
  • 3Transition to a single vote per share for all common stock classes, including new Class L common stock.
  • 4Mr. Daniel Gilbert and RHI shareholders will now hold common stock directly in Rocket Companies, Inc., aligning economic and voting rights.
  • 5A special cash dividend of $0.80 per share will be paid to Class A common stockholders of record on March 20, 2025, payable on April 3, 2025.
  • 6Lock-up periods will be imposed on shares received by Mr. Gilbert and other RHI shareholders, restricting transfers for one to two years post-closing.
  • 7The company expects to remain a 'controlled company' as Mr. Gilbert will continue to hold over a majority of the voting power.

Frequently Asked Questions

The primary purpose is to simplify Rocket Companies, Inc.'s organizational and capital structure. This involves collapsing the current Up-C structure, ensuring all common stock classes have one vote per share, and consolidating the number of common stock classes. The goal is to enhance equity liquidity, improve acquisition capabilities, and present a clearer corporate profile to investors.

Public stockholders will continue to hold their existing Class A common stock. The restructuring aims to create a more unified structure where all shareholders participate directly in the company's economics and voting power through common stock ownership, potentially leading to improved liquidity and a more straightforward investment profile.

A special cash dividend of $0.80 per share will be paid to holders of Class A common stock on April 3, 2025. However, Mr. Gilbert and other RHI stockholders will not receive this specific dividend on the Class L shares they receive in the Up-C Collapse, as they have already received the economic benefit of such distributions through their prior ownership of Holdings LLC Units.

Mr. Gilbert and other RHI stockholders will be subject to lock-up periods. They will be prohibited from transferring or disposing of the shares they receive in the Up-C Collapse prior to the first anniversary of the closing date, and 50% of their shares will be restricted until the second anniversary of the closing date. These restrictions are intended to ensure stability during the transition.