Summary
Visa Inc. (V) filed an 8-K on April 6, 2011, to report a significant event related to its retrospective responsibility plan. On March 31, 2011, the company deposited $400 million into a litigation escrow account. This action is structured as a repurchase of its Class A common stock on an as-converted basis, effectively reducing the Class B common stock share count. This deposit had a material impact on the company's share structure, reducing the number of Class B shares and lowering the conversion rate applicable to these shares. The repurchase price was determined based on the volume-weighted average price over a specified eight-day period, reflecting a commitment to managing its share structure and potential litigation liabilities.
Key Highlights
- 1Visa Inc. deposited $400 million into a litigation escrow account on March 31, 2011.
- 2The deposit is treated as a repurchase of Class A common stock on an as-converted basis.
- 3This action reduces the Class B common stock share count from 125,253,161 to 119,833,888.
- 4The effective repurchase price was approximately $73.81 per share.
- 5The conversion rate for Class B common stock decreased from 0.5102 to 0.4881.
- 6The share repurchase calculation was based on the volume-weighted average price from March 25, 2011, to April 5, 2011.
- 7The event is part of Visa's retrospective responsibility plan.
Frequently Asked Questions
The $400 million deposit was made into a litigation escrow account under Visa's retrospective responsibility plan. It is accounted for as a repurchase of Class A common stock, which in turn reduces the outstanding Class B common stock and lowers the conversion rate for those shares.
The deposit resulted in a reduction of the Class B common stock share count and a decrease in the conversion rate applicable to these shares. Specifically, the Class B share count fell from 125,253,161 to 119,833,888, and the conversion rate decreased from 0.5102 to 0.4881.
The effective repurchase price was approximately $73.81 per share. This price was determined on an as-converted basis and calculated according to Visa's certificate of incorporation, using the volume-weighted average price over an eight-day period ending April 5, 2011.
These actions are part of Visa's retrospective responsibility plan, which is designed to manage potential liabilities, likely related to past litigation or settlement agreements. The deposit and share repurchase mechanism is a way to address these obligations and adjust the company's capital structure accordingly.