What is the main purpose of the proposed Certificate of Incorporation amendments?

The main purpose is to enable Visa to conduct an exchange offer program that would allow for the phased release of transfer restrictions on its Class B common stock. This is intended to be economically equivalent to existing arrangements for Class A and Class C stockholders related to certain litigation and to manage the market impact of releasing these restricted shares.

How will the exchange offer work for Class B stockholders?

Existing Class B common stock would be redenominated as Class B-1. Holders could tender their Class B-1 shares in exchange for a combination of new Class B-2 common stock (subject to similar restrictions, but with accelerated adjustment rates) and Class C common stock. Subsequent exchange offers would allow for further releases of Class B stock over time.

What is the 'makewhole agreement' and why is it required?

The makewhole agreement is a condition for participating in the exchange offer. It obligates the tendering Class B stockholder to reimburse Visa for certain future litigation-related escrow deposits if the value of the Class B stock they received in the exchange offer is depleted through conversion rate adjustments. This ensures that the economic burden of litigation remains with the former Class B stockholders.

What approval is needed for these amendments and the exchange offer?

The proposed amendments to the Certificate of Incorporation require approval by a majority of the outstanding shares of Class A, Class B, and Class C common stock, each voting as a separate class. If Visa proceeds with an exchange offer, it will also require filings with the SEC, including a registration statement on Form S-4.

V 8-K: Regulation FD — Sep 13, 2023

Summary

Visa Inc. has announced its engagement with common stockholders regarding potential amendments to its Certificate of Incorporation. These proposed changes are designed to enable an exchange offer program that would facilitate the release of transfer restrictions on portions of Visa's Class B common stock. This initiative aims to provide economic equivalence to existing arrangements for Class A and Class C stockholders concerning certain litigation exposure, while also mitigating potential market impacts from the simultaneous release of all Class B stock upon litigation resolution. The proposed amendments, if approved by stockholders (voting as separate classes of A, B, and C stock), would lead to the redenomination of existing Class B stock to "Class B-1 common stock." This would pave the way for an initial exchange offer where Class B-1 holders could tender shares for a combination of new Class B-2 common stock and Class C common stock. Subsequent exchange offers are contemplated to gradually release transfer restrictions on the newly issued Class B stock over time, subject to certain conditions and one-year waiting periods between offers. Participating Class B stockholders would enter into a "makewhole agreement" to reimburse Visa for certain future litigation-related escrow deposits.

Key Highlights

1Visa is proposing amendments to its Certificate of Incorporation to allow for an exchange offer program for Class B common stock.
2The goal is to release transfer restrictions on Class B stock in a phased manner, providing economic equivalence to Class A and C stockholders regarding litigation exposure.
3The proposed changes aim to prevent a large, single-day market impact from the release of all restricted Class B shares upon litigation resolution.
4Class B stock would be redenominated to Class B-1, with an initial exchange offering Class B-2 and Class C stock.
5Subsequent exchange offers could release further tranches of Class B stock over time, conditioned on progress in US covered litigation and a one-year interval.
6Participating Class B stockholders will be required to sign a 'makewhole agreement' to cover potential future litigation costs.
7Stockholder approval from Class A, B, and C common stock, voting as separate classes, is required for the amendments.

VISA INC. 8-K Report, Regulation FD Disclosure (Sep 13, 2023)

Summary

Key Highlights

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