|6 Months Ended|
Jun. 30, 2021
|Subsequent Events [Abstract]|
Note 13- Subsequent Events
On July 23, 2021, XPO, Inc. issued and sold 200,000 shares of Convertible Preferred for aggregate cash proceeds of $200,000, before deduction of offering costs. Holders of Convertible Preferred shares are entitled to quarterly coupon payments at the rate of 6.50% of the fixed liquidation preference per share, initially $1,000 per share. In the event the quarterly preferential coupon is not paid in cash, the fixed liquidation preference automatically increases at the PIK rate of 7.50%. The Convertible Preferred has an initial conversion price equal to $14.40 per share and is mandatorily convertible under certain circumstances and redeemable at the option of the holder beginning on the date that is eight years from the IPO or upon change of control.
In connection with the IPO, XPO, Inc. issued 10,000,000 shares of Class A common stock, at a price of $12.00 per share. After the IPO, 22,994,044 shares of Class A common stock are outstanding, including 12,994,044 shares issued to historical owners of the Parent. Also on July 23, 2021, in connection with the completion of the Reorganization Transactions, 23,542,663 shares of Class B common stock were issued to the Continuing Pre-IPO LLC Members.
Proceeds from the IPO and issuance of Convertible Preferred were used to (i) purchase all of the shares of LCAT from LCAT shareholders, (ii) pay the H&W Cash Merger Consideration (iii) repay approximately $116,059 of outstanding borrowings under the Term Loan, including prepayment penalties and interest, (iv) pay fees and expenses of approximately $6,700 in connection with the IPO and the Reorganization Transactions, (v) pay approximately $20,500 in the Class A-5 Unit Redemption for the Class A-5 Units redeemed from certain of the Continuing Pre-IPO Members and (vi) the remainder for working capital. The Company evaluated the fair value of shares being purchased from LCAT and determined that the payment exceeded the fair value by $6,500, which will be recorded as a deemed dividend and paid in quarterly installments through June 2022.
In August 2021, XPO, Inc. sold 904,000 shares of Class A common stock to the underwriters pursuant to the underwriter’s option to purchase additional shares. After underwriter discounts and commissions, XPO, Inc. received net proceeds of approximately $10,116 on August 24, 2021, which are expected to be used (i) $9,000 to purchase 750,000 LLC Units from the Company’s Chief Executive Officer and (ii) $1,116 for working capital.
In connection with the Reorganization Transactions, the Parent merged with and into the Member. XPO, Inc. will record contingent consideration equal to the fair value of the shares issued in connection with the Rumble acquisition of $23,100 and $10,600 receivable from shareholder for debt financing provided to the Rumble seller. The fair value of the contingent consideration is preliminary based on management’s estimates and assumptions and may be subject to change.
XPO, Inc. entered into a TRA that obligates it to make payments to the TRA parties in the aggregate generally equal to 85% of the applicable cash savings realized as a result of (i) certain favorable tax attributes acquired from the Blocker Companies in the Mergers (including net operating losses and the Blocker Companies’ allocable share of existing tax basis), (ii) increases in XPO, Inc.’s allocable share of existing tax basis and tax basis adjustments that may result from (x) the IPO Contribution, the Class A-5 Unit Redemption, and the purchase of LLC Units from Continuing Pre-IPO LLC Members in the IPO, (y) future taxable redemptions and exchanges of LLC Units by Continuing Pre-IPO LLC Members, and (z) certain payments made under the TRA, and (iii) deductions in respect of interest under the TRA. XPO, Inc. will retain the benefit of the remaining 15% of these tax savings. The estimated total TRA liability is approximately $31,500, of which $3,900 has been recorded on the balance sheet following the IPO. This amount represents 85% of the cash tax savings expected to be paid to the Pre-IPO LLC members based on the TRA. The remaining unrecorded TRA liability is approximately $27,600. If utilization of the deferred tax assets subject to the TRA becomes more likely than not in the future, XPO, Inc. will recognize incremental increases to the TRA liability and corresponding expense within its consolidated statements of operations.
In August 2021, the Company paid off the contingent consideration related to the CycleBar acquisition totaling $8,737 as of the payment date.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef