As filed with the Securities and Exchange Commission on December 21, 2020

Registration No. 333-          

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM F-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

PAYSAFE LIMITED

(Exact Name of Registrant as Specified in the Company Charter)

 

 

 

Bermuda		7389		Not Applicable
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Paysafe Limited

Victoria Place

31 Victoria Street

Hamilton H10, Bermuda

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

 

CT Corporation System

28 Liberty Street

New York, NY 10005

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

Copies to:

 

Joshua Ford Bonnie Elizabeth A. Cooper William R. Golden III Katherine M. Krause Simpson Thacher & Bartlett LLP 900 G Street, N.W. Washington, D.C. 20001 Telephone: (202) 636-5500		Michael J. Aiello Eoghan P. Keenan Weil, Gotshal & Manges LLP 767 5th Avenue New York, NY 10153 Telephone: (212) 310-8000

 

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration for the share offering.   ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

 

†	The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of securities to be registered		Amount to be registered(1)		Proposed maximum offering price per unit(2)		Proposed maximum aggregate offering price(2)		Amount of registration fee(3)
Common Shares(4)(7)		146,703,345		$13.795		$2,023,772,644.28		$220,794
Warrants(5)(7)		48,901,115		$3.22715		$ 157,811,233.27		$17,218
Common Shares issuable on exercise of Warrants(6)(7)		48,901,115		$11.50		$— (8)		$—
Total						$2,181,583,877.55		$238,012

(1)

All securities being registered will be issued by the Registrant. In connection with the business combination described in this registration statement and the proxy statement/prospectus included herein (x) a series of transactions will result in outstanding publicly traded shares of Class A Common Stock and public warrants of Foley Trasimene Acquisition Corp. II, a Delaware corporation (“FTAC”), becoming securities of the Registrant registered hereunder and (y) in private transactions not registered hereunder, (i) the sole shareholder Pi Jersey Holdco 1.5 Limited, a private limited company incorporated under the laws of Jersey, Channel Islands (“Accounting Predecessor”) will exchange 100% of the outstanding share capital of Accounting Predecessor for common shares of the Registrant, (ii) Trasimene Capital FT, LP II (“FTAC Founder”) will, in respect of outstanding Class B Common Stock and private placement warrants issued by FTAC, acquire common shares of the Registrant and interests in a subsidiary partnership, (iii) shares of Class A Common Stock of FTAC and private placement warrants issued by FTAC to be acquired by Cannae Holdings, Inc. (“Cannae Holdings”) pursuant to a Forward Purchase Agreement with FTAC will become common shares and warrants of the Registrant, and (iv) the Registrant will complete a private placement of common shares of the Registrant to certain investors pursuant to subscription agreements with such investors as described herein.

(2)

Based on the market price on December 16, 2020 of the Class A Common Stock of FTAC, par value $0.0001 per share (“FTAC Class A Common Stock”), and the warrants to acquire FTAC Class A Common Stock (the company to which the Registrant will succeed after the transactions described in this registration statement and the proxy statement/prospectus included herein).

(3)	Computed in accordance with Rule 457(f) of the Securities Act.

(4)

Consists of common shares issuable in exchange for outstanding FTAC Class A Common Stock, including shares of Class A Common Stock included in outstanding units of FTAC (“Units”), each Unit consisting of one share of FTAC Class A Common Stock and one-third of one warrant of FTAC (“FTAC Warrant”). In connection with the completion of the business combination described in this registration statement and the proxy statement/prospectus included herein, all Units will be separated into their component securities.

(5)	Consists of warrants that will replace outstanding FTAC Warrants, including warrants included in outstanding Units of FTAC.

(6)	Consists of common shares issuable upon exercise of warrants. Each warrant will entitle the warrant holder to purchase one common share of the Registrant at a price of $11.50 per share (subject to adjustment).

(7)	Pursuant to Rule 416(a), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.

(8)	No separate registration fee is required pursuant to Rule 457(g) of the Securities Act.

 

 

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

PRELIMINARY PROXY STATEMENT/PROSPECTUS

SUBJECT TO COMPLETION, DATED DECEMBER 21, 2020

FOLEY TRASIMENE ACQUISITION CORP. II

1701 Village Center Circle,

Las Vegas, NV 89134

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON                  , 2021

TO THE STOCKHOLDERS OF FOLEY TRASIMENE ACQUISITION CORP. II:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the “Special Meeting”) of Foley Trasimene Acquisition Corp. II, a Delaware corporation (“FTAC”), will be held on                 , 2021 at 12:00 p.m. Eastern Time. The Special Meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast. FTAC Stockholders will be able to attend the Special Meeting remotely, vote and submit questions during the Special Meeting by visiting                 and entering the individualized control number on each holder’s proxy card. We are pleased to utilize virtual stockholder meeting technology to (a) provide ready access and cost savings for FTAC’s stockholders and FTAC, and (b) to promote social distancing pursuant to guidance provided by the Centers for Disease Control and Prevention (“CDC”) and the U.S. Securities and Exchange Commission (“SEC”) due to the novel coronavirus (COVID-19). The virtual meeting format allows attendance from any location in the world. You are cordially invited to attend the Special Meeting, which will be held for the following purposes:

 

(1)

Proposal No. 1—To consider and vote upon a proposal to approve the Business Combination described in the accompanying proxy statement/prospectus, including (a) adopting the Agreement and Plan of Merger dated effective as of December 7, 2020 (the “Merger Agreement”) by and among FTAC, Paysafe Limited, an exempted limited company incorporated under the laws of Bermuda (“Paysafe Limited”), Paysafe Merger Sub Inc., a Delaware corporation and direct, wholly owned subsidiary of Paysafe Limited (“Merger Sub”), Paysafe Bermuda Holding LLC, a Bermuda exempted limited liability company (the “LLC”), Pi Jersey Holdco 1.5 Limited, a private limited company incorporated under the laws of Jersey, Channel Islands (the “Accounting Predecessor”), and Paysafe Group Holdings Limited, a private limited company incorporated under the laws of England and Wales (“PGHL”), and the transactions contemplated by the Merger Agreement (collectively, the “Business Combination”), pursuant to which, subject to the terms and conditions set forth therein, at the Closing, among other things, (i) Merger Sub will merge with and into FTAC, with FTAC being the surviving corporation in the merger and an indirect subsidiary of Paysafe Limited (“Merger”) and each outstanding share of FTAC Class A Common Stock and FTAC Class B Common Stock (other than certain excluded shares) will convert into the right to receive one common share, par value $0.001 per share, of Paysafe Limited (“Company Common Shares”), and (ii) PGHL will transfer and contribute the Accounting Predecessor to the Company in exchange for Company Common Shares and cash, (b) approving the issuance of shares of Class C common stock, par value $0.0001 of FTAC (“Class C Common Stock”), to Trasimene Capital FT, LP II, (the “Founder”) in exchange for the existing private placement warrants held by the Founder, pursuant to the requirements of Section 312.03(b) of the New York Stock Exchange’s Listed Company Manual and (c) approving the other transactions contemplated by the Merger Agreement and related agreements described in the accompanying proxy statement/prospectus—we refer to this proposal as the “Business Combination Proposal.” A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A.

 

(2)

Proposal No. 2—To consider and vote upon a proposal to approve and adopt the third amended and restated certificate of incorporation of FTAC in the form attached hereto as Annex B (the “Third Amended and Restated Certificate of Incorporation”)—we refer to this proposal as the “Charter Amendment Proposal.”

 

(3)

Proposal No. 3—To consider and vote upon, on a non-binding advisory basis, certain governance provisions in the amended and restated bye-laws of Paysafe Limited (the “Company Bye-laws”), presented separately in accordance with the SEC requirements—we refer to this as the “Governance Proposal.”

 

(4)

Proposal No. 4—To consider and vote upon a proposal to approve and adopt the Paysafe Limited 2021 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), which, among other things, provides for the reservation for issuance of a number of Company Common Shares as set forth in the Omnibus Incentive Plan, subject to annual increases as provided therein—we refer to this as the “Omnibus Incentive Plan Proposal.” A copy of the Omnibus Incentive Plan is attached to this proxy statement/prospectus as Annex E.

 

(5)

Proposal No. 5—To consider and vote upon a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Amendment Proposal, the Governance Proposal or the Omnibus Incentive Plan Proposal. We refer to this proposal as the “Adjournment Proposal” and, together with the Business Combination Proposal, the Governance Proposal, the Charter Amendment Proposal and the Omnibus Incentive Plan Proposal as the “Proposals.”

These Proposals are described in the accompanying proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of FTAC’s Class A common stock, par value $0.0001 per share (“FTAC Class A Common Stock”), and FTAC’s Class B common stock, par value $0.0001 per share (“FTAC Class B Common Stock”) at the close of business on                  , 2021 (the “Record Date”) are entitled to notice of the Special Meeting and to vote and have their votes counted at the Special Meeting and any adjournments or postponements thereof.

After careful consideration, the FTAC Board has determined that the Business Combination Proposal, the Charter Amendment Proposal, the Governance Proposal, the Omnibus Incentive Plan Proposal and the Adjournment Proposal are fair to and in the best interests of FTAC and its stockholders and recommends voting “FOR” the Business Combination Proposal, “FOR” the Charter Amendment Proposal, “FOR” the Governance Proposal, “FOR” the Omnibus Incentive Plan Proposal and, if presented, “FOR” the Adjournment Proposal. See “Proposal No. 1—The Business Combination—FTAC’s Board of Directors’ Reasons for Approval of the Business Combination” for additional information. Consummation of the Transactions are conditioned on the approval of each of the Business Combination Proposal and the Charter Amendment Proposal. If either of those proposals are not approved, we will not consummate the Transaction.

All stockholders of FTAC are cordially invited to attend the Special Meeting virtually. To ensure your representation at the Special Meeting, however, you are urged to mark, sign and date the enclosed proxy card and return it as soon as possible in the pre-addressed postage paid envelope provided. If you are a stockholder of record of FTAC Common Stock, you may also cast your vote by means of remote communication at the Special Meeting by navigating to                  and entering the control number on your proxy card. If your shares are held in an account at a brokerage firm or bank, or by a nominee, you must instruct your broker, bank or nominee on how to vote your shares or, if you wish to attend the Special Meeting by means of remote communication you must obtain a proxy from your broker or bank and a control number from Continental Stock Transfer and Trust Company. If the Business Combination Proposal or the Charter Amendment Proposal fails to receive the required approval by the stockholders of FTAC at the Special Meeting, the Business Combination will not be completed.

Whether or not you plan to attend the Special Meeting, we urge you to read the accompanying proxy statement/prospectus (and any documents incorporated into the accompanying proxy statement/prospectus by reference) carefully. Please pay particular attention to the section entitled “Risk Factors” in the accompanying proxy statement/prospectus.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the Special Meeting or not, please mark, sign and date the enclosed proxy card and return it as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

Thank you for your participation. We look forward to your continued support.

 

                , 2021

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED “FOR” EACH OF THE PROPOSALS.

YOU MAY EXERCISE YOUR RIGHTS TO DEMAND THAT FTAC REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT WHETHER YOU VOTE FOR OR AGAINST THE PROPOSALS OR DO NOT VOTE ON THE PROPOSALS AND WHETHER OR NOT YOU ARE HOLDER OF SHARES AS OF THE RECORD DATE OR ACQUIRED YOUR SHARES AFTER THE RECORD DATE. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST TENDER YOUR SHARES TO FTAC’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE SPECIAL MEETING. YOU MAY TENDER YOUR SHARES FOR REDEMPTION BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT/WITHDRAWAL AT CUSTODIAN (“DWAC”) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE TENDERED SHARES WILL NOT BE REDEEMED FOR CASH AND WILL BE RETURNED TO THE APPLICABLE STOCKHOLDER. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BROKER OR BANK TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE THE SECTION ENTITLED “SPECIAL MEETING OF FTAC STOCKHOLDERS—REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

The information in this proxy statement/prospectus is not complete and may be changed. We may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED DECEMBER 21, 2020

PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS OF

FOLEY TRASIMENE ACQUISITION CORP. II

and

PROSPECTUS FOR UP TO 146,703,345 COMMON SHARES, 48,901,115 WARRANTS AND 48,901,115

COMMON SHARES ISSUABLE UPON EXERCISE OF WARRANTS

OF

PAYSAFE LIMITED

 

 

Dear Foley Trasimene Acquisition Corp. II Stockholders,

On behalf of the FTAC board of directors, which we refer to as the “FTAC Board,” we cordially invite you to a special meeting, which we refer to as the “Special Meeting,” of stockholders of Foley Trasimene Acquisition Corp. II, a Delaware corporation, which we refer to as “FTAC,” to be held via live webcast at 12:00 p.m. Eastern Time, on                , 2021. The Special Meeting can be accessed by visiting                 , where you will be able to listen to the meeting live and vote during the meeting. Please note that you will only be able to access the special meeting by means of remote communication.

This proxy statement/prospectus is being provided to the stockholders of FTAC, in connection with the proposed business combination with Paysafe Group Holdings Limited, a private limited company incorporated under the laws of England and Wales, which we refer to as “PGHL,” and Paysafe Limited, an exempted limited company incorporated under the laws of Bermuda, which we refer to as the “Company.” These terms and others used in this introduction are defined in greater detail below in this proxy statement/prospectus under the caption “Frequently Used Terms.”

Pursuant to the Agreement and Plan of Merger, dated as of December 7, 2020, by and among FTAC, the Company, Paysafe Merger Sub Inc., a Delaware corporation and direct, wholly owned subsidiary of the Company, which we refer to as “Merger Sub,” Paysafe Bermuda Holding LLC, a Bermuda exempted limited liability company, which we refer to as the “LLC,” Pi Jersey Holdco 1.5 Limited, a private limited company incorporated under the laws of Jersey, Channel Islands, which we refer to as the “Accounting Predecessor,” and PGHL, which we refer to as the “Merger Agreement,” among other things, (i) Merger Sub will merge with and into FTAC, with FTAC being the surviving corporation in the merger and an indirect subsidiary of the Company, which we refer to as the “Merger” and each outstanding share of common stock of FTAC (other than certain excluded shares) will convert into the right to receive one common share, par value $0.001 per share, of the Company, which we refer to as “Company Common Shares,” and (ii) PGHL will transfer and contribute the Accounting Predecessor to the Company in exchange for Company Common Shares and cash, which we refer to as the “Paysafe Contribution.” We refer to the transactions contemplated by the Merger Agreement as the Business Combination.

The consideration to be paid to PGHL will be paid in a combination of stock and cash consideration, which we refer to as the “Closing Transaction Consideration.” The cash consideration will be an amount equal to (i) (x) all amounts in FTAC’s trust account (after reduction for the aggregate amount of payments required to be made in connection with any valid stockholder redemptions), plus (y) the aggregate amount of cash that has been funded pursuant to the Subscription Agreements (as defined below) as of immediately prior to the closing, plus (z) the aggregate amount of cash that has been funded pursuant to that certain Forward Purchase Agreement, by and between FTAC and Cannae Holdings, dated as of August 18, 2020, as of immediately prior to the closing, we refer to such amounts in clauses (x), (y) and (z) as the “Available Cash Amount,” minus (ii) any excess amount of the Company’s net debt over $1,805,000,000, minus (iii) any transaction expenses, which amount we refer to as the “Closing Cash Consideration.” The remainder of the Closing Transaction Consideration will be paid in a number of Company Common Shares equal to (A) (i) $8,713,000,000, minus (ii) the Company’s net

debt, minus (iii) any transaction expenses, plus (iv) the aggregate price of permitted acquisitions, if any, minus (v) Closing Cash Consideration, divided by (B) $10.00 per share, which amount we refer to as the “Closing Seller Shares.”

At the effective time of the Merger, each share of FTAC’s Class A common stock, par value $0.0001 per share, which we refer to as the “FTAC Class A Common Stock,” and FTAC’s Class B common stock, par value $0.0001 per share, which we refer to as the “FTAC Class B Common Stock” will be cancelled and automatically deemed for all purposes to represent the right to receive, in the aggregate, one Company Common Share. At the effective time of the Merger, each of FTAC’s public warrants that are outstanding immediately prior to the effective time will, pursuant to and in accordance with the warrant agreement covering such warrants, automatically and irrevocably be modified to provide that such warrant will no longer entitle the holder thereof to purchase the amount of share(s) of FTAC common stock set forth therein and in substitution thereof such warrant will entitle the holder thereof to acquire the same number of Company Common Shares per warrant on the same terms.

In connection with the consummation of the Business Combination and immediately prior thereto, the warrants held by Trasimene Capital FT, LP II, which we refer to as “FTAC Founder” or the “Founder” will be exchanged for shares of Class C Common Stock, par value $0.0001 of FTAC, which we refer to as “Class C Common Stock,” and immediately thereafter the Founder will transfer and contribute such shares of Class C Common Stock to the LLC in exchange for exchangeable units of the LLC (as provided for in the Sponsor Agreement described herein). Such exchangeable units will be exchangeable into Company Common Shares or cash, as determined by the LLC, on the same terms as such warrants, following the first anniversary of the closing and expiring on the fifth anniversary of the closing.

At the Special Meeting, FTAC Stockholders will be asked to consider and vote upon:

(1) Proposal No. 1 —To consider and vote upon a proposal to approve the Business Combination described in the accompanying proxy statement/prospectus, including (a) adopting the Merger Agreement, (b) the issuance of the Class C Common Stock in exchange for the warrants held by the FTAC Founder and (c) approving the other transactions contemplated by the Merger Agreement and related agreements described in the accompanying proxy statement/prospectus—we refer to this proposal as the “Business Combination Proposal;”

(2) Proposal No. 2 — To consider and vote upon a proposal to approve and adopt the third amended and restated certificate of incorporation of FTAC in the form attached hereto as Annex B, which we refer to as the “Third Amended and Restated Certificate of Incorporation”—we refer to this proposal as the “Charter Amendment Proposal;”

(3) Proposal No. 3—To consider and vote upon, on a non-binding advisory basis, certain governance provisions in the Company Bye-laws, presented separately in accordance with the SEC requirements—we refer to this as the “Governance Proposal;”

(4) Proposal No. 4—To consider and vote on a proposal to approve and adopt the Paysafe Limited 2021 Omnibus Incentive Plan, which we refer to as the “Omnibus Incentive Plan” and the material terms thereunder, including the authorization of the initial share reserve thereunder—we refer to this proposal as the “Omnibus Incentive Plan Proposal.” A copy of the Omnibus Incentive Plan is attached to the accompanying proxy statement/prospectus as Annex E; and

(5) Proposal No. 5—To consider and vote upon a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Amendment Proposal, the Governance Proposal or the Omnibus Incentive Plan Proposal—we refer to this proposal as the “Adjournment Proposal.”

Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting. Only holders of record of FTAC Class A Common Stock and FTAC Class B Common Stock at the close of business on                 , 2021 are entitled to notice of the Special Meeting and to vote and have their votes counted at the Special Meeting and any adjournments or postponements thereof.

After careful consideration, the FTAC Board has determined that the Business Combination Proposal, the Charter Amendment Proposal, the Governance Proposal, the Omnibus Incentive Plan Proposal and the Adjournment Proposal are fair to and in the best interests of FTAC and its stockholders and recommends voting “FOR” the Business Combination Proposal, “FOR” the Charter Amendment Proposal, “FOR” the Governance Proposal, “FOR” the Omnibus Incentive Plan Proposal and, if presented, “FOR” the Adjournment Proposal. See “Proposal No. 1— The Business Combination— FTAC’s Board of Directors’ Reasons for Approval of the Business Combination” for additional information. Consummation of the Transactions is conditioned on the approval of each of the Business Combination Proposal and the Charter Amendment Proposal. If either of those proposals are not approved, we will not consummate the Transaction.

The Merger Agreement is attached to this proxy statement/prospectus as Annex A. The Company Charter is attached to this proxy statement/prospectus as Annex C and the Company Bye-laws will be amended and restated substantially in the form attached to this proxy statement/prospectus as Annex D.

On July 31, 2020, FTAC entered into a Forward Purchase Agreement with Cannae Holdings, Inc., which we refer to as “Cannae Holdings,” pursuant to which Cannae Holdings agreed to purchase an aggregate of 15,000,000 shares of FTAC Class A Common Stock, plus an aggregate of 5,000,000 redeemable warrants to purchase shares of FTAC Class A Common Stock at $11.50 per unit, for an aggregate purchase price of $150,000,000, or $10.00 for one share of FTAC Class A Common Stock and one-third of one private placement warrant, in a private placement to occur concurrently with the closing of the Business Combination. Each share of FTAC Class A Common Stock held by Cannae Holdings as of the closing will become one Company Common Share. Each of the warrants held by Cannae Holdings as of the closing will become one warrant to acquire a Company Common Share.

Concurrently with the execution and delivery of the Merger Agreement, the Company, FTAC and certain investors (including a subsidiary of Cannae Holdings), referred to collectively as the “PIPE Investors,” entered into Subscription Agreements, pursuant to which the PIPE Investors have committed to purchase, concurrently with the closing of the Business Combination, in the aggregate, 200 million Company Common Shares for $10.00 per share or an aggregate purchase price equal to $2.0 billion.

All FTAC Stockholders are cordially invited to attend the special meeting and we are providing the accompanying proxy statement/prospectus and proxy card in connection with the solicitation of proxies to be voted at the Special Meeting (or any adjournment or postponement thereof). To ensure your representation at the Special Meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the Special Meeting and vote, obtain a proxy from your broker or bank.

FTAC’s Units (each consisting of one share of FTAC Class A Common Stock and one-third of one warrant to acquire a share of FTAC Class A Common Stock, which we refer to as a “FTAC Warrant”), FTAC Class A Common Stock and FTAC Warrants are currently listed on the New York Stock Exchange, which we refer to as the “NYSE,” under the symbols “BFT.U,” “BFT” and “BFT.WS,” respectively. The Company will apply for listing, effective upon the closing of the Business Combination, of its common shares and warrants on the NYSE, under the symbols “PSFE” and “PSFE.WS,” respectively.

Pursuant to the FTAC Charter, in connection with the completion of the Business Combination, holders of shares of FTAC Class A Common Stock may elect to have their shares redeemed for cash from FTAC’s trust account at the applicable redemption price per share calculated in accordance with the FTAC Charter. Payment for such redemptions will come from FTAC’s trust account that holds a portion of the proceeds of FTAC’s initial public offering and the concurrent sale of its private placement Units. To the extent holders of shares of FTAC Class A Common Stock elect to have their shares redeemed, the Closing Cash Consideration and the Closing Seller Shares to be paid to PGHL will vary, as described herein.

Proposals to approve the Merger Agreement and the other matters discussed in this proxy statement/prospectus will be presented at the Special Meeting of stockholders of FTAC scheduled to be held on                , 2021.

This proxy statement/prospectus provides you with detailed information about the Business Combination and other matters to be considered at the Special Meeting of FTAC’s stockholders. We encourage you to carefully read this entire document. You should also carefully consider the risk factors described in “Risk Factors.”

Your vote is important regardless of the number of shares you own. Whether you plan to attend the Special Meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

The transactions described in the accompanying proxy statement/prospectus have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

Thank you for your participation. We look forward to your continued support.

 

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST ELECT TO HAVE FTAC REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO FTAC’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT AND WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. PLEASE SEE THE SECTION ENTITLED “SPECIAL MEETING OF FTAC STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

This proxy statement/prospectus is dated                 , 2021, and is first being mailed to FTAC’s stockholders on or about                 , 2021.

TABLE OF CONTENTS

 

		Page
ABOUT THIS PROXY STATEMENT/PROSPECTUS			1
FINANCIAL STATEMENT PRESENTATION			1
INDUSTRY AND MARKET DATA			1
FREQUENTLY USED TERMS			3
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS			13
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS			26
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			41
COMPARATIVE PER SHARE DATA			43
RISK FACTORS			45
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			103
SPECIAL MEETING OF FTAC STOCKHOLDERS			105
PROPOSAL NO. 1—THE BUSINESS COMBINATION PROPOSAL			110
PROPOSAL NO. 2—THE CHARTER AMENDMENT PROPOSAL			156
PROPOSAL NO. 3—THE GOVERNANCE PROPOSAL			158
PROPOSAL NO. 4—THE OMNIBUS INCENTIVE PLAN PROPOSAL			161
PROPOSAL NO. 5—THE ADJOURNMENT PROPOSAL			168
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			169
INFORMATION RELATED TO FTAC			183
FTAC’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION			191
INFORMATION RELATED TO PAYSAFE			195
PAYSAFE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION			234
MANAGEMENT OF PAYSAFE FOLLOWING THE BUSINESS COMBINATION			269
BENEFICIAL OWNERSHIP OF SECURITIES			277
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS			280
DESCRIPTION OF THE COMPANY’S SECURITIES			289
DESCRIPTION OF CERTAIN INDEBTEDNESS			300
COMPARISON OF CORPORATE GOVERNANCE AND SHAREHOLDER RIGHTS			306
STOCK MARKET AND DIVIDEND INFORMATION			319
APPRAISAL RIGHTS			319
FTAC SPECIAL STOCKHOLDER MEETING PROPOSALS			319
FUTURE STOCKHOLDER PROPOSALS			320
OTHER STOCKHOLDER COMMUNICATIONS			320
LEGAL MATTERS			321
EXPERTS			321
DELIVERY OF DOCUMENTS TO STOCKHOLDERS			321
TRANSFER AGENT AND REGISTRAR			321
WHERE YOU CAN FIND MORE INFORMATION			321
INDEX TO FINANCIAL STATEMENTS			F-1

ANNEXES

Annex A: Agreement and Plan of Merger

Annex B: Third Amended and Restated Certificate of Incorporation of FTAC

Annex C: Memorandum of Association of Paysafe Limited

Annex D: Form of Amended and Restated Bye-laws of Paysafe Limited

Annex E: The Omnibus Incentive Plan

 

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission, or the “SEC,” by the Company, constitutes a prospectus of the Company under Section 5 of the U.S. Securities Act of 1933, as amended, or the “Securities Act,” with respect to the Company Common Shares to be issued to FTAC Stockholders, the Company Warrants to be issued to warrant holders and the Company Common Shares underlying such warrants, if the Business Combination described herein is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended, or the “Exchange Act,” with respect to the Special Meeting of FTAC Stockholders at which FTAC Stockholders will be asked to consider and vote upon a proposal to approve the Business Combination by the adoption of the Merger Agreement, among other matters.

FINANCIAL STATEMENT PRESENTATION

Paysafe Limited

Paysafe Limited was incorporated by PGHL under the laws of Bermuda on November 23, 2020 for the purpose of effectuating the Business Combination described herein. Paysafe Limited has no material assets and does not operate any businesses. Accordingly, no financial statements have been included in this proxy statement/prospectus. The Business Combination will result in Paysafe Limited acquiring, and becoming the successor to, the Accounting Predecessor. Simultaneously, it will complete the combination with the public shell company, FTAC, with an exchange of the shares and warrants issued by Paysafe Limited for those of FTAC. The Business Combination will be accounted for as a capital reorganization followed by the combination with FTAC, which will be treated as a recapitalization. Following the Business Combination, both the Accounting Predecessor and FTAC will be indirect wholly owned subsidiaries of Paysafe Limited.

The Accounting Predecessor

As a result of the transaction being accounted for as a capital reorganization, Pi Jersey Holdco 1.5 Limited will be deemed to be the Accounting Predecessor of Paysafe Limited. The Accounting Predecessor has a direct voting interest or a variable interest in the Group’s activities and operations that result in revenues, expenses, assets and liabilities.

The financial statements for the Accounting Predecessor are included in this proxy statement/prospectus for the year ended December 31, 2019, and comparative period for the year ended December 31, 2018 (the “Paysafe Audited 2019 Consolidated Financial Statements”) along with unaudited condensed consolidated interim results for the nine months ended September 30, 2020, and comparative period for the nine months ended September 30, 2019 (the “Paysafe Unaudited 2020 Interim Condensed Consolidated Financial Statements” and, together with the Paysafe Audited 2019 Consolidated Financial Statements, the “Paysafe Consolidated Financial Statements”).

INDUSTRY AND MARKET DATA

In this proxy statement/prospectus, we present industry data, forecasts, information and statistics regarding the markets in which we compete as well as our analysis of statistics, data and other information that we have derived from third parties, including independent consultant reports, publicly available information, various industry publications and other published industry sources (including Mastercard’s investor presentation, eMarketer Inc.’s global eCommerce report dated June 2020 (referred to herein as “eMarketer”), the Strawhecker Group, Nilson, FIS, Newzoo, Eilers & Krejcik, H2 Gambling Capital, Allied Market Research,Glenbrook and Boston Consulting Group). Independent consultant reports, industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be

 

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reliable. Such information is supplemented where necessary with our own internal estimates and information obtained from discussions with our customers, taking into account publicly available information about other industry participants and our management’s judgment where information is not publicly available. This information appears in “Summary of the Proxy Statement/Prospectus,” “Information Related to Paysafe,” “Paysafe’s Management’s Discussion and Analysis of Financial Condition and Results of Operation” and other sections of this proxy statement/prospectus.

Although we believe that these third-party sources are reliable, it does not guarantee the accuracy or completeness of this information, and we have not independently verified this information. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this proxy statement/prospectus. These forecasts and forward-looking information are subject to uncertainty and risk due to a variety of factors, including those described under “Risk Factors.” These and other factors could cause results to differ materially from those expressed in any forecasts or estimates. Some market data and statistical information are also based on our good faith estimates, which are derived from management’s knowledge of our industry and such independent sources referred to above. Certain market, ranking and industry data included elsewhere in this proxy statement/prospectus, including the size of certain markets and our size or position and the positions of our competitors within these markets, including its services relative to its competitors, are based on estimates by us. These estimates have been derived from management’s knowledge and experience in the markets in which we operate, as well as information obtained from surveys, reports by market research firms, our customers, distributors, suppliers, trade and business organizations and other contacts in the markets in which we operate and have not been verified by independent sources. Unless otherwise noted, all of our market share and market position information presented in this proxy statement/prospectus is an approximation. Our market share and market position in each of our business segments, unless otherwise noted, is based on our volume relative to the estimated volume in the markets served by each of our business segments. References herein to Paysafe being a leader in a market or product category refer to our belief that we have a leading market share position in each specified market, unless the context otherwise requires. As there are no publicly available sources supporting this belief, it is based solely on our internal analysis of our volume as compared to the estimated volume of our competitors. In addition, the discussion herein regarding our various end markets is based on how it defines the end markets for its products, which products may be either part of larger overall end markets or end markets that include other types of products and services.

Our internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and management’s understanding of industry conditions. Although we believe that such information is reliable, it has not had this information verified by any independent sources.

 

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FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, all references to “we,” “us,” “our,” “Paysafe” or the “Company” refer to (i) Pi Jersey Holdco 1.5 Limited prior to the consummation of the Business Combination and to (ii) Paysafe Limited following the consummation of the Business Combination.

In addition, in this document:

“Absolute Share Limit” means total number of Company Common Shares that may be issued under the Omnibus Incentive Plan.

“Accounting Predecessor” means Pi Jersey Holdco 1.5 Limited, a private limited company incorporated under the laws of Jersey, Channel Islands.

“Additional I/C Loans” means FTAC’s loans out of the Available Cash Amount, caused by the Company, to certain Subsidiaries of the Company following the FTAC Contribution.

“Adjournment Proposal” means the proposal to adjourn the Special Meeting of the stockholders of FTAC to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Business Combination Proposal.

“Affiliate” means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, through one or more intermediaries or otherwise; provided, except for the Company and its Subsidiaries, no Affiliate or portfolio company (as such term is commonly understood in the private equity industry) of CVC or Blackstone or any of their respective Affiliates shall be considered an Affiliate of the Company or any of its Subsidiaries.

“Aggregate Permitted Acquisition Price Amount” means, without duplication, the aggregate amount of consideration paid by any Paysafe Party prior to Closing in respect of all Permitted Acquisitions.

“Antitrust Laws” means the HSR Act, the Federal Trade Commission Act, as amended, the Sherman Act, as amended, the Clayton Act, as amended, and any applicable foreign antitrust Laws and all other applicable Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.

“Available Cash Amount” means, as of immediately prior to Closing, all available Cash and Cash Equivalents of FTAC and its Subsidiaries, including (i) all amounts in the Trust Account (after reduction for the aggregate amount of payments required to be made in connection with FTAC Stockholder Redemption), (ii) the PIPE Investment Proceeds, and (iii) the aggregate amount of cash proceeds from the FTAC Financing.

“Blackstone” means The Blackstone Group Inc.

“Blackstone Investors” means certain funds affiliated with Blackstone.

“Brexit” means the United Kingdom (“UK”) leaving the EU.

“Broker Non-Vote” means the failure of an FTAC stockholder, who holds his or her shares in “street name” through a broker or other nominee, to give voting instructions to such broker or other nominee.

“Business Combination” means the transactions contemplated by the Merger Agreement.

“Business Combination Proposal” means the proposal to adopt the Merger Agreement and approve the transactions contemplated thereby.

 

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“CAGR” means compounded annual growth rate.

“Cannae” means Cannae Holdings and Cannae LLC.

“Cannae Holdings” means Cannae Holdings, Inc.

“Cannae LLC” means Cannae Holdings LLC, a wholly-owned subsidiary of Cannae Holdings.

“Cash and Cash Equivalents” means, for any Person, all cash and cash equivalents (including marketable securities, checks and bank deposits); provided, however that with respect to PGHL and its Subsidiaries, such amount shall (x) exclude segregated account funds and liquid assets as more fully described on Exhibit F-1 attached to the Merger Agreement and (y) include any costs, fees and expenses associated with refinancing or repricing the existing indebtedness of the Company (in accordance with the Merger Agreement) that have not been paid on or prior to the Closing Date.

“CBI” means the Central Bank of Ireland.

“CBI Approval” means each required approval from the CBI of (i) the applicable Sponsor Persons and (ii) the Company and the LLC, pursuant to Regulation 44 of the European Communities (Electronic Money) Regulations 2011 (S.I. No. 183/2011) (as amended) and the requirements of the CBI, as a result of the transactions contemplated hereby, to the extent required by applicable Law.

“Charter Amendment Proposal” means the proposal to approve the amendment and restatement of the FTAC Charter.

“Closing” means the closing of the transactions contemplated by the Merger Agreement and the PIPE Investment agreements.

“Closing Cash Consideration” means an amount equal to the sum of (i) the Available Cash Amount, minus (ii) the Debt Repayment Amount, minus (iii) the Transaction Expenses.

“Closing Date” means the date on which the Closing is completed.

“Closing Seller Shares” means the number of Company Common Shares (rounded up to the nearest whole share) equal to (i) the Closing Seller Share Consideration, divided by (ii) $10.00.

“Closing Transaction Consideration” means an amount equal to (i) $8,713,000,000, minus (ii) Company Net Debt Amount, minus (iii) Transaction Expenses, plus (iv) the Aggregate Permitted Acquisition Price Amount, if any.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Committee” means the compensation committee of the Company’s Board, or such other committee of the Company’s Board to which it has properly delegated power, or if no such committee or subcommittee exists, the Company’s Board which the Omnibus Incentive Plan will be administered by.

“Company Board” means the board of directors of the Company from time to time.

“Company Bye-laws” means the bye-laws of the Company to be amended and restated substantially in the form of Exhibit B attached to the Merger Agreement prior to the Effective Time.

“Company Charter” means the memorandum of association of the Company as in effect on the date hereof and substantially in the form of Exhibit A attached to the Merger Agreement.

 

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“Company Common Share(s)” means the common shares, par value $0.001 per share, of Paysafe Limited and any successors thereto or other classes of common share of the Company created in any Pre-Closing Recapitalization.

“Company Net Debt Amount” means, as of immediately prior to the Closing, an amount equal to (i) the aggregate indebtedness for borrowed money of PGHL and its Subsidiaries and indebtedness issued by PGHL and its Subsidiaries in substitution or exchange for borrowed money, excluding any items set forth on Exhibit F-1 attached to the Merger Agreement minus (ii) Cash and Cash Equivalents of PGHL and its Subsidiaries minus (iii) any costs, fees and expenses associated with refinancing or repricing the existing indebtedness of the Company (in accordance with the Merger Agreement) that have been paid on or prior to the Closing Date. An illustrative example of the Company Net Debt Amount is set forth on Exhibit F-2 attached to the Merger Agreement.

“Company LLC Contribution” means the transfer and contribution of FTAC and the Accounting Predecessor by the Company to the LLC in exchange for LLC Interests immediately following the I/C Loan.

“Company Warrants” means warrants that will entitle the holder thereof to purchase for $11.50 per share one Company Common Share in lieu of one share of FTAC Class A Common Stock (subject to adjustment in accordance with the Warrant Agreement).

“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions thereof or any other epidemics, pandemics or disease outbreaks.

“CVC” means CVC Advisers Limited.

“CVC Investors” means certain funds affiliated with CVC.

“Debt Repayment Amount” means an amount equal to the excess, if any, of (i) the Company Net Debt Amount over (ii) the Specified Net Debt Amount.

“DGCL” means the Delaware General Corporation Law.

“Effective Time” has the meaning specified in Section 2.04 of the Merger Agreement.

“ERISA” means Employee Retirement Income Security Act of 1974.

“EU” means European Union.

“EUR” means Euro, the legal currency of the European Union.

“Executive Management” means members of the executive management of Paysafe.

“Existing Paysafe Shareholders” means CVC Investors, Blackstone Investors and Executive Management.

“FCA” means the UK Financial Conduct Authority and any successor authority thereto.

“FCA Approval” means each required prior approval from the FCA to, in accordance with s178 of the Financial Services and Markets Act 2000 (as amended from time to time) (“FSMA”), and the requirements of the FCA, any of (i) the applicable Sponsor Persons and (ii) the Company and the LLC for the purposes of the Part XII of FSMA as a result of the transactions contemplated hereby, to the extent required by applicable Law.

“FNF Subscribers” means each of Fidelity National Title Insurance Company, Commonwealth Land Title Insurance Company, Chicago Title Insurance Company and Fidelity & Guaranty Life Insurance Company, collectively, the “FNF Subscribers.”

 

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“Forward Purchase Agreement” means the forward purchase agreement, dated as of July 31, 2020, between FTAC and Cannae Holdings, Inc.

“Founder” means Trasimene Capital FT, LP II.

“Founder FTAC Warrant Recapitalization” means the recapitalization of the Private Placement Warrants for FTAC Class C Common Stock, consummated prior to the consummation of the Founder LLC Contribution, the Merger, the I/C Loan, the Company LLC Contribution, the FTAC Contribution and the Additional I/C Loans.

“Founder LLC Contribution” means the contribution by Founder of FTAC Class C Common Stock to the LLC in exchange for exchangeable units.

“Founder Shares” means the shares of FTAC Class B Common Stock held by the Founder.

“FTAC” means Foley Trasimene Acquisition Corp. II.

“FTAC Affiliate Agreement” means that FTAC is a party to any transaction, agreement, arrangement or understanding with any (i) present or former equityholder, executive officer or director of FTAC, (ii) beneficial owner (within the meaning of Section 13(d) of the Exchange Act) of 5% or more of the capital stock or equity interests of any of the Company or its Subsidiaries or (iii) Affiliate, “associate” or member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act).

“FTAC Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA (including Multiemployer Plans), or any stock purchase, stock option, severance, employment, individual consulting, retention, change-in-control, fringe benefit, collective bargaining, bonus, incentive, deferred compensation, employee loan and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA, whether formal or informal, oral or written.

“FTAC Board” means the board of directors of FTAC.

“FTAC Charter” means the second amended and restated certificate of incorporation of FTAC.

“FTAC Class A Common Stock” means the Class A common stock, par value $0.0001 per share, of FTAC.

“FTAC Class B Common Stock” means the Class B common stock, par value $0.0001 per share, of FTAC.

“FTAC Class C Common Stock” means the Class C common stock, par value $0.0001 per share, of FTAC to be authorized pursuant to the FTAC Charter.

“FTAC Common Stock” means FTAC Class A Common Stock and FTAC Class B Common Stock.

“FTAC Contribution” means, immediately following the Company LLC Contribution, the transfer by the LLC to the Accounting Predecessor, or a Subsidiary of the Accounting Predecessor, of all of the stock of FTAC, consummated prior to the consummation to the Additional I/C Loans.

“FTAC Financing” means the equity financing to be provided pursuant to the Forward Purchase Agreement.

“FTAC Investors” means certain entities affiliated with FTAC, including the Founder and Cannae.

“FTAC Organizational Documents” means the FTAC Charter and FTAC’s bylaws, as amended and in effect on December 7, 2020.

“FTAC Promissory Note” means a promissory note issued on July 17, 2020 by FTAC to the Founder and an affiliate of the Founder, pursuant to which FTAC may borrow up to an aggregate principal amount of $800,000.

“FTAC Public Shares” means shares of FTAC Class A Common Stock sold as part of the units in the IPO (whether they are purchased in the IPO or thereafter in the open market).

 

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“FTAC Public Stockholders” means holders of the FTAC Public Shares, including the Founder and FTAC management team to the extent FTAC and/or members of FTAC management team purchase FTAC Public Shares, provided that Founder’s and each member of FTAC management team’s status as a “FTAC Public Stockholder” will only exist with respect to such FTAC Public Shares.

“FTAC Public Warrants” means warrants included in the FTAC Units.

“FTAC Schedules” means the disclosure schedules of FTAC.

“FTAC Stockholder Matters” refers to (1) the adoption of the Merger Agreement and approval of the Transactions; (2) the amendment and restatement of the Certificate of Incorporation in the form of FTAC Charter attached as Annex B hereto; (3) the Omnibus Incentive Plan Proposal; and (4) any other proposals the Parties agree are necessary or desirable to consummate the Transactions.

“FTAC Stockholder Redemption” means providing FTAC’s stockholders with the opportunity to redeem shares of FTAC Class A Common Stock by tendering such shares for redemption not later than 5:00 p.m. Eastern Time on the date that is at least two (2) business days prior to the date of the Special Meeting.

“FTAC Stockholders” means the holders of shares of FTAC Common Stock.

“FTAC Transaction Expenses” means (i) the fees and disbursements of outside counsel to FTAC (including its direct and indirect equityholders), (ii) the fees and expenses of accountants to FTAC, (iii) the fees and expenses of the consultants and other advisors to FTAC set forth on Schedule 4.02(b)(i) of the FTAC Schedules, (iv) the fees and disbursements of bona fide third-party investment bankers and financial advisors to FTAC, (v) the placement fee set forth on Schedule 4.02(b)(ii) of the FTAC Schedules, and (vi) any premiums, fees, disbursements or expenses incurred in connection with any rep and warranty insurance policy and any tail insurance policy for the directors’ and officers’ liability insurance of FTAC, in each case, incurred in connection with the Transactions.

“FTAC Units” means the units sold in connection with FTAC’s IPO.

“FTAC Working Capital Loans” means loans the Founder or an affiliate of the Founder may, but are not obligated to, give the Company in order to finance transaction costs in connection with a Business Combination.

“GAAP” means generally accepted accounting principles in the United States.

“GDPR” means the EU’s General Data Protection Regulation 2016/679, as amended.

“Governance Proposal” means the FTAC Stockholder vote, on a non-binding advisory basis, of certain governance provisions in the Company Bye-laws, presented separately in accordance with SEC guidance.

“Governmental Authority” means any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal.

“Governmental Order” means any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any Governmental Authority.

“Group” means, where appropriate, Paysafe and its subsidiaries.

“HMRC” means HM Revenue & Customs.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

 

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“I/C Loans” means the loans made by FTAC to the Company and the Accounting Predecessor out of the Available Cash Amount, made prior to the consummation of the Company LLC Contribution, FTAC Contribution and the Additional I/C Loans.

“IPO” means the initial public offering of FTAC Units, consummated on July 15, 2020.

“IFRS” means International Financial Reporting Standards as issued by the International Accounting Standards Board and adopted by the European Union.

“Initial Business Combination” means FTAC’s effecting of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses pursuant to the FTAC Charter.

“Initial Founder Shares” means all of the FTAC Class B Common Stock owned by the Founder and the independent directors on the board of directors of the Founder, which equals 36,675,836 shares of FTAC Class B Common Stock as of the date hereof and shall equal 28,687,959 shares of FTAC Class B Common Stock as of the Closing.

“Initial Stockholders” means the holders of Initial Founder Shares.

“Insiders” refers to William P. Foley, II, Richard N. Massey, Mark D. Linehan, Erika Meinhardt, David W. Ducommun, Michael L. Gravelle, C. Malcolm Holland and Bryan D. Coy.

“Intended Tax Treatment” means for U.S. federal income tax purposes (and for purposes of any applicable state or local income tax that follows U.S. federal income tax treatment), each of the Parties’ intention that (i) the Pubco Contribution should qualify as a transaction under Section 351 of the Code and should not subject shareholders of FTAC to tax under Section 367 of the Code (subject to entry into gain recognition agreements by any such shareholders required to enter into such agreements to preserve tax-free treatment under Section 367 of the Code), and (ii) the LLC Contribution should qualify as a transaction under Section 721 of the Code.

“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of December 20, 2017, made between Paysafe Group Holdings II Limited (formerly Pi UK Holdco II Limited) as parent, Credit Suisse AG, London Branch as senior facility agent, Credit Suisse AG, London Branch as second lien facility agent, Credit Suisse AG, London Branch as security agent and the other Persons from time to time party thereto, as the same has been and may be further amended, restated, amended and restated, supplemented, replaced, refinanced, or otherwise modified from time to time in accordance with the terms thereof.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, encumbrance, easement, license, option, right of first refusal, security interest or other lien of any kind.

“LLC” means, Paysafe Bermuda Holding LLC, a Bermuda exempted limited liability company.

“LLC Contribution” means, collectively, the Founder LLC Contribution and the Company LLC Contribution.

“LLC Interests” means the limited liability company interests in the LLC.

“Merger” means, immediately following the Founder LLC Contribution, on the terms and subject to the conditions of the Merger Agreement and in accordance with the DGCL and other applicable Laws, a business combination transaction by and among the Parties by which Merger Sub will merge with and into FTAC, with FTAC being the surviving corporation of the Merger, consummated prior to the consummation of the I/C Loans, the Company LLC Contribution, the FTAC Contribution and the Additional I/C Loans.

“Merger Agreement” means the agreement and plan of merger made and entered into as of December 7, 2020, by and among FTAC, the Company, Merger Sub, the LLC, the Accounting Predecessor and PGHL.

 

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“Merger Sub” means Paysafe Merger Sub Inc., a Delaware corporation and direct, wholly owned subsidiary of the Company.

“No Redemption Scenario” means no holder of FTAC Public Shares elects to have such shares redeemed in connection with the Business Combination.

“Non-Founder FTAC Warrant” means a FTAC Warrant, other than a Private Placement.

“NYSE” means the New York Stock Exchange.

“OECD” means the Organisation for Economic Co-operation and Development.

“Omnibus Incentive Plan” means the Paysafe Limited 2021 Omnibus Incentive Plan attached as Exhibit H to the Merger Agreement.

“Omnibus Incentive Plan Proposal” means the approval of the adoption of the Omnibus Incentive Plan.

“Paysafe Audited 2019 Consolidated Financial Statements” means the consolidated statement of financial position of Pi Jersey Holdco 1.5 Limited as of December 31, 2019, the related consolidated statements of comprehensive loss, shareholder’s equity, and cash flows, for the year ended December 31, 2019, and the related notes and comparative period for the year ended December 31, 2018.

“Paysafe Consolidated Financial Statements” means the Paysafe Audited 2019 Consolidated Financial Statements and the Paysafe Unaudited 2020 Interim Condensed Consolidated Financial Statements together.

“Paysafe Contribution” means, immediately following the PIPE Investment, PGHL’s transfer and contribution of the Accounting Predecessor to the Company, in exchange for the Closing Seller Shares and the right to receive the Closing Cash Consideration, consummated prior to the consummation of the FTAC Financing, Founder FTAC Warrant Recapitalization, the Founder LLC Contribution, the Merger, the I/C Loans, the Company LLC Contribution, the FTAC Contribution and the Additional I/C Loans.

“Paysafe Limited” means Paysafe Limited, an exempted limited company incorporated under the laws of Bermuda.

“Paysafe Parties” means PGHL, the Accounting Predecessor, Merger Sub and the LLC.

“Paysafe Unaudited 2020 Interim Condensed Consolidated Financial Statements” means the unaudited condensed consolidated statement of financial position of Pi Jersey Holdco 1.5 Limited as of September 30, 2020, the related unaudited condensed consolidated statements of comprehensive loss, shareholders’ equity and cash flows for the nine-month periods ended September 30, 2020 and 2019, and the related notes.

“PCAOB” means the Public Company Accounting Oversight Board.

“Permitted Acquisition” means any acquisition of assets, equity interests or any business or other Person or division thereof by any Paysafe Party set forth on Schedule 1.01 of the PGHL Schedules, permitted under Section 7.01 of the Merger Agreement, or consented to by FTAC pursuant to Section 7.01(f) of the Merger Agreement.

“PGHL” means Paysafe Group Holdings Limited, a private limited company incorporated under the laws of England and Wales.

“PGHL Benefit Plan” has the meaning specified in Section 5.13(a) of the Merger Agreement.

 

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“PGHL Employees” means any current or former employee, officer, director or independent contractor of PGHL or its Subsidiaries.

“PGHL Financing Agreements” means the Senior Facilities Agreement, the Second Lien Facility Agreement, the Intercreditor Agreement, any L/C Facility Agreement, and the PPPSL Credit Agreement and each other Permitted Financing Document (as defined in the Intercreditor Agreement).

“PGHL Schedules” means the disclosure schedules of PGHL and its subsidiaries.

“PGHL Transaction Expenses” means (i) the fees and disbursements of outside counsel to PGHL (including its direct and indirect equityholders), (ii) the fees and expenses of accountants and other advisers to PGHL set forth on Schedule 4.02(a)(i) of the PGHL Schedules, (iii) the fees and disbursements of bona fide third-party investment bankers and financial advisors to PGHL, and (iv) any premiums, fees, disbursements or expenses incurred in connection with any tail insurance policy for the directors’ and officers’ liability insurance of PGHL, in each case, incurred in connection with the Transactions.

“Pi Topco” means Pi Jersey Topco Limited, a company incorporated in Jersey.

“PIPE Investment” means the commitments obtained by FTAC from certain investors for a private placement of Company Common Shares pursuant to those certain Subscription Agreements.

“PIPE Investment Proceeds” mean the aggregate amount funded and paid to the Company by the PIPE Investors pursuant to their Subscription Agreements.

“PIPE Investor” means an investor party to a Subscription Agreement.

“POS” means point of sale.

“PPPSL Credit Agreement” means that certain credit agreement dated as of June 18, 2019, among Paysafe Payment Processing Solutions LLC as borrower, the financial institutions from time to time party thereto as lenders, Woodforest National Bank, as administrative agent, and the other Persons from time to time party thereto, as the same has been and may be further amended, restated, amended and restated, supplemented, replaced, refinanced, or otherwise modified from time to time in accordance with the terms thereof.

“Pre-Closing Recapitalization” means the Company shall be permitted to adjust, split, combine, subdivide, recapitalize, reclassify or otherwise effect (including by merger) any change in respect of the then-outstanding Company Common Shares (including any such event that involves the creation of new classes of common shares of the Company, which may have varying voting rights on a per-share basis) as necessary or appropriate to facilitate the Transactions.

“Principal Shareholders” means, collectively, the parties to the Shareholders Agreement.

“Private Placement Warrants” means the Warrants sold to the Founder in a private placement in connection with the IPO.

“Pubco Contribution” means, collectively, the PIPE Investment, the Paysafe Contribution, and the Merger.

“Record Date” means the close of business on                  , 2021.

“Registration Rights Agreement” has the meaning specified in the Recitals of the Merger Agreement.

“Regulatory Consent Authorities” means the Governmental Authorities with jurisdiction over enforcement of any applicable Law, including the FCA and the CBI.

 

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“Schedules” means the PGHL Schedules and the FTAC Schedules.

“SEC Reports” means all required registration statements, reports, schedules, forms, statements and other documents required to be filed by FTAC with the SEC since August 18, 2020.

“Second Lien Facility Agreement” means that certain Second Lien Facility Agreement dated as of December 20, 2017, among Paysafe Group Holdings II Limited (formerly Pi UK Holdco II Limited), Paysafe Group Holdings III Limited (formerly Pi UK Holdco III Limited), the Persons from time to time party thereto as Borrowers and as Guarantors (in each case, as defined therein), the financial institutions from time to time party thereto as lenders, Credit Suisse AG, London Branch, as agent and as security agent, and the other Persons from time to time party thereto, as the same has been and may be further amended, restated, amended and restated, supplemented, replaced, refinanced, or otherwise modified from time to time in accordance with the terms thereof.

“Senior Facilities Agreement” means that certain Senior Facilities Agreement dated as of December 20, 2017, among Paysafe Group Holdings II Limited (formerly Pi UK Holdco II Limited), Paysafe Group Holdings III Limited (formerly Pi UK Holdco III Limited), the Persons from time to time party thereto as TLB Borrowers, RCF Borrowers, and as Guarantors (in each case, as defined therein), the financial institutions from time to time party thereto as lenders, Credit Suisse AG, London Branch, as agent and as security agent, and the other Persons from time to time party thereto, as the same has been and may be further amended, restated, amended and restated, supplemented, replaced, refinanced, or otherwise modified from time to time in accordance with the terms thereof.

“Shareholders Agreement” means the agreement entered into by the Company, Cannae Holdings and PGHL stockholders in connection with the consummation of the Merger, attached to the Merger Agreement as Exhibit D.

“SMB” means small and medium-sized businesses.

“Special Meeting” means a meeting of the holders of FTAC Common Stock to be held for the purpose of approving the FTAC Stockholder Matters.

“Specified Net Debt Amount” means $1,805,000,000.

“Sponsor Agreement” means that certain Amended and Restated Letter Agreement, dated as of December 7, 2020, by and among the Founder, FTAC, the Company and certain other parties thereto, as amended, restated, modified or supplemented from time to time.

“Sponsor Person” has the meaning specified in the Sponsor Agreement.

“Subscription Agreement” means each individual subscription agreement entered into by each PIPE Investor.

“Termination Date” means December 7, 2021.

“Transaction Agreements” means the Merger Agreement, the Registration Rights Agreement, the Shareholders Agreement, the Sponsor Agreement, the Forward Purchase Agreement, the Subscription Agreements, the Company Charter, the Company Bye-laws, the FTAC Charter, and all the agreements, documents, instruments and certificates entered into in connection herewith or therewith and any and all exhibits and schedules thereto.

“Transaction Expenses” means the aggregate amount of the PGHL Transaction Expenses and FTAC Transaction Expenses.

 

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“Transactions” means the transactions contemplated by the Merger Agreement, including the Merger, the Paysafe Contribution, the FTAC Contribution, the Founder LLC Contribution, the Company LLC Contribution and the Pre-Closing Recapitalization.

“Trasimene Capital” means Trasimene Capital Management, LLC, a financial advisory firm led by William P. Foley, II.

“Treasury Regulations” means the regulations, including proposed and temporary regulations, promulgated under the Code.

“Trust Account” has the meaning specified in Section 6.07(a) of the Merger Agreement.

“Trust Agreement” means the Investment Management Trust Agreement, dated August 21, 2020, by and between FTAC and the Trustee on file with the SEC Reports of FTAC as of December 7, 2020.

“Trustee” means Continental Stock Transfer & Trust Company, a New York corporation.

“U.S. dollar,” “USD,” “US$” and “$” mean the legal currency of the United States.

“VAT” means any: (a) tax imposed in compliance with the council directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112) (including, in relation to the UK, value added tax imposed by the Value Added Tax Act 1994 and legislation and regulations supplemental thereto); and (b) other tax of a similar nature (including, without limitation, sales tax, use tax, consumption tax and goods and services tax), whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in (a), or elsewhere.

“VWAP” means, for any security as of any date(s), the dollar volume-weighted average price for such security on the principal securities exchange or securities market on which such security is then traded during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Refinitiv Workspace or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Refinitiv Workspace, or, if no dollar volume-weighted average price is reported for such security by Refinitiv Workspace for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by OTC Markets Group Inc.

“Warrant Agreement” means that certain Warrant Agreement, dated as of August 21, 2020, between FTAC and Continental Stock Transfer & Trust Company, a New York corporation.

 

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

 

Q. Why am I receiving this proxy statement/ prospectus?		A. FTAC, PGHL, the Company, Merger Sub, the Accounting Predecessor and the LLC (PGHL, the Accounting Predecessor, Merger Sub and the LLC, together, the “Paysafe Parties”) have agreed to the Business Combination under the terms of the Merger Agreement that is described in this proxy statement/prospectus and is attached to this proxy statement/prospectus as Annex A. The Merger Agreement provides that, among other things, (i) Merger Sub will merge with and into FTAC, with FTAC being the surviving corporation in the merger and an indirect subsidiary of the Company and each outstanding share of FTAC Class A Common Stock and FTAC Class B Common Stock (other than certain excluded shares) will convert into the right to receive one Company Common Share, and (ii) PGHL will transfer and contribute the Accounting Predecessor to the Company in exchange for Company Common Shares and cash.   This proxy statement/prospectus and its annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the Special Meeting. You should read this proxy statement/prospectus and its annexes carefully and in their entirety. See the section entitled “Proposal No. 1—The Business Combination Proposal.”
Q. When and where is the Special Meeting?		A. The Special Meeting will be held on                 , 2021, at 12:00 p.m., Eastern Time via live webcast at .
Q. Can I attend the Special Meeting in person?		A. No. You will not be able to attend the Special Meeting in person. FTAC will be hosting the Special Meeting via live webcast on the Internet. The webcast will start at 12:00 p.m. Eastern Time, on                 , 2021. Any stockholder can listen to and participate in the Special Meeting live via the Internet at                 . You will be able to attend the Special Meeting online and vote during the Special Meeting by visiting                 and entering the control number on your proxy card.
Q. What do I need in order to participate in the Special Meeting online?		A. You can attend the Special Meeting via the Internet by visiting                 . You will need the voter control number included on your proxy card in order to be able to vote your shares during the Special Meeting. If you do not have a voter control number, you will be able to listen to the meeting only and you will not be able to vote during the Special Meeting.
Q. What is being voted on at the Special Meeting?		A. FTAC’s stockholders are being asked to consider and vote upon a proposal to approve the Business Combination described in the accompanying proxy statement/prospectus, including (a) adopting the Merger Agreement, (b) approving the issuance of the Class C Common Stock in exchange for the warrants held by the FTAC Founder and (c) approving the other transactions contemplated by the Merger Agreement and related agreements described in the accompanying proxy statement/prospectus. See the section entitled “Proposal No. 1—The Business Combination Proposal.”
		FTAC’s stockholders are also being asked to consider and vote upon a proposal to approve and adopt the third amended and restated certificate of incorporation of FTAC. See the section entitled “Proposal No. 2—The Charter Amendment Proposal.”   FTAC’s stockholders are also being asked to consider and vote upon, on a non-binding advisory basis, certain governance provisions in the Company Bye-laws, presented separately in accordance with the SEC requirements. See the section entitled “Proposal No. 3—The Governance Proposal.”

 

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		FTAC’s stockholders are also being asked to consider and vote on a proposal to approve and adopt the Paysafe Limited 2021 Omnibus Incentive Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder. See the section entitled “Proposal No. 4—The Omnibus Incentive Plan Proposal.”   FTAC’s stockholders may also be asked to consider and vote upon an Adjournment Proposal, which is a proposal to adjourn the Special Meeting to a later date or dates to permit further solicitation and voting of proxies if, based upon the tabulated vote at the time of the Special Meeting, FTAC would not have been authorized to consummate the Business Combination. See the section entitled “Proposal No. 5—The Adjournment Proposal.”
		FTAC will hold the Special Meeting of its stockholders to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the proposed Business Combination and the other matters to be acted upon at the Special Meeting. Stockholders should read it carefully.
Q. Are the proposals conditioned on one another?		A. Unless the Business Combination Proposal is approved, the Omnibus Incentive Plan Proposal and Charter Amendment Proposals will not be presented to the FTAC Stockholders at the Special Meeting. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event that the Business Combination Proposal does not receive the requisite vote for approval, then FTAC will not consummate the Business Combination. In addition, if the Charter Amendment Proposal does not receive the requisite vote for approval, then FTAC will not consummate the Business Combination. If FTAC does not consummate the Business Combination and fails to complete an initial business combination by August 21, 2022 (or such later date as FTAC Stockholders may approve in accordance with its Current Charter), FTAC will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such account to its public stockholders.
		The vote of stockholders is important. Stockholders are encouraged to submit their completed proxy card as soon as possible after carefully reviewing this proxy statement/prospectus.
Q. Why is FTAC proposing the Business Combination?		A. FTAC was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
		FTAC completed its initial public offering (the “IPO”) of Units on August 21, 2020, with each Unit consisting of one share of its FTAC Class A Common Stock and one-third of one FTAC Warrant. Each whole FTAC Warrant entitles the holder to purchase one share of FTAC Class A Common Stock at a price of $11.50. FTAC also closed on the sale of the Units subject to over-allotment on August 21, 2020, raising total gross proceeds of $1,300,000,000. On August 26, 2020, the underwriters partially exercised their over-allotment option, resulting in an additional 16,703,345 Units issued for an aggregate amount of $167,033,450. In connection with the underwriters’ partial exercise of their over-allotment option, FTAC also consummated the sale of an additional 2,227,113 Private Placement Warrants at $1.50 per Private Placement Warrant, generating total proceeds of $3,340,669. A total of $167,033,450 was deposited into the Trust Account, bringing the total Units sold in the IPO to 146,703,345 Units and the aggregate proceeds held in the Trust Account as of such date to $1,467,033,450.

 

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		Paysafe is a leading, global pioneer in digital commerce with over $98 billion in volume processed in 2019 and $73 billion processed for the nine months ended September 30, 2020. Paysafe empowers over 15 million active users in more than 120 countries and over 250,000 small and medium businesses (“SMBs”) across the United States, Canada and Europe to conduct secure and friction-less commerce across online, mobile, in-app and in-store channels, generating over 75% of its revenue from eCommerce and Integrated Commerce solutions.
		After careful consideration, the FTAC Board has determined that the Business Combination Proposal, the Charter Amendment Proposal, the Governance Proposal, the Omnibus Incentive Plan Proposal and the Adjournment Proposal are fair to and in the best interests of FTAC and its stockholders and recommends voting “FOR” the Business Combination Proposal, “FOR” the Charter Amendment Proposal, “FOR” the Governance Proposal, “FOR” the Omnibus Incentive Plan Proposal and, if presented, “FOR” the Adjournment Proposal. See “Proposal No. 1—The Business Combination—FTAC’s Board of Directors’ Reasons for Approval of the Business Combination” for additional information. Consummation of the Transactions is conditioned on the approval of each of the Business Combination Proposal and the Charter Amendment Proposal. If either of those proposals are not approved, we will not consummate the Transaction.
Q. What will happen in the Business Combination?		A. At the Closing, Merger Sub will merge with and into FTAC, with FTAC surviving such Merger. Upon consummation of the Merger, FTAC will become a wholly-owned indirect subsidiary of the Company and holders of FTAC securities will exchange their FTAC securities for securities of the Company. In particular, among other transactions, (i) each outstanding share of FTAC Class A Common Stock (excluding shares that are redeemed by the holders) and each outstanding share of FTAC Class B Common Stock (28,687,959 shares following the Founder’s forfeiture to FTAC for cancellation of 7,987,877 Founder Shares) will be converted into one Company Common Share, and (ii) each outstanding FTAC Warrant (other than Private Placement Warrants) will become one Company Warrant that will entitle the holder thereof to purchase one Company Common Share in lieu of one share of FTAC Class A Common Stock.
Q. What equity stake will current stockholders of FTAC, the PIPE Investors, and PGHL hold in the post-combination company after the closing?		A. Upon consummation of the Business Combination, the Company will become a new public company and FTAC will become a wholly-owned subsidiary of the Company. PGHL, the former security holders of FTAC, and the PIPE Investors will all become security holders of the Company. See the section entitled “Beneficial Ownership of Securities.”   It is anticipated that, upon completion of the Business Combination: (i) FTAC’s public stockholders and Cannae will retain an ownership interest of approximately 22.5% in the post-combination company; (ii) the PIPE Investors will own approximately 27.8% of the post-combination company; (iii) the Founder will own approximately 4.0% of the post-combination company; and (iv) current indirect investors in PGHL will own approximately 45.7% of the post-combination company. These levels of ownership interest: (i) exclude the impact of the shares of FTAC Class A Common Stock underlying the FTAC Warrants and (ii) assume the No Redemption Scenario.

 

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		For more information, please see the sections entitled “Beneficial Ownership of Securities,” and “Unaudited Pro Forma Condensed Combined Financial Information.”
Q. What are the U.S. Federal income tax consequences of the Business Combination to U.S. holders of FTAC Common Stock and/or FTAC Warrants?		A. As described more fully under the section entitled “Proposal No. 1—The Business Combination Proposal—Material Tax Considerations—Material U.S. Federal Income Tax Considerations—U.S. Holders,” subject to the discussions below of Non-Founder FTAC Warrants and Section 367(a) of the Code, the exchange by FTAC Stockholders of FTAC Class A Common Stock and the acquisition of the Company Common Shares by FTAC Stockholders solely in exchange therefor resulting from the Merger, taken together with the related transactions, should qualify as a transfer of property to a corporation in exchange for stock qualifying for non-recognition of gain or loss under Section 351(a) of the Code. In addition, the parties expect that Section 367(a) of the Code should not cause the Company to not be treated as a corporation for purposes of non-recognition of gain under Section 351(a) of the Code.   Accordingly, the expected U.S. federal income tax treatment of U.S. holders of FTAC Class A Common Stock or Non-Founder FTAC Warrants is as follows: (1) a U.S. holder that owns only FTAC Class A Common Stock but not Non-Founder FTAC Warrants and that exchanges such FTAC Class A Common Stock for Company Common Shares in the Merger and related transactions generally should not recognize gain or loss, (2) a U.S. holder that owns only Non-Founder FTAC Warrants but not FTAC Class A Common Stock and whose Non-Founder FTAC Warrants convert into Company Warrants should recognize gain or loss upon the conversion of Non-Founder FTAC Warrants into Company Warrants equal to the difference between the fair market value of the Company Warrants received and such U.S. holder’s adjusted tax basis in such U.S. holder’s Non-Founder FTAC Warrants, and (3) a U.S. holder that receives Company Common Shares and whose Non-Founder FTAC Warrants convert into Company Warrants in the Merger and related transactions should recognize gain (if any) with respect to the shares of FTAC Class A Common Stock and Non-Founder FTAC Warrants held immediately prior to the Merger in an amount equal to the lesser of (i) the excess (if any) of the fair market value of the Company Common Shares and Company Warrants received over such U.S. holder’s tax basis in the FTAC Class A Common Stock and Non-Founder FTAC Warrants or (ii) the fair market value of the Company Warrants received. Any loss realized by a U.S. holder would not be recognized.   If the exchange by FTAC Stockholders of FTAC Class A Common Stock and the acquisition of Company Common Shares by FTAC Stockholders in exchange therefor resulting from the Merger, together with the related transactions, is not treated as a transfer of property to a corporation in exchange for stock qualifying for non-recognition of gain or loss under Section 351(a) of the Code or is treated as a transfer described in Section 351(a) of the Code but it is determined that Section 367(a) of the Code applies to the transfer of FTAC Class A Common Stock, then a U.S. holder would generally recognize gain, if any, in an amount equal to the excess of (i) the fair market value of the Company Common Shares (and, if such FTAC Stockholders also hold Non-Founder FTAC Warrants that pursuant to the terms of the Non-Founder FTAC Warrants convert into Company Warrants, the converted Company Warrants) received over (ii) such U.S. holder’s adjusted tax basis in such FTAC Class A Common Stock (and

 

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		Non-Founder FTAC Warrants, if any). This could result in a U.S. holder of FTAC Class A Common Stock (and Non-Founder FTAC Warrants, if any) recognizing a greater amount of gain for U.S. federal income tax purposes than such holder would have recognized if Section 351(a) of the Code applied or Section 367(a) of the Code did not apply.   The summary above is qualified in its entirety by the more detailed discussion provided in the section entitled “Proposal No. 1—The Business Combination Proposal—Material Tax Considerations—Material U.S. Federal Income Tax Considerations.”
Q. What are the U.S. federal income tax consequences of exercising my redemption rights?		A. The receipt of cash by a U.S. holder of FTAC Class A Common Stock in redemption of such shares will be a taxable transaction for U.S. federal income tax purposes. Please see the section entitled “Proposal No. 1—The Business Combination Proposal—Material Tax Considerations—Material U.S. Federal Income Tax Considerations—Redemption of FTAC Class A Common Stock Pursuant to the FTAC Stockholder Redemption” for additional information. You are urged to consult your tax advisors regarding the tax consequences of exercising your redemption rights.   Please see the section entitled “Proposal No. 1—The Business Combination Proposal—Material Tax Considerations—Material U.S. Federal Income Tax Considerations—Redemption of FTAC Common Stock” for additional information. You are urged to consult your tax advisors regarding the tax consequences of exercising your redemption rights.
Q. What conditions must be satisfied to complete the Business Combination?		A. There are a number of closing conditions to the Business Combination, including, but not limited to, the following:
		•  the approval of the FTAC Stockholder Matters, other than the Omnibus Incentive Plan Proposal, by the requisite vote of FTAC’s stockholders;
		•  receipt of requisite regulatory approvals, including termination or expiration of the applicable waiting period under the HSR Act and receipt of required approvals from the UK Financial Conduct Authority and the Central Bank of Ireland;
		•  no law or order preventing or prohibiting the transactions contemplated by the Merger Agreement;
		•  the Company Common Shares to be issued in connection with the transactions having been approved for listing on the NYSE, subject only to official notice of issuance thereof;
		•  the effectiveness of the registration statement of which this proxy statement/prospectus forms a part;   •  the Available Cash Amount being not less than $3,400,000,000; and
		•  FTAC shall have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining after the FTAC Stockholder Redemption.

 

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		For a summary of all of the conditions that must be satisfied or waived prior to completion of the Business Combination, see the section entitled “Proposal No. 1—The Business Combination Proposal—The Merger Agreement.”
Q. How many votes do I have at the Special Meeting?		A. FTAC Stockholders are entitled to one vote at the Special Meeting for each share of FTAC Common Stock held of record as of                 , 2021, the record date for the Special Meeting (the “record date”). As of the close of business on the record date, there were                 shares of FTAC Class A Common Stock outstanding and                 shares of FTAC Class B Common Stock outstanding. The holders of FTAC Warrants have no voting rights with respect to such securities.
Q. Why is FTAC proposing the Governance Proposal?		A. FTAC is requesting that its stockholders vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the Company Bye-laws that materially affect stockholder rights. This vote is not otherwise required by Delaware law (separate and apart from the Charter Amendment Proposal), but, consistent with SEC guidance, FTAC is submitting these provisions to its stockholders separately for approval. The stockholder vote regarding this proposal is an advisory vote and is not binding on FTAC or the FTAC Board (separate and apart from the approval of the Charter Amendment Proposal). Furthermore, the Business Combination is not conditioned on the approval of the Governance Proposal. Please see the section entitled “Proposal No. 3—The Governance Proposal.”
Q. What vote is required to approve the proposals presented at the Special Meeting?		A. The approval of the Business Combination Proposal requires the affirmative vote of holders of a majority of the outstanding shares of FTAC Class A Common Stock and FTAC Class B Common Stock, voting together as a single class, represented virtually or by proxy and entitled to vote thereon at the Special Meeting represented virtually or by proxy at the Special Meeting. Abstentions and Broker Non-Votes will count as a vote “AGAINST” the Business Combination Proposal.   The approval of the Charter Amendment Proposal will require the affirmative vote of (i) holders of a majority of the outstanding shares of FTAC Class A Common Stock and FTAC Class B Common Stock, voting together as a single class, represented virtually or by proxy and entitled to vote thereon at the Special Meeting and (ii) holders of a majority of the outstanding shares of FTAC Class B Common Stock entitled to vote thereon at the Special Meeting, which approval of the FTAC Class B Common Stock shall be provided by the holders of FTAC Class B Common Stock by written consent, voting separately as a single class. Abstentions and Broker Non-Votes will have the same effect as votes “AGAINST” for this vote.   The approval of the Governance Proposal, the Omnibus Incentive Plan and, if presented, the Adjournment Proposal will require the affirmative vote of a majority of the votes cast by holders of shares of FTAC Class A Common Stock and FTAC Class B Common Stock, voting together as a single class, represented virtually or by proxy at the Special Meeting. Accordingly, if a valid quorum is established, a FTAC stockholder’s failure to vote by proxy or to vote at the Special Meeting with regard to the Governance Proposal, the Omnibus Incentive Plan Proposal and the Adjournment Proposal will have no effect on such proposals.

 

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Q. What constitutes a quorum at the Special Meeting?		A. A quorum shall be present at a meeting of FTAC Stockholders if the holders of a majority of the shares entitled to vote are present in person, represented by duly authorized representative in the case of a corporation or other legal entity or presented by proxy. In the absence of a quorum, the chairman of the Special Meeting has power to postpone or adjourn the Special Meeting for a period of no longer than twenty (20) days, and FTAC is required to do so under the terms of the Merger Agreement in such circumstances. As of the record date,                 shares of FTAC Common Stock would be required to achieve a quorum.
Q. How do the Sponsor Persons of FTAC intend to vote on the proposals?		A. The Sponsor Persons, which hold 100% of the issued and outstanding shares of FTAC Class B Common Stock, beneficially own and are entitled to vote an aggregate of approximately 20% of the outstanding shares of FTAC Common Stock. These parties are required by certain agreements and intend to vote their securities in favor of the FTAC Stockholder Matters and in favor of the Governance Proposal and the Adjournment Proposal, if the latter is presented at the Special Meeting.
Q. Do I have redemption rights?		A. Yes. Pursuant to the FTAC Charter, in connection with the completion of the Business Combination, holders of shares of FTAC Class A Common Stock (other than the Sponsor Persons who have agreed to waive the right to redeem shares pursuant to the Sponsor Agreement) may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the FTAC Charter. For illustrative purposes, as of                 , 2021, this would have amounted to approximately $         per share. If a holder of FTAC Class A Common Stock exercises its redemption rights, then such holder will be exchanging its shares of FTAC Class A Common Stock for cash. Such a holder would be entitled to receive cash for its shares only if it properly demands redemption and delivers its shares of FTAC Class A Common Stock (either physically or electronically) to FTAC’s transfer agent at least two (2) business days prior to the Special Meeting. See the section titled “Special Meeting of FTAC Stockholders—Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash.
Q. Will how I vote affect my ability to exercise redemption rights?		A. No. You may exercise your redemption rights regardless of whether you vote or, if you vote, irrespective of whether you vote “FOR” or “AGAINST” the Business Combination Proposal, the Charter Amendment Proposal, the Governance Proposal, the Omnibus Incentive Plan Proposal or the Adjournment Proposal. As a result, the Merger Agreement can be approved by stockholders who will redeem their shares of FTAC Class A Common Stock and no longer remain stockholders, leaving stockholders who choose not to redeem their shares holding shares in a company with a potentially less liquid trading market, fewer stockholders, potentially less cash and the potential inability to meet the listing standards of the NYSE.
Q. How do I exercise my redemption rights?		A. If you are a holder of shares of FTAC Class A Common Stock (other than a Sponsor Person) and wish to exercise your right to have your shares of FTAC Class A Common Stock redeemed, you must:
		•  submit a written request to Continental Stock Transfer & Trust Company, FTAC’s transfer agent, in which you (a) request that FTAC redeem all or a portion of your shares of FTAC Class A Common Stock for cash and (b) identify yourself as the beneficial holder of the shares of FTAC Class A Common Stock and provide your legal name, phone number and address; and

 

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		•  deliver your shares of FTAC Class A Common Stock to Continental Stock Transfer & Trust Company, FTAC’s transfer agent, physically or electronically through The Depository Trust Company (“DTC”).
		Holders of shares of FTAC Class A Common Stock must complete the procedures for electing to redeem their shares of FTAC Class A Common Stock in the manner described above prior to 5:00 p.m., eastern time, on                 , 2021 (two (2) business days before the Special Meeting) in order for their shares of FTAC Class A Common Stock to be redeemed.
		The address of Continental Stock Transfer & Trust Company, FTAC’s transfer agent, is listed under the question “Who can help answer my questions?” below.
		Holders of Units must elect to separate the Units into the underlying shares of FTAC Class A Common Stock and FTAC Warrants prior to exercising redemption rights with respect to the shares of FTAC Class A Common Stock. If holders hold their FTAC Units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the FTAC Units into the underlying shares of FTAC Class A Common Stock and FTAC Warrants, or if a holder holds FTAC Units registered in its own name, the holder must contact Continental Stock Transfer & Trust Company, FTAC’s transfer agent, directly and instruct them to do so.
		Holders of shares of FTAC Class A Common Stock will be entitled to request that their shares of FTAC Class A Common Stock be redeemed for a pro rata portion of the amount on deposit in the Trust Account as of two (2) business days prior to the consummation of the Business Combination, including interest earned on the funds held in the Trust Account and not previously released to FTAC (net of taxes payable). For illustrative purposes, as of                 , 2021, this would have amounted to approximately $         per issued and outstanding shares of FTAC Class A Common Stock. However, the proceeds deposited in the Trust Account could become subject to the claims of FTAC’s creditors, if any, which would have priority over the claims of holders of shares of FTAC Class A Common Stock. Therefore, the per share distribution from the Trust Account in such a situation may be less than originally expected due to such claims. It is expected that the funds to be distributed to holders of shares of FTAC Class A Common Stock electing to redeem their shares of FTAC Class A Common Stock will be distributed promptly after the consummation of the Business Combination.
		A holder of shares of FTAC Class A Common Stock, together with any affiliate of such holder and any person with whom such holder is acting in concert or as a “group” (as defined under Section 13(d)(3) of the Exchange Act), may not seek to have more than 15% of the aggregate shares of FTAC Class A Common Stock redeemed without the consent of FTAC.
		Any request for redemption, once made by a holder of shares of FTAC Class A Common Stock, may be withdrawn at any time up to two (2) business days prior to the vote on the Business Combination Proposal. Furthermore, if a holder of a shares of FTAC Class A Common Stock delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply

 

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		request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of shares of FTAC Class A Common Stock electing to redeem their shares will be distributed promptly after the completion of the Initial Business Combination. You may make such request by contacting Continental Stock Transfer & Trust Company at the phone number or address listed under the question “Who can help answer my questions?” below.
		Any corrected or changed written exercise of redemption rights must be received by Continental Stock Transfer & Trust Company, FTAC’s transfer agent, two (2) business days prior to the vote taken on the FTAC Stockholder Matters at the Special Meeting. No request for redemption will be honored unless the holder’s shares of FTAC Class A Common Stock have been delivered (either physically or electronically) to Continental Stock Transfer & Trust Company, at least two (2) business days prior to the Special Meeting.
		If you exercise your redemption rights, then you will be exchanging your shares of FTAC Class A Common Stock for cash and will not be entitled to Company Common Shares upon consummation of the Business Combination.
		If you are a holder of shares of FTAC Class A Common Stock and you exercise your redemption rights, such exercise will not result in the loss of any FTAC Warrants that you may hold.
Q. If I am a FTAC Warrant holder, can I exercise redemption rights with respect to my FTAC Warrants?		A. No. The holders of FTAC Warrants have no redemption rights with respect to such securities.
Q. If I am a FTAC Unit holder, can I exercise redemption rights with respect to my FTAC Units?		A. No. Holders of outstanding FTAC Units must separate the underlying shares of FTAC Class A Common Stock and FTAC Warrants prior to exercising redemption rights with respect to the shares of FTAC Class A Common Stock.   If you hold FTAC Units registered in your own name, you must deliver the certificate for such FTAC Units to Continental Stock Transfer & Trust Company, FTAC’s transfer agent, with written instructions to separate such FTAC Units into shares of FTAC Class A Common Stock and FTAC Warrants. This must be completed far enough in advance to permit the mailing of the share certificates back to you so that you may then exercise your redemption rights upon the separation of the shares of FTAC Class A Common Stock from the FTAC Units. See “How do I exercise my redemption rights?” above. The address of Continental Stock Transfer & Trust Company is listed under the question “Who can help answer my questions?” below.
		If a broker, bank, or other nominee holds your FTAC Units, you must instruct such broker, bank or nominee to separate your FTAC Units. Your nominee must send written instructions by facsimile to Continental Stock Transfer & Trust Company, FTAC’s transfer agent. Such written instructions must include the number of FTAC Units to be split and the nominee holding such FTAC Units. Your nominee must also initiate electronically, using DTC’s deposit withdrawal at custodian (DWAC) system, a withdrawal of the relevant FTAC Units and a

 

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		deposit of the number of shares of FTAC Class A Common Stock and FTAC Warrants represented by such FTAC Units. This must be completed far enough in advance to permit your nominee to exercise your redemption rights upon the separation of the shares of FTAC Class A Common Stock from the FTAC Units. While this is typically done electronically the same business day, you should allow at least one full business day to accomplish the separation. If you fail to cause your shares of FTAC Class A Common Stock to be separated in a timely manner, you will likely not be able to exercise your redemption rights.
Q. Do I have appraisal rights if I object to the proposed Business Combination?		A. No. Neither FTAC Stockholders nor its unit holders or warrant holders have appraisal rights in connection with the Business Combination under the DGCL.
Q. I am an FTAC warrant holder. Why am I receiving this proxy statement/prospectus?		A. As a holder of FTAC Warrants, which will become Company Warrants, you will be entitled to purchase one Company Common Share in lieu of one share of FTAC Class A Common Stock at a purchase price of $11.50 upon consummation of the Business Combination. This proxy statement/prospectus includes important information about the Company and the business of Paysafe and its subsidiaries following consummation of the Business Combination. Since holders of FTAC Warrants will become holders of Company Warrants and may become holders of Company Common Shares upon consummation of the Business Combination, we urge you to read the information contained in this proxy statement/prospectus carefully.
Q. What happens to the funds deposited in the Trust Account after consummation of the Business Combination?		A. Of the net proceeds of FTAC’s IPO (including the net proceeds of the underwriters’ partial exercise of their over-allotment option) and simultaneous private placements, a total of $1,467,033,450 was placed in the Trust Account following the IPO. After consummation of the Business Combination, the funds in the Trust Account will be released to FTAC and used by FTAC to pay holders of the shares of FTAC Class A Common Stock who exercise redemption rights, to pay a portion of the Closing Cash Consideration to PGHL, to pay fees and expenses incurred in connection with the Business Combination (including fees of an aggregate of approximately $51,346,170 in deferred underwriter fees to certain underwriters in connection with the IPO) and for expenses related to prior proposed business combinations that were not consummated.
Q. What happens if a substantial number of FTAC Stockholders vote in favor of the Business Combination Proposal and exercise their redemption rights?		A. Holders of shares of FTAC Class A Common Stock may vote in favor of the Business Combination and exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the Trust Account and the number of FTAC Stockholders are substantially reduced as a result of redemption by holders of shares of FTAC Class A Common Stock. The FTAC Charter provides that the Business Combination will not be consummated if, upon the consummation of the Business Combination, FTAC does not have at least $5,000,001 in net tangible assets after giving effect to the payment of amounts that FTAC will be required to pay to redeeming stockholders upon consummation of the Business Combination. In the event of significant stockholder redemptions, with fewer shares of FTAC Class A Common Stock and fewer holders of shares of FTAC Class A Common Stock, the trading market for Company Common Shares may be less liquid than the market for shares of FTAC Class A Common Stock was prior to the consummation of the Business Combination and one of PGHL’s conditions to

 

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		consummation of the Business Combination may not be satisfied if the redemptions result in the Available Cash Amount being less than $3,400,000,000. In addition, in the event of significant stockholder redemptions, the Company may not be able to meet the listing standards for the NYSE. FTAC, the Company and the Paysafe Parties have certain obligations in the Merger Agreement to use reasonable best efforts in connection with the Business Combination, including with respect to satisfying the NYSE listing condition. It is a condition precedent to the Paysafe Parties’ obligation to consummate the Business Combination that the Available Cash Amount not be less than $3,400,000,000. Unless waived in accordance with the Merger Agreement, if either the NYSE listing condition in the Merger Agreement or the Available Cash Amount condition is not met, the Business Combination will not be consummated.
Q. What happens if the Business Combination is not consummated?		A. If FTAC does not complete the Business Combination with the Company and the Paysafe Parties (or another initial business combination) by August 21, 2022, FTAC must cease operation and redeem 100% of the outstanding shares of FTAC Class A Common Stock, at a per-share price, payable in cash, equal to the amount then held in the Trust Account (approximately $        per share as of                 , 2021).
Q. When do you expect the Business Combination to be completed?		A. The Business Combination will be consummated as promptly as practicable (and in any event no later than 12:00 p.m. Eastern Time on the third (3rd) business day) following the satisfaction, or waiver, of the conditions precedent to Closing set forth in the Merger Agreement, including the approval of the Business Combination Proposal by the holders of FTAC Common Stock. For a description of the conditions for the completion of the Business Combination, see the section entitled “Proposal No. 1—The Business Combination Proposal—The Merger Agreement—Conditions to Closing of the Transaction.”
Q. What do I need to do now?		A. FTAC urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a stockholder and/or warrant holder of FTAC. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.
Q. How do I vote?		A. If you are a holder of record of FTAC Common Stock on the record date, you may vote remotely at the Special Meeting or by submitting a proxy for the Special Meeting. The Special Meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast. You will be able to attend the Special Meeting online, vote during the Special Meeting by visiting                 and entering the control number on your proxy card. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the meeting and vote remotely, obtain a proxy from your broker, bank or nominee and a control number from Continental Stock Transfer and Trust Company, available once you have received your proxy by emailing proxy@continentalstock.com.

 

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Q. If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?		A. No. Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-routine matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. We believe the proposals presented to the FTAC Stockholders at the special meeting will be considered non-routine and, therefore, your broker, bank or nominee cannot vote your shares without your instruction on any of the proposals presented at the Special Meeting. If you do not provide instructions with your proxy, your broker, bank or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a broker, bank or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the Special Meeting. Your bank, broker or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.
Q. May I change my vote after I have mailed my signed proxy card?		A. Yes. FTAC Stockholders of record may send a later-dated, signed proxy card to FTAC’s transfer agent at the address set forth at the end of this section so that it is received prior to the vote at the Special Meeting or attend the Special Meeting by visiting                 , entering the control number on your proxy card and voting. Stockholders also may revoke their proxy by sending a notice of revocation to FTAC’s transfer agent, which must be received by FTAC’s transfer agent prior to the vote at the Special Meeting.
Q. What happens if I fail to take any action with respect to the Special Meeting?		A. If you fail to take any action with respect to the Special Meeting and the Business Combination is approved by FTAC Stockholders and consummated, you will become a stockholder and/or warrant holder of the Company. If you fail to take any action with respect to the Special Meeting and the Business Combination is not approved, you will continue to be a stockholder and/or warrant holder of FTAC.
Q. What should I do if I receive more than one set of voting materials?		A. FTAC Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your FTAC Common Stock.
Q. What happens if I sell my FTAC Common Stock before the Special Meeting?		A. The record date for the Special Meeting is earlier than the date of the Special Meeting and earlier than the date the Business Combination is expected to be completed. If you transfer your shares after the applicable record date, but before the Special Meeting date, unless you grant a proxy to the transferee, you will retain your right to vote at the Special Meeting.

 

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Q. Who can help answer my questions?		A. If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact FTAC’s proxy solicitor as follows:
		Morrow Sodali LLC 470 West Avenue Stamford, CT 06902 Individuals call toll-free (800) 662-5200 Banks and Brokers call (203) 658-9400 BFT.info@investor.morrowsodali.com   You may also obtain additional information about FTAC from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of shares of FTAC Class A Common Stock and you intend to seek redemption of your shares, you will need to deliver your stock (either physically or electronically) to FTAC’s transfer agent at the address below at least two (2) business days prior to the Special Meeting. If you have questions regarding the certification of your position or delivery of your stock for redemption, please contact FTAC’s transfer agent as follows:
		Continental Stock Transfer & Trust Company Attention: Mark Zimkind 1 State Street, 30th Floor New York, New York 10004 mzimkind@continentalstock.com

 

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RISK FACTORS

Unless otherwise stated or unless the context otherwise requires, all references to “we,” “us,” “our,” “Paysafe” or the “Company” refer to (i) the Accounting Predecessor prior to the consummation of the Business Combination and to (ii) Paysafe Limited following the consummation of the Business Combination.

The following risk factors apply to the business and operations of the Company and will also apply to our business and operations following the completion of the Business Combination. These risk factors are not exhaustive, and investors are encouraged to perform their own investigation with respect to the business, financial condition and prospects of the Company and our business, financial condition and prospects following the completion of the Business Combination. You should carefully consider the following risk factors in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business or financial condition. The following discussion should be read in conjunction with our financial statements and notes to the financial statements included herein.

Risks Related to Paysafe

Risks Related to COVID-19

The ongoing COVID-19 pandemic, including the resulting global economic uncertainty and measures taken in response to the pandemic, could materially impact our business and future results of operations and financial condition.

The COVID-19 pandemic has disrupted the economy and put unprecedented strains on governments, health care systems, businesses and individuals around the world. The impact and duration of the COVID-19 pandemic are difficult to assess or predict. It is even more difficult to predict the impact on the global economic market, which will depend upon the actions taken by governments, businesses and other enterprises in response to the pandemic. The pandemic has already caused, and is likely to result in further, significant disruption of global financial markets and economic uncertainty. The pandemic has resulted in authorities implementing numerous measures to try to contain the COVID-19 pandemic, such as travel bans and restrictions, quarantines, shelter in place or total lock-down orders, and business limitations and shutdowns. Such measures have significantly contributed to rising unemployment and negatively impacted consumer and business spending. On March 17, 2020 and March 18, 2020, as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of uncertainty in the global markets resulting from the COVID-19 pandemic, we drew-down $216,000,000 under our revolving credit facility at an interest rate equal to 2.75% + USD LIBOR. We subsequently repaid all outstanding borrowings under our revolving credit facility during the period between August 17, 2020 and October 13, 2020. The extent to which COVID-19 impacts the Company’s financial results will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions taken by governments to curtail or treat its impact, including shelter in place directives, business limitations and shutdowns, travel bans and restrictions, loan payment deferrals (whether government-mandated or voluntary), moratoriums on debt collection activities and other actions, which, if imposed or extended, may impact the economies in which the Company now or in the future operates in. Adverse market conditions resulting from the spread of COVID-19 could materially adversely affect our business and the value of our shares.

Our merchants, particularly in industries most impacted by the COVID-19 pandemic, including the retail, restaurant, hotel, hospitality, consumer discretionary and travel industries and companies whose customers operate in impacted industries, may reduce or delay their technology-driven transformation initiatives, which could materially and adversely impact our business. Further, as a result of the COVID-19 pandemic, we have experienced, and may continue to experience, slowed growth or decline in new demand for our products and services and lower demand from our existing merchants for expansion within our products and services, as well

 

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as existing and potential merchants reducing or delaying purchasing decisions. For example, while our Digital Wallet business is showing recovery as sporting events resume, if the COVID-19 pandemic continues and authorities implement measures to contain the pandemic that have the effect of decreasing or halting altogether sporting events, our Digital Wallet could be materially adversely affected. We have experienced, and may continue to experience, an increase in prospective merchants seeking lower prices or other more favorable contract terms and current merchants attempting to obtain concessions on the terms of existing contracts, including requests for early termination or waiver or delay of payment obligations, all of which has adversely affected and could materially adversely impact our business, results of operations and overall financial condition in future periods. Further, we may face increased competition due to changes to our competitors’ products or services, including modifications to their terms, conditions and pricing that could materially adversely impact our business, results of operations and overall financial condition in future periods.

The COVID-19 pandemic could cause our third-party service providers such as data center hosting facilities and cloud computing platform providers, which are critical to our infrastructure, to shut down their business, experience security incidents that impact our business, delay or disrupt performance or delivery of services or experience interference with the supply chain of hardware required by their systems and services, any of which could materially adversely affect our business. Further, the COVID-19 pandemic has resulted in our employees and those of many of our customers working from home and conducting work via the internet, and if the network and infrastructure of internet providers becomes overburdened by increased usage or is otherwise unreliable or unavailable, our employees’ and our customers’ employees’ access to the internet to conduct business could be negatively impacted. Limitations on access or disruptions to services or goods provided by or to some of our suppliers upon which our platform and business operations rely could interrupt our ability to provide our platform, decrease the productivity of our workforce and significantly harm our business operations, financial condition and results of operations. In addition, our technology platforms and the other systems or networks used in our business may experience an increase in attempted cyber-attacks, targeted intrusions, ransomware and phishing campaigns seeking to take advantage of shifts to employees working remotely using their household or personal internet networks as a result of the COVID-19 pandemic. The success of any of these unauthorized attempts could substantially impact our technology platforms, the proprietary and other confidential data contained therein or otherwise stored or processed in our operations, and ultimately our business. Any actual or perceived security incident also may cause us to incur increased expenses to improve our security controls and to remediate security vulnerabilities. Additionally, we may experience an increased volume of unanticipated customer requests for support (resulting in increased volume to our customer support and operations centers) and regulatory requests for information and support or additional regulatory requirements, which could require additional resources and costs to address.

While the current macroeconomic environment as a result of the COVID-19 outbreak has adversely impacted general consumer and merchant spending with a more pronounced impact on travel and events verticals, the spread of COVID-19 has also accelerated the shift from in-store shopping and traditional in-store payment methods (e.g., credit cards, debit cards, cash) towards e-commerce and digital payments and resulted in increased customer demand for safer payment and delivery solutions (e.g. contactless payment methods, buy online and pick up in store) and a significant increase in online spending in certain verticals that have historically had a strong in-store presence. Our eCash Solutions segment has benefited from these behavioral shifts, including a significant increase in net new active accounts and payments volume. To the extent that consumer preferences revert to pre-COVID-19 behaviors as mitigation measures to limit the spread of COVID-19 are lifted or relaxed, our business, financial condition, and results of operations could be adversely impacted.

The spread of COVID-19 has caused us to modify our business practices to help minimize the risk of the pandemic to our employees, our partners, our merchants and their customers, and the communities in which we participate, which could negatively impact our business. In response to the COVID-19 pandemic, we have enabled our employees to work remotely, implemented travel restrictions for all non-essential business and shifted company events to virtual-only experiences, and we may deem it advisable to similarly alter, postpone or cancel additional events in the future. There is no certainty that the measures we have taken will be sufficient to

 

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mitigate the risks posed by the pandemic. If the COVID-19 pandemic worsens, especially in regions where we have offices, our business activities originating from affected areas could be adversely affected. Disruptive activities could include additional business closures in impacted areas, further restrictions on our employees’ and service providers’ ability to travel, impacts to productivity if our employees or their family members experience health issues and potential delays in hiring and onboarding of new employees. We may take further actions that alter our business operations as may be required by local, provincial, state or federal authorities or that we determine are in the best interests of our employees. Such measures could negatively affect our sales and marketing efforts, sales cycles, employee productivity or customer retention, any of which could harm our financial condition and business operations.

Additionally, diversion of management focus to address the impacts of the COVID-19 pandemic could potentially disrupt our operating plans. The extent and continued impact of the COVID-19 pandemic on our business will depend on certain developments, including: the duration and spread of the outbreak; government responses to the pandemic; the impact on our customers and our sales cycles; the impact on customer, industry or employee events; and the effect on our partners, merchants and their customers, third-party service providers, customers and supply chains, all of which are uncertain and cannot be predicted. Because of our largely subscription-based business model, the effect of the COVID-19 pandemic may not be fully reflected in our results of operations and overall financial condition until future periods, if at all.

To the extent that the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

Risks Related to Paysafe’s Business and Industry

Our focus on specialized industry verticals can increase our risks relative to other companies in our industry.

We focus on specialized and high-risk industry verticals, including iGaming (which encompasses a broad selection of online betting related to sports, esports, fantasy sports, poker and other casino games), digital trading, cryptocurrencies, nutraceuticals, Cannabidiol (CBD) products and multi-level marketing, which represented approximately $640 million, or 45%, of our revenue for the year ended December 31, 2019. Although this focus distinguishes us from industry peers, it also increases risks inherent in our business and broader industry. For example:

 

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the industry verticals we serve are extensively regulated, and their regulation is evolving and subject to frequent change and uncertain interpretation. As a result of regulatory action, we have had to exit a market altogether, limit services we provide, or otherwise modify our business in ways that have adversely impacted profitability. We are also exposed to a higher risk of losses resulting from related investigations, regulatory actions and litigation. See “—Regulatory, Legal and Tax Risks—We generate a significant portion of our revenue by processing online payments for merchants and customers engaged in the online gambling and foreign exchange trading sectors”;

 

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serving these high-risk industry verticals routinely creates greater operational complexity, including for our compliance, legal and risk functions;

 

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with respect to certain industry verticals (such as CBD or iGaming), the laws related to, or the legal status of, such verticals vary significantly among the countries in which we operate and, in the U.S., from state to state, further adding operational complexity particularly in compliance and risk mitigation;

 

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we may have difficulty obtaining or maintaining relationships with merchants and third-party service providers for our business, such as banks and payment card networks, including as a result of their assessment and appetite for the compliance, cost, government regulation, risk of consumer fraud or public pressure that can be associated with some of the specialized industry verticals that we operate in. For example, merchants may compel us to change our operations or add bespoke or enhanced internal controls in order to do business with them; and

 

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from time to time, the industry verticals we serve (and we by association) are the subject of negative publicity, which can harm our brand and deter consumers and merchants from adopting our products and services and influence our third-party service providers’ assessment of our business.

The enhanced risks resulting from our specialized focus can materialize suddenly and without warning, which may result in increased volatility in our results of operations compared with other companies in our industry that do not provide services to companies in high-risk industry verticals, and could result in a material adverse effect on our business, financial condition, results of operations and future prospects.

Cyberattacks and security vulnerabilities could result in loss of customer and merchant funds and personal data, including financial data, as well as serious harm to our reputation, business, and financial condition.

Our operations rely on the secure processing, transmission and storage of confidential, proprietary, personal, financial and other information in our computer systems and networks. Our information technology (“IT”) security systems, software and networks and those of the customers and third parties with whom we interact may be vulnerable to unauthorized access (from within or by third parties), computer viruses or other malicious code, or other cybersecurity threats, which could result in the unauthorized access, loss, theft or disclosure of confidential, proprietary, or personal information relating to merchants, customers and employees. Such access, loss, theft, or disclosure of confidential, proprietary, or personal information could result in identity theft, third party access to unique pin codes, the loss of card payment details that are stored on our system, and/or the loss of funds stored in customers’ ewallets and prepaid cards. We, like other financial technology organizations, are routinely subject to cybersecurity threats and our technologies, IT systems and networks have been victims of cyberattacks in the past. Information security risks for payment and technology companies such as ours have significantly increased in recent years in part because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties. Additionally, geopolitical events and resulting government activity could also lead to information security threats and attacks by affected jurisdictions and their sympathizers.

We are responsible for data security for ourselves and for third parties with whom we partner, including with respect to complying with rules and regulations established by the payment networks and card networks. These third parties include merchants, our distribution partners, our third-party payment processors and other third-party service providers and agents. We and other third parties collect, process, store and/or transmit personal information, such as names, addresses, social security numbers, credit or debit card numbers, expiration dates, driver’s license numbers and bank account numbers. We have ultimate liability to the payment networks and our partner banks for our failure or the failure of third parties with whom we contract to protect this data in accordance with payment network requirements. The loss, destruction or unauthorized modification of merchant or consumer data by us or our contracted third parties could result in significant fines, sanctions, proceedings or actions against us by governmental bodies, the payment networks, consumers, merchants or others, and could harm our business and reputation.

Certain of our products particular to our eCash business are identified by unique pin codes assigned to them at the point of sale when a customer uses the voucher on a merchant website. These active voucher pins are stored on our servers. Due to the anonymous nature of these pins, a theft and subsequent fraudulent utilization of pins from a server (either due to third-party hacking or due to internal fraud by an employee) could result in the original voucher holder’s inability to use his or her vouchers. While customer verification and fraud management procedures are in place to mitigate this risk, we would honor the payment by the original voucher holder from our own funds and therefore incur a loss. Our Digital Wallet business, on the other hand, could suffer from a loss of funds if a third-party hacker or an employee is successful in taking over one of our customer’s accounts. Additionally, loss of payment card information would also lead us to incur card re-issuing costs, which depending on the size of the data breach could be significant. Significant losses incurred as a result of such activity would have a material adverse effect on our results of operations and, depending on the nature of such

 

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fraudulent attacks, we may be required to notify relevant regulators and other authorities such as law enforcement. Any adverse publicity as a result of such theft and fraudulent utilization could adversely affect our reputation and the demand for our products.

Despite various mitigation efforts that we undertake, there can be no assurance that we will be immune to these risks and not suffer material security incidents and resulting losses in the future, or that our insurance coverage would be sufficient to cover all related financial losses. The techniques used to obtain unauthorized, improper, or illegal access to our systems, our data (including our confidential business information and intellectual property rights) or our customers’ data, to disable or degrade our services, demand ransom or to sabotage our systems are constantly evolving and have become increasingly complex and sophisticated. These techniques may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. Threats to our IT systems and our associated third parties’ IT systems may result from human error, fraud or malice on the part of employees or third parties, including state-sponsored organizations with significant financial and technological resources, or from accidental technological failure. For example, certain of our employees require access to sensitive data that could be used to commit identity theft or fraud. While we have internal controls in place surrounding system access and segregation of duties, if unauthorized individuals gain access to this data, the risk of malfeasance is heightened. Concerns about security increase when we transmit information electronically, even though we encrypt certain communications and data to reduce this risk, because such transmissions can be subject to attack, interception or loss. Also, computer viruses can be distributed and spread rapidly over the internet and could infiltrate our systems or those of our contracted third parties. Denial of service, ransomware, or other attacks could be launched against us for a variety of purposes, including interfering with our services or to create a diversion for other malicious activities. These or similar types of actions and attacks could disrupt our delivery of services or make them unavailable. As cybersecurity threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. Any of the risks described above could materially adversely affect our overall business, financial condition and results of operations.

We have experienced and will likely continue to regularly experience denial-of-service and other cyberattacks and security events. In such circumstances, our data encryption practices and other protective measures have not always prevented and in the future may not prevent, as applicable, unauthorized access service disruption or system sabotage. For example, in November 2020, we discovered that we were the target of a cybersecurity attack that involved an outside actor attempting to exploit a potential vulnerability of a website used by part of our U.S. business. As a result of our investigation, we identified evidence of suspicious activity on the website that potentially impacted approximately 100,000 merchants and agents. Following the discovery of the cybersecurity incident, we began undertaking remediation efforts, took steps to prevent further unauthorized access and closed the website. We reported the data breach to the appropriate authorities. In addition, we provided the relevant individuals, at no cost to them, with two years of credit monitoring and identity protection services, and established a call center to respond to inquiries regarding the data breach.

Regardless of whether an actual or perceived breach is attributable to our products, such a breach could, among other things:

 

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interrupt our operations,

 

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result in our systems or services being unavailable,

 

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result in improper disclosure of data,

 

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result in a demand for a ransom payment,

 

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materially harm our reputation and brands,

 

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result in significant regulatory scrutiny and legal and financial exposure,

 

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cause us to incur significant remediation costs,

 

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lead to loss of customer confidence in, or decreased use of, our products and services,

 

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divert the attention of management from the operation of our business,

 

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result in significant compensation or contractual penalties from us to our customers and their business partners as a result of losses to them or claims by them, and

 

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adversely affect our business and results of operations.

In addition, a significant cybersecurity breach of our systems or communications could result in payment networks prohibiting us from processing transactions on their networks or the loss of our sponsor banks that facilitate our participation in the payment networks, either of which could materially impede our ability to conduct our business. We may also be subject to liability for claims relating to misuse of personal information, such as unauthorized marketing, or violation of data privacy laws. In addition, our agreements with our sponsor banks and our third-party payment processors (as well as payment network requirements) require us to take certain protective measures to ensure the confidentiality of merchant and consumer data. Any failure to adequately comply with these protective measures could result in fees, penalties, litigation or termination of our sponsor bank agreements. Although we generally require that our agreements with distribution partners or our service providers who may have access to merchant or consumer data include confidentiality obligations that restrict these parties from using or disclosing any merchant or consumer data except as necessary to perform their services under the applicable agreements, we cannot guarantee that these contractual measures will be followed or will be adequate to prevent the unauthorized access, use, modification, destruction or disclosure of data or allow us to seek damages from the contracted party. In addition, many of our merchants are small and medium businesses that may have fewer resources dedicated to data security and may thus experience data breaches. Any unauthorized use, modification, destruction or disclosure of data could result in protracted and costly litigation, and cause us to incur significant losses.

We are vulnerable to the effects of chargebacks, merchant insolvency and consumer deposit settlement risk.

We are exposed to the effect of chargebacks and merchant insolvency in our Integrated Processing Solutions business. In that business, we are liable to various acquiring banks for chargebacks incurred by our merchants where the merchants are unable to meet liabilities arising as a result of those chargebacks. If the average chargeback rate on any of our merchant portfolios at any acquiring bank exceeds the maximum average chargeback rate permitted by the card agreements, we will be required to take steps to reduce the average chargeback rate so that it falls below the maximum permitted rate or risk losing our relationship with that acquiring bank. Those steps might include processing more transactions for merchants who have lower chargeback rates to produce a lower average chargeback rate for the portfolio as a whole or terminating relationships with merchants who have higher chargeback rates, which could in turn lead to a material loss of revenue for us. Chargebacks may arise as individual claims or as multiple claims relating to the same facts or circumstances. For example, the insolvency or cessation of a merchant doing business could cause numerous individual customers to bring claims at once which, either singly or in aggregate, could have a material adverse effect on our results of operations, financial condition and future prospects. Similarly, chargebacks or fraud related to our customers or merchants in our Digital Wallet business could cause the payment card schemes of which we are a member in Europe to require us to implement additional and potentially costly controls, and ultimately disqualify us from processing transactions if satisfactory controls are not maintained. Further, if any of the services we offer are deemed to have caused or contributed to illegal activity, customers, consumer protection agencies and regulatory firms could band together to initiate chargeback card payments or ACH reversals for transactions associated with the activity in question.

In our Digital Wallet business, we offer our merchants a “no chargeback policy.” A chargeback is the return of funds to a customer and in this context relates to a reversal of unauthorized charges to a customer’s credit card, for example, as a result of fraud or identity theft. Under our “no chargeback policy,” we agree to allow merchants who qualify under our vetting policy to retain all monies received from our NETELLER and Skrill

 

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digital wallet holders and undertake not to request reimbursement from such merchants in respect of chargebacks incurred. In such cases, the full amount of the disputed transaction is charged back to us and our credit card processor may levy additional fees against us unless we can successfully challenge the chargeback. We believe that our “no chargeback policy” is a key factor in a merchant’s decision to use our Digital Wallet services.

Our businesses are also subject to merchant credit risk in respect of non-payment for products provided and services rendered or non-reimbursement of costs incurred. The contracts we enter into may require significant expenditure prior to merchant payments and may expose us to potential credit risk or may require us to use our available bank facilities in order to meet payment obligations.

Additionally, we are exposed to risk associated with the settlement of consumer deposits. Digital Wallet deposits from financial institutions, such as bank accounts, are credited to customer accounts before settlement of funds is received. Thus, there is a risk that the funds may not be settled or may be recalled due to insufficient funds or fraud reasons, exposing us to the risk of negative customer wallet balances and bad debt. Further, Digital Wallet prepaid card deposits or transactions made by consumers may be charged back by consumers resulting in a negative balance and loss on our accounts. If we are unable to effectively manage and monitor these risks, they could have a material adverse effect on our results of operations, financial condition and future prospects.

Our success depends on our relationships with banks, payment card networks, issuers and financial institutions.

The nature of our business requires us to enter into numerous commercial and contractual relationships with banks, card networks, issuers and financial institutions. We depend on these relationships to operate on a day-to-day basis. If we are unsuccessful in establishing, renegotiating or maintaining mutually beneficial relationships with these parties, our business may be harmed. In addition, these relationships are subject to a number of risks, including the following:

 

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loss of banking relationships: we rely on the use of numerous bank accounts in the jurisdictions in which we operate for the efficient delivery of our services. A loss of any important banking relationship could have a material effect on our business and financial performance. For example, in the past, we have experienced the loss of three important banking relationships for our Digital Wallet business, which resulted in a higher concentration risk with our remaining banking partners;

 

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new banking relationships: as we are considered a high risk customer for our banks and payment partners, there is a long lead time associated with establishing new or replacing banking and non-bank payment partner relationships due to the extensive level of compliance due diligence required by the banks and providers;

 

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loss of a banking product: many of our products rely on banks providing payments capability to us. We may lose that service although still maintain the banking relationship as the bank would, for example, continue to provide us with foreign exchange services. Such a loss of services from a bank (or banks) could have a material effect on our business and financial performance including on the geographies, customers and associated payment volumes which we are able to serve;

 

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loss of an alternative payment method: many of our products rely on processing relationships and connections to alternative or local payment methods, either direct or indirect via aggregators. Such a loss of payment methods or providers could have a material effect on our business and financial performance, including on the geographies, customers and associated payment volumes which we are able to serve;

 

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downstream correspondent banking risk: if the correspondent banks of our banks (or the underlying banks of our non-bank payment providers) change their risk appetite, this could lead to restrictions with or rejections of our products’ payment flows which could have a material effect on our business and financial performance, including on the geographies, customers and associated payment volumes which we are able to serve;

 

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failure of banks and financial institutions: across our businesses, we hold our own, merchants’ and customers’ funds on deposit at various banks and financial institutions. In our Digital Wallet and eCash businesses, we receive funds from our merchants and customers into a number of bank accounts operated by various banks in the countries in which we operate. We then transfer funds, from the various banks in the countries in which we operate, to multiple banks such that amounts equivalent to all merchant and customer funds are held in segregated accounts in accordance with applicable regulatory requirements. While we have controls in place intended to monitor and mitigate this risk, there can be no guarantee that the banks in which funds are held will not suffer any kind of financial difficulty or commence any insolvency or bankruptcy proceedings, or any moratorium, composition, arrangement or enforcement action or any other kind of analogous event in any jurisdiction that may result in the permanent loss of some or all of our own funds or the funds of merchants or customers, which could have a material adverse effect on our business and financial performance;

 

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Visa and Mastercard operating rules: we are subject to the operating rules and regulations of Visa and Mastercard and changes to those operating rules and regulations could have a material adverse effect on our business. If a merchant or an independent sales organization (“ISO”) fails to comply with the applicable requirements of the card associations and networks, we or the merchant or ISO could be subject to a variety of fines or penalties that may be levied by the card associations or networks. If we cannot collect or pursue collection of such amounts from the applicable merchant or ISO, we may have to bear the cost of such fines or penalties, resulting in lower earnings for us. Policy changes by Visa and/or Mastercard could impact the merchant category code assignments to our business which can in turn impact our acceptance and authorization rates as well as our banking provider risk appetite assessment and costs. Policy changes can also impact our ability to acquire card transactions on a cross-border basis in particular markets, for example depending on the merchant country of registration;

 

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fines and assessments: the payment card schemes and their processing service providers may pass on fines and assessments in respect of fraud or chargebacks related to our merchants or disqualify us from processing transactions if satisfactory controls are not maintained;

 

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risk management policies: banks and financial institutions that provide us with services enabling us to operate our payments platform could reassess our risk profile due to the portfolio of products and services we offer and/or regard us as being non-compliant with certain laws or regulations (e.g., in relation to the regulation of e-money, cross border transactions or the provision of services to online gambling operators) that are applicable in their relevant jurisdictions or may regard our customers as being non-compliant. Banks and financial institution may choose to withdraw from certain markets as a result of their internal risk management policies and may, in compliance with their regulatory obligations or internal risk and compliance policies, freeze the funds of our merchants and customers. In addition, consolidation in the banking sector may result in one of our banking providers being acquired by another bank, which may then prompt a change in our provider’s risk appetite and impacts our relationship with that provider;

 

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potential competitors: banks, payment card schemes, issuers and financial institutions may view us as being a competitor to their own business and may cease doing business with us as a result; and

 

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fee increases: we are required to pay interchange and assessment fees, processing fees and bank settlement fees to third-party payment processors and financial institutions. From time to time, payment card networks have increased, and may increase in the future, the interchange fees and assessments that they charge for each transaction processed using their networks. Banks occasionally raise our fees in order to compensate for the increased risk, controls and anti-money laundering monitoring costs the bank may incur due to increased regulatory requirements or scrutiny. Additionally, if one of our banking providers cease to supply us services, that could lead to an increase in costs to continue to offer those services via alternative means, particularly where the service is provided in multiple currencies due to the incursion of additional foreign transaction fees.

 

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If, for any reason, any banks, payment card schemes, issuers or financial institutions cease to supply us with the services we require to conduct our business, or the terms on which such services are provided were to become less favorable or be cancelled, or a contractual claim made against us, it could impact our ability to provide our payment services, or the basis on which we are able to provide such services. This, and any of the factors set forth above, could result in a loss for us, which could have a material adverse effect on our results of operations, financial condition and future prospects.

We rely on third parties in many aspects of our business, which creates additional operational risk.

We rely on third parties in many aspects of our business, including the following:

 

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payment processing services from various service providers in order to allow us to process payments for merchants and customers and to properly code such transactions;

 

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payment networks;

 

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connectivity, routing and payment orchestration providers;

 

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banks;

 

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payment processors;

 

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payment gateways that link us to the payment card and bank clearing networks to process transactions;

 

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third parties that provide certain outsourced customer support functions, which are critical to our operations; and

 

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third parties that provide IT-related services including data center facilities and cloud computing and compliance and risk functions.

This reliance exposes us to increased operational risk. These third parties may be subject to financial, legal, regulatory and labor issues, cybersecurity incidents, privacy breaches, service terminations, disruptions or interruptions, or other problems, which may impose additional costs or requirements on us or prevent these third parties from providing services to us or our customers on our behalf, which could have a material adverse effect on our results of operations, financial condition and future prospects.

The European Banking Authority (“EBA”) published guidance on outsourcing arrangements that became effective on September 30, 2019 and is applicable to certain of our businesses. These guidelines set out strict standards to follow when outsourcing critical or important functions that have a strong impact on a financial institution’s risk profile or on its internal control framework. Although we have implemented processes to ensure compliance with the required standards, a failure to meet these requirements could lead to regulatory challenge and require remediation and/or fines or penalties if we are found to be in non-compliance with the relevant regulation.

In addition, these third parties may breach their agreements with us, disagree with our interpretation of contract terms or applicable laws and regulations, refuse to continue or renew these agreements on commercially reasonable terms or at all, fail or refuse to process transactions or provide other services adequately, take actions that degrade the functionality of our services, impose additional costs or requirements on us or our customers, or give preferential treatment to competitive services. Some of these third party service providers are, or may become, owned by our competitors. There can be no assurance that third parties who provide services directly to us or our customers on our behalf will continue to do so on acceptable terms, or at all. If any third parties do not adequately or appropriately provide their services or perform their responsibilities to us or our customers on our behalf, we may be unable to procure alternatives from other third parties in a timely and efficient manner and on acceptable terms, or at all, and we may be subject to business disruptions, losses or costs to remediate any of the deficiencies, customer dissatisfaction, reputational damage, legal or regulatory proceedings, or other adverse consequences, any of which could have a material adverse effect on our results of operations, financial condition and future prospects.

 

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Our Integrated Processing Solutions business’s revenues from the sale of services to merchants that accept Visa cards and Mastercard cards are dependent on our continued financial institution sponsorship.

Because we are not a bank, our North American Component of our Integrated Processing Solutions business is not eligible for membership in the card payment networks, and we are, therefore, unable to directly access these card payment networks, which are required to process transactions. These networks’ operating regulations require us to be sponsored by a member bank in order to process electronic payment transactions. Our various payment processing businesses are registered with the card networks through seven separate sponsor banks (who settle the transactions with our merchants).

Our sponsor banks may terminate their agreements with us if we materially breach the agreements and do not cure the breach within an established cure period, if we enter bankruptcy or file for bankruptcy, or if applicable laws or regulations, including Visa and/or Mastercard regulations, change to prevent either the applicable bank or us from performing services under the agreement. If these sponsorships are terminated and we are unable to secure a replacement sponsor bank within the applicable wind down period, we will not be able to process electronic payment transactions.

Furthermore, our agreements with our sponsor banks provide the sponsor banks with substantial discretion in approving certain elements of our business practices, including our solicitation, application and underwriting procedures for merchants. We cannot guarantee that our sponsor banks’ actions under these agreements will not be detrimental to us, nor can we provide assurance that any of our sponsor banks will not terminate their sponsorship of us in the future. Our sponsor banks have broad discretion to impose new business or operational requirements on us for purposes of compliance with payment network rules, which may materially adversely affect our business. If our sponsorship agreements are terminated and we are unable to secure another sponsor bank, we will not be able to offer Visa, Mastercard or other card scheme transactions or settle transactions which would likely cause us to terminate our operations.

Our sponsor banks also provide or supplement authorization, funding and settlement services in connection with our bankcard processing services. If our sponsorships agreements are terminated and we are unable to secure another sponsor bank, we will not be able to process Visa, Mastercard or other card scheme transactions, which would have a material adverse effect on results of operations, financial conditions and future prospects. A change in underwriting, credit policies, credit risk or reputational risk appetite of our sponsor banks may impact appetite for volume and/or merchant categories. Further, there is a long lead time to secure new sponsor banks, as described above under “—Our success depends on our relationships with banks, payment card networks, issuers and financial institutions—new banking relationships.”

In Bermuda and in many countries in which we operate, we are legally or contractually required to comply with the anti-money laundering laws and regulations, such as, in the United States, the Bank Secrecy Act, as amended by the USA PATRIOT Act (collectively, the “BSA”), and similar laws of other countries, which, among other things, require that customer identifying information be obtained and verified. As described in “—Regulatory, Legal and Tax Risks—We must comply with money laundering regulations in Bermuda, the UK, Ireland, Switzerland, the United States, Canada and elsewhere, and any failure to do so could result in severe financial and legal penalties,” we are directly subject to certain of these requirements, including, in the United States, BSA requirements applicable to Skrill USA Inc. (“Skrill USA”). In other instances, we also have contractually agreed to assist our sponsor banks with their obligation to comply with any-money laundering requirements that apply to them, including, in the United States, BSA requirements applicable to such sponsor banks. In addition, we and our sponsor banks are subject to laws and regulations that prohibit persons in certain jurisdictions from engaging in transactions with certain prohibited persons or entities, such as those enforced by the Office of Foreign Assets Control in the United States (“OFAC”). Similar requirements apply in other countries. It could be costly for us to comply with these legal and contractual requirements and our failure to comply with any of these contractual requirements or laws could adversely affect our results of operations, financial conditions and future prospects, and could result in termination of the contracts.

 

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We have obtained “principal membership” with both Mastercard Europe and Visa Europe payment networks to offer merchant acquiring services to merchants in the European Union. This means that we are solely responsible for the adherence to the rules and standards of the payment networks and it enables us to route transactions under our own payment network license to authorize and clear transactions. Under our payment network licenses, we are allowed to perform funds settlement directly to merchants. A loss of membership or significant change to the commercial terms of our European Mastercard and Visa payment network membership or sponsor bank relationships would have an adverse effect on the results of these businesses’ operations.

We may fail to hold, safeguard or account accurately for merchant or customer funds.

Our success requires significant public confidence in our ability to properly manage our customers’ balances and handle large and growing transaction volumes and amounts of customer funds. Customer and merchant funds must either be held in secure, liquid low-risk assets that are held by a custodian or placed in a segregated account of an authorized credit institution or we may hold an insurance policy or bank guarantee to safeguard the funds. In 2019, following a review of our United Kingdom (“UK”) regulated business, our UK regulator required us to hold additional cash as a liquidity buffer in respect of our European Acquiring, Digital Wallet and eCash businesses, resulting in a consequent increase in liquidity held in our UK regulated entities. Following our work with the regulator, we now have a liquidity and capital adequacy assessment framework in place in respect of our UK regulated entities.

We employ internal controls and compliance procedures designed to hold, safeguard and account accurately for customer and merchant funds. Our ability to manage and account accurately for the assets underlying our customer funds and comply with applicable liquidity requirements requires a high level of internal controls. As our business continues to grow and we expand our product offerings, we must continue to strengthen our associated internal controls. Any failure to account accurately for customer and merchant funds or to fail to comply with applicable regulatory requirements could result in reputational harm, lead customers to discontinue or reduce their use of our products and result in significant penalties and fines, which could materially harm our business.

Our business and products are dependent on the availability, integrity and security of internal and external IT transaction processing systems and services.

Our business requires the ongoing availability and uninterrupted operation of internal and external transaction processing systems and services. We rely on controls and systems designed to ensure data integrity of critical business information and proper operation of our systems and networks, and we review the processes of our third party providers of transaction processing and IT-related functions. Such third parties are, however, ultimately responsible for maintaining their own network security, disaster recovery and system management procedures. All operational systems are vulnerable to damage or interruption from targeted denial of service attacks, viruses, unauthorized access (internally or by third parties), natural or man-made disasters and human or technological failures under a variety of scenarios. A system outage or data loss, whether connected to our IT transaction processing systems and services or those of our third party providers, could have a material adverse effect on our business, financial condition and results of operations. In addition, as a provider of payments solutions, we are subject to scrutiny by regulators, and laws and regulations may require specific business continuity and disaster recovery plans and rigorous testing of such plans. This scrutiny and the related requirements may be costly and time-consuming and may divert our resources from other business priorities, and frequent or persistent site interruptions could lead to fines and penalties, and mandatory and costly changes to our business practices, and ultimately could cause us to lose existing licenses that we need to operate or prevent or delay us from obtaining additional licenses that may be required for our business. Events that could cause system interruptions include fire, earthquake, flood, terrorist attacks, natural disasters, attacks from malicious third parties, employee malfeasance or negligence, computer viruses, unauthorized entry, telecommunications failure, power loss, data loss, cyberattacks, acts of war or any similar events.

 

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We may modify, enhance, upgrade and implement new systems, procedures and controls to reflect changes in our business, technological advancements and changing industry trends. These upgrades can create risks associated with implementing new systems and integrating them with existing ones. As a result, our IT and information management systems may fail to operate properly (for example, by capturing customer data erroneously) or become disabled as a result of events that are beyond our control, such as increased transaction volume. We may also incur additional costs in relation to any new or upgraded systems, procedures and controls and additional management attention could be required in order to ensure an efficient integration, placing burdens on our internal resources.

Despite the network security, disaster recovery and systems management measures that we have in place, we cannot ensure that we would be able to carry on our business in the ordinary course if our systems or those of our third party service providers fail or are disrupted. Indeed, while much of our processing infrastructure is located in multiple redundant data centers, we have some core business systems, such as one of our customer relationship management systems, that are located in only one facility and do not have redundancy. Any such failure of IT and information management systems could adversely affect our reputation, our ability to effect transactions and service customers and merchants, disrupt our business or result in the misuse of customer data, financial loss or liability to our customers or regulators, the loss of suppliers, regulatory intervention or reputational damage.

Additionally, as our customers may use our products for critical transactions, any errors, defects or other infrastructure problems could result in damage to such customers’ businesses. These customers could seek compensation from us for their losses and our insurance policies may be insufficient to cover such claims. Even if unsuccessful, this type of claim may be time consuming and costly for us. Any of the foregoing could have a material adverse effect on our results of operations and financial condition.

We may become an unwitting party to fraud or be deemed to be handling proceeds resulting from the criminal activity of our customers.

We are focused on providing trusted services to our customers and merchants and ensuring that data and confidential information is transmitted and stored securely. Combatting money laundering and fraud is a significant challenge in the online payment services industry because transactions are conducted between parties who are not physically present, which in turn creates opportunities for misrepresentation and abuse. Criminals are using increasingly sophisticated methods to engage in illegal activities such as identity theft, fraud and paper instrument counterfeiting. Online payment companies are especially vulnerable because of the convenience, immediacy and in some cases anonymity of transferring funds from one account to another and subsequently withdrawing them. The highly automated nature of, and liquidity offered by, our payments services make us a target for illegal or improper uses, including fraudulent or illegal sales of goods or services, money laundering and terrorist financing. Allegations of fraud may result in fines, settlements, litigation expenses and reputational damage.

While we employ a variety of tools to protect against fraud, these tools may not be successful. We reserve the right to refuse to accept accounts or transactions from many high-risk countries, internet protocol addresses and e-mail domains and continually update these screening filters. Our transaction monitoring systems are designed to identify various criteria, including the country of origination, in order to detect and monitor fraud and to reject any purported transactions if they appear to be fraudulent. Nevertheless, our transaction monitoring systems may not operate as intended or may otherwise fail to effectively detect fraudulent transactions or locate where a transaction is being made. We face significant risks of loss due to money laundering, fraud and disputes between senders and recipients, and if we are unable to deal effectively with losses from fraudulent transactions our business could be materially harmed.

The ability for customers to withdraw and deposit funds within various accounts and the potential for customer fraud in connection with certain gambling activities heightens the risks of money laundering and the

 

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unwitting receipt by us of criminal proceeds. Our industry is under increasing scrutiny from governmental authorities—in Europe, the United States and many other jurisdictions in which we operate—in connection with the potential for consumer fraud. The laws of some jurisdictions define or interpret what constitutes the underlying criminal activity that gives rise to criminal proceeds relatively narrowly (for example, terrorist financing). Conversely, other jurisdictions have adopted laws providing for relatively broad definitions or interpretations of underlying criminal activity (for example, in the UK criminal proceeds may arise from the conviction of any criminal offence where it is found that the defendant has benefitted from the criminal conduct). Further, to the extent to which payment processors may be held civilly or criminally liable for the criminal activities of its merchant customers also varies widely across the jurisdictions in which we operate.

If consumer fraud levels involving our services were to rise, it could lead to regulatory intervention and reputational and financial damage. This, in turn, could lead to additional government enforcement actions and investigations and concerns raised by merchants and our banking partners, which in turn could reduce the use and acceptance of our services or increase our compliance costs and thereby have a material adverse impact on our business, financial condition and results of operations. By processing payments for merchants and customers in certain industry vehicles, such as those engaged in the online gambling sector, we may be deemed to be handling proceeds of crime in the jurisdiction where our merchants and customers are located. We are subject to anti-money laundering laws and regulations, including, in the United States, the BSA which requires money services businesses such as us to develop and implement risk-based anti-money laundering programs, report large cash transactions and suspicious activity and maintain transaction records. We have adopted a program to comply with these and other anti-money laundering regulations, but any errors or failure to implement the program properly could lead to lawsuits, administrative action and government fines and/or prosecution. In addition, even if we comply with such reporting and record-keeping requirements, law enforcement agencies in the relevant country could seize merchants’ or customers’ funds that are the proceeds of unlawful activity. Any such action could result in adverse publicity for our business and could have a material adverse effect on our results of operations, financial condition and future prospects.

Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks, which could expose us to losses and liability and otherwise harm our business.

We operate in a rapidly changing industry and we have experienced significant change in recent years, including in connection with certain acquisitions and this Business Combination. Accordingly, our risk management policies and procedures may not be fully effective at identifying, monitoring and managing our risks. Some of our risk evaluation methods depend upon information provided by third parties regarding markets, clients or other matters that are otherwise inaccessible to us. In some cases, however, that information may not be accurate, complete or up-to-date. Our risk management policies, procedures, techniques and processes may not be effective at identifying all of the risks to which we are exposed or enabling us to mitigate the risks we have identified. In addition, when we introduce new services, focus on new business types or begin to operate in markets in which we have a limited history of fraud loss, we may be less able to forecast and reserve accurately for new risks. Some risk mitigations may be deemed ineffectual, for example, if our insurance coverage is not adequate. We may need to initiate legal proceedings at a high cost if we are unable to come to a settlement with adversarial parties. If our risk management policies and processes are ineffective, we may suffer large financial losses, we may be subject to civil and criminal liability and our business, financial condition and results of operations may be materially and adversely affected.

We are required to comply with payment card network operating rules.

Payment networks, such as Visa, Mastercard and American Express, establish their own rules and standards that allocate liabilities and responsibilities among the payment networks and their participants. These rules and standards, including the Payment Card Industry Data Security Standards, govern a variety of areas, including how consumers and clients may use their cards, the security features of cards, security standards for processing,

 

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data security and allocation of liability for certain acts or omissions, including liability in the event of a data breach. The payment networks may change these rules and standards from time to time as they may determine in their sole discretion and with or without advance notice to their participants. These changes may be made for any number of reasons, including as a result of changes in the regulatory environment, to maintain or attract new participants, or to serve the strategic initiatives of the payment networks, and may impose additional costs and expenses on or be disadvantageous to certain participants. Participants are subject to audit by the payment networks to ensure compliance with applicable rules and standards. The networks may fine, penalize or suspend the registration of participants for certain acts or omissions or the failure of the participants to comply with applicable rules and standards. Our removal from a given network’s list of Payment Card Industry Data Security Standard compliant service providers could mean that existing merchants, customers, sales partners or other third parties may cease using or referring our services. Also, prospective merchants, customers, sales partners or other third parties may choose to terminate negotiations with us, or delay or choose not to consider us for their processing needs. In addition, the card networks could refuse to allow us to process through their networks. Any of the foregoing could materially adversely impact our business, financial condition or results of operations.

Changes to these network rules or how they are interpreted could have a significant impact on our business and financial results. For example, changes in the payment card network rules regarding chargebacks may affect our ability to dispute chargebacks and the amount of losses we incur from chargebacks. Changes to and interpretations of the network rules that were inconsistent with the way we operated has, in the past, required us to make changes to our business, and any future changes to or interpretations of the network rules that are inconsistent with the way we currently operate may require us to make changes to our business that could be costly or difficult to implement. If we fail to make such changes or otherwise resolve the issue with the payment card networks, the networks could pass on fines and assessments in respect of fraud or chargebacks related to our merchants or disqualify us from processing transactions if satisfactory controls are not maintained, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, we are required to comply with additional clearing scheme rules not particular to card companies, such as Bacs Payment Schemes Limited (formerly known as the Bankers Automated Clearing System), and the Single Euro Payments Area (also known as the SEPA, EBA Step2) scheme, which govern the clearing and settlement of certain UK and European electronic payment methods. Changes in the classification of our business by Visa and/or Mastercard could result in restrictions on our service offerings. For examples, the classification of our Digital Wallet as a “Staged Digital Wallet,” a “Pass-Through Digital Wallet,” or a “Stored Value Digital Wallet” impacts which merchants in various jurisdictions can accept our funds.

Our efforts to expand our product portfolio and market reach may not succeed, and if we fail to manage our growth effectively, our business could be materially harmed.

While we intend to continue to broaden the scope of products and services we offer, we may not be successful in deriving any significant revenue from these products and services. Failure to broaden the scope of products and services that are attractive may inhibit our growth and harm our business. Furthermore, we may have limited or no experience in our newer markets and we cannot assure you that any of our products or services in our newer markets will be widely accepted or that they will grow in revenue. Our offerings may present new and difficult technological, operational, regulatory and other challenges, and if we experience service disruptions, failures, or other issues, our business may be materially and adversely affected. Our newer activities may not recoup our investments in a timely manner or at all. If any of this were to occur, it could damage our reputation, limit our growth, and materially and adversely affect our results of operations and financial condition.

Further, in order to manage our growth effectively, we must continue to strengthen our existing infrastructure, develop and improve our processes and internal controls, create and improve our reporting systems, and timely address issues as they arise. As we continue to strengthen our existing infrastructure and systems, we will also be required to hire additional personnel. These efforts may require substantial financial expenditures, commitments of resources, developments of our processes, and other investments and innovations.

 

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Furthermore, we encourage employees to quickly develop and launch new features for our products and services. As we grow, we may not be able to execute as quickly as smaller, more efficient organizations. In addition, as we grow, we may not be able to maintain our entrepreneurial company culture, which fosters innovation and talent. If we do not successfully manage our growth, our business may be adversely affected.

We might not be successful at acquiring, investing in or integrating businesses, entering into joint ventures or divesting businesses.

We expect to continue pursuing strategic and targeted acquisitions, investments and joint ventures to enhance or add to our skills and capabilities or offerings of services and solutions, or to enable us to expand in certain geographic and other markets. For example, in 2018 we acquired iPayment, a U.S.-based provider of payment and processing products for small and medium-sized businesses, but our broader plan to expand into the U.S. markets may not succeed. We may not be successful in identifying additional suitable investment opportunities. We also might not succeed in completing targeted transactions or achieve desired results of operations from these transactions.

Furthermore, we face risks in successfully integrating any businesses we might acquire or create through a joint venture. Ongoing business may be disrupted, and our management’s attention may be diverted by acquisition, investment, transition or integration activities. In addition, we might need to dedicate additional management and other resources, and our organizational structure could make it difficult for us to efficiently integrate acquired businesses into our ongoing operations and assimilate and retain employees of those businesses into our culture and operations. The potential loss of key executives, employees, customers, suppliers, and other business partners of businesses we acquire may adversely impact the value of the assets, operations or businesses. Moreover, acquisitions or joint ventures may result in significant costs and expenses, including those related to retention payments, equity compensation, severance pay, early retirement costs, intangible asset amortization and asset impairment charges, assumed litigation and other liabilities, and legal, accounting and financial advisory fees, which could negatively affect our profitability. We may have difficulties as a result of entering into new markets where we have limited or no direct prior experience or where competitors may have stronger market positions.

We might fail to realize the expected benefits or strategic objectives of any acquisition, investment or joint venture we undertake. We might not achieve our expected return on investment or may lose money. We may be adversely impacted by liabilities that we assume from a company we acquire or in which we invest, including from that company’s known and unknown obligations, intellectual property or other assets, terminated employees, current or former clients or other third parties. In addition, we may fail to identify or adequately assess the magnitude of certain liabilities, shortcomings or other circumstances prior to acquiring, investing in or partnering with a company, including potential exposure to regulatory sanctions or liabilities resulting from an acquisition target’s previous activities, internal controls and security environment. If any of these circumstances occurs, they could result in unexpected legal or regulatory exposure, unfavorable accounting treatment, unexpected increases in taxes or other adverse effects on our business. Litigation, indemnification claims and other unforeseen claims and liabilities may arise from the acquisition or operation of acquired businesses. If we are unable to complete the number and kind of investments for which we plan, or if we are inefficient or unsuccessful at integrating any acquired businesses into our operations, we may not be able to achieve our planned rates of growth or improve our market share, profitability or competitive position in specific markets or services.

We periodically evaluate, and have engaged in, the disposition of assets and businesses. Divestitures could involve difficulties in the separation of operations, services, products and personnel, the diversion of management’s attention, the disruption of our business and the potential loss of key employees. After reaching an agreement with a buyer for the disposition of a business, the transaction may be subject to the satisfaction of pre-closing conditions, including obtaining necessary regulatory and government approvals, which, if not satisfied or obtained, may prevent us from completing the transaction. Divestitures may also involve continued

 

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financial involvement in or liability with respect to the divested assets and businesses, such as indemnities or other financial obligations, in which the performance of the divested assets or businesses could impact our results of operations. Any divestiture we undertake could adversely affect our results of operations.

We depend on key management, as well as our experienced and capable employees, and any failure to attract, motivate, and retain our employees could harm our ability to maintain and grow our business.

We depend upon the continued services and performance of our directors and key senior management. Our directors and key senior management play a key role in maintaining our culture and in setting our strategic direction. The unexpected departure or loss of one of our directors or key senior management team members could harm our ability to maintain and grow our business, and there can be no assurance we will be able to attract or retain suitable replacements for such directors and/or key management in a timely manner, or at all. We also may incur significant additional costs in recruiting and retaining suitable replacements and avoiding disruption in integrating them into our business.

In addition, our operations and the execution of our business plan depend on our ability to attract, train and retain suitably skilled or qualified personnel with relevant industry and operational experience and to ensure that we have a robust succession planning system in place. In order for us to expand our operations in the future we will need to recruit and retain further personnel with suitable experience, qualifications and skill sets capable of advancing our business. Additionally, we are in the process of incorporating more automation and re-engineering processes in our business, and uncertainty related to this transformation may affect our ability to retain our employees. Depending on the geographical area, there can be substantial competition for suitably skilled or qualified personnel with relevant industry and operational experience and there can be no assurance that we will be able to attract or retain our personnel on similar terms to those on which we currently engage our employees, or at all. We see this risk in particular in our Digital Wallet operations center in Sofia, Bulgaria, where we have found it can be more difficult to identify qualified local talent from which to staff our operations and in our Hyderabad, India technology hub, where there is a highly competitive local market for staff. If we are unable to attract or retain suitably skilled or qualified personnel then this could have a material adverse effect on our results of operations, financial condition and future prospects.

Our business depends on a strong and trusted brand, and any failure to maintain, protect and enhance our brand could materially harm our business.

We believe that maintaining, protecting and enhancing our strong and trusted brand is critical to achieving widespread acceptance of our products and services and expanding our base of customers. Maintaining and promoting our brand will depend largely on our ability to continue to provide useful, reliable, secure, and innovative products and services, as well as our ability to maintain trust and be a technology leader. We may introduce, or make changes to, features, products, services, privacy practices, or terms of service that customers do not like, which may materially and adversely affect our brand. Our brand promotion activities may not generate customer awareness or increase revenue, and even if they do, any increase in revenue may not offset the expenses we incur in building our brand. The introduction and promotion of new products and services, as well as the promotion of existing products and services, may be partly dependent on our visibility on third-party advertising platforms, such as Google, Twitter, or Facebook. Changes in the way these platforms operate or changes in their advertising prices, date use practices or other terms could make the maintenance and promotion of our products and services and our brand more expensive or more difficult. If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business could be materially and adversely affected.

Harm to our brand can arise from many sources, including failure by us or our partners and service providers to satisfy expectations of service and quality, inadequate protection or misuse of sensitive information, compliance failures and allegations, litigation and other claims, employee misconduct, fraud, fictitious transactions, bad transactions, negative customer experiences, and misconduct by our partners, service providers,

 

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or other counterparties. We have also been in the past, and may in the future be, the target of incomplete, inaccurate, and misleading or false statements about our company, our business, and our products and services that could damage our brand and deter consumers and merchants from adopting our products and services. From time to time, the industry verticals we serve (and we, by association) are the subject of negative publicity, which can harm our brand and deter consumers and merchants from adopting our products and services. See “—Our focus on specialized industry verticals can increase our risks relative to other companies in our industry.” Any negative publicity about our industry or our company, the quality and reliability of our products and services, our risk management processes, changes to our products and services, our ability to effectively manage and resolve customer complaints, our privacy, data protection, and information security practices, litigation, regulatory activity, policy positions, and the experience of our customers with our products or services could adversely affect our reputation and the confidence in and use of our products and services. If we do not successfully maintain a strong and trusted brand, our business could be materially and adversely affected.

In addition, the registered or unregistered trademarks or trade names that we own may be challenged, infringed, declared generic, or determined to be infringing on or dilutive of other marks. We may not be able to protect our rights in these trademarks and trade names, which we need in order to build name recognition with potential customers. Moreover, third parties may use, or file for registration of trademarks similar or identical to our trademarks; if they succeed in registering or otherwise developing common law rights in such trademarks, and if we are not successful in challenging such third-party’s use of such trademarks, our own trademarks may no longer be useful to develop brand recognition of our technologies, products or services. Furthermore, there could be potential trade name or trademark infringement claims brought by owners of other trademarks, including trademarks that incorporate variations of our registered or unregistered trademarks or trade names. If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively, which could have a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects.

Global and regional economic conditions could materially harm our business.

Our operations and performance depend significantly on global and regional economic conditions. Uncertainty about global and regional economic events and conditions may result in consumers and businesses postponing or lowering spending in response to, among other factors:

 

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tighter credit;

 

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higher unemployment;

 

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consumer debt levels or reduced consumer confidence;

 

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financial market volatility;

 

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fluctuations in foreign currency exchange rates and interest rates;

 

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changes and uncertainties related to government fiscal and tax policies, U.S. and international trade relationships, agreements, policies, treaties and restrictive actions, including increased duties, tariffs, or other restrictive actions;

 

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government austerity programs; and

 

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other negative financial news, macroeconomic developments or pandemics.

In addition, many of our merchants are small businesses and these businesses may be disproportionately adversely affected by economic downturns and may fail at a higher rate than larger or more established businesses. If spending by their customers declines, these businesses would experience reduced sales and process fewer payments with us or, if they cease to operate, stop using our products and services altogether. Small businesses frequently have limited budgets and limited access to capital, and they may choose to allocate their spending to items other than our financial or marketing services, especially in times of economic uncertainty or

 

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in recessions. These and other global and regional economic events and conditions could have a material adverse impact on the demand for our products and services. Furthermore, any financial turmoil affecting the banking system or financial markets could cause additional consolidation of the financial services industry, significant financial service institution failures, new or incremental tightening in the credit markets, low liquidity, and extreme volatility or distress in the fixed income, credit, currency, and equity markets, which could have a material adverse impact on our results of operations, financial condition and future prospects.

If we cannot keep pace with rapid technological developments to provide new and innovative products and services, the use of our products and services and, consequently, our revenues could decline.

Rapid, significant, and disruptive technological changes impact the industries in which we operate, including developments in payment card tokenization, mobile, social commerce (i.e., ecommerce through social networks), authentication, cryptocurrencies (including distributed ledger and blockchain technologies), and near-field communication, and other proximity payment technology, such as contactless payments. As a result, we expect new services and technologies to continue to emerge and evolve, and we cannot predict the effects of technological changes on our business. In addition to our own initiatives and innovations, we rely in part on third parties, including some of our competitors, for the development of and access to new or evolving technologies. These third parties may restrict or prevent our access to, or utilization of, those technologies, as well as their platforms or products. In addition, we may not be able to accurately predict which technological developments or innovations will become widely adopted and how those technologies may be regulated. We expect that new services and technologies applicable to the industries in which we operate will continue to emerge and may be superior to, or render obsolete, the technologies we currently use in our products and services. Developing and incorporating new technologies into our products and services may require substantial expenditures, take considerable time, and ultimately may not be successful.

In addition, our ability to adopt new products and services and to develop new technologies may be inhibited by industry-wide standards, payments networks, changes to laws and regulations, resistance to change from consumers or merchants, third-party intellectual property rights, or other factors. For example, consumers can use their Skrill and NETELLER wallets to trade in cryptocurrencies. Cryptocurrencies are not considered legal tender or backed by any government and have experienced price volatility, technological glitches and various law enforcement and regulatory interventions. The use of cryptocurrencies has been prohibited or effectively prohibited in some countries. If we fail to comply with prohibitions applicable to us, we could face regulatory or other enforcement actions and potential fines and other consequences. Even in countries where cryptocurrencies are permitted, businesses associated with cryptocurrencies have had and may continue to have their existing accounts with banks and financial institutions closed or services discontinued, and offering cryptocurrency services may cause difficulties in obtaining or maintaining our relationships with sponsor banks and payment card networks. Furthermore, the prices of cryptocurrencies are routinely highly volatile and subject to exchange rate risks as well as the risk that regulatory or other developments may adversely affect their value. Our success in providing cryptocurrency services, and with other rapid technological innovations, will depend on our ability to develop and incorporate new technologies and adapt to technological changes and evolving industry standards; if we are unable to do so in a timely or cost-effective manner, our business could be harmed.

We are currently building a single core platform for our businesses to increase resilience, speed and security and provide firm foundations for future releases and enhancements. Related to this are various initiatives, which include increasing our risk management, fraud management and compliance capabilities and ensuring that our updated architecture can support a constantly evolving Know Your Customer (“KYC”), anti-money laundering, credit check and fraud monitoring environment; providing us with better reporting and analytics; providing our merchants with the ability to accept any payment method they wish and allowing for increased customer customization of their services. However, there is no assurance that this platform will operate effectively or that we will achieve these intended benefits. A failure to deliver the solutions identified by our businesses as important for their future success in a timely or cost-effective manner could have an impact on our future success.

 

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We face substantial and increasingly intense competition worldwide in the global payments industry.

The global payments industry is highly competitive, rapidly changing, very innovative, and increasingly subject to regulatory scrutiny. We compete against a wide range of businesses, including businesses that are larger than we are, have a more dominant and secure position, or offer other products and services to consumers and merchants that we do not offer, as well as smaller companies that may be able to respond more quickly to regulatory and technological changes. These competitors may act on business opportunities within our specialized industry verticals, which may reduce our ability to maintain or increase or market share. In addition, the services of our various competitors are differentiated by features and functionalities such as brand recognition, customer service, trust and reliability, distribution network and channel options, convenience, price, speed, variety of payment methods, service offerings and innovation.

In addition, our competitors may be able to offer more attractive economic terms to our current and prospective clients. If competition requires us to offer more attractive economics by reducing our fees or otherwise modifying our terms in order to maintain market share and continue growing our client base, we will need to aggressively control our costs in order to maintain our profit margins and our revenues may be adversely affected, and our ability to control our costs is limited because we are subject to fixed transaction costs related to payment networks. Competition could also result in a loss of existing clients and greater difficulty in attracting new clients. One or more of these factors could have a material adverse effect on our business, financial condition and results of operations.

Furthermore, many of the areas in which we compete evolve rapidly with changing and disruptive technologies, shifting user needs, and frequent introductions of new products and services. Competition may also intensify as businesses enter into business combinations and alliances, and established companies in other segments expand to become competitive with different aspects of our business. If we cannot compete effectively, the demand for our products and services may decline, which would adversely impact our competitive position, business and financial performance.

Our international operations subject us to increased risks, which could harm our business.

We have extensive international operations and our customers are resident in over 120 countries and territories. There are risks inherent in doing business internationally on both a domestic (i.e., in-country) and cross-border basis, including, but not limited to:

 

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foreign currency and cross-border trade risks;

 

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risks related to government regulation or required compliance with local laws;

 

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local licensing and reporting obligations;

 

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obligations to comply with local regulatory and legal obligations related to privacy, data security and data localization;

 

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expenses associated with localizing our products and services, including offering customers the ability to transact business in the local currency, and adapting our products and services to local preferences (e.g., payment methods) with which we may have limited or no experience;

 

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trade barriers and changes in trade regulations;

 

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difficulties in developing, staffing, and simultaneously managing a large number of varying foreign operations as a result of distance, language and cultural differences;

 

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stringent local labor laws and regulations;

 

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credit risk and higher levels of payment fraud;

 

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profit repatriation restrictions, foreign currency exchange restrictions or extreme fluctuations in foreign currency exchange rates for a particular currency;

 

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•

political or social unrest, economic instability, repression or human rights issues;

 

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geopolitical events, including natural disasters, public health issues, pandemics, acts of war and terrorism;

 

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import or export regulations;

 

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compliance with Bermuda, UK, Irish, U.S. and other international laws prohibiting corrupt payments to government officials, such as the Bermuda Bribery Act, the U.S. Foreign Corrupt Practices Act, the UK Bribery Act, the Irish Criminal Justice (Corruption Offences) Act 2018 and other local anticorruption laws;

 

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compliance with Bermuda, UK, Irish, U.S. and other international laws and associated regulations designed to combat money laundering and the financing of terrorist activities;

 

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antitrust and competition regulations;

 

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potentially adverse tax developments and consequences;

 

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economic uncertainties relating to sovereign and other debt;

 

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national or regional differences in macroeconomic growth rates;

 

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different, uncertain, overlapping, or more stringent user protection, data protection, privacy and other laws and regulations; and

 

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increased difficulties in collecting accounts receivable.

Violations of the complex UK, Irish, U.S. and other international laws, rules and regulations that apply to our international operations may result in fines, criminal actions, or sanctions against us, our officers, or our employees; prohibitions on the conduct of our business; and damage to our reputation. Although we have implemented policies and procedures designed to promote compliance with these laws, there can be no assurance that our employees, contractors, or agents will not violate our policies. These risks are inherent in our international operations and expansion, may increase our costs of doing business internationally, and could harm our business.

Catastrophic events or geopolitical conditions may disrupt our business.

War, terrorism, political events, geopolitical instability, trade barriers and restrictions, public health issues, pandemics such as the COVID-19 pandemic, natural disasters, or other catastrophic events have caused and could cause damage or disruption to the economy and commerce on a global, regional, or country-specific basis, which could have a material adverse effect on our business, our customers, and companies with which we do business. Such events could decrease demand for our products and services or make it difficult or impossible for us to deliver products and services to our customers. The frequency and severity of some catastrophic events, such as flooding, hurricanes, tornadoes, extended droughts, and wildfires are contributed to by global climate change, which many in the scientific community, in governmental bodies and elsewhere believe will continue for decades to come, potentially resulting in increased disruption to us. Geopolitical trends, including nationalism, protectionism, and restrictive visa requirements could limit the expansion of our business in those regions. Our business operations are subject to interruption by, among others, natural disasters, fire, power shortages, earthquakes, floods, nuclear power plant accidents, and events beyond our control such as other industrial accidents, terrorist attacks and other hostile acts, labor disputes and public health issues. A catastrophic event that results in a disruption or failure of our systems or operations could result in significant losses and require substantial recovery time and significant expenditures in order to resume or maintain operations, which could have a material adverse impact on our business, financial condition, and results of operations.

 

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Our operating results and operating metrics are subject to seasonality and volatility, which could result in fluctuations in our quarterly revenues and operating results or in perceptions of our business prospects.

We have experienced in the past, and expect to continue to experience, seasonal fluctuations in our business. For instance, our Integrated Processing Solutions and eCash businesses historically experiences increased activity during the traditional holiday period and around other nationally recognized holidays, when certain of our games operators may run promotions, consumers enjoy more leisure time and younger consumers may receive our products as gifts. Our Digital Wallet and eCash businesses experience increased activity based on the occurrence and timing of sporting events. Volatility in our revenue, key operating metrics or their rates of growth could result in fluctuations in our financial condition or results of operations and may lead to adverse inferences about our prospects, which could result in declines in our stock price.

Regulatory, Legal and Tax Risks

Our operations can be constrained in countries with less predictable legal and regulatory frameworks.

If the legal and regulatory system in a particular country is less predictable, this can create a more difficult environment in which to conduct business. For example, any of the following could hamper our operations and reduce our earnings in these types of countries:

 

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the absence of a statutory or regulatory basis or guidance for engaging in specific types of business or transactions;

 

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conflicting or ambiguous laws and regulations, or the inconsistent application or interpretation of existing laws and regulations;

 

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uncertainty concerning the enforceability of contractual, intellectual property or other obligations;

 

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difficulty in competing in economies in which the government controls or protects all or a portion of the local economy or specific businesses, or where graft or corruption may be pervasive; and

 

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the threat of arbitrary regulatory investigations, civil litigations or criminal prosecutions, the imposition of licensing requirements, or the termination or unavailability of licenses, to operate in the local market or the suspension of business relationships with governmental bodies.

Conducting business in countries with less predictable legal and regulatory regimes could require us to devote significant additional resources to understanding, and monitoring changes in, local laws and regulations, as well as structuring our operations to comply with local laws and regulations and implementing and administering related internal policies and procedures.

Given the above mentioned challenges and the ever changing landscape, we may fail to conduct our business in compliance with the laws and regulations of the jurisdictions in which we operate and/or those jurisdictions in which we provide services, and the risk of non-compliance can be greater in countries that have less predictable legal and regulatory systems.

Our business is subject to extensive regulation and oversight in a variety of areas, all of which are subject to change and uncertain interpretation, including in such ways as could criminalize certain of our activities.

We are subject to a wide variety of laws, regulations, licensing schemes and industry standards in the countries and localities in which we operate. These laws, regulations, and standards govern numerous areas that are important to our business, including, but not limited to, online gambling, consumer protection, privacy, information security, anti-money laundering, safeguarding of client funds, strong customer authentication, financial services, securities, labor and employment, competition, data protection, biometric data processing and marketing and communications practices. Such laws, regulations, and standards are subject to changes and evolving interpretations and application, including by means of legislative changes, administrative changes and/

 

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or executive orders, and it can be difficult to predict how they may be applied to our business and the way we conduct our operations, particularly as we introduce new products and services and expand into new jurisdictions. Any perceived or actual breach of laws, regulations, and standards could result in investigations, regulatory inquiries, loss of licensure, litigation, fines, injunctions, negative customer sentiment, impairment of our existing or planned products and services, or otherwise materially and adversely impact our business. In addition, regulatory scrutiny in one jurisdiction can lead to increased scrutiny from regulators and legislators in other jurisdictions that may harm our reputation, brand and third-party relationships and have a material adverse effect on our results of operations, financial performance and future prospects.

We are also subject to oversight by various governmental agencies and authorities in the countries and localities in which we operate. In light of the current conditions in the global financial markets and economy, lawmakers and regulators have increased their focus on the regulation of the financial services industry. Although we have a compliance program focused on the laws, rules, and regulations that we believe are applicable to our business, we may still be subject to a requirement to change various aspects of our business or the manner in which we carry out our business in certain countries, or to fines, injunctions or other penalties levied by regulators in one or more jurisdictions. In addition to fines, penalties for failing to comply with applicable rules and regulations could include significant criminal and civil lawsuits, forfeiture of significant assets, increased licensure requirements, loss of licensure or other enforcement actions. Any perceived or actual breach of compliance by us with respect to applicable laws, rules and regulations could have a significant impact on our reputation as a trusted brand and could cause us to lose existing customers, prevent us from obtaining new customers, require us to expend significant funds to remedy problems caused by breaches and to avert further breaches and expose us to legal risk and potential liability.

In the future, we may also be required to make changes to our business practices or compliance programs as a result of regulatory scrutiny. For example, in Norway, the Norwegian gambling regulator notified us that processing gambling payments for Norwegians is prohibited, and consequently we have stopped processing certain gambling payments there, which will result in a small loss of a revenue. As another example, the Central Bank of Ireland (“CBI”) may conduct a similar market review to that carried out by the Financial Conduct Authority (“FCA”) in the UK and require us to safeguard additional amounts in respect of our European Acquiring business and the acquiring activities of our European eCash business resulting in a consequent increase in our liquidity requirements. See “—We are subject to financial services regulatory risks.”

Relatedly, as another example of a potential future regulatory change, the common reporting standard (the “CRS”) was first released by the OECD in February 2014 as a result of the G20 members endorsing a global model of automatic exchange of information in order to increase international tax transparency. The Directive 2014/107/EU on Administrative Cooperation in the Field of Taxation (the “DAC II”) implements the CRS in a European context and creates a mandatory obligation for all EU Member States to exchange financial account information of residents in other EU Member States on an annual basis. Over 100 jurisdictions have committed to implementing the CRS, including the UK and Bermuda. To the extent the CRS and/or the DAC II (as applicable) is implemented in any of our relevant jurisdictions, these arrangements will require affected banks and financial institutions to report certain information to their local tax authorities about account holders from the jurisdictions which are party to such arrangements (which information will in turn be provided to the relevant tax authorities). Although currently, we do not believe that any of our accounts fall within the remit of the CRS or DAC II, this may change in the future and it is not clear if, and to what extent, the obligations under the CRS/DAC II will apply. To the extent that the accounts we offer come to fall within the remit of the CRS/DAC II, certain operational challenges with respect to collecting and reporting the requisite information may arise. Additionally, it is generally necessary to capture the information required for CRS reporting at the time a customer is taken on, which may impact the onboarding process and reduce customer adoption, and/or customers may choose to discontinue using our services altogether.

 

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We generate a significant portion of our revenue by processing online payments for merchants and customers engaged in the online gambling and foreign exchange trading sectors.

We generate a significant portion of our revenue from merchants operating in the regulated gaming and sports betting and foreign exchange trading sectors. We and our merchants and customers are subject to various laws and regulations in relation to online gambling. Regulations in the gaming and sports betting and foreign exchange trading sectors vary significantly among different countries and localities. In many cases, they may be unclear and may also change, sometimes dramatically, and such laws and regulations are constantly evolving and are often subject to conflicting interpretations.

In the United States, for instance, the evolving regulatory regime of online gambling creates uncertainty and could adversely affect our operations in those jurisdictions. As a particular example, in 2018, the U.S. Department of Justice (“DOJ”) reversed its previously-issued opinion published in 2011, which stated that interstate transmissions of wire communications that do not relate to sports betting fall outside the purview of the Wire Act of 1961 (the “Wire Act”). The DOJ’s updated opinion concluded instead that the Wire Act was not uniformly limited to sports betting and that certain of its provisions apply to non-sports-related wagering activity. On June 3, 2019, in a case challenging the DOJ’s updated opinion, Judge Paul Barbadoro of the United States District Court for the District of New Hampshire found that the Wire Act only applies to sports betting and not to other online gambling games. The DOJ has appealed this ruling, however, and we do not know what the ultimate outcome of this case will be.

The EU, by contrast, has generally moved towards controlled regulation of online-based gambling operators, rather than absolute prohibition. For example, in March 2019, German regulators agreed on the Third Amendment to the Interstate Treaty on Gambling, which provides new, temporary regulations for sports betting companies in the country effective January 1, 2020 until permanent regulations can be established by June 2021. In March 2020, German regulators subsequently agreed to additional legislation that will legalize online forms of certain gambling, such as casino and poker, within certain parameters. The regimes in Italy and France have similarly moved away from state-run monopoly-based markets to controlled regulation. However, local laws in place in EU member states are sometimes incompatible with EU laws, regulations and directives, which introduces additional uncertainty around licensing and ongoing compliance obligations into the regulatory framework.

Additionally, many jurisdictions, particularly those outside of Europe and the United States, have not updated their laws to address the supply of online gambling, which by its nature is a multijurisdictional activity. Due to the borderless nature of online gaming and sports betting and foreign exchange trading, a merchant properly licensed in its home jurisdiction may still provide services to consumers in other jurisdictions, knowingly or unknowingly, including in jurisdictions whose regulations are ambiguous or where gaming, sports betting and/or foreign exchange trading are prohibited. For example, in India, we recently were notified about two investigations being conducted by the Government of India Enforcement Directorate (“ED”) relating to gambling activity by Indian residents which indirectly concern the provision of digital wallet services to our Indian resident customers. If the ED or other Government of India regulatory authority finds that we violated Indian law by failing to restrict certain payments from being made, it could lead to certain penalties being imposed on us or we may cease providing services to Indian resident customers altogether if it is determined that our services to Indian resident customers are licensable in India and we cannot, or decide not to, obtain a license. Additionally, in Latvia, the Latvian Financial and Capital Market Commission (the “Commission”) notified us of their belief that we were in breach of Latvian law as a result of processing gambling payments between Latvian customers and gambling operators that do not have a local license. Following engagement with the Commission, we asserted that we were not in breach of Latvian law and currently have not received a response.

We have policies and procedures in place that are designed to ensure that we comply with applicable rules regarding card brands, regulated verticals and bank sponsor requirements. However, these policies and procedures may not always be effective. If we provide services, intentionally or unintentionally, to gaming and

 

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sports betting and foreign exchange trading companies that do not have proper regulatory authorizations, we could be subject to fines, penalties, reputational harm or other negative consequences. Other jurisdictions have updated legislation to pass laws to regulate online gambling but only to permit license holders to supply services in that jurisdiction, some of which laws purport to have an extra territorial effect and which specifically preclude payment support of any gambling transactions, with powers to request the co-operation of banks and card issuers, or, in some jurisdictions, to criminalize the support they provide. Nevertheless, the legality of online gambling and the provision of services to online gambling merchants and customers is subject to uncertainties arising from differing approaches by legislatures, regulators and enforcement agents, including in relation to determining in which jurisdiction the game or the bet takes place and, therefore, which law applies and where the transaction should be taxed. This uncertainty creates a risk for us that even in instances where older laws have not been updated to address new technology, courts may interpret older legislation in an unfavorable way and determine our activities to be illegal. This could lead to criminal or civil actions being brought against our customers, merchants, us or any of our directors, or us (or our merchants or customers) being forced to cease doing business in a particular jurisdiction, all or any of which may, individually or collectively, materially and adversely affect our results of operations and financial condition and damage our reputation.

We rely on the continued supply of our services to merchants within the online gambling industry. Digital Wallet and our eCash businesses (each of which primarily provides services to the online gambling industry) represent approximately 48% of our revenue for the year ended December 31, 2019. Changes in the regulation of online gambling in the markets where we operate may materially and adversely affect our results of operations and financial condition if such merchants are subject to increased taxes, compliance costs, levies and license fees or are forced to cease operating in a jurisdiction as a result of prohibitive legislation, which may result in reduced demand for our services within the online gambling industry.

While we do not provide gambling services, it is possible that we could be found to be acting unlawfully for processing gambling related payments. For example, we previously processed payments in connection with online gambling in the United States until the passage of the Unlawful Internet Gambling Enforcement Act (“UIGEA”), which banned the processing of payments related to illegal online gambling in the United States, in 2006. Within days of enactment of the UIGEA, we announced our intention to withdraw from the U.S. market. However, in January 2007 the Office of the United States Attorney for the Southern District of New York (the “USAO”) initiated criminal actions against us and two former senior executives and founding shareholders of NETELLER related to gambling and unlicensed money transmitting violations, seized approximately $60 million in customer funds that were in transit with our payment processors and prohibited us from engaging in any further transactions with U.S. banks, effectively preventing our customers from withdrawing their funds. As a result, we suspended all U.S. gambling-related processing and negotiated a plan to facilitate the complete return of funds to our U.S. customers. In July 2007, we entered into a deferred prosecution agreement (“DPA”) with the USAO, providing for forfeiture of $136 million, completion of the return of funds to U.S. customers, imposition of an ongoing obligation to cooperate with any further USAO inquiries and the appointment of a forensic accounting firm to monitor our activities in order to ensure we continued to comply with the UIGEA. All of our U.S. customers subsequently had their money returned, and the USAO obtained dismissal of the complaint and terminated the DPA in August 2009. Both former founders of NETELLER pled guilty to a single count of conspiracy to violate U.S. gambling and money-transmitting laws and agreed to a combined forfeiture of $100 million. None of the management or directors at the time of the DPA are now employed by the Company.

If we were found to be acting unlawfully for processing online gambling payments in any jurisdiction, it could have a material adverse effect on our reputation, operations and financial performance. Additional civil, criminal or regulatory proceedings could also be brought against us and/or our directors, executive officers and employees as a result. We could also be joined to proceedings brought against a merchant or other third parties for tracing claims resulting in the seizure of funds. Any such proceedings would potentially have cost, resource and reputational implications, and could have a material adverse effect on our results of operations, financial performance and future prospects and on our ability to retain, renew or expand our portfolio of licenses.

 

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Moreover, even if successfully defended, the process may result in us incurring considerable costs and require significant management resource and time.

In addition to gambling related payments, our payment systems may be used for potentially illegal or improper uses, including the fraudulent sales of goods or services, illegal sales of controlled substances or to facilitate other illegal activity. Such usage of our payment systems may subject us to claims, individual and class action lawsuits, government and regulatory investigations, inquiries or requests that could result in liability and reputational harm for us. Changes in law have increased the penalties for intermediaries providing payment services for certain illegal activities, and government authorities may consider additional payments-related proposals from time to time. Owners of intellectual property rights or government authorities may seek to bring legal action against providers of payments solutions that are peripherally involved in the sale of infringing or allegedly infringing items. Any threatened or resulting claims could result in reputational harm, and any resulting liabilities, loss of transaction volume, or increased costs could harm our business.

We are subject to financial services regulatory risks.

Certain of our subsidiaries in the UK are authorized by the FCA under the Electronic Money Regulations 2011 to perform the regulated activity of issuing e-money and the provision of payment services (which has the meaning specified in the Second Electronic Money Directive) as well as to provide account information services and payment initiation services to support our Rapid Transfer service. We have the appropriate licenses and permissions to act as an e-money issuer in the UK.

Additionally, we have obtained authorization from the CBI for two of our entities in Ireland to act as e-money issuers and to provide payment services (including account information and payment initiation services) and have completed the necessary passporting notifications necessary to operate in other European Economic Area (“EEA”) jurisdictions. The CBI also implements, maintains and enforces a range of rules covering (among other things) market conduct, communications with customers, the safeguarding of users’ funds and the fair treatment of consumers and other vulnerable customers. These rules are contained in various sources including the Consumer Protection Code and the European Union (Payment Services) Regulations 2018 and apply to the regulated activities we carry out from Ireland across the EEA. Breach of these rules may result in fines, public censures, customer remediation and redress and ultimately in the revocation of our regulatory licenses in Ireland.

EU laws and regulations are typically subject to different and potentially inconsistent interpretations by the local authorities in EU member states, which can make compliance more costly and operationally difficult to manage. Moreover, countries that are EU members may each have different and potentially inconsistent domestic regulations implementing European Directives, including the Revised Payment Services Directive (“PSD2”), which may further increase compliance costs and operational complexity. As a result of PSD2, we have had to make changes which impacted our business. PSD2 seeks to enable new payment models whereby a newly formed category of regulated payment provider would be able to access bank and payment accounts (including our accounts) for the purposes of accessing account information or initiating a payment on behalf of a customer. Such access could subject us to data security and other legal and financial risks and could create new competitive forces and new types of competitors in the European payments market. PSD2 imposes new standards for payment security and strong customer authentication that may make it more difficult and time consuming to carry out a transaction, which may adversely impact our customer value proposition and its European business.

Additionally, Skrill USA is registered with the U.S. Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”) as a money services business and is regarded as a money transmission business in the United States. Money transmitting businesses are subject to numerous regulations in the United States at the federal and state levels, and we have obtained or applied for money transmitter licenses (or applicable similar licenses) in all U.S. states and territories in which we are required to do so, with licenses pending. As a result, we are also subject to inspections, examinations, supervision, and regulation by each state in which we are licensed, and are subject to direct supervision by the Consumer Financial Protection Bureau (the “CFPB”). The CFPB has authority to interpret, enforce and issue regulations implementing enumerated consumer laws, including certain laws that apply to our business. The Dodd-Frank Act also empowers state attorneys general and other state officials to enforce federal consumer protection laws under specified conditions.

 

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Although we have the authorizations and licenses referred to above, we issue e-money to customers in over 120 countries and territories and we are not licensed as an e-money issuer in the vast majority of these jurisdictions. We take the view that, in general, we are not conducting regulated activities in these other jurisdictions on the basis that our activities of issuing e-money are not conducted in each jurisdiction in which our relevant customers reside, but rather e-money is issued in jurisdictions in which we are licensed. We acknowledge that local regulators in these jurisdictions may take a different view and, as transaction volumes increase and/or the matter is brought to our attention by local regulators, we will take advice in respect of local requirements on a case-by-case basis.

Due to ongoing developments in e-money regulation, we obtain advice from external counsel as required in order to assess any applicable risk and, where necessary, will limit the extent of our operations in a particular jurisdiction or will consider whether to obtain a license in such jurisdiction. For example, we are evaluating whether payments laws enacted in Russia in June 2019 will impact our ability to continue operating in that jurisdiction, and in Norway, we intend to cease processing gambling payments following an approach by a local regulator. We believe that the likelihood of any enforcement action by a regulator is low due to factors such as the operation of the services through the internet on a cross-border basis from a country in which the relevant entity holds a license, the limited extent of our activities in the respective jurisdictions, the lack of enforcement action against similar payment processors, the lack of a physical presence in the respective jurisdictions and the effective management of our relationships with our customers. However, the adoption of new money transmitter or other licensing statutes in the jurisdictions in which we operate, changes in regulators’ interpretation of existing money transmitter or other licensing statutes or regulations, or disagreement by a regulatory authority with our interpretation of such statutes or regulations, could require additional registrations or licenses, limit certain of our business activities until they are appropriately licensed, and expose us to financial penalties.

We are not aware of any circumstances that may result in us being in breach of the terms of our e-money issuer, payment initiation service provider or money transmitter licenses that would be likely to lead to a revocation or termination of such licenses or a material restriction on such licenses, nor are we aware of any current or pending financial, civil or criminal proceedings asserted against us in connection with a failure to hold a license in any relevant jurisdiction. However, if we were found to be in violation of any current or future regulations, or to have previously been in breach of any regulation, in any countries from which we accept merchants or customers, including as a result of any failure by our employees to apply correctly our anti-money laundering procedures, this could result in a requirement for future compliance, fines, other forms of liability and/or force us to change business practices or to cease operations altogether, and we, our directors, executive officers or employees may also be exposed to a financial liability, civil or criminal liability, any of which could have a material adverse effect on our results of operations, financial condition and future prospects.

We are subject to current and proposed regulation addressing consumer privacy and data use, which could adversely affect our business, financial condition and results of operations.

We are subject to a number of laws, rules, directives, and regulations relating to the collection, use, retention, storage, destruction, security, processing, transfer, and sharing of personally identifiable information about our customers and employees in the countries where we operate. Our business relies on the processing of data in many jurisdictions and the movement of data across national borders. As a result, much of the personal data that we process, especially financial information, is regulated by multiple privacy laws and, in some cases, the privacy laws of multiple jurisdictions. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between or among us, our subsidiaries, and other parties with which we have commercial relationships. These regulations may at times be conflicting, and the requirements to comply with these regulations could result in a negative impact to our business.

Regulatory scrutiny of privacy, data protection, and the collection, use, storage, destruction, security, processing, transfer and sharing of personal data is increasing around the world. There is uncertainty associated with the legal and regulatory environment relating to privacy and data protection laws, which continue to develop

 

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in ways we cannot predict, including with respect to evolving technologies such as cloud computing and blockchain technology. Additionally, these laws and regulations may change or be interpreted and applied differently over time and from jurisdiction to jurisdiction, and it is possible they will be interpreted and applied in ways that will materially and adversely affect our business.

For example, in the EU, we are subject to enhanced compliance and operational requirements under the General Data Protection Regulation (“GDPR”), which became effective in May 2018. The GDPR expands the scope of the EU data protection law to foreign companies processing personal data of EU residents, imposes a strict data protection compliance regime with severe penalties of up to the greater of 4% of worldwide annual turnover or €20 million, and includes new rights such as the “portability” of personal data. The increased penalties for noncompliance could have a material adverse effect on our business, financial condition, results of operations and cash flows. We have incurred and we expect to continue to incur significant expenses to meet the obligations of the GDPR, which have required us to make significant changes to our business operations.

Although the GDPR applies across the EU without a need for local implementing legislation, each EU member state has the ability to interpret the GDPR opening clauses, which permit region-specific data protection legislation and which has created inconsistencies, on a country-by-country basis. Further, Brexit has created uncertainty with regard to the regulation of data protection in the UK, especially as the UK awaits to see whether the EU will grant it an adequacy decision, allowing continued free-flow of data between the UK and the EU. Meanwhile, the Court of Justice of the European Union (“CJEU”) issued a decision on July 16, 2020 (commonly known as “Schrems II”), invaliding the EU-U.S. Privacy Shield Framework, a previously lawful mechanism of transfer for personal data between the U.S. and EU. While the Schrems II decision did not invalidate standard contractual clauses, another lawful mechanism for making cross-border transfers, the decision has called their validity into question under certain circumstances, and has made the legality of transferring personal information from the EU to the U.S. more uncertain, and it may require government cooperation to resolve this issue. Other jurisdictions could require us to make additional changes to the way we conduct our business and transmit data between the U.S., the UK, the EU, and the rest of the world.

Any failure, or perceived failure, by us to comply with our privacy policies, with applicable industry data protection or security standards, with any applicable regulatory requirements or orders, or with privacy, data protection, information security, or consumer protection-related laws and regulations in one or more jurisdictions could result in proceedings or actions against us by data protection authorities, governmental entities or others, including class action privacy litigation in certain jurisdictions, which could subject us to significant awards, fines, sanctions, penalties, judgments, and negative publicity arising from any financial or non-financial damages suffered by any individuals. This could, individually or in the aggregate, materially harm our business.

Since 2016, we have engaged in a large, transformative program regarding data privacy in connection with GDPR compliance requirements. However, policymakers around the globe are using these requirements as a reference to adopt new or updated privacy laws that could result in similar or stricter requirements in other jurisdictions. In the U.S., the Gramm-Leach-Bliley Act of 1999 (along with its implementing regulations) restricts certain collection, processing, storage, use and disclosure of personal financial information, requires notice to individuals of privacy practices and provides individuals with certain rights to prevent the use and disclosure of certain nonpublic or otherwise legally protected information. These rules also impose requirements for the safeguarding and proper destruction of such information through the issuance of data security standards or guidelines. In addition, there are state laws in the United States governing the collection of personal information (including, as of January 1, 2020, the California Consumer Privacy Act of 2018 (the “CCPA”)), including those restricting the ability to collect and use certain types of information such as Social Security and driver’s license numbers. The CCPA imposes stringent data privacy and data protection requirements for the data of California residents, and provides for penalties for noncompliance of up to $7,500 per violation, if willful, and provides for a private right of action in the event of a data breach affecting specified personal information of California residents. Implementing regulations for the CCPA were released in August 2020, and on November 3, 2020, California voters approved a new law, the California Privacy Rights Act. As a result of these constant changes, it

 

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is still not certain how the various provisions of the CCPA and the CPRA will be interpreted and enforced. The CPRA expands the rights of consumers and establishes the California Privacy Protection Agency, providing the agency with investigative, enforcement and rule-making powers. Certain other state laws impose or are in the process of imposing similar privacy obligations. The effects of the CCPA are potentially far-reaching, however, and may require us to continue to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. Certain other state laws impose similar privacy obligations as well and, in addition, all 50 states have laws with varying obligations to provide notification of security breaches of computer databases that contain personal information to affected individuals, state officers and others. The use or generation of biometric data as an aid to fraud prevention is becoming increasingly regulated through a patchwork of laws in both the EU and across the U.S., with a number of state laws now requiring consent to such use. For example, Illinois has passed the Biometric Information Privacy Act (“BIPA”), Texas and Washington have passed similar laws, and other states plan to pass similar laws.

Some jurisdictions are also considering requirements for businesses that collect, process and/or store data within their borders (“data localization”), as well as prohibitions on the transfer of data abroad, leading to technological and operational implications. Other jurisdictions are considering adopting sector-specific regulations for the payments industry, including forced data sharing requirements or additional verification requirements that overlap or conflict with, or diverge from, general privacy rules. Failure to comply with these laws, regulations and requirements could result in fines, sanctions or other penalties, which could materially and adversely affect our results of operations, financial condition, and reputation. Collective or class-action litigations relating to data privacy violations are also permitted under the GDPR and are beginning to arise in the EU, and are no longer unique to the U.S.

Regulation of privacy and data protection and information security often requires monitoring of and changes to our data practices in regard to the collection, use, disclosure, storage, transfer and/or security of personal and sensitive information. We have incurred, and may continue to incur, significant expenses to comply with evolving mandatory privacy and security standards and protocols imposed by law, regulation, industry standards, shifting consumer expectations, or contractual obligations. In particular, with laws and regulations such as the GDPR in the EU and the CCPA, CPRA and BIPA in the U.S. imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices, and may incur significant costs and expenses in an effort to do so. New requirements or reinterpretations of existing requirements in these areas, or the development of new regulatory schemes related to the digital economy in general, may also increase our costs and could impact the products and services we offer and other aspects of our business, such as fraud monitoring, the development of information-based products and solutions and technology operations. We may not be able to respond quickly or effectively to regulatory, legislative, and other developments, and these changes may in turn impair our ability to offer our existing or planned features, products, and services and/or increase our cost of doing business. Any of these developments could materially and adversely affect our overall business and results of operations.

In addition, fraudulent activity could encourage regulatory intervention, which could damage our reputation and reduce the use and acceptance of our integrated products and services or increase our compliance costs. Criminals are using increasingly sophisticated methods to capture consumer account information to engage in illegal activities such as counterfeiting or other fraud, sometimes setting up fake Paysafe websites or using stolen credentials from the dark web to attack customer accounts, where such customers are using the same credentials across multiple sites or accounts. While we are taking measures we believe will make payments more secure, increased fraud levels involving our products and services, or misconduct or negligence by third parties servicing our products and services, could lead to regulatory intervention, such as enhanced security requirements, as well as damage to our reputation.

 

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Legal, political and economic uncertainty surrounding Brexit may be a source of instability in international markets, could cause disruption to and create uncertainty surrounding our business and result in new regulatory challenges and costs.

On January 31, 2020, the UK left the EU (commonly referred to as “Brexit”) and entered into a transition period set to end on December 31, 2020 (the “Transition Period”), during which EU legislation continues to apply in the UK as though it were a member state of the EU. Negotiations to determine the future terms of the UK’s relationship with the EU following the end of the Transition Period are ongoing and, therefore, at present it is difficult to predict the political and economic consequences of Brexit on the UK, European and global economies and the effect it will have on our business and operations. Ongoing uncertainty on whether and when the UK and the EU will come to an agreement on the terms of the future relationship sustains the possibility that the UK will leave the EU without an agreement for the future trade relationship in place. If the UK and the EU are unable to negotiate acceptable trading and customs terms or if other EU member states pursue withdrawal, barrier-free access between the UK and other EU member states or among the European Economic Area overall could be diminished or eliminated. The long-term effects of Brexit will depend on any agreements (or lack thereof) between the UK, the EU and those third countries with which the UK currently enjoys tariff free access and, in particular, any arrangements for the UK to retain access to EU markets after the Transition Period.

Any of the above-mentioned developments, or the perception that any of these developments are likely to occur, could have a material adverse effect on political stability, economic growth or business activity in the UK, the EU and elsewhere. Any Brexit-related downturn is likely to be compounded by the effects of the COVID-19 pandemic. See “—Risks Related to COVID-19—The ongoing COVID-19 pandemic, including the resulting global economic uncertainty and measures taken in response to the pandemic, could materially impact our business and future results of operations and financial condition.”

We have significant operations in the UK and the EU. A withdrawal from the EU is unprecedented, and it is unclear how the UK’s access to the EU’s single market for goods, capital, services and labor within the EU and the wider commercial, legal and regulatory environment, will impact our UK operations. Lack of clarity about future UK laws and regulations, as the UK determines which EU laws and regulations to keep or replace in the UK in the event of a withdrawal, or how such laws and regulations may be changed, may adversely impact the behavior of our customers and increase costs and cause disruption to our business. We may also face new regulatory costs and challenges as a result of Brexit that could have an adverse effect on our operations and development programs, consumer and investor confidence and the level of consumer discretionary purchases, thereby impacting the use of our payments services by merchants. In addition, Brexit could also result in increasingly divergent laws, regulations, and licensing requirements for us over time. Brexit could lead to legal uncertainty and increased complexity for financial services firms as national laws and regulations in the UK start to diverge from EU laws and regulations.

While we have obtained the necessary licenses and completed the necessary passporting notifications from the CBI and opened and staffed an additional office in Ireland to enable the continuation of operations within ongoing EEA jurisdictions after the end of the Transition Period, there may still continue to be uncertainty surrounding the consequences of Brexit, which could negatively impact our business, financial condition, results of operations and cash flows. For example, applicable tax rules and regulations concerning the transfer of assets and operations from the UK to EEA jurisdictions are complex and subject to significant judgment and interpretation. If HMRC or other applicable tax authorities were successful in challenging our conclusions in this regard, we may be liable for material additional taxes and penalties. In addition, political decisions could result in the relocation of businesses and people, cause business interruptions, cause currency fluctuations (including in relation to the British Pound), lead to trade restrictions and increases in or the imposition of trade tariffs, lead to economic recession or depression and impact the stability of the financial markets, the availability of credit, political systems, financial institutions and the financial and monetary system. By extension, this could impact our business and/or envisioned business arrangements, licenses and contingency plans, thereby damaging our reputation, operations and financial position and lead to increased costs to retain current revenues, any of which could have a material adverse effect on us.

 

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We must comply with money laundering regulations in Bermuda, the UK, Ireland, Switzerland, the United States, Canada and elsewhere, and any failure to do so could result in severe financial and legal penalties.

We are subject to various anti-money laundering and counter-terrorist financing laws and regulations around the world that prohibit, among other things, our involvement in transferring the proceeds resulting from criminal activities. Facilitating financial transactions over the internet creates a risk of fraud and ensuring customer data security, privacy, and ongoing compliance with applicable regulations requires significant capital expenditure. Applicable money laundering regulations require firms to put preventative measures in place and to perform KYC procedures, including conducting customer identification and verification and undertaking ongoing monitoring. In addition, regulations require companies to keep records of identity and to train their staff on the requirements of the relevant money laundering regulations. At present, for instance, in the UK and Ireland, a senior member of staff needs to be appointed and approved by the FCA or by the CBI, respectively, to oversee appropriate policies and procedures. Regulators globally continue to increase their scrutiny of compliance with these obligations, which may require us to further revise or expand our compliance program, including the procedures we use to verify the identity of our customers and to monitor transactions. Regulators regularly re-examine the transaction volume thresholds at which we must obtain and keep applicable records or verify identities of customers and any change in such thresholds could result in greater costs for compliance. In the EU, the implementation of the Fifth Anti-Money Laundering Directive (“MLD5”) (which had to be transposed by each Member State by 10 January 2020) amended the Fourth Anti-Money Laundering Directive by (among other things) limiting the scope of customer due diligence exemptions for electronic money products and revising the monitoring requirements of existing customers. The implementation of MLD5 and the consequent potential for divergence in interpretation and application by EU Member States may make compliance more costly and operationally difficult to manage, lead to increased friction for customers, and result in a decrease in business. In the U.S., the BSA requires among other things, requires money services businesses (such as money transmitters and providers of prepaid access) to develop and implement risk-based anti-money laundering programs, report large cash transactions and suspicious activity, and maintain transaction records. We are also subject to regulatory oversight and enforcement by FinCEN and have registered Skrill USA with FinCEN as a money services business. Any determination that we have violated the anti-money-laundering laws could have a material adverse effect on our financial condition, results of operations and future prospects. For example, the BSA requires us to report currency transactions in excess of $10,000, including identification of the customer by name and social security number, to the IRS. This regulation also requires us to report certain suspicious activity, including any transaction that exceeds $2,000 that we know, suspect or have reason to believe involves funds derived from illegal activity or is designed to evade federal regulations or reporting requirements and to verify sources of such funds. Substantial penalties can be imposed against us if we fail to comply with this regulation. If we fail to comply with these laws and regulations, the imposition of a substantial penalty could have a material adverse effect on our business, financial condition and results of operations.

Our customers reside in over 120 countries and territories. However, we believe that we do not conduct regulated activities in all of these jurisdictions. Rather, we conduct regulated activity in only a limited number of jurisdictions and our wider customer base accesses our services online. We are subject to anti-money laundering regulations in Bermuda, the UK, Ireland, Switzerland, the United States, Canada and in any other jurisdiction where we are established and performing activities that would require that we apply anti-money laundering regulations. Where a customer resides in a jurisdiction outside of Europe in which we do not consider ourselves to be conducting a regulated activity, we follow the home state laws of the relevant Group regulated entities and our group policies which seek to apply the highest common standard regardless of the residency of that customer. We believe that these processes are of the requisite standard, although there can be no guarantee that they meet all the requirements of other jurisdictions. However, if we were to violate laws or regulations governing money transmitters or electronic fund transfers, either in Bermuda, the UK, Ireland, Switzerland, the United States, Canada or elsewhere, including as a result of any failure by our employees to apply correctly our KYC procedures, this could result in a requirement for future compliance, fines, other forms of liability and/or force us to change business practices or to cease operations altogether.

 

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We are also subject to rules and regulations imposed by, amongst others, the European Union, HM Treasury and OFAC restricting the transfer of funds to certain specifically designated countries. While we believe that we have in place appropriate systems and procedures to ensure that transfers to merchants or customers in countries on watch lists are not executed, there can be no guarantee that such controls are, or will continue to be, effective and any sanctions imposed by any regulatory body on us for executing a transfer to a country on a watch list could have a material adverse effect on our results of operations, financial condition and future prospects.

Limitations imposed by the FCA and CBI on the right to own our securities may result in sanctions being imposed on our regulated subsidiaries and an acquirer of such securities in the event of non-compliance by such acquirer, and may reduce the value of our shares.

Several of the Company’s indirect subsidiaries are subject to regulatory supervision, including the requirement to obtain prior consent from the relevant regulator when a person holds, acquires or increases a qualifying holding in those entities. See “Information Related to Paysafe—Licensing and Regulation—Payments Regulation” and “Description of the Company’s Securities.” On the basis of these regulations, no person may hold or acquire, alone or together with others, a direct or indirect stake of 10% or more of our shares, 10% of the voting rights attached to our shares, or exercise, directly or indirectly, significant influence over any of the regulated subsidiaries (or increase an existing holding of 10% or more of our shares or the voting rights attached to our shares crossing a control threshold (20%, 30% or 50%)) without first obtaining the prior approval of the FCA and the CBI.

Non-compliance with those requirements constitutes a criminal offense that may lead to criminal prosecution, as well a violation of applicable laws governing the payment services and electronic money industry in the relevant jurisdictions, which may lead to injunctions, penalties and sanctions against the Company’s regulated subsidiaries as well as the person seeking to hold, acquire or increase the qualifying holding (including, but not limited to, substantial fines, public censure and prison sentences), may subject the relevant transactions to cancellation or forced sale, and may result in increased regulatory compliance requirements or other potential regulatory restrictions on our business (including in respect of matters such as corporate governance, restructurings, mergers and acquisitions, financings and distributions), enforced suspension of operations, cancellation of corporate resolutions made on the basis of such qualifying holding, restitution to customers, removal of board members, suspension of voting rights and variation, cancellation or withdrawal of licenses and authorizations. If any of this were to occur, it could damage our reputation, limit our growth and materially and adversely affect our business, financial condition and results of operations.

In addition, uncertainty and inconvenience created by those regulatory requirements may discourage potential investors from acquiring 10% or more of our shares, which may in turn reduce the value of the shares.

We may not be able to adequately protect or enforce our intellectual property rights, or third parties may allege that we are infringing their intellectual property rights.

Our success and ability to compete in various markets around the world depends, in part, upon our proprietary technology. We seek to protect our intellectual property rights by relying on applicable laws and regulations in the U.S. and internationally, as well as a variety of administrative procedures and contractual measures. We rely on copyright, trade secret and trademark laws to protect our technology, including the source code for proprietary software, and other proprietary information. We also rely on contractual restrictions to protect our proprietary rights when offering or procuring products and services, including confidentiality and invention assignment agreements entered into with our employees and contractors and confidentiality agreements with parties with whom we conduct business. We have not applied for any patents in respect of our electronic payment processing systems and cannot give assurances that any patent applications will be made by us in the future or that, if they are made, will be granted.

We may, over time, increase our investment in protecting our intellectual property through additional trademark, patent and other intellectual property filings, which could be expensive and time-consuming. We may

 

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not be able to obtain protection for our technology and even if we are successful in obtaining effective patent, trademark, trade secret and copyright protection, it is expensive to maintain these rights and the costs of defending our rights could be substantial. Moreover, our failure to develop and properly manage new intellectual property could hurt our market position and business opportunities.

Although we have generally taken measures to protect our intellectual property rights, there can be no assurance that we will be successful in protecting or enforcing our rights in every jurisdiction, or that contractual arrangements and other steps that we have taken to protect our intellectual property will prevent third parties from infringing or misappropriating our intellectual property or deter independent development of equivalent or superior intellectual property rights by others. If we are unable to prevent third parties from adopting, registering, or using trademarks and trade dress that infringe, dilute, or otherwise violate our trademark rights, the value of our brands could be diminished and our business could be adversely affected. Also, we may not be able to discover or determine the extent of any unauthorized use of our proprietary rights. Our intellectual property rights may be infringed, misappropriated, or challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. Any failure to adequately protect or enforce our intellectual property rights, or the significant costs incurred in doing so, could diminish the value of our intangible assets and materially harm our business.

Similarly, our reliance on unpatented proprietary information and technology, such as trade secrets and confidential information, depends in part on agreements we have in place with employees and third parties that place restrictions on the use and disclosure of this intellectual property. These agreements may be insufficient or may be breached, in either case potentially resulting in the unauthorized use or disclosure of our trade secrets and other intellectual property, including to our competitors, which could cause us to lose any competitive advantage resulting from this intellectual property. Individuals not subject to invention assignment agreements may make adverse ownership claims to our current and future intellectual property. Unauthorized parties may attempt to copy aspects of our intellectual property or obtain and use information that we regard as proprietary and, if successful, may potentially cause us to lose market share or otherwise harm our business and ability to compete. There can be no assurance that the intellectual property we own or license will provide competitive advantages or will not be challenged or circumvented by our competitors.

We are, from time to time, subject to litigation related to alleged infringement of other parties’ patents. As the number of products in the technology and payments industries increases and the functionality of these products further overlaps, and as we acquire technology through acquisitions or licenses, we may become increasingly subject to intellectual property infringement and other claims. These risks have been amplified by the increase in so-called non-practicing entities, third parties whose sole or primary business is to assert such claims. Even if we believe that any of these intellectual property related claims are without merit, litigation may be necessary to determine the validity and scope of the patent or other intellectual property rights of others. The ultimate outcome of any alleged infringement claim is often uncertain and, regardless of the outcome, any such claim, with or without merit, may be time-consuming, result in costly litigation, divert management’s time and attention from our business, and require us to, among other things, redesign or stop providing our products or services, pay substantial amounts to satisfy judgments or settle claims or lawsuits, pay substantial royalty or licensing fees, or satisfy indemnification obligations that we have with certain parties with whom we have commercial relationships. Alternatively, we may, from time to time, determine to incur the costs required to obtain a third party patent license so as to avoid the uncertainty, significant costs and potentially negative publicity associated with patent litigation. We may not be able to obtain licenses to relevant intellectual property on commercially reasonable terms or at all, and such inability could materially harm or restrict our business. Even if we were able to obtain such a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us. In addition, we could be found liable for significant monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. Claims that we have misappropriated the confidential information or trade secrets of third parties could similarly harm our business.

 

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Our use of open source software could compromise our ability to offer our products or services and subject us to possible litigation.

We use open source software in connection with our products and services. Companies that incorporate open source software into their products have, from time to time, faced claims challenging the use of open source software and compliance with open source license terms. As a result, we could be subject to suits by parties claiming ownership of what we believe to be open source software or claiming noncompliance with open source licensing terms. While the use of open source software may reduce development costs and speed up the development process, it may also present certain risks that may be greater than those associated with the use of third-party commercial software. For example, open source software is generally provided without any warranties or other contractual protections regarding infringement or the quality of the code, including the existence of security vulnerabilities. Despite our efforts to monitor our use of open source software and compliance with applicable license terms, we cannot guarantee we comply with all terms of open source licenses applicable to us, and we could be required by the terms of applicable open source software licenses to publicly disclose all or part of the proprietary source code to our software and/or make available any derivative works of the open source code on unfavorable terms or at no cost. The terms of some open source licenses are ambiguous, and third parties may claim that we have violated terms of open source licenses even if we believe we comply. There is little legal precedent in this area and any actual or claimed requirement to disclose our proprietary source code or pay damages for breach of contract could harm our business and could help third parties, including our competitors, develop products and services that are similar to or better than ours. Any of the foregoing could be harmful to our business, financial condition and results of operations.

If we fail to comply with our obligations under license or technology agreements with third parties, we may be required to pay damages and we could lose license rights that are critical to our business.

We license certain intellectual property that is important to our business, including technologies, data and software from third parties, and in the future we may enter into additional agreements that provide us with licenses to valuable intellectual property, technology, or data. Certain of our agreements may provide that intellectual property arising under these agreements, such as data valuable to our business, will be owned by the counterparty, in which case, we may not have adequate rights to use such data or may not have exclusivity with respect to the use of such data, which could result in third parties, including our competitors, being able to use such data to compete with us. If we fail to comply with any of the obligations under our license agreements, we may be required to pay damages and the licensor may have the right to terminate the license. Termination by the licensor could cause us to lose valuable rights, and could prevent us from selling our products and services, or inhibit our ability to commercialize future products and services. Our business could suffer if any current or future licenses expire or are terminated, if the licensors fail to abide by the terms of the license, if the licensors fail to enforce licensed intellectual property against infringing third parties, if the licensed intellectual property rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms, or at all. Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects.

Changes in tax law, changes in our effective tax rate or exposure to additional tax liabilities could affect our profitability and financial condition.

We carry out our business operations through entities in multiple foreign jurisdictions. As such, we are required to file corporate income tax returns that are subject to foreign tax laws. The foreign tax liabilities are determined, in part, by the amount of operating profit generated in these different taxing jurisdictions. Our effective tax rate, earnings and operating cash flows could be adversely affected by changes in the mix of operating profits generated in countries with higher statutory tax rates as well as by the positioning of our cash balances globally. If statutory tax rates or tax bases were to increase or if changes in tax laws, regulations or interpretations were made that impact us directly, our effective tax rate, earnings and operating cash flows could be adversely impacted.

 

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Any such adverse changes in the applicability of tax to us could increase the levels of taxation payable by us which would have an adverse effect on our business, financial condition, results of operations and prospects. In addition to the possibility of a substantial tax burden being imposed on us, the risk that we may become subject to an increased level of taxation may result in us needing to change our corporate or operational structure, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Additionally, the tax authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements. For example, various levels of government and international organizations, such as the OECD and the EU, increasingly focus on future tax reform and any result from this development may create changes to long-standing tax principles, which could adversely affect our effective tax rate. Additionally, tax authorities at the international, federal, state, and local levels are currently reviewing the appropriate tax treatment of companies engaged in internet commerce and financial technology. These developing changes could affect our financial position and results of operations. In particular, due to the global nature of the internet, it is possible that tax authorities at the international, federal, state, and local levels may attempt to regulate our transactions or levy new or revised sales & use taxes, VAT, digital services taxes, income taxes, or other taxes relating to our activities in the internet commerce and financial technology space. New or revised taxes, in particular, sales & use taxes, VAT, and similar taxes, including digital service taxes, would likely increase the cost of doing business. New taxes could also create significant increases in internal costs necessary to capture data and collect and remit taxes. Any of these events could have an adverse effect on our business and results of operations.

Furthermore, any changes in other jurisdictions to the political and social perception of running a business out of a tax-friendly jurisdiction (such as Bermuda) or any action by HMRC or any other tax authority to investigate our tax arrangements could result in adverse publicity and reputational damage for us, which could have an adverse effect on our business, financial condition, results of operations and prospects. For example, in January 2019, HMRC introduced its Profit Diversion Compliance Facility (“PDCF”), the focus of which is to target, and subsequently bring into the charge to tax, transactions which are considered to result in a diversion of profits from the UK corporation tax net. We are engaged in submissions and correspondence with HMRC in connection with the PDFC, primarily relating to legacy transfer pricing policies. Transfer pricing is an inherently subjective area requiring significant management judgments. If HMRC or any other tax authority is successful in challenging our tax arrangements, we may be liable for additional tax and penalties and interest related thereto, which may have a significant impact on our business, financial condition, results of operations and prospects.

We may be affected by Sections 1471-74 of the Code (“FATCA”) and other cross border automatic exchange of information provisions.

In light of FATCA, certain non-U.S. financial institutions (“foreign financial institutions” or “FFIs”) are required to register with the U.S. Internal Revenue Service (“IRS”) to obtain a Global Intermediary Identification Number (“GIIN”) and comply with the terms of FATCA, including any applicable intergovernmental agreement (“IGA”) and any local laws implementing such agreement or FATCA. Based on our current operations and business activities, including our Digital Wallet business, we have registered certain of our subsidiaries, and may be required to register additional subsidiaries, as FFIs and will therefore be required to register with the IRS to obtain a GIIN, and required to comply with the terms of any applicable IGA. Failure to comply with FATCA (including as the same may be implemented under the terms of any applicable IGA) could subject certain payments of U.S. source fixed, determinable, annual, or periodical income made to us to 30% FATCA withholding tax. Further, our FFI subsidiaries would need to perform diligence on their existing and new customers, provided that their account balances reached certain thresholds, including obtaining self-certifications regarding the account holder’s citizenship or tax residence in the United States. They would then be required to report certain information about their U.S. accountholders to either the IRS or their local tax authorities (which will in turn provide such information to the IRS). This reporting requirement could potentially dissuade customers from doing business with us.

 

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We are regularly subject to litigation, regulatory actions and government inquiries.

We may be and in some cases have been subject to claims, lawsuits (including class action lawsuits), government or regulatory investigations, subpoenas, inquiries or audits, and other adverse legal proceedings involving areas such as intellectual property, consumer protection, privacy, data protection, biometric data processing, gambling, labor and employment, immigration, competition, accessibility, securities, tax, marketing and communications practices, commercial disputes, anti-money laundering, anti-corruption, counter-terrorist financing, sanctions and other matters. See “Information Related to Paysafe—Legal Proceedings.” For example, Al’s Pals Pet Care, LLC, et al filed a class action lawsuit in 2017 against Woodforest National Bank (“Woodforest”) and its former payment processing affiliate that we acquired in August 2017, Merchants’ Choice Payment Solutions (“MCPS”). The lawsuit alleged, in claims extending back to December 2013, that sales agents of MCPS were enrolling merchants without properly disclosing that those merchants were switching payment services providers. In addition, it was alleged that merchants were assessed unauthorized charges by MCPS. Woodforest and Paysafe Payment Processing Solutions, LLC (“Paysafe Payment”), as successor to MCPS, settled the lawsuit in January 2019 for a maximum of $15 million. The settlement was funded from an escrow account established in connection with our acquisition of MCPS. The number and significance of disputes and inquiries may increase as our business expands in scale, scope and geographic reach, and our products and services increase in scale and complexity. In addition, the laws, rules and regulations affecting our business, including those pertaining to internet and mobile commerce, data protection, payments services, and credit, are subject to evolving interpretation by the courts and governmental authorities, and the resulting uncertainty in the scope and application of these laws, rules, and regulations increases the risk that we will be subject to private claims and governmental actions alleging liability on our part. Further, our focus on specialized industry verticals exposes us to a higher risk of losses resulting from investigations, regulatory actions and litigation. See “—Risks Related to Paysafe’s Business and Industry—Our focus on specialized industry verticals can increase our risks relative to other companies in our industry.”

The scope, outcome, and impact of any claims, lawsuits, government investigations, disputes, and other legal proceedings to which we are subject cannot be predicted with certainty. Regardless of the outcome, such matters can have an adverse impact, which may be material, on our business, financial condition and results of operations because of legal costs, diversion of management resources, reputational damage, and other factors. Determining reserves for our pending litigation and regulatory proceedings is a complex, fact-intensive process that involves a high degree of discretionary judgment. Resolving one or more of such legal and regulatory proceedings or other matters could potentially require us to make substantial payments to satisfy judgments, fines, or penalties or to settle claims or proceedings, any of which could materially and adversely affect our business, financial condition and results of operations. These proceedings could also result in reputational harm, criminal sanctions, consent decrees, or orders that prevent us from offering certain products or services, cause us to withdraw from certain markets or terminate certain relationships, require us to change our business practices in costly ways, or develop non-infringing or otherwise altered products or technologies. Any of these consequences could materially and adversely affect our business, financial condition, results of operations and future prospects.

Risks Related to Paysafe’s Indebtedness

Our substantial leverage could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to engage in acquisitions, our ability to react to changes in the economy or our industry or our ability to pay our debts, and could divert our cash flow from operations to debt payments.

We are highly leveraged. As of September 30, 2020, the total principal amount of our debt was approximately $3.3 billion. Subject to the limits contained in the credit agreements that govern our credit facilities, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our high level of

 

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debt could increase. Specifically, our high level of debt could have important consequences, including the following:

 

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making it more difficult for us to satisfy our obligations with respect to our debt;

 

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limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

 

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requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;

 

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increasing our vulnerability to general adverse economic and industry conditions;

 

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exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest;

 

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limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

 

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placing us at a disadvantage compared to other, less leveraged competitors; and

 

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increasing our cost of borrowing.

We are a holding company, and our consolidated assets are owned by, and our business is conducted through, our subsidiaries. Revenue from these subsidiaries is our primary source of funds for debt payments and operating expenses. Our credit agreements contain covenants that restrict our subsidiaries from making distributions, subject to certain baskets and exceptions, which may impair our ability to meet our debt service obligations or otherwise fund our operations. Moreover, there may be restrictions on payments by subsidiaries to their parent companies under applicable laws, including laws that require companies to maintain minimum amounts of capital and to make payments to shareholders only from profits. As a result, although a subsidiary of ours may have cash, we may not be able to obtain that cash to satisfy our obligation to service our outstanding debt or fund our operations.

Despite our current level of indebtedness, we may be able to incur substantially more debt and enter into other transactions which could further exacerbate the risks to our financial condition described above.

We may be able to incur significant additional indebtedness in the future. Although certain of the agreements governing our existing indebtedness contain restrictions on the incurrence of additional indebtedness and entering into certain types of other transactions, these restrictions are subject to a number of qualifications and exceptions. Additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also do not prevent us from incurring obligations, such as trade payables, that do not constitute indebtedness as defined under our debt instruments. To the extent new debt is added to our current debt levels, the substantial leverage risks described in the immediately preceding risk factor would increase. See “Description of Certain Indebtedness.”

Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

Interest rates may increase in the future. As a result, interest rates on our variable rate credit facilities could be higher or lower than current levels. As of September 30, 2020, the Company held $3.2 billion of outstanding debt at variable interest rates. We have entered into interest rate caps maturing on December 31, 2021 and interest rate swaps maturing on December 31, 2023 with combined notional amounts of $1.9 billion, which may mitigate the exposure to changes in interest rates. However, if interest rates were to increase, our debt service obligations on the variable rate indebtedness would increase even where the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.

 

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Further, our USD First Lien Term Loan, USD Second Lien Term Loan and First Lien Revolving Credit Facility (each, as defined in “Description of Certain Indebtedness”) bear interest at a rate that varies depending on the London Interbank Offered Rate (“LIBOR”). The FCA, which regulates LIBOR, has announced that it intends to stop encouraging or requiring banks to submit LIBOR rates after 2021 and it is unclear if LIBOR will cease to exist or if new methods of calculating LIBOR will evolve. Changes in the method by which LIBOR is determined or the transition from LIBOR to a successor benchmark rate may result in, among other things, a sudden or prolonged increase or decrease in LIBOR, a delay in the publication of LIBOR, and changes in the rules or methodologies in LIBOR, which may discourage market participants from continuing to administer or to participate in LIBOR’s determination, and, in certain situations, could result in LIBOR no longer being determined and published. If a published U.S. dollar LIBOR rate is unavailable after 2021, the interest rates on our USD First Lien Term Loan and USD Second Lien Term Loan will be determined using various alternative methods, any of which may result in interest obligations that are more than or do not otherwise correlate over time with the payments that would have been made on such debt if U.S. dollar LIBOR was available in its current form. Further, the same costs and risks that may lead to the discontinuation or unavailability of U.S. dollar LIBOR may make one or more of the alternative methods impossible or impracticable to determine. Any of these proposals or consequences could have a material adverse effect on our results of operations and financial condition.

Our debt agreements impose significant operating and financial restrictions on us and our subsidiaries, which could prevent us from capitalizing on business opportunities.

The agreements that govern our credit facilities impose significant operating and financial restrictions on us. These restrictions limit the ability of certain of our subsidiaries to, among other things:

 

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incur additional indebtedness and make guarantees;

 

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create liens on assets;

 

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engage in mergers or consolidations or make fundamental changes;

 

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sell assets;

 

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pay dividends and distributions or repurchase share capital;

 

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make investments, loans and advances, including acquisitions;

 

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engage in certain transactions with affiliates;

 

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enter into certain burdensome agreements;

 

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make changes in the nature of their business; and

 

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make prepayments of junior debt.

In addition, with respect to the First Lien Revolving Credit Facility (as defined in “Description of Certain Indebtedness”), certain of our subsidiaries are required to maintain a maximum consolidated first lien net leverage ratio not to exceed 9.00:1.00, tested at the end of each quarter in which the principal amount of the First Lien Revolving Credit Facility outstanding exceeds 40% of the total commitments under such facility at such time. Furthermore, the Paysafe Payment Credit Agreement (as defined in “Description of Certain Indebtedness”) requires Paysafe Payment to maintain, as of the last day of each four fiscal quarter period, (i) a minimum fixed charge coverage ratio, (ii) a maximum leverage ratio and (iii) a minimum liquidity amount. See “Description of Certain Indebtedness.”

As a result of these restrictions, we are limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include similar or more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders or amend the covenants.

 

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Our failure to comply with the restrictive covenants described above as well as other terms of our other indebtedness or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms or are unable to refinance these borrowings, our results of operations and financial condition could be adversely affected.

Our business may be adversely impacted by changes in currency exchange rates.

As we operate across multiple jurisdictions and currencies, changes in currency exchange rates could lead to adverse impacts on our financial assets and liability, and in particular on our external debt and intercompany transactions. A deterioration in reported earnings as a result of currency exchange rate fluctuations could lead to a covenant breach and result in an event of default in our agreements relating to our outstanding indebtedness which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms or are unable to refinance these borrowings, our results of operations and financial condition could be adversely affected.

Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of events beyond our control, could result in an event of default that could materially and adversely affect our results of operations and our financial condition.

If there were an event of default under any of the agreements relating to our outstanding indebtedness, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. We cannot assure you that our assets or cash flows would be sufficient to fully repay borrowings under our outstanding debt instruments if accelerated upon an event of default. Further, if we are unable to repay, refinance or restructure our indebtedness under our secured debt, the holders of such debt could proceed against the collateral securing that indebtedness. In addition, any event of default or declaration of acceleration under one debt instrument could also result in an event of default under one or more of our other debt instruments.

Upon a change of control, all of our outstanding debt under our credit facilities would become immediately due and payable.

Upon a change of control, as defined under our credit agreements, all of our outstanding debt under our credit facilities would be immediately due and payable. Among other events, the CVC Investors and the Blackstone Investors, collectively, ceasing to beneficially own directly or indirectly more than 30% of the issued and outstanding Company Common Shares would constitute a change of control under our credit agreements. In order to obtain sufficient funds to repay our debt if a change of control occurs, we expect that we would have to refinance our debt. We cannot assure you that we would be able to refinance our debt on reasonable terms, if at all. Our failure to repay all outstanding debt which becomes due and payable due to a change of control would trigger an event of default under the applicable credit agreement and may be an event of default under one or more of our other agreements. Moreover, such an event of default under one credit facility may cause the acceleration of our other debt under our other credit facilities. Our future debt also may contain restrictions on repayment requirements with respect to specified events or transactions that constitute a change of control under our debt agreements. Such restrictions could discourage, delay or prevent a transaction involving a change in control of the Company, including actions that our stockholders may deem advantageous, or negatively affect the trading price of the Company Common Shares.

Repayment of our debt is dependent on cash flow generated by our subsidiaries, which may be subject to limitations beyond our control.

Our subsidiaries own all of our assets and conduct all of our operations. Accordingly, repayment of our indebtedness is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available by dividend, debt repayment or otherwise.

 

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Unless they are obligors of our indebtedness, our subsidiaries do not have any obligation to pay amounts due on such indebtedness or to make funds available to the notes issuers for that purpose. Our non-guarantor subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each non-guarantor subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our non-guarantor subsidiaries. While limitations on our subsidiaries restrict their ability to pay dividends or make other intercompany payments, these limitations are subject to certain qualifications and exceptions.

In the event that we are unable to receive distributions from our subsidiaries or make other intercompany payments, we may be unable to make required principal and interest payments on our indebtedness.

Our inability to generate sufficient cash flow could affect our ability to execute our strategic plans.

Organic growth opportunities are an important element of our strategy. See “Information Related to Paysafe—Our Growth Strategies.” We may not generate sufficient cash flow to finance such growth plans. Consequently, the execution of our growth strategy may require access to external sources of capital, which may not be available to us on acceptable terms, or at all. Limitations on our access to capital, including on our ability to issue additional debt or equity, could result from events or causes beyond our control, and could include decreases in our creditworthiness or profitability, significant increases in interest rates, increases in the risk premium generally required by investors, decreases in the availability of credit or the tightening of terms required by lenders. Any limitations on our ability to secure external capital, continue our existing finance arrangements or refinance existing financing obligations could limit our liquidity, financial flexibility or cash flow and affect our ability to execute our strategic plans, which could have a material adverse effect on our business, results of operations and financial condition.

Our consolidated financial statements include significant intangible assets which could be impaired.

We carry significant intangible assets on our statement of financial position. As of September 30, 2020, we had $1.6 billion of intangible assets, including $114.5 million in brands, and $3.5 billion in goodwill.

Pursuant to current accounting rules, we are required to assess goodwill for impairment at least annually or more frequently if impairment indicators are present. Impairment indicators include, but are not limited to, significant underperformance relative to historical or projected future operating results, a significant decline in share price or market capitalization and negative industry or economic trends. If such events were to occur, the carrying amount of our goodwill may no longer be recoverable and we may be required to record an impairment charge. The COVID-19 pandemic and its impact on our business was an impairment indicator that we assessed. See “—Risks Related to COVID-19—The ongoing COVID-19 pandemic, including the resulting global economic uncertainty and measures taken in response to the pandemic, could materially impact our business and future results of operations and financial condition.” Due to the impairment indicators triggered by the COVID-19 pandemic that began in March 2020 and the effect of the resulting uncertainty on future performance, we performed an assessment of goodwill and intangible assets at March 31, 2020. We also assessed our intangible assets for impairment for the most recent reporting date as of September 30, 2020. Should the impact of the COVID-19 pandemic on our revenue be more severe or of longer duration than assumed in the downside sensitivity, the goodwill balance may be at risk of impairment. Other intangible assets, such as trademarks and customer relationships, are amortized across their useful economic lives. However, if impairment indicators are present, we are required to test such intangible assets for impairment.

Risks Related to FTAC, the Business Combination and Paysafe Following the Business Combination

Risks Related to FTAC and the Business Combination

FTAC has no operating history and its results of operations and those of the post-combination company may differ significantly from the unaudited pro forma financial data included in this proxy statement/prospectus.

FTAC is a development stage blank check company, and as it has no operating history or results.

 

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This proxy statement/prospectus includes unaudited pro forma condensed combined financial statements for the post-combination company. The summary unaudited pro forma condensed combined balance sheet as of September 30, 2020 combines the unaudited condensed consolidated statement of financial position of Accounting Predecessor as of September 30, 2020 and the unaudited balance sheet of FTAC as of September 30, 2020 on a pro forma basis as if the Business Combination had been consummated on September 30, 2020. The summary unaudited pro forma condensed combined statements of comprehensive loss for the nine months ended September 30, 2020 and the year ended December 31, 2019 combine the unaudited condensed consolidated statement of comprehensive loss of the Accounting Predecessor for the nine months ended September 30, 2020, the audited consolidated statement of comprehensive loss of the Accounting Predecessor for the year ended December 31, 2019 and FTAC unaudited condensed statement of operations for the period from July 15, 2020 (inception) through September 30, 2020 on a pro forma basis as if the Business Combination had been consummated on January 1, 2019, the beginning of the earliest period presented.

The unaudited pro forma condensed combined financial information is based upon, and should be read in conjunction with, the Paysafe Unaudited 2020 Interim Condensed Consolidated Financial Statements and related notes, the Paysafe Audited 2019 Consolidated Financial Statements and related notes and the historical financial statements of FTAC and related notes included in this proxy statement/prospectus. The Summary Pro Forma Information has been presented for informational purposes only and is not necessarily indicative of what the combined Company’s financial position or results of operations actually would have been had the Business Combination and related transactions been completed as of the dates indicated. In addition, the Summary Pro Forma Information does not purport to project the future financial position or operating results of the Company following the consummation of the Business Combination. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

The Sponsor Persons and Cannae have agreed to vote in favor of the Initial Business Combination, regardless of how the Public Stockholders vote.

In connection with the Business Combination, the Sponsor Persons and Cannae, have each agreed to vote their shares of FTAC Common Stock in favor of the Business Combination. Currently, the Sponsor Persons and Cannae collectively own approximately 20% of the outstanding shares of FTAC Common Stock. Accordingly, it is more likely that the necessary stockholder approval will be received than would be the case if the Sponsor Persons and Cannae agreed to vote their shares of FTAC Common Stock in accordance with the majority of the votes cast by FTAC’s Public Stockholders.

FTAC may not be able to complete the Business Combination or any other business combination within the prescribed time frame, in which case FTAC would cease all operations, except for the purpose of winding up and FTAC would redeem FTAC’s Public Shares and liquidate.

If FTAC does not complete an Initial Business Combination by August 21, 2022, it must cease operation and redeem 100% of the outstanding shares of FTAC Class A common Stock. FTAC may not be able to consummate the Business Combination or any other business combination by such date. If FTAC has not completed any Initial Business Combination by such date, it will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding Public Shares, which redemption will completely extinguish the Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of FTAC’s remaining stockholders and board of directors, dissolve and liquidate, subject in each case to FTAC’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

 

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The Founder, certain members of the FTAC Board and certain FTAC officers have interests in the Business Combination that are different from or are in addition to those of other stockholders in recommending that stockholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in this proxy statement/prospectus.

In considering the recommendation of the FTAC Board to vote in favor of approval of the Business Combination Proposal and the other proposals, stockholders should keep in mind that the Founder and the Insiders have interests in such proposals that are different from, or in addition to, those of FTAC Stockholders generally. In particular:

 

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The fact that if the Transactions or another business combination are not consummated by August 21, 2022, FTAC will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and the FTAC Board, dissolving and liquidating. In such event, the 36,675,836 initial shares held by the Founder would be worthless because the holders thereof are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of approximately $             based upon the closing price of $             per share on the NYSE on                 , 2021, the record date for the Special Meeting.

 

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The fact that the Founder purchased an aggregate of 20,893,780 Private Placement Warrants from FTAC for an aggregate purchase price of $31,340,669 (or $1.50 per warrant). These purchases took place on a private placement basis simultaneously with the consummation of the FTAC IPO. A portion of the proceeds FTAC received from these purchases were placed in the Trust Account. Such warrants had an aggregate market value of approximately $             based upon the closing price of $             per share on the NYSE on                 , 2021, the record date for the Special Meeting. The Private Placement Warrants will become worthless if FTAC does not consummate a business combination by August 21, 2022.

 

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The fact that                 ,                 ,                  and                  will become directors of the Company after the closing of the Transactions. As such, in the future each will receive any cash fees, stock options or stock awards that the Company Board determines to pay to its executive and non-executive directors.

 

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The fact that FTAC has entered into (i) Subscription Agreements with the FNF Subscribers and Cannae LLC for $500,000,000 (in the aggregate) and $350,000,000, respectively; and (ii) the Forward Purchase with Cannae Holdings for $150,000,000. Each of the directors of FTAC also serves as a director of Cannae Holdings and each of the officers of FTAC are also officers of Cannae Holdings. Messrs. Foley and Massey also serve on the board of directors of Fidelity National Financial, Inc. and Ms. Meinhardt and Mr. Gravelle are also officers of Fidelity National Financial, Inc.

 

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The fact that if FTAC is unable to complete a business combination within the completion window, its executive officers will be personally liable under certain circumstances to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by FTAC for services rendered or contracted for or products sold to FTAC. If FTAC consummates a business combination, on the other hand, the Company will be liable for all such claims.

 

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The fact that FTAC’s officers and directors, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on FTAC’s behalf, such as identifying and investigating possible business targets and business combinations. However, if FTAC fails to consummate a business combination within the completion window, they will not have any claim against the trust account for reimbursement. Accordingly, FTAC may not be able to reimburse these expenses if the Transactions or another business combination, are not completed within the completion window.

 

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The continued indemnification of current directors and officers and the continuation of directors’ and officers’ liability insurance.

 

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Legal proceedings in connection with the business combination, the outcomes of which are uncertain, could delay or prevent the completion of the business combination.

In connection with business combination transactions similar to the Transaction, it is not uncommon for lawsuits to be filed against the Company, FTAC and/or their respective directors and officers alleging, among other things, that the proxy statement/prospectus contains false and misleading statements and/or omits material information concerning the Transactions. Although no such lawsuits have yet been filed in connection with the Transaction, it is possible that such actions may arise and, if such actions do arise, they generally seek, among other things, injunctive relief and an award of attorneys’ fees and expenses. Defending such lawsuits could require the Company and/or FTAC to incur significant costs and draw the attention of the Company and FTAC’s management teams away from the Transactions. Further, the defense or settlement of any lawsuit or claim that remains unresolved at the time the Transactions are consummated may adversely affect the combined company’s business, financial condition, results of operations and cash flows. Such legal proceedings could delay or prevent the Business Combination from becoming effective within the agreed upon timeframe.

The Business Combination is subject to conditions, including certain conditions that may not be satisfied on a timely basis, if at all.

The consummation of the Transactions is subject to customary closing conditions for transactions involving special purpose acquisition companies, including, among others:

 

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approval of the FTAC Stockholder Matters by FTAC’s stockholders,

 

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the expiration or termination of the waiting period under the HSR Act,

 

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receipt of other required regulatory approvals,

 

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no order, statute, rule or regulation enjoining or prohibiting the consummation of the Transactions being in force,

 

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FTAC having at least $5,000,001 of net tangible assets as of the closing of the Transactions,

 

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the Form F-4 having become effective,

 

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the Company Common Shares having been approved for listing on the NYSE, and

 

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customary bring down conditions.

Additionally, the obligations of PGHL and the Company to consummate the Transactions are also conditioned upon, among others, (A) the amount of Available Closing Cash being at least $3,400,000,000 as of the closing of the Transactions, (B) the audited and interim financial statements of the Accounting Predecessor being available for issuance and (C) each of the covenants of the parties to the Sponsor Agreement (as defined below) having been performed as of or prior to the closing of the Transactions in all material respects, and none of such parties having threatened (orally or in writing) that the Sponsor Agreement is not valid, binding and in full force and effect, that the Company is in breach of or default under the Sponsor Agreement or to terminate the Sponsor Agreement.

See “Proposal No. 1—The Business Combination Proposal—The Merger Agreement—Conditions to Closing of the Transaction” for additional information.

The grant and future exercise of registration rights may adversely affect the market price of Company Common Shares upon consummation of the Business Combination.

Pursuant to the Registration Rights Agreement to be entered into in connection with the Business Combination and which is described elsewhere in this proxy statement/prospectus, the Company, PiTopco, PGHL, the Founder, Cannae Holdings and certain other parties signatory thereto can each demand that the

 

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Company register their registrable securities under certain circumstances and will each also have piggyback registration rights for these securities in connection with certain registrations of securities that the Company undertakes. In addition, following the consummation of the Business Combination, the Company is required to file and maintain an effective registration statement under the Securities Act covering such securities and certain other securities of the Company. The registration of these securities will permit the public sale of such securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of the Company Common Shares post-Business Combination.

FTAC Stockholders may be held liable for claims by third parties against FTAC to the extent of distributions received by them upon redemption of their shares in a liquidation.

If the Business Combination is not completed, then under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of FTAC’s Trust Account distributed to FTAC’s Public Stockholders upon the redemption of FTAC’s Public Shares in the event FTAC does not complete an Initial Business Combination by August 21, 2022 may be considered a liquidation distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.

Because FTAC may not be complying with Section 280, Section 281(b) of the DGCL requires FTAC to adopt a plan, based on facts known to FTAC at such time that will provide for FTAC’s payment of all existing and pending claims or claims that may be potentially brought against FTAC within the ten (10) years following FTAC’s dissolution. However, because FTAC is a blank check company, rather than an operating company, and FTAC’s operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from FTAC’s vendors (such as lawyers, investment bankers and auditors) or prospective target businesses. If FTAC’s plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. FTAC cannot assure you that it will properly assess all claims that may be potentially brought against it. As such, FTAC’s Public Stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of FTAC’s Public Stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our Trust Account distributed to FTAC’s Public Stockholders upon the redemption of August 21, 2022 is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.

FTAC did not obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination.

The FTAC Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Transactions. The officers and directors of FTAC, including Mr. Foley, have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of FTAC’s financial and other advisors, as well as having consulted with a leading consulting firm regarding the market opportunity, competitive landscape, growth plans and regulatory structure of PGHL, enabled them to

 

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perform the necessary analyses and make determinations regarding the Transactions. Accordingly, investors will be relying solely on the judgment of the FTAC Board in valuing PGHL’s business, and assuming the risk that the FTAC Board may not have properly valued such business. The lack of a third-party valuation or fairness opinion may also lead an increased number of stockholders to vote against the proposed business combination or demand redemption of their shares for cash, which could potentially impact FTAC’s ability to consummate the Business Combination.

FTAC Public Warrants will be exchanged to the Company Warrants and become exercisable for the Company Common Stock, which would increase the number of share eligible for future resale in the public market and result in dilution to FTAC Stockholders.

FTAC issued 130,000,000 Units which consist of one share of Class A Common Stock and one-third of one redeemable Public Warrant as part of the IPO. Upon the consummation of the Business Combination, the FTAC Public Warrants will be exchanged to the Company Warrants. To the extent such the Company Warrants are exercised, additional shares of the Company Common Stock will be issued, which will result in dilution to then existing holders of the Company Common Stock and increase the number of share eligible for resale in the public market. Sales of substantial numbers of the Company shares in the public market could also adversely affect the market price of the Company Common Stock post-Business Combination.

FTAC Public Stockholders may experience dilution as a consequence of, among other transactions, the issuance of Company Common Shares as consideration in the Business Combination, the Forward Purchase and the PIPE Investment. Having a minority share position may reduce the influence that FTAC’s Public Stockholders have on the management of the Company.

It is anticipated that, assuming the No Redemption Scenario, the concentration of ownership by the Company immediately following the consummation of the Business Combination will be as follows:

 

		Ownership Percentage
FTAC existing public stockholders (including Cannae)			22.5	%
PIPE Investors			27.8	%
Founder (and its affiliates)			4.0	%
PGHL’s indirect investors			45.7	%

If the actual facts are different than these assumptions (which they are likely to be), the ownership percentages set forth above will change and be different, including the percentage ownership retained by FTAC’s existing stockholders in the Company.

The exercise of FTAC’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in FTAC’s stockholders’ best interest.

In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Merger Agreement, would require FTAC to agree to amend the Merger Agreement, to consent to certain actions taken by PGHL or to waive rights that FTAC is entitled to under the Merger Agreement. Such events have arisen and could continue to arise because of changes in the course of PGHL’s business, a request by PGHL to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement or the occurrence of other events that would have a material adverse effect on PGHL’s business and would entitle FTAC to terminate the Merger Agreement. In any of such circumstances, FTAC may grant its consent or waive those rights in accordance with the Merger Agreement. FTAC has given its consent, upon request by PGHL, to certain actions otherwise prohibited by the terms of the Merger Agreement, largely related to measures it has implemented in

 

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response to the COVID-19 pandemic. The existence of the financial and personal interests of the directors described in the preceding risk factors may result in a conflict of interest on the part of one or more of the directors between what they may believe is best for FTAC and what they may believe is best for themselves in determining whether or not to take the requested action.

Sale of a substantial number of Company Common Shares in the public market following the business combination could adversely affect the market price of the Company.

The market price of the Company’s Common Shares could decline as a result of substantial sales of Company Common Shares, particularly by our significant stockholders, a large number of Company Common Shares becoming available for sale or the perception in the market that holders of a large number of shares intend to sell their shares. After the business combination, it is anticipated that we will have approximately 719.5 million Company Common Shares outstanding (assuming that no shares of FTAC’s Class A common stock are elected to be redeemed by FTAC Stockholders).

The Company Common Shares held by the Sponsor Persons will be subject to a lock-up restriction on the transfer of such shares for a period beginning on the Closing until the earlier of (a) 270 days thereafter, or (b) if the VWAP of the Company Common Shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a period of 30 consecutive trading days, 150 days thereafter.

Furthermore, pursuant to the Shareholders Agreement and subject to certain exceptions as set forth therein, the Company Common Shares held by the CVC Investors and the Blackstone Investors will be subject to a lock-up restriction on the transfer of such shares for a period beginning on the Closing Date until the earlier of (i) 180 days thereafter or (ii) if the VWAP of the Company Common Shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a period of 30 consecutive trading days, 60 days thereafter. After the applicable lock-up period expires, the Company Common Shares held by the Sponsor Persons, the CVC Investors and the Blackstone Investors will become eligible for future sale in the public market. Sale of a significant number of the Company Common Shares in the public market, or the perception that such sales could occur, could reduce the market price of the Company Common Shares

The Sponsor Persons, the CVC Investors, the Blackstone Investors and the PIPE Investors will beneficially own a significant equity interest in the Company and may take actions that conflict with your interests.

The interests of the Sponsor Persons, the CVC Investors, the Blackstone Investors and the PIPE Investors may not align with the interests of the Company and its other shareholders. The Sponsor Persons, the CVC Investors, the Blackstone Investors and the PIPE Investors are each in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with the Company. The Sponsor Persons, the CVC Investors, the Blackstone Investors and the PIPE Investors, and their respective affiliates, may also pursue acquisition opportunities that may be complementary to the Company’s business and, as a result, those acquisition opportunities may not be available to the Company. The Company Bye-laws and Shareholders Agreement will provide that none of its Principal Shareholders or any director who is not employed by the Company (including any non-employee director who serves as one of its officers in both his or her director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which the Company operates. In addition, the Principal Shareholders may have an interest in the Company pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to the Company and its shareholders.

 

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If FTAC’s Public Stockholders fail to properly demand redemptions rights, they will not be entitled to redeem their Public Shares for a pro rata portion of the Trust Account.

FTAC’s Public Stockholders holding Public Shares may demand that FTAC redeems their Public Shares for a pro rata portion of the Trust Account, calculated as of two (2) business days prior to the anticipated consummation of the Business Combination. FTAC Public Stockholders who seek to exercise this redemption right must deliver their Public Shares (either physically or electronically) to FTAC’s transfer agent at least two (2) business days prior to the vote at the Special Meeting. Any Public Stockholder who fails to properly demand redemption rights will not be entitled to redeem his, her, or its shares for a pro rata portion of the Trust Account. See the section of this proxy statement/prospectus titled “Special Meeting of FTAC Stockholders—Redemption Rights” for the procedures to be followed if you wish to redeem your Public Shares to cash.

The ability of Public Stockholders to exercise redemption rights with respect to a large number of FTAC’s Public Shares could increase the probability that the Business Combination would be unsuccessful and that Public Stockholders would have to wait for liquidation to redeem their Public Shares.

At the time FTAC entered into the Merger Agreement and related Transaction Agreements for the Business Combination, it did not know how many Public Stockholders will exercise their redemption rights, and therefore it structured the Business Combination based on its expectations as to the number of Public Shares that will be submitted for redemption. If a larger number of Public Shares are submitted for redemption than it initially expected, this could lead to a failure to consummate the Business Combination, a failure to maintain the listing of its securities on NYSE or another national securities exchange, or a lack of liquidity, which could impair FTAC’s ability to fund its operations and adversely affect its business, financial condition and results of operations.

Even if FTAC consummates the Business Combination, there is no guarantee that the public warrants will ever be in the money, and they may expire worthless.

The exercise price for FTAC public warrants is $11.50 per share of FTAC Class A Common Stock. There is no guarantee that the public warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless.

If FTAC is unable to complete an initial business combination, FTAC’s warrants may expire worthless.

It FTAC is unable to complete an initial business combination, FTAC’s warrants may expire worthless.

If FTAC’s due diligence investigation of PGHL’s business was inadequate, then stockholders of the Company following the business combination could lose some or all of their investment.

Even though FTAC conducted a due diligence investigation of PGHL’s business, FTAC cannot be sure that this diligence uncovered all material issues that may be present inside PGHL’s business, or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of PGHL’s business and outside of its control will not later arise.

Public stockholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a “group,” will be restricted from seeking redemption rights with respect to more than 15% of the public shares.

A Public Stockholder, together with any affiliate of his or any other person with whom he is acting in Concert or as a “group,” will be restricted from seeking redemption rights with respect to more than 15% of the Public Shares. Accordingly, if you hold more than 15% of the public shares and the Business Combination Proposal is approved, you will not be able to seek redemption rights with respect to the full amount of your Public Shares and may be forced to hold the Public Shares in excess of 15% or sell them in the open market.

 

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FTAC cannot assure you that the value of such excess Public Shares will appreciate over time following the Business Combination or that the market price of the Company Common Stock will exceed the per-share redemption price.

You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to redeem or sell your Public Shares or Warrants, potentially at a loss.

Public Stockholders will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) two business days prior to FTAC’s completion of the Business Combination, and then only in connection with those shares of FTAC Common Stock that such stockholder properly elected to redeem, subject to the limitations described herein, and (ii) the redemption of FTAC’s Public Shares if FTAC is unable to complete a business combination by August 21, 2022, subject to applicable law and as further described herein. In addition, if FTAC plans to redeem its Public Shares because FTAC is unable to complete a business combination by August 21, 2022, for any reason, compliance with Delaware law may require that FTAC submit a plan of dissolution to FTAC’s then-existing stockholders for approval prior to the distribution of the proceeds held in FTAC’s Trust Account. In that case, Public Stockholders may be forced to wait beyond August 21, 2022, before they receive funds from the Trust Account. In no other circumstances will Public Stockholders have any right or interest of any kind in the Trust Account. Accordingly, to liquidate your investment, you may be forced to sell your Public Shares or Warrants, potentially at a loss.

FTAC is relying on the availability of the funds from the Forward Purchase Agreement and the PIPE Investment to be used as part of the consideration in the Business Combination. If the Forward Purchase or the PIPE Investments fail to close, FTAC may lack sufficient funds to complete the Business Combination.

The funds from the Forward Purchase Agreement and the PIPE Investment will be used as part of the consideration in the Business Combination, expenses in connection with the Business Combination or for working capital in the Company. The obligations under the Forward Purchase Agreement and the PIPE Investment do not depend on whether any Public Stockholders elect to redeem their Public Shares and provide FTAC with a minimum funding level for the Business Combination. However, if the Forward Purchase Agreement or the PIPE Investment do not close, FTAC may lack sufficient funds to complete the Business Combination.

If the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation of the Business Combination, the FTAC Board will not have the ability to adjourn the Special Meeting to a later date in order to solicit further votes, and, therefore, the Business Combination will not be approved.

The Adjournment Proposal seeks approval to adjourn the Special Meeting to a later date or dates if, at the Special Meeting, based upon the tabulated votes, there are insufficient votes to approve the consummation of the Business Combination. If the Adjournment Proposal is not approved, the FTAC Board will not have the ability to adjourn the Special Meeting to a later date and, therefore, will not have more time to solicit votes to approve the consummation of the Business Combination. In such event, the Business Combination would not be completed.

Risks Related to the U.S. Federal Income Tax Treatment of the Business Combination and Paysafe

The IRS may not agree that Paysafe (i) should be treated as a non-U.S. corporation for U.S. federal income tax purposes and (ii) should not be treated as a “surrogate foreign corporation” for U.S. federal income tax purposes.

Under current U.S. federal income tax law, a corporation generally will be considered to be a U.S. corporation for U.S. federal income tax purposes only if it is created or organized in the United States or under

 

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the law of the United States or of any State. Accordingly, under generally applicable U.S. federal income tax rules, Paysafe, which is not created or organized in the United States or under the law of the United States or of any State but is instead a Bermuda incorporated entity, would generally be classified as a non-U.S. corporation. Section 7874 of the Code and the Treasury regulations promulgated thereunder, however, contain specific rules that may cause a non-U.S. corporation to be treated as a U.S. corporation for U.S. federal income tax purposes. If it were determined that Paysafe is treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code and the Treasury regulations promulgated thereunder, Paysafe would be liable for U.S. federal income tax on its income just like any other U.S. corporation and certain distributions made by Paysafe to non-U.S. holders of Paysafe’s securities would be subject to U.S. withholding tax. In addition, even if Paysafe is not treated as a U.S. corporation, it may be subject to unfavorable treatment as a “surrogate foreign corporation” in the event that ownership attributable to former FTAC Stockholders exceeds a threshold amount. If it were determined that Paysafe is treated as a surrogate foreign corporation for U.S. federal income tax purposes under Section 7874 of the Code and the Treasury regulations promulgated thereunder, dividends by Paysafe would not qualify for “qualified dividend income” treatment, and U.S. affiliates of Paysafe after the completion of the Business Combination could be subject to increased taxation under the inversion gain rules and Section 59A of the Code.

As more fully described in “Proposal No. 1—The Business Combination Proposal—Material Tax Considerations—Material U.S. Federal Income Tax Considerations—Tax Treatment of Paysafe,” Paysafe believes it should not be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code or otherwise be subject to unfavorable treatment as a surrogate foreign corporation under Section 7874 of the Code. However, whether the requirements for such treatment have been satisfied must be finally determined after the completion of the Business Combination, by which time there could be adverse changes to the relevant facts and circumstances. No IRS ruling has been requested or will be obtained in connection with the Business Combination. Furthermore, the interpretation of Treasury regulations relating to the required ownership of Paysafe is subject to uncertainty and there is limited guidance regarding their application. Accordingly, there can be no assurance that the IRS will not take a contrary position to those described above or that a court will not agree with a contrary position of the IRS in the event of litigation.

The IRS may not agree with the position that Section 367(a) of the Code should not cause Paysafe not to be treated as a corporation for purposes of non-recognition of gain under Section 351(a) of the Code with respect to the surrender by FTAC Stockholders of FTAC Common Stock and the acquisition of Company Common Shares in exchange therefor resulting from the Merger taken together with related transactions.

The parties expect that the surrender by FTAC Stockholders of FTAC Common Stock and the acquisition of Company Common Shares by FTAC Stockholders solely in exchange therefor resulting from the Merger, taken together with the related transactions, should qualify as a transfer of property to a corporation in exchange for stock qualifying for non-recognition of gain or loss under Section 351(a) of the Code (subject to gain recognition in respect of the Company Warrants). In addition, the parties expect that Section 367(a) of the Code should not cause Paysafe to not be treated as a corporation for purposes of non-recognition of gain under Section 351(a) of the Code. If the IRS successfully determines that the transfer is not a transaction described in Section 351(a) of the Code, or that the transfer is a transaction described in Section 351(a) of the Code, but that Section 367(a) of the Code applies to the transfer, then a U.S. holder would generally recognize gain, if any, in an amount equal to the excess of (i) the fair market value of the Company Common Shares (and, if such U.S. holder is also surrendering Public Warrants, Company Warrants) received over (ii) such U.S. holder’s adjusted tax basis in such FTAC Common Stock (and Public Warrant, if any). Any such gain would be capital gain and generally would be long-term capital gain if the U.S. holder’s holding period for the FTAC Common Stock (and Public Warrant, if any) exceeded one year at the time of the Merger.

U.S. holders of FTAC Common Stock should consult their tax advisors regarding the qualification of the Merger, taken together with the related transactions, as a transfer described in Section 351 of the Code. In addition, U.S. holders are cautioned that the potential application of Section 367(a) of the Code to the Merger and

 

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related transactions is complex and depends on factors that cannot be determined until the closing of the Merger. There can be no assurance that the IRS will not take a position contrary to those described above or that a court will not agree with a contrary position of the IRS in the event of litigation. Accordingly, U.S. holders should consult with their tax advisor regarding the potential application of Section 367(a) of the Code in their particular situation. For additional discussion of material federal U.S. federal income tax considerations of the Merger, please see “Proposal No. 1—The Business Combination Proposal—Material Tax Consideration—Material U.S. Federal Income Tax Considerations.”

If a United States person is treated as owning at least 10% of Company Common Shares, such person may be subject to adverse U.S. federal income tax consequences.

If a United States person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of Company Common Shares, such person may be treated as a “United States shareholder” with respect to each of Paysafe and its direct and indirect subsidiaries (the “Paysafe Group”) that is a “controlled foreign corporation.” If the Paysafe Group includes one or more U.S. subsidiaries, under recently enacted rules, certain of Paysafe’s non-U.S. subsidiaries could be treated as controlled foreign corporations regardless of whether Paysafe is treated as a controlled foreign corporation (although there is currently a pending legislative proposal to significantly limit the application of these rules). Immediately following the Business Combination, the Paysafe Group will include a U.S. subsidiary.

A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of the controlled foreign corporation’s “Subpart F income” and (in computing its “global intangible low-taxed income”) “tested income” and a pro rata share of the amount of U.S. property (including certain stock in U.S. corporations and certain tangible assets located in the United States) held by the controlled foreign corporation regardless of whether such controlled foreign corporation makes any distributions. Failure to comply with these reporting obligations (or related tax payment obligations) may subject such United States shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such United States shareholder’s U.S. federal income tax return for the year for which reporting (or payment of tax) was due from starting. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. Paysafe cannot provide any assurances that it will assist holders in determining whether any of its non-U.S. subsidiaries are treated as a controlled foreign corporation or whether any holder is treated as a United States shareholder with respect to any of such controlled foreign corporations or furnish to any holder information that may be necessary to comply with reporting and tax paying obligations. United States persons should consult with their tax advisor regarding the potential application of these rules.

If Paysafe were a passive foreign investment company for United States federal income tax purposes for any taxable year, U.S. holders of Company Common Shares could be subject to adverse United States federal income tax consequences.

If Paysafe is or becomes a “passive foreign investment company,” or a PFIC, within the meaning of Section 1297 of the Code for any taxable year during which a U.S. holder (as defined in “Proposal No. 1—The Business Combination Proposal—Material Tax Considerations—Material U.S. Federal Income Tax Considerations—U.S. Holders”) holds Company Common Shares, certain adverse U.S. federal income tax consequences may apply to such U.S. holder. Paysafe does not believe that it was a PFIC for its prior taxable year and does not expect to be a PFIC for U.S. federal income tax purposes for the current taxable year or in the foreseeable future. However, PFIC status depends on the composition of a company’s income and assets and the fair market value of its assets from time to time, as well as on the application of complex statutory and regulatory rules that are subject to potentially varying or changing interpretations. Accordingly, there can be no assurance that Paysafe will not be treated as a PFIC for any taxable year.

 

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If Paysafe were treated as a PFIC, a U.S. holder of Company Common Shares may be subject to adverse U.S. federal income tax consequences, such as taxation at the highest marginal ordinary income tax rates on capital gains and on certain actual or deemed distributions, interest charges on certain taxes treated as deferred, and additional reporting requirements. See “Proposal No. 1—The Business Combination Proposal—Material Tax Considerations—Material U.S. Federal Income Tax Considerations—U.S. Holders—Passive Foreign Investment Company Rules.” U.S. holders of Company Common Shares should consult with their tax advisor regarding the potential application of these rules.

Risks Related to Paysafe’s Business, Operations and Corporate Structure Following the Business Combination

Paysafe will rely on its operating subsidiaries to provide it with funds necessary to meet Paysafe’s financial obligations and Paysafe’s ability to pay dividends may be constrained.

Paysafe operates through a holding structure. Paysafe is a holding company with no material, direct business operations. Paysafe’s only assets are its direct and indirect equity interests in its operating subsidiaries. As a result, Paysafe is dependent on loans, dividends and other payments from these subsidiaries to generate the funds necessary to meet its financial obligations, including the payment of dividends. The ability of Paysafe’s subsidiaries to make such distributions and other payments depends on their earnings and may be subject to contractual or statutory limitations, such as limitations imposed by Paysafe’s financing facilities to which Paysafe’s subsidiaries are borrowers or guarantors or the legal requirement of having distributable profits or distributable reserves. See “Stock Market and Dividend Information—Dividend Policy.” As an equity investor in Paysafe’s subsidiaries, Paysafe’s right to receive assets upon a subsidiary’s liquidation or reorganization will be structurally subordinated to the claims of such subsidiary’s creditors. To the extent that Paysafe is recognized as a creditor of a subsidiary, its claims may still be subordinated to any security interest in or other lien on such subsidiary’s assets and to any of its debt or other obligations that are senior to Paysafe’s claims.

The actual payment of future dividends on the Company Common Shares and the amounts thereof depend on a number of factors, including, inter alia, the amount of distributable profits and reserves, including capital contribution reserves (which can be reduced by losses in a current year or carried forward from previous years), Paysafe’s capital expenditure and investment plans, revenue, profits, financial condition, Paysafe’s level of profitability, leverage ratio (as such term is defined under our credit agreements), applicable restrictions on the payment of dividends under applicable laws, compliance with credit covenants, general economic and market conditions, future prospects and such other factors as the Paysafe board of directors may deem relevant from time to time. There can be no assurance that the abovementioned factors will facilitate or allow adherence to Paysafe’s dividend policy. Paysafe’s ability to pay dividends may be impaired if any of the risks described in this section “Risk Factors” were to occur. As a result, Paysafe’s ability to pay dividends in the future may be limited and Paysafe’s dividend policy may change. Paysafe’s board of directors will revisit Paysafe’s dividend policy from time to time.

Following the Business Combination, our Principal Shareholders will control us and their interests may conflict with ours or yours in the future.

Immediately following the consummation of the Business Combination, assuming that no shares of FTAC Class A Common Stock are elected to be redeemed by FTAC Stockholders, and without giving effect to any Company Common Shares or underlying warrants, our Principal Shareholders will beneficially own approximately         % of our Company Common Shares. Moreover, under the Company Bye-laws and the shareholders agreement with our Principal Shareholders that will be in effect by the completion of the Business Combination, for so long as our Principal Shareholders retain significant ownership of us, we will agree to nominate to our board individuals designated by such shareholders. Even when our Principal Shareholders cease to own common shares representing a majority of the total voting power of our issued and outstanding shares carrying the right to vote at general meetings at the relevant time, for so long as each such shareholder continues

 

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to own a significant percentage of our Company Common Shares, such shareholder will still be able to significantly influence the composition of our board of directors and the approval of actions requiring shareholder approval through their voting power. Accordingly, for such period of time, our Principal Shareholders will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers. In particular, for so long as our Principal Shareholders continue to own a significant percentage of our Company Common Shares, such shareholder will be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive you of an opportunity to receive a premium for your Company Common Shares as part of a sale of our company and ultimately might affect the market price of our Company Common Shares.

Paysafe has identified material weaknesses in its internal controls over financial reporting and if our remediation of such material weaknesses is not effective, or if we are unable to develop and maintain effective internal controls over financial reporting, we may not be able to produce timely and accurate financial statements or comply with applicable laws and regulations, which could have a material adverse effect on our business.

Management has identified the following material weaknesses, affecting each of the five components of the Internal Control—Integrated Framework (2013) by the Committee of Sponsoring Organization of the Treadway Commission (“COSO 2013”), which have caused management to conclude that as of December 31, 2019 we did not maintain an effective control framework:

 

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Inadequate controls over the completeness and accuracy of revenue data in Integrated Processing

 

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Inadequate review in Integrated Processing of certain cash and working capital account reconciliations

 

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Inadequate controls over key accounting judgement areas including capitalized development costs, intangible asset impairment valuation models and purchase price allocations

 

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Insufficient management review of assumptions and the completeness and accuracy of inputs associated with key business process management review controls across substantially all financial statement account balances and disclosures

 

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Ineffective information technology controls, including lack of segregation of duties and privileged access, and ineffective controls over completeness and accuracy of information used in controls

We have concluded that these material weaknesses arose because, as a private company, we did not have the necessary business processes, systems, personnel and related internal controls necessary to satisfy the accounting and financial reporting requirements of a public company.

To address the material weakness related to our ineffective control framework as of December 31, 2019, we hired employees with extensive experience related to internal control over financial reporting. These employees have identified and assessed relevant risks of material misstatement. We have also designed and implemented new processes and controls in each of the areas impacted by the material weaknesses. We intend to continue to take steps to remediate the material weaknesses described above through hiring additional qualified accounting and financial reporting personnel, providing additional training, and further evolving our accounting processes and systems. While we have made good progress on remediation, we will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time.

Furthermore, we cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to our material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. Our current controls and any new controls that we develop may become inadequate because of changes in conditions

 

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in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement may prevent us from detecting errors on a timely basis, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Effective internal control is necessary for us to produce reliable financial reports and is important to prevent fraud.

Beginning with our second annual report filed with the SEC, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting on an annual basis. If we are not able to complete our initial assessment of our internal controls and otherwise implement the requirements of Section 404 in a timely manner or with adequate compliance, our independent registered public accounting firm may not be able to certify as to the adequacy of our internal controls over financial reporting. Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable stock exchange listing rules, which may result in a breach of the covenants under our financing arrangements. There also could be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements also could suffer if we or our independent registered public accounting firm were to report a material weakness in our internal controls over financial reporting. This could materially adversely affect us and lead to a decline in the price of our Company Common Shares.

As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file less information with the SEC than a U.S. company. This may limit the information available to holders of the common shares.

We were founded in the UK in 1996 and were previously listed on the London Stock Exchange. At the time of the consummation of the Business Combination, the majority of our outstanding voting securities will be directly and indirectly owned of record by non-U.S. residents. In addition, U.S. residents do not comprise a majority of our executive officers or directors, and most of our assets are located, and our business is principally administered, outside of the United States. As a result, upon consummation of the Business Combination, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Under Rule 405 of the Securities Act, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2021.

As a foreign private issuer, we are not subject to all of the disclosure requirements applicable to public companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. In addition, our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, while we expect to submit quarterly interim consolidated financial data to the SEC under cover of the SEC’s Form 6-K, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. public companies and will not be required to file quarterly reports on Form 10-Q or current reports on Form 8-K under the Exchange Act. Accordingly, there may be less publicly available information concerning our business than there would be if we were a U.S. public company. Additionally, certain accommodations in the NYSE corporate governance standards allow foreign private issuers, such as us, to follow “home country” corporate governance practices in lieu of the otherwise applicable corporate governance standards. The Company Bye-laws do not require shareholder approval for the issuance of authorized but unissued shares, including (i) in connection with the acquisition of stock or assets of another company; (ii) when it would result in a change of control; (iii) when a share option or purchase plan is to be established or materially amended or other equity compensation

 

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arrangement made or materially amended, pursuant to which shares may be acquired by officers, directors, employees, or consultants; or (iv) in connection with certain private placements. To this extent, our practice varies from the requirements of the corporate governance standards of NYSE, which generally requires an issuer to obtain shareholder approval for the issuance of securities in connection with such events. While we do not currently intend to rely on any other home country accommodations, for so long as we qualify as a foreign private issuer, we may take advantage of them.

We may lose our foreign private issuer status which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant legal, accounting and other expenses.

For so long as we qualify as a foreign private issuer, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers. We may no longer be a foreign private issuer as early as June 30, 2021 (the last business day of our most recently completed second fiscal quarter that follows the consummation of the Business Combination), which would require us to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers as of January 1, 2022. In order to maintain our current status as a foreign private issuer, either (a) a majority of our securities must be either directly or indirectly owned of record by non-residents of the United States or (b)(i) a majority of our executive officers or directors cannot be U.S. citizens or residents, (ii) more than 50% of our assets must be located outside the United States and (iii) our business must be administered principally outside the United States. If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and NYSE rules. For example, the annual report on Form 10-K requires domestic issuers to disclose executive compensation information on an individual basis with specific disclosure regarding the domestic compensation philosophy, objectives, annual total compensation (base salary, bonus, and equity compensation) and potential payments in connection with change in control, retirement, death or disability, while the annual report on Form 20-F permits foreign private issuers to disclose compensation information on an aggregate basis. We would also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors, and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act.

The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and is likely to make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors.

Paysafe may not meet the NYSE’s initial listing criteria, and even if it does, the NYSE may not continue to list Paysafe’s securities on its exchange, which could limit the ability of investors in Paysafe to make transactions in Paysafe’s securities and subject Paysafe to additional trading restrictions.

Paysafe intends to apply to have its securities listed on the NYSE upon the consummation of the Business Combination, and it is a condition to the Closing that such listing be approved. Paysafe will be required to meet the NYSE’s initial listing requirements to be listed. Among the conditions requested by the NYSE are requirements of an expected at least $4.00 per share trading price and a minimum “public float” (based on all outstanding Company Common Shares except shares held by directors, executive officers and shareholders owning 10% or more of the outstanding shares) of at least $100.0 million.

 

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If Company Common Shares are listed on the NYSE upon completion of the Business Combination and Paysafe fails to continue to meet the listing requirements of the NYSE, the Company Common Shares and Company Warrants may be delisted, and Paysafe could face significant material adverse consequences, including:

 

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limited availability of market quotations for its securities;

 

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limited amount of news and analyst coverage for Paysafe; and

 

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decreased ability to issue additional securities or obtain additional financing in the future.

This risk will be exacerbated by a high level of redemptions of FTAC Public Shares in connection with the Closing of the Business Combination.

Upon the listing of our Company Common Shares on the NYSE, we will be a “controlled company” within the meaning of the rules of the NYSE and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to shareholders of companies that are subject to such requirements.

After consummation of the Business Combination, our Principal Shareholders will continue to control a majority of our issued and outstanding voting shares. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the NYSE. Under these rules, a company of which more than 50% of the voting power in the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements. For example, controlled companies, within one year of the date of the listing of their common shares:

 

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are not required to have a board that is composed of a majority of “independent directors,” as defined under the rules of such exchange;

 

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are not required to have a compensation committee that is composed entirely of independent directors; and

 

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are not required to have a nominating and corporate governance committee that is composed entirely of independent directors.

Following this offering, we intend to utilize these exemptions. In addition, foreign private issuers are not subject to these requirements. As a result, we do not expect a majority of the directors on our board will be independent upon the consummation of the Business Combination. Furthermore, we do not expect that any of the committees of the Company Board will consist entirely of independent directors upon the consummation of the Business Combination. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE.

The Company Bye-laws and shareholders agreement, as well as Bermuda law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our Company Common Shares.

The Company Bye-laws and shareholders agreement, as well as Bermuda law, contain provisions that may discourage, delay or prevent a merger, amalgamation, acquisition, or other change in control that shareholders may consider favorable, including transactions in which you might otherwise receive a premium for your Company Common Shares. These provisions may also prevent or frustrate attempts by our shareholders to replace or remove our management. Our corporate governance documents include provisions:

 

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authorizing blank check preference shares, which could be issued without shareholder approval and with voting, liquidation, dividend and other rights superior to our Company Common Shares;

 

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providing that any action required or permitted to be taken by our shareholders must be taken at a duly called annual or special meeting of such shareholders and may not be taken by any consent in writing

 

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by such shareholders; provided that for so long as our Principal Shareholders beneficially own, collectively, at least 30% of the issued and outstanding shares carrying the right to vote at general meetings at the relevant time, any action (except the removal of a director or an auditor) which may be done by resolution of the shareholders in a general meeting may also be done by resolution in writing, signed by the shareholders who at the date of the notice of the resolution in writing represent not less than the minimum number of votes as would be required to pass the resolution if the resolution was voted on at a quorate meeting of the shareholders;

 

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requiring, to the fullest extent permitted by applicable law, advance notice of shareholder proposals for business to be conducted at meetings of our shareholders and for shareholder-proposed nominations of candidates for election to our board of directors;

 

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establishing a classified board of directors, so that not all members of our board are elected at one time, with the election of directors requiring only a plurality of votes cast;

 

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providing that certain actions required or permitted to be taken by our shareholders, including amendments to the Company Bye-laws and certain specified corporate transactions, may be effected only with the approval of our board of directors, in addition to any other vote required by the Company Bye-laws and/or applicable law;

 

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prohibit us from engaging in a business combination with a person who acquires at least 10% of our Company Common Shares for a period of three years from the date such person acquired such common shares unless approved by the Company Board and authorized at an annual or special meeting of shareholders by the affirmative vote of at least two-thirds of our issued and outstanding voting shares that are not owned by such person, subject to certain exceptions. This provision shall not apply to our Principal Shareholders and any of their respective direct or indirect transferees;

 

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limiting the filling of vacancies or newly created seats on the Company Board between general meetings to the decision of our board of directors then in office at any time when our Principal Shareholders beneficially own, collectively, less than 30% of the issued and outstanding shares carrying the right to vote at general meetings at the relevant time, subject to the rights granted to one or more series of preference shares then outstanding or the rights granted under the shareholders agreement; and

 

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providing that directors may be removed by shareholders only by resolution with or without cause upon the affirmative vote of a majority of our issued and outstanding voting shares; provided, however, at any time when our Principal Shareholders beneficially own, collectively, less than 30% of the issued and outstanding shares carrying the right to vote at general meetings at the relevant time, directors may only be removed for cause (as determined by the Company Board), and only upon the affirmative vote of holders of at least 66 2/3% of the issued and outstanding shares carrying the right to vote at general meetings at the relevant time, voting together as a single class.

The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for common shares. They could also deter potential acquirers of our Company, thereby reducing the likelihood that you could receive a premium for your Company Common Shares in an acquisition. See “Description of the Company’s Securities” for a more detailed discussion of these provisions.

You may have difficulty enforcing judgments of U.S. courts against us in Bermuda courts.

We are organized as an exempted company pursuant to the laws of Bermuda. In addition, a number of our directors and executive officers are not residents of the United States, and a substantial portion of our assets and their assets are or may be located in jurisdictions outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon those persons or us or to recover against them or us on judgments of U.S. courts, including judgments predicated upon civil liability provisions of the U.S. federal securities laws.

 

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We have been advised that there is no treaty in force between the United States and Bermuda providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. As a result, whether a U.S. judgment would be enforceable in Bermuda against us or our directors and officers depends on whether the U.S. court that entered the judgment is recognized by the Bermuda court as having jurisdiction over us or our directors and officers, as determined by reference to Bermuda conflict of law rules. A judgment debt from a U.S. court that is final and for a sum certain based on U.S. federal securities laws will not be automatically enforceable in Bermuda unless the judgment debtor had submitted to the jurisdiction of the U.S. court, and the issue of submission and jurisdiction is a matter of Bermuda (not U.S.) law.

In addition, and irrespective of jurisdictional issues, the Bermuda courts will not enforce a U.S. federal securities law that is either penal or contrary to Bermuda public policy. We have been advised that an action brought pursuant to a public or penal law, the purpose of which is the enforcement of a sanction, power or right at the instance of the state in its sovereign capacity, will not be entertained by a Bermuda court. Certain remedies available under the laws of U.S. jurisdictions, including certain remedies under U.S. federal securities laws, would not be available under Bermuda law or enforceable in a Bermuda court, as they would be contrary to Bermuda public policy. Further, no claim may be brought in Bermuda against us or our directors and officers in the first instance for violation of U.S. federal securities laws because these laws have no extraterritorial jurisdiction under Bermuda law and do not have force of law in Bermuda. A Bermuda court may, however, impose civil liability on us or our directors and officers if the facts alleged in a complaint constitute or give rise to a cause of action under Bermuda law.

Our shareholders may have more difficulty protecting their interests than shareholders of a U.S. corporation.

The rights of shareholders under Bermuda law are not as extensive as the rights of shareholders under legislation or judicial precedent in many U.S. jurisdictions. Class actions and derivative actions are generally not available to shareholders under Bermuda law. However, Bermuda courts ordinarily would be expected to follow English case law precedent, which would permit a shareholder to commence an action in the name of a company to remedy a wrong done to a company where the act complained of is alleged to be beyond the corporate power of a company, is illegal or would result in the violation of that company’s memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to allow derivative action rights where acts that are alleged to constitute a fraud against the minority shareholders or where an act requires the approval of a greater percentage of our shareholders than actually approved it. The winning party in such an action generally would be able to recover a portion of attorneys’ fees incurred in connection with such action.

As a result of increased shareholder approval powers, Paysafe will have less flexibility than FTAC with respect to certain aspects of capital management.

Under Delaware law, FTAC’s directors may issue, without shareholder approval, any common shares authorized in FTAC’s amended and restated certificate of incorporation that are not issued or reserved. Delaware law also provides the board of directors with substantial flexibility in establishing the terms of preferred shares and to repurchase its own shares. In addition, FTAC’s board of directors has the right, subject to statutory limitations, to declare and pay dividends on FTAC Common Stock without a shareholder vote. In accordance with applicable Bermuda law, the Company Bye-laws permit the Company Board to designate our previously undesignated share capital as one or more classes of shares, to ascribe rights to such shares which may be preferential to our Company Common Shares, and to issue such shares without the need for a shareholder vote. Increases in the amount of undesignated shares available to the Company Board will require the approval of shareholders at a quorate general meeting or, if permitted by the Company Bye-laws, by written resolution.

We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a public company, which could lower our profits or make it more difficult to run our business.

As a public company, we will incur significant legal, accounting and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also

 

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will incur costs associated with the Sarbanes-Oxley Act and related rules implemented by the SEC and the NYSE. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Company Common Shares, fines, sanctions and other regulatory action and potentially civil litigation.

There may not be an active trading market for our Company Common Shares, which would adversely affect the liquidity and price of our securities and make it difficult for you to sell our Company Common Shares.

Prior to the consummation of the Business Combination, there has not been a public trading market for our Company Common Shares. It is possible that after this offering an active trading market will not develop or continue or, if developed, that any market will be sustained which would make it difficult for you to sell your Company Common Shares at an attractive price or at all.

If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our Company Common Shares, the price of our Company Common Shares and trading volume could decline.

The trading market for our Company Common Shares will be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us downgrade our Company Common Shares or publishes inaccurate or unfavorable research about our business, the price of our Company Common Shares may decline. If analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the price of our Company Common Shares or trading volume to decline and our Company Common Shares to be less liquid.

We may issue additional Company Common Shares or other securities without shareholder approval, which would dilute existing ownership interests and may depress the market price of Company Common Shares.

Paysafe may issue additional Company Common Shares or other equity securities of equal or senior rank in the future in connection with, among other things, repayment of outstanding indebtedness or Paysafe’s equity incentive plan, without shareholder approval, in a number of circumstances.

Paysafe’s issuance of additional Company Common Shares or other equity securities of equal or senior rank would have the following effects:

 

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Existing Paysafe Shareholders’ proportionate ownership interest in Paysafe may decrease;

 

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the amount of cash available per share, including for payment of dividends in the future, may decrease;

 

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the relative voting strength of each previously outstanding Company Common Shares may be diminished; and

 

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the market price of Company Common Shares may decline.

Future sales of the Company Common Shares issued to the Existing Paysafe Shareholders and other significant shareholders may cause the market price of Company Common Shares to drop significantly, even if Paysafe’s business is doing well.

Under the Merger Agreement, the Existing Paysafe Shareholders will receive, among other things, a significant amount of Company Common Shares. Pursuant to the Shareholders Agreement, the Existing Paysafe Shareholders

 

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will be restricted from selling any of the Company’s securities that they receive as a result of the share exchange during the six month period after the closing date of the Business Combination, subject to certain exceptions.

Subject to the Shareholders Agreement, the Existing Paysafe Shareholders and certain other shareholders party to the Shareholders Agreement may sell Company’s securities pursuant to Rule 144 under the Securities Act, if available. In these cases, the resales must meet the criteria and conform to the requirements of that rule, including, because FTAC and Paysafe are currently shell companies, waiting until one year after Paysafe’s filing with the SEC of a Form 20-F transition report reflecting the Business Combination.

Upon expiration or waiver of the applicable lock-up periods, and upon effectiveness of the registration statement Paysafe files pursuant to the Registration Rights Agreement or upon satisfaction of the requirements of Rule 144 under the Securities Act, the Existing Paysafe Shareholders and certain other significant shareholders may sell large amounts of the Company’s securities in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in Paysafe’s stock price or putting significant downward pressure on the price of the Company Common Shares.

Because we have no current plans to pay cash dividends on our Company Common Shares, you may not receive any return on your investment unless you sell your Company Common Shares for a price greater than that which you paid for it.

We have no current plans to pay cash dividends. The declaration, amount and payment of any future dividends on our Company Common Shares will be at the sole discretion of our board of directors. Our board of directors may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our shareholders or by our subsidiaries to us and such other factors as our board of directors may deem relevant. In addition, our ability to pay dividends is limited by our credit facilities and may be limited by covenants of other indebtedness we or our subsidiaries incur in the future. As a result, you may not receive any return on an investment in our Company Common Shares unless you sell your Company Common Shares for a price greater than that which you paid for it.

The market price of our Company Common Shares may be volatile, which could cause the value of your investment to decline.

Even if a trading market develops, the market price of our Company Common Shares may be highly volatile and could be subject to wide fluctuations. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of our Company Common Shares regardless of our operating performance. In addition, our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly operating results or dividends, if any, to shareholders, additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies or speculation in the press or investment community, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industries we participate in or individual scandals, and in response the market price of our Company Common Shares could decrease significantly. You may be unable to resell your Company Common Shares at or above the initial public offering price.

In the past few years, stock markets have experienced extreme price and volume fluctuations. In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this proxy statement/prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. The Company’s forward-looking statements include, but are not limited to, statements regarding the Company or its management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “appear,” “approximate,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “would” and similar expressions (or the negative version of such words or expressions) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement/prospectus may include, for example, statements about:

 

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our ability to consummate the Business Combination;

 

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the expected benefits of the Business Combination;

 

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our financial performance following the Business Combination;

 

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changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, margins, cash flows, prospects and plans;

 

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the impact of health epidemics, including the COVID-19 pandemic, on our business and the actions we may take in response thereto;

 

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expansion plans and opportunities; and

 

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the outcome of any known and unknown litigation and regulatory proceedings.

These forward-looking statements are based on information available as of the date of this proxy statement/prospectus, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should not place undue reliance on these forward-looking statements in deciding how to vote your proxy or instruct how your vote should be cast on the Proposals set forth in this proxy statement/prospectus. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

 

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the occurrence of any event, change or other circumstances that could delay the Business Combination or give rise to the termination of the Transaction Agreements;

 

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the outcome of any legal proceedings that may be instituted against FTAC following announcement of the proposed Business Combination and transactions contemplated thereby;

 

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the inability to complete the Business Combination due to the failure to obtain approval of the FTAC Stockholders or to satisfy other conditions to the Closing in the Transaction Agreements;

 

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the ability to obtain or maintain the listing of the Company Common Shares on NYSE following the Business Combination;

 

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the risk that the proposed Business Combination disrupts current plans and operations of the Company as a result of the announcement and consummation of the transactions described herein;

 

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the Company’s ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the Company to grow and manage growth profitably following the Business Combination;

 

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costs related to the Business Combination;

 

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changes in applicable laws or regulations;

 

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the effect of the COVID-19 pandemic on the Company’s business;

 

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the possibility that FTAC or the Company may be adversely affected by other economic, business, and/or competitive factors;

 

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the inability to obtain or maintain the listing of the Company Common Shares on the NYSE following the Business Combination; and

 

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other risks and uncertainties described in this proxy statement/prospectus, including those under the section entitled “Risk Factors.”

 

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SPECIAL MEETING OF FTAC STOCKHOLDERS

General

FTAC is furnishing this proxy statement/prospectus to FTAC’s stockholders as part of the solicitation of proxies by FTAC’s board of directors for use at the Special Meeting of FTAC Stockholders to be held on                , 2021, and at any adjournment or postponement thereof. This proxy statement/prospectus provides FTAC’s stockholders with information they need to know to be able to vote or instruct their vote to be cast at the Special Meeting.

Date, Time and Place

The Special Meeting of stockholders will be held on                , 2021 at 12:00 p.m. The Special Meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast. FTAC Stockholders will be able to attend the Special Meeting remotely, vote and submit questions during the Special Meeting by visiting                  and entering their control number included on their proxy card or instructions that accompanied their proxy materials. We are pleased to utilize virtual stockholder meeting technology to (i) provide ready access and cost savings for FTAC’s stockholders and FTAC, and (ii) to promote social distancing pursuant to guidance provided by the CDC and the SEC due to COVID-19. The virtual meeting format allows attendance from any location in the world.

Purpose of FTAC Special Meeting/Proposals

At the Special Meeting, FTAC is asking holders of FTAC Common Stock to consider and vote upon:

 

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a proposal to approve the business combination described in this proxy statement/prospectus, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in this proxy statement/prospectus. See the section entitled “Proposal No. 1—The Business Combination Proposal”;

 

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a proposal to approve and adopt the third amended and restated certificate of incorporation of FTAC in the form attached hereto as Annex B. See the section entitled “Proposal No. 2—The Charter Amendment Proposal”;

 

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a proposal to vote upon, on a non-binding advisory basis, certain governance provisions in the Company Bye-laws, presented separately in accordance with the SEC requirements. See the section entitled “Proposal No. 3—The Governance Proposal”;

 

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a proposal to approve and adopt the Omnibus Incentive Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 4— The Omnibus Incentive Plan Proposal”; and

 

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a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient vote for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Amendment Proposal or the Omnibus Incentive Plan Proposal. Please see the section entitled “Proposal No. 5—The Adjournment Proposal.”

Recommendation of FTAC Board of Directors:

The FTAC Board recommends that stockholders vote “FOR” the Business Combination Proposal, “FOR” the Charter Amendment Proposal, “FOR” the Governance Proposal, “FOR” the Omnibus Incentive Plan Proposal and, if presented, “FOR” the Adjournment Proposal. See “Proposal No. 1—The Business Combination—FTAC’s Board of Directors’ Reasons for Approval of the Business Combination” for additional information

When you consider the FTAC Board’s recommendation of these proposals, you should keep in mind that FTAC’s directors and officers have interests in the Business Combination that are different from, or in addition

 

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to, the interests of FTAC Stockholders generally. Please see the section entitled “Proposal No. 1—The Business Combination Proposal—Interests of Certain Persons in the Business Combination” for additional information. The FTAC Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the FTAC Stockholders that they vote “FOR” the proposals presented at the Special Meeting.

Record Date; Outstanding Shares; Stockholders Entitled to Vote

FTAC has fixed the close of business on                 , 2021, as the “record date” for determining FTAC Stockholders entitled to notice of and to attend and vote at the Special Meeting. As of the close of business on the record date, there were                  shares of FTAC Common Stock outstanding and entitled to vote. Each share of FTAC Common Stock is entitled to one vote per share at the Special Meeting.

Quorum

A quorum of FTAC’s stockholders is necessary to hold a valid meeting. The presence at the Special Meeting by attendance via the virtual meeting website or by proxy of the holder or holders of a majority of the shares of FTAC Common Stock as of the record date entitled to vote constitutes a quorum at the Special Meeting.

Abstentions and Broker Non-Votes

Abstentions are considered present for purposes of establishing a quorum. Abstentions will have the same effect as a vote “AGAINST” the Business Combination Proposal and the Charter Amendment Proposal, however abstentions will have no effect on the outcome of each of the Governance Proposal, the Omnibus Incentive Plan Proposal and the Adjournment Proposal.

In general, if your shares are held in “street” name and you do not instruct your broker, bank or other nominee on a timely basis on how to vote your shares, your broker, bank or other nominee, in its sole discretion, may either leave your shares unvoted or vote your shares on routine matters, but not on any non-routine matters. We believe the Business Combination Proposal, the Charter Amendment Proposal, the Governance Proposal, the Omnibus Incentive Plan Proposal and, if presented, the Adjournment Proposal will be considered non-routine matters. As such, without your voting instructions, your brokerage firm cannot vote your shares on any of the foregoing proposals to be voted on at the FTAC Special Meeting without your instruction.

Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the Special Meeting. Broker non-votes will count as a vote “AGAINST” the Business Combination Proposal and the Charter Amendment Proposal but will not have any effect on the outcome of any other proposals.

Vote Required

The approval of the Business Combination Proposal requires the affirmative vote by the holders of a majority of the outstanding shares of FTAC Class A Common Stock and FTAC Class B Common Stock, voting together as a single class, represented virtually or by proxy and entitled to vote thereon at the Special Meeting. Accordingly, if a valid quorum is established, a FTAC stockholder’s failure to vote by proxy or to vote at the Special Meeting with regard to the Business Combination Proposal will have the same effect as a vote “AGAINST” such proposal. The Initial Stockholders have agreed to vote their Founder Shares and any Public Shares they may hold in favor of the Business Combination. Currently, the Initial Stockholders own approximately 20% of the issued and outstanding FTAC Common Stock, including all of the outstanding Founder Shares.

The approval of the Charter Amendment Proposal will require the (i) affirmative vote by the holders of a majority of the outstanding shares of FTAC Class A Common Stock and FTAC Class B Common Stock, voting together as a single class, represented virtually or by proxy and entitled to vote thereon at the Special Meeting

 

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and (ii) affirmative vote of the holders of a majority of the shares of FTAC Class B Common Stock then outstanding, voting separately as a single class. Accordingly, if a valid quorum is established, a FTAC stockholder’s failure to vote by proxy or to vote at the Special Meeting with regard to the Charter Amendment Proposal will have the same effect as a vote “AGAINST” such proposal. The Initial Stockholders have agreed to provide a unanimous written consent to the Charter Amendment Proposal.

The approval of each of the Governance Proposal (which is a non-binding advisory vote), the Omnibus Incentive Plan Proposal and the Adjournment Proposal require the affirmative vote of a majority of the votes cast by holders of shares of FTAC Class A Common Stock and FTAC Class B Common Stock, voting together as a single class, represented at the Special Meeting by attendance via the virtual meeting website or by proxy and entitled to vote at the Special Meeting. Accordingly, if a valid quorum is established, a FTAC Stockholder’s failure to vote by proxy or to vote at the Special Meeting with regard to the Governance Proposal, the Omnibus Incentive Plan Proposal and the Adjournment Proposal will have no effect on such proposals.

Attending the FTAC Special Meeting; Voting Virtually at the FTAC Special Meeting

In light of ongoing developments related to the COVID-19 pandemic and after careful consideration, the FTAC Board has determined to hold the special meeting virtually in order to facilitate stockholder attendance and participation by enabling stockholders to participate from any location and at no cost.

To participate in the virtual Special Meeting, FTAC Stockholders will need the control number included on their proxy card or instructions that accompanied their proxy materials, if applicable, or to obtain a proxy form from their broker, bank or other nominee. The Special Meeting webcast will begin promptly at                  a.m., Eastern Time on                 , 2021. FTAC Stockholders are encouraged to access the Special Meeting prior to the start time. Online check-in will begin at                  a.m., Eastern Time, and FTAC Stockholders should allow ample time for the check-in procedures. If you encounter any difficulties accessing the virtual meeting or during the meeting time, please call the technical support number that will be posted on the virtual meeting login page.

FTAC Stockholders will be able to attend the Special Meeting online and vote their shares electronically during the FTAC Special Meeting by visiting                 .

Voting Your Shares

Each share of FTAC Common Stock that you own in your name entitles you to one vote. Your proxy card shows the number of shares of FTAC Common Stock that you own. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

There are two ways to vote your shares of FTAC common stock at the Special Meeting:

 

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You can vote by signing and returning the enclosed proxy card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted “FOR” the Business Combination Proposal, “FOR” the Charter Amendment Proposal, “FOR” the Governance Proposal, “FOR” the Omnibus Incentive Plan Proposal, and “FOR” the Adjournment Proposal, if presented. Votes received after a matter has been voted upon at the Special Meeting will not be counted.

 

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You can attend the Special Meeting via the virtual meeting platform and vote during the meeting by following the instructions on your proxy card. You can access the Special Meeting by visiting the website                 . You will need your control number for access. If you do not have a control number, please contact                 . Instructions on how to attend and participate at the Special Meeting are available at                 .

 

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However, if your shares are held in the name of your broker, bank or another nominee, you must get a proxy from the broker, bank or other nominee. That is the only way FTAC can be sure that the broker, bank or nominee has not already voted your shares.

Certain Voting Arrangements

As of                 , 2021, the record date for the Special Meeting, the Initial Stockholders (including FTAC’s directors and officers) beneficially owned and were entitled to vote                 shares of FTAC Common Stock. The Initial Stockholders will count towards the quorum and, pursuant to the terms of the Sponsor Agreement, the Initial Stockholders, including FTAC’s directors and officers, and Cannae have agreed (and any of their permitted transferees will agree) to vote the FTAC Common Stock held by them (including any public shares purchased during or after the IPO in open market and privately-negotiated transactions) in favor of the Business Combination. In the aggregate, the foregoing shares represent approximately 20% of the issued and outstanding shares of FTAC Common Stock. Each of the foregoing also have committed to FTAC to vote such shares in favor of the Business Combination Proposal, the Governance Proposal, the Charter Amendment Proposal, the Omnibus Incentive Plan Proposal and, if presented, the Adjournment Proposal.

Revoking Your Proxy

If you give a proxy, you may revoke it at any time before the FTAC Special Meeting or at the FTAC Special Meeting webcast by doing any one of the following:

 

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filing a notice with the corporate secretary of FTAC;

 

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mailing a new, subsequently dated proxy card; or

 

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by attending the FTAC Special Meeting webcast and electing to vote your shares electronically, as indicated above.

Who Can Answer Your Questions About Voting Your Shares

If you are a stockholder and have any questions about how to vote or direct a vote in respect of your shares of FTAC Common Stock, you may call Morrow Sodali, FTAC’s proxy solicitor, at (800) 662-5200.

Redemption Rights

Holders of FTAC Common Stock may seek to have their shares redeemed for cash, regardless of whether they vote “for” or “against”, or whether such holder abstained from voting on, the Business Combination Proposal. Any FTAC stockholder may demand that FTAC redeem such shares into a full pro rata portion of the Trust Account (which was $     per share as of                 , 2021, the record date for the Special Meeting), calculated as of two business days prior to the anticipated consummation of the Business Combination. If a holder properly seeks redemption as described in this section and the Business Combination is consummated, FTAC will redeem these shares for a pro rata portion of funds deposited in the Trust Account and the holder will no longer own these shares following the Business Combination. A holder of Public Shares, together with any affiliate of such holder and any person with whom such holder is acting in concert or as a “group” (as defined under Section 13(d)(3) of the Exchange Act) may not seek to have more than 15% of the aggregate public shares redeemed without the consent of FTAC.

The Founder and the Insiders will not have redemption rights with respect to any shares of FTAC Common Stock owned by them, directly or indirectly.

FTAC Stockholders who seek to have their Public Shares redeemed are required to vote “for” or “against” the Business Combination Proposal in order to exercise their redemption rights. In addition to voting on the Business Combination Proposal, holders demanding redemption are also required to (A) check the applicable box on their proxy card, to indicate their vote (B) submit their redemption request in writing to Continental Stock

 

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Transfer & Trust Company, FTAC’s transfer agent and (C) deliver their stock, either physically or electronically using DTC’s DWAC System, to FTAC’s transfer agent no later than 5:00 pm eastern time on                 , 2021 (two (2) business days prior to the Special Meeting). If you hold the shares in street name, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Certificates that have not been tendered (either physically or electronically) in accordance with these procedures will not be converted into cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting stockholder. In the event the proposed Business Combination is not consummated this may result in an additional cost to stockholders for the return of their shares.

Any request to have such shares redeemed, once made, may be withdrawn at any time up to two (2) business days prior to the vote on the Business Combination Proposal. If a holder of public shares delivers such shares for redemption and later decides prior to the Special Meeting not to elect redemption, such holder may request that FTAC consent to the return of such shares to such holder. Such a request must be made by contacting Continental Stock Transfer & Trust Company, FTAC’s transfer agent, at the phone number or address set out elsewhere in this proxy statement/prospectus.

If the Business Combination is not approved or completed for any reason, then Public Stockholders who elected to exercise their redemption rights will not be entitled to have their shares redeemed for a full pro rata portion of the Trust Account. FTAC will thereafter promptly return any shares delivered by Public Stockholders. In such case, Public Stockholders may only share in the assets of the Trust Account upon the liquidation of FTAC. This may result in Public Stockholders receiving less than they would have received if the Business Combination was completed and they had exercised redemption rights in connection therewith due to potential claims of creditors.

The closing price of FTAC Class A Common Stock on the record date was $                . The cash held in the Trust Account on such date was approximately $                 million (approximately $                 per Public Share). Prior to exercising redemption rights, Public Stockholders should verify the market price of FTAC Class A Common Stock as they may receive higher proceeds from the sale of their shares of FTAC Class A Common Stock in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. FTAC cannot assure its stockholders that they will be able to sell their shares of FTAC Class A Common Stock in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in its securities when its stockholders wish to sell their shares.

Appraisal Rights

None of the stockholders, unit holders or warrant holders of FTAC have appraisal rights in connection the Business Combination under the DGCL.

Proxy Solicitation Costs

FTAC is soliciting proxies on behalf of its board of directors. This solicitation is being made by mail but also may be made by telephone or in person. FTAC has engaged                 to assist in the solicitation of proxies for the FTAC Special Meeting. FTAC and its directors, officers and employees may also solicit proxies in person. FTAC will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions.

FTAC will bear the entire cost of the proxy solicitation, including the preparation, assembly, printing, mailing and distribution of the proxy materials. FTAC will pay Morrow Sodali its customary fee, plus costs and expenses. They will not be paid any additional amounts for soliciting proxies.

 

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PROPOSAL NO. 1—THE BUSINESS COMBINATION PROPOSAL

General

Holders of FTAC Common Stock are being asked to approve the Merger Agreement and the transactions contemplated thereby, including the Business Combination. FTAC Stockholders should read this proxy statement/prospectus carefully and in its entirety for more detailed information concerning the Merger Agreement, which is attached as Annex A to this proxy statement/prospectus. Please see the section entitled “—The Merger Agreement” below, for additional information and a summary of certain terms of the Merger Agreement. You are urged to read the Merger Agreement carefully and in its entirety before voting on the Business Combination Proposal.

FTAC may consummate the Business Combination only if it is approved by the affirmative vote of majority of the outstanding shares of FTAC Common Stock.

Structure of the Transactions

On December 7, 2020, FTAC entered into the Merger Agreement with PGHL, the Company, Merger Sub, the Accounting Predecessor and LLC. Pursuant to the Merger Agreement, the parties thereto will enter into a business combination transaction pursuant to which, among other things, (i) Merger Sub will merge with and into FTAC, with FTAC being the surviving corporation in the merger and an indirect subsidiary of the Company and each outstanding share of common stock of FTAC (other than certain excluded shares) will convert into the right to receive one Company Common Share and (ii) PGHL will transfer and contribute the Accounting Predecessor to the Company in exchange for Company Common Shares and cash. The proposed Business Combination is expected to be consummated after the required approval by the stockholders of FTAC and the satisfaction of certain other conditions summarized below. Certain terms used in this section are defined in the “Frequently Used Terms” section at the beginning of this proxy statement/prospectus.

The following simplified diagram illustrates the ownership structure of FTAC and Paysafe immediately prior to the consummation of the Business Combination:

FTAC

 

 

 

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Paysafe

 

 

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The following simplified diagram illustrates the ownership structure of the Company immediately following to the consummation of the Business Combination:

 

 

Merger Consideration

Consideration Paid to PGHL—Closing Transaction Consideration

The consideration to be paid to PGHL will be paid in a combination of stock and cash consideration (the “Closing Transaction Consideration”). The cash consideration will be an amount equal to (i) (x) all amounts in FTAC’s trust account (after reduction for the aggregate amount of payments required to be made in connection with any valid stockholder redemptions), plus (y) the aggregate amount of cash that has been funded pursuant to the Subscription Agreements as of immediately prior to the Closing, plus (z) the aggregate amount of cash that has been funded pursuant to the Forward Purchase Agreement as of immediately prior to the Closing (such amounts in clauses (x), (y) and (z), the “Available Cash Amount”), minus (ii) any excess amount of the Company’s net debt over $1,805,000,000, minus (iii) any transaction expenses (such amount, the “Closing Cash Consideration”). The remainder of the Closing Merger Consideration will be paid in a number of Company Common Shares equal to (A) (i) $8,713,000,000, minus (ii) the Company’s net debt, minus (iii) any transaction expenses, plus (iv) the aggregate price of permitted acquisitions, if any, minus (v) Closing Cash Consideration, divided by (B) $10.00 per share (the “Closing Seller Shares”).

Consideration Paid to FTAC Stockholders—Effects of the Merger

At the Effective Time, each share of FTAC’s Class A Common Stock and FTAC’s Class B Common Stock will be cancelled and automatically deemed for all purposes to represent the right to receive, in the aggregate, one Company Common Share. At the Effective Time, each of FTAC’s Public Warrants that are outstanding immediately prior to the Effective Time will, pursuant to and in accordance with the warrant agreement covering such Public Warrants, automatically and irrevocably be modified to provide that such Public Warrant will no longer entitle the holder thereof to purchase the amount of share(s) of FTAC Common Stock set forth therein and

 

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in substitution thereof such warrant will entitle the holder thereof to acquire the same number of Company Common Shares per Public Warrant on the same terms.

In connection with the consummation of the Business Combination, the Private Placement Warrants held by the Founder will be exchanged for shares of Class C Common Stock, and immediately thereafter the Founder will transfer and contribute such shares of Class C Common Stock to the LLC in exchange for exchangeable units of the LLC (as provided for in the Sponsor Agreement). Such exchangeable units will be exchangeable into Company Common Shares or cash, as determined by the LLC, on the same terms as such warrants, following the first anniversary of the closing and expiring on the fifth anniversary of the closing.

Pursuant to Section 312.03(b) of the NYSE’s Listed Company Manual, stockholder approval is required prior to the issuance of common stock, or of securities convertible into or exercisable for common stock, in any transaction or series of related transactions, to (1) a Related Party, (2) a subsidiary, affiliate or other closely related person of a Related Party or (3) any company or entity in which a Related Party has a substantial direct or indirect interest, in each case, if the number of shares of common stock to be issued, or if the number of shares of common stock into which the securities may be convertible or exercisable, exceeds either one percent of the number of shares of common stock or one percent of the voting power outstanding before the issuance. The stockholders of FTAC are being asked to approve the issuance of the FTAC Class C Common Stock in exchange for the warrants held by the Founder in connection with the Business Combination.

Concurrently with the execution of the Merger Agreement, the Founder entered into the Sponsor Agreement pursuant to which, among other things, the Founder and certain Insiders have agreed to forfeit 7,987,877 shares of FTAC Class B Common Stock (subject to the consummation of the Transactions). After such forfeiture, the Founder and such Insiders shall hold 28,687,959 shares of Class B Common Stock.

Impact of the Business Combination on FTAC’s Public Float

It is anticipated that, upon completion of the business combination: (i) FTAC’s public stockholders (other than the PIPE Investors but including Cannae) will retain an ownership interest of approximately 22.5% in the post-combination company; (ii) the PIPE Investors will own approximately 27.8% of the post-combination company; (iii) the Founder will own approximately 4.0% of the post-combination company; and (iv) Paysafe’s Existing Shareholders will own approximately 45.7% of the post-combination company. These levels of ownership interest: (a) exclude the impact of the shares of FTAC’s Class A common stock underlying the warrants and (b) assume the No Redemption Scenario.

For more information, please see the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information” and “Proposal No. 4—The Omnibus Incentive Plan Proposal.”

The following table illustrates varying ownership levels in the post-combination company, assuming the No Redemption Scenario and the maximum redemptions by FTAC’s public stockholders:

 

		Assuming No Redemptions Scenario				Assuming Maximum Redemptions
FTAC existing public stockholders (including Cannae)			22.5	%			20.0	%
PIPE Investors			27.8	%			28.7	%
Founder			4.0	%			4.1	%
PGHL’s indirect investors			45.7	%			47.2	%

These levels of ownership interest also exclude the impact of the shares of FTAC’s Class A Common Stock underlying the warrants.

 

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The Merger Agreement

The subsections that follow this subsection describe the material provisions of the Merger Agreement, but do not purport to describe all of the terms of the Merger Agreement. The following summary is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A hereto. FTAC Public Stockholders and other interested parties are urged to read the Merger Agreement carefully and in its entirety (and, if appropriate, with the advice of financial and legal counsel) because it is the primary legal document that governs the Business Combination.

The Merger Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Merger Agreement or other specific dates, which may be updated prior to the closing of the Business Combination. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Merger Agreement. The representations, warranties and covenants in the Merger Agreement are also modified in important part by the Schedules referred to therein which are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to stockholders. The Schedules were used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that the Schedules contain information that is material to an investment decision.

Closing and Effective Time of the Transactions

The closing of the Transactions will take place as promptly as practicable (an in any event no later than 9:00 a.m. Eastern Time on the third (3rd) business day) following the satisfaction or waiver of the conditions described below under the subsection entitled “—Conditions to Closing of the Transactions,” unless FTAC and PGHL agree in writing to another time or unless the Merger Agreement is terminated.

Representations and Warranties

The Merger Agreement contains representations and warranties of FTAC and PGHL, on behalf of itself and its subsidiaries (including with respect to certain representations, the Company, Merger Sub and the LLC), made solely for the benefit of (a) in the case of FTAC, the Paysafe Parties and (b) in the cases of PGHL and each Paysafe Party (solely for purposes of the representations contained in Sections 5.03, 5.04 and 5.05 of the Merger Agreement), FTAC.

The Merger Agreement, PGHL made certain customary representations and warranties to FTAC, including, among others, representations and warranties related to the following:

 

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corporate organization;

 

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subsidiaries;

 

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the authorization, performance and enforceability of the Merger Agreement and Transaction Agreements;

 

•

no conflict;

 

•

governmental approvals; consents;

 

•

current capitalization;

 

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capitalization of subsidiaries;

 

•

financial statements;

 

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absence of undisclosed liabilities;

 

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litigation and proceedings;

 

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compliance with laws;

 

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material contracts and absence of defaults;

 

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benefit plans;

 

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labor matters;

 

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tax matters;

 

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insurance;

 

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permits;

 

•

real property;

 

•

intellectual property and IT Security;

 

•

data privacy;

 

•

environmental matters;

 

•

absence of material adverse effect and certain changes;

 

•

brokers’ fees;

 

•

related party transactions; and

 

•

this proxy statement/prospectus.

In the Merger Agreement, each of the Company, Merger Sub and the LLC also makes certain customary representations and warranties to FTAC, including representations and warranties related to the following:

 

•

the authorization, performance and enforceability of the Merger Agreement and Transaction Agreements;

 

•

no conflict; and

 

•

government approvals and consents.

In the Merger Agreement, FTAC made certain customary representations and warranties to the Paysafe Parties, including, among others, representations and warranties related to the following:

 

•

corporate organization;

 

•

the authorization, performance and enforceability of the Merger Agreement and Transaction Agreements;

 

•

no conflict;

 

•

litigation and proceedings;

 

•

consent, approval or authorization of governmental authorities;

 

•

compliance with laws;

 

•

financial ability and trust account;

 

•

brokers’ fees;

 

•

SEC Reports, financial statements and Sarbanes-Oxley Act;

 

•

absence of undisclosed liabilities;

 

•

business activities;

 

•

employee benefit plans;

 

•

tax matters;

 

•

capitalization;

 

•

NYSE listing;

 

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PIPE Investment;

 

•

Sponsor Agreement;

 

•

Forward Purchase Agreement;

 

•

contracts, absence of defaults and affiliate agreements;

 

•

title to property;

 

•

Investment Company Act;

 

•

interest in competitors; and

 

•

no foreign person(s).

Covenants

Prior to the closing of the Transactions, PGHL has agreed to, and cause its subsidiaries to, use commercially reasonable efforts to operate its business in the ordinary course of business and to continue to accrue and collect accounts receivables, accrue and pay accounts payable and other expenses as well as establish reserves for uncollectible accounts in accordance with past practices, in each case, including recent past practice in light of the current COVID-19 pandemic; provided that, any action taken, or omitted to be taken, that relates to, or arises out of, the current COVID-19 pandemic shall be deemed to be in the ordinary course of business.

PGHL and FTAC have agreed that, unless otherwise required or permitted under the Merger Agreement, required by law, and subject to certain disclosed exceptions, neither PGHL nor its subsidiaries will take, among others, the following actions during the interim period between signing of the Merger Agreement and closing of the Transactions without the prior written consent of FTAC (which consent will not be unreasonably conditioned, withheld, delayed or denied):

 

•

change or amend its certificate of formation or incorporation, limited liability company agreement, bylaws or other organizational documents, except as otherwise required by law;

 

•

make, declare, set aside, establish a record date for or pay any dividend or distribution, other than any dividends or distributions from any wholly owned subsidiary of the Accounting Predecessor to the Accounting Predecessor or any other wholly owned subsidiaries of the Accounting Predecessor;

 

•

issue, deliver, sell, transfer, pledge, dispose of or place any lien (other than a permitted lien) on any shares of capital stock or any other equity or voting securities of PGHL or any of its subsidiaries;

 

•

issue or grant any options, warrants, restricted stock units, performance stock units or other rights to purchase or obtain any shares of capital stock or any other equity or voting securities of;

 

•

subject to certain exceptions, sell, assign, transfer, convey, lease, license, abandon, allow to lapse of expire, subject to or grant any lien on any material assets, rights or properties;

 

•

(i) cancel or compromise any claim or Indebtedness owed to PGHL or any of its subsidiaries, or (ii) settle any pending or threatened Action, (a) if such settlement would require payment by PGHL in an amount greater than $10,000,000, (b) to the extent such settlement includes an agreement to accept or concede injunctive relief, or (c) to the extent such settlement involves a Governmental Authority or alleged criminal wrongdoing;

 

•

acquire (by merger, consolidation, acquisition of a substantial portion of stock or assets or otherwise), directly or indirectly, any material portion of assets, securities, properties or businesses other than (i) any such acquisitions that, individually or in the aggregate, do not exceed $50,000,000 and (ii) any residual purchase obligations with respect to credit card portfolios; provided, that any such other acquisitions that are not otherwise permitted by clause (i) or (ii) shall be deemed approved and permitted if the Founder has been provided with three (3) business days’ notice thereof and has not responded;

 

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make any loans or advance any money or other property to any third party, except for certain advances to employees or officers, prepayments and deposits paid to suppliers of PGHL and its subsidiaries and trade credit extended to customers of PGHL or any of its subsidiaries, in each case, in the ordinary course of business;

 

•

redeem, purchase or otherwise acquire, any equity interests (convertible or otherwise) of PGHL or any of its subsidiaries;

 

•

adjust, split, combine, subdivide, recapitalize, reclassify or otherwise effect any change in respect of any shares of capital stock or other equity interests or securities of PGHL;

 

•

enter into, renew or amend in any material respect, any transaction or Contract relating to PGHL Transaction Expenses if such entry, renewal or amendment would result in additional PGHL Transaction Expenses that, individually or in the aggregate, exceed $5,000,000;

 

•

make any change in its customary accounting principles or methods of accounting materially affecting the reported consolidated assets, liabilities or results of operations of PGHL and its subsidiaries, other than as may be required by applicable law, GAAP or regulatory guidelines;

 

•

adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of PGHL or its subsidiaries;

 

•

make or change any material income tax election, adopt or change any material accounting method with respect to taxes, file any amended material tax return or settle or compromise any material tax liability;

 

•

change its residence for any Tax purposes;

 

•

directly or indirectly, incur, or modify in any material respect the terms of, any Indebtedness, or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person for Indebtedness (other than (i) Indebtedness under the any PGHL Financing Agreement or capital leases entered into in the ordinary course of business or (ii) Indebtedness that is repaid at Closing);

 

•

except as otherwise required by Law, the terms of any existing PGHL Benefit Plan as in effect on December 7, 2020 or the terms of any contract with the Company or any of its Affiliates, (i) establish, adopt, enter into or amend any PGHL Benefit Plan providing for severance or termination benefits or payments or make any grant of severance or termination benefits or payments to any person other than in the ordinary course of business with respect to PGHL Employees with an annual base salary equal to or less than $250,000 (“Non-Management Employees”), (ii) make any grant of any cash retention payment to any Person, except in connection with the hiring (to the extent permitted by clause (iii) immediately following this clause (ii)) of any employee or promotion of a PGHL Employee, (iii) except in the ordinary course of business, hire, or terminate the employment (other than for cause) of, any PGHL Employee who is not a Non-Management Employee or (iv) except in the ordinary course of business, establish, adopt, enter into, amend in any material respect or terminate any PGHL Benefit Plan or any plan, agreement, program, policy, trust, fund or other arrangement that would be a PGHL Benefit Plan if it were in existence as of the date of the Merger Agreement (except to the extent permitted to be established, adopted, entered into or amended in accordance with Section 7.01(p)(i) of the Merger Agreement);

 

•

voluntarily fail to maintain in full force and effect material insurance policies covering PGHL and its subsidiaries and their respective properties, assets and businesses in a form and amount consistent with past practices;

 

•

enter into any transaction with any Person that, to the knowledge of PGHL, is an Affiliate of PGHL, Blackstone or CVC subject to certain exclusions, including ordinary course payments of annual compensation, provision of benefits or reimbursement of expenses in respect of members or stockholders who are employees of PGHL;

 

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enter into any agreement that materially restricts the ability of PGHL or its subsidiaries to engage or compete in any material line of business or in any geographic territory or enter into a new material line of business; or

 

•

enter into any agreement, or otherwise become obligated, to do any of the foregoing actions.

Covenants of FTAC

PGHL and FTAC have agreed that, unless otherwise required or permitted under the Merger Agreement, and subject to certain disclosed exceptions, FTAC will not take the following actions during the interim period between signing of the Merger Agreement and closing of the Transactions, among others, without the prior written consent of PGHL:

 

•

change, modify or amend the Trust Agreement or the FTAC Organizational Documents;

 

•

declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, FTAC;

 

•

split, combine or reclassify any capital stock of, or other equity interests in, FTAC;

 

•

other than in connection with the FTAC Stockholder Redemption or as otherwise required by FTAC’s Organizational Documents in order to consummate the Transactions, repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, FTAC;

 

•

make, change or revoke any material income tax election, adopt or change any material accounting method with respect to taxes, file any amended material tax return or settle or compromise any material tax liability;

 

•

enter into, renew or amend in any material respect, any transaction or contract with an Affiliate of FTAC, the Founder or Cannae Holdings (including, for the avoidance of doubt, (i) any director or officer of FTAC, the Founder or Cannae Holdings or anyone related by blood, marriage or adoption to any such person and (ii) any Person with whom any director or officer of FTAC, the Founder or Cannae Holdings has a direct or indirect legal or contractual relationship or beneficial ownership interest of 5% or greater) or any other FTAC Affiliate Agreement;

 

•

enter into, renew or amend in any material respect, any transaction or Contract relating to FTAC Transaction Expenses if such entry, renewal or amendment would result in additional FTAC Transaction Expenses that, individually or in the aggregate, exceed $5,000,000;

 

•

waive, release, compromise, settle or satisfy any pending or threatened material claim, action or proceeding or compromise or settle any liability;

 

•

except as contemplated by the Omnibus Incentive Plan Proposal, adopt or amend any FTAC Benefit Plan (or any plan, policy or arrangement that would be an FTAC Benefit Plan if so adopted), or enter into any employment contract or collective bargaining agreement, pay any special bonus or special remuneration to any director, officer, employee or contractor, or increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) of its directors, officers, employees or independent contractors;

 

•

acquire by merging or consolidating with, or by purchasing the assets of, or by any other manner, any business or person or division thereof or otherwise acquire any assets;

 

•

adopt a plan of complete or partial liquidation, dissolution, merger, division transaction, consolidation or recapitalization;

 

•

incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any Indebtedness;

 

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offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, other equity interests, equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in, FTAC or any of its subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than the, issuance of FTAC Class A Common Stock in connection with FTAC Financing on the terms set forth in the Forward Purchase Agreement;

 

•

amend, modify or waive any of the terms or rights set forth in, any FTAC Warrant or the Warrant Agreement, including any amendment, modification or reduction of the warrant price set forth therein;

 

•

take any action or knowingly fail to take any action, which action or failure to act would reasonably be expected to prevent or impede the Business Combination from qualifying for the Intended Tax Treatment; or

 

•

authorize any of, or commit or agree to take, whether in writing or otherwise, any of, the foregoing actions.

The Merger Agreement also contains additional covenants of the parties, including, among other things, covenants providing:

 

•

that each of FTAC and the Paysafe Parties will cooperate with one another and use their respective reasonable best efforts to prepare all necessary documentation (including furnishing all information (i) required under any applicable Antitrust Laws or other applicable Laws, (ii) requested by a Governmental Authority pursuant to applicable Antitrust Laws, or (iii) requested by the FCA or CBI as part of the FCA Approval and CBI Approval applications) to effect promptly all necessary filings with any Governmental Authority and to obtain all necessary, proper or advisable actions or nonactions, consents, waivers, exemptions and approvals of any Governmental Authority necessary to consummate the transactions contemplated by the Merger Agreement, including the FCA Approval and the CBI Approval;

 

•

that the parties will prepare and file this proxy statement/prospectus and solicit proxies from FTAC Stockholders to vote on the proposals that will be presented for consideration at the Special Meeting;

 

•

for mutual exclusivity during the interim period between signing of the Merger Agreement and closing of the Transactions;

 

•

that each party take certain actions to effect the intended tax treatment of the Transactions;

 

•

for the protection of confidential information in accordance with the terms of the existing confidentiality agreement between the parties and, subject to the confidentiality requirements, the provision of reasonable access to information;

 

•

that each party use commercially reasonable efforts to obtain all material consents and approvals of third parties and take such other actions as may reaasonably be necessary to satisfy the closing conditions and consummate the Transactions as soon as practicable;

 

•

post-closing cooperation to give full effect to the Merger Agreement and the transactions contemplated thereby;

 

•

for customary indemnification of, and provision of insurance with respect to, former and current officers and directors of FTAC and PGHL and each of their respective subsidiaries;

 

•

FTAC to take all actions and do all things necessary, proper or advisable to consummate the transactions contemplated by the Subscription Agreements and the Forward Purchase Agreement on the terms and conditions described therein;

 

•

FTAC to take all actions and do all things necessary, proper or advisable to satisfy on a timely basis all conditions and covenants applicable to FTAC in the Sponsor Agreement and to enforce its rights thereunder;

 

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FTAC to use its reasonable best efforts to ensure FTAC remains listed as a public company on, and for shares of FTAC’s Class A common stock and warrants to be listed on, the NYSE;

 

•

FTAC to take all commercially reasonable steps as may be required to cause any acquisition or disposition of FTAC’s Class A common stock that occurs or is deemed to occur by reason of or pursuant to the Transactions by each individual who is or will be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to FTAC to be exempt under Rule 16b-3 promulgated under the Exchange Act;

 

•

the Company to, subject to obtaining the approval of the stockholders of FTAC for the Omnibus Incentive Plan Proposal, adopt the Paysafe Limited 2021 Omnibus Incentive Plan;

 

•

that, from signing of the Merger Agreement to closing of the Transactions, FTAC take all actions necessary to continue to qualify as an “emerging growth company” within the meaning of the JOBS Act and not take any action that would cause FTAC to not qualify as an “emerging growth company” within the meaning of the JOBS Act;

 

•

FTAC and PGHL execute and deliver to the other at or prior to the Closing, the Shareholders Agreement and the Registration Rights Agreement;

 

•

PGHL provide to FTAC, (a) audited financial statements, including consolidated balance sheets and consolidated statements of income, shareholders’ equity and cash flows, of the Accounting Predecessor and its subsidiaries as at and for the years ended December 31, 2019 and December 31, 2018, in each case, prepared in accordance with GAAP and Regulation S-X and audited in accordance with the auditing standards of the of the U.S. Public Company Accounting Oversight Board and (b) unaudited financial statements, including consolidated balance sheets and consolidated statements of income, shareholders’ equity and cash flows, of the Accounting Predecessor and its subsidiaries as at and for the nine-months ended September 30, 2019 and September 30, 2020, in each case, prepared in accordance with GAAP and Regulation S-X;

 

•

in the event the Closing occurs, or is expected to occur, on or after March 25, 2021, the parties reasonably cooperate and take, or cause to be taken, such actions as are reasonably necessary to prepare the audited consolidated balance sheets of the Accounting Predecessor and its Subsidiaries as at December 31, 2020, and the related audited consolidated statements of income and comprehensive income, shareholders’ equity and cash flows for the year then ended, together with the auditor’s reports thereon; and

 

•

to work in good faith to enter into a share purchase agreement between the Company and Skrill USA, Inc. and associated documentation, including an indemnification agreement between the Company and PGHL, in each case, on terms substantially consistent with the forms attached to the PGHL Schedules.

Conditions to Closing of the Transactions

General Conditions

Consummation of the Transactions is conditioned on the approval of the Business Combination Proposal and the Charter Amendment Proposal, as described in this proxy statement/prospectus.

In addition, the consummation of the Transactions contemplated by the Merger Agreement is conditioned upon, among other things:

 

•

the early termination or expiration of the waiting period under the HSR Act;

 

•

receipt of required consents and approvals from all applicable Governmental Authorities;

 

•

no order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any Governmental Authority, and no statute, rule or regulation that is in effect and enjoins or prohibits the consummation of the Transactions;

 

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FTAC having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining after FTAC Stockholder Redemption; and

 

•

the Form F-4 registration statement that this proxy statement/prospectus forms a part of and the absence of any issued or pending stop order by the SEC;

 

•

the Company Common Shares to be issued in connection with the Transactions having been approved for listing on the NYSE, subject only to official notice of issuance;

 

•

the Company Board shall be constituted with the Persons specified in the PGHL Schedules;

 

•

the delivery by each of PGHL to FTAC to the other of an executed copy of the Shareholders Agreement and the Registration Rights Agreement; and

 

•

the delivery by each of the Paysafe Parties and FTAC to the other of a certificate with respect to the truth and accuracy of such party’s representations and warranties as of the Closing, as well as the performance by such party of the covenants and agreements contained in the Merger Agreement required to be complied with by such party prior to the Closing.

FTAC’s Conditions to Closing

The obligations of FTAC to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:

 

•

the accuracy of the representations and warranties of the Paysafe Parties (subject to customary bring-down standards); and

 

•

the covenants of the Paysafe Parties having been performed in all material respects.

The Paysafe Parties’ Conditions to Closing

The obligations of the Paysafe Parties to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:

 

•

the accuracy of the representations and warranties of FTAC (subject to customary bring-down standards);

 

•

the covenants of FTAC having been performed in all material respects;

 

•

there being at least $3,400,000,000 of Available Closing Cash;

 

•

the covenants of the Sponsor Persons under the Sponsor Agreement having been performed in all material respects, and the Sponsor Persons shall not have threatened (orally or in writing) (i) that the Sponsor Agreement is not valid, binding and in full force and effect, (ii) that PGHL is in breach of or default under the Sponsor Agreement or (iii) to terminate the Sponsor Agreement;

 

•

delivery by FTAC to PGHL on or before the Closing Date of a duly executed statement dated as of the Closing Date that certifies, in accordance with Treasury Regulations Section 1.1445-2(c)(3) and Section 1.897-2(h), that FTAC Common Stock is not a United States real property interest within the meaning of Section 897(c) of the Code; and

 

•

the preparation and availability for issuance of the audited and interim financial statements of the Accounting Predecessor that will be required to be included in the Form 20-F to be filed in connection with the Closing.

Waiver

Any party to the Merger Agreement may, at any time prior to the closing of the Transactions, by action taken by its board of directors or equivalent governing body, or officers thereunto duly authorized, waive in

 

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writing any of its rights or conditions in its favor under the Merger Agreement. Notwithstanding the foregoing, pursuant to FTAC’s current certificate of incorporation, FTAC cannot consummate the proposed Business Combination if it has less than $5,000,001 of net tangible assets remaining after the closing.

The existence of the financial and personal interests of the directors may result in a conflict of interest on the part of one or more of them between what he may believe is best for FTAC and what he may believe is best for himself in determining whether or not to grant a waiver in a specific situation.

Termination

The Merger Agreement may be terminated and the transactions contemplated thereby abandoned under certain customary and limited circumstances, notwithstanding approval of the Merger Agreement by the stockholders of FTAC or PGHL as follows:

 

•

by mutual written consent of PGHL and FTAC;

 

•

by FTAC if the Transactions are not consummated on or before December 7, 2021 (the “Termination Date”), which may be automatically extended in the event that any action or legal proceeding for specific performance or other equitable relief by PGHL with respect to the Merger Agreement or any other Transaction Agreement or otherwise with respect to the Transactions is commenced or pending on or before December 7, 2021 until 30 days following the date on which a final, non-appealable order or judgment has been entered with respect to such action or legal proceeding, provided that FTAC’s failure to fulfill any obligation under the Merger Agreement is not the primary cause of, or primarily resulted in, the failure of the closing of the Transactions to occur on or before the Termination Date;

 

•

by PGHL if the Transactions are not consummated on or before December 7, 2021, provided that PGHL’s failure to fulfill any obligation under the Merger Agreement is not the primary cause of, or primarily resulted in, the failure of the closing of the Transactions to occur on or before the Termination Date;

 

•

by either FTAC or PGHL if the other party has breached any of its covenants, agreements, representations or warranties which would cause the conditions to closing of the Transactions not to be satisfied and has not cured its breach, if curable, within thirty days of an intent to terminate, provided that the terminating party’s failure to fulfill any obligation under the Merger Agreement is not the primary cause of, or primarily resulted in, the failure of the closing of the Transactions to occur on or before the Termination Date or, in the case of a termination by PGHL, the extended Termination Date, as applicable;

 

•

by either FTAC or PGHL if a final, non-appealable governmental order or a statute, rule or regulation permanently enjoins or prohibits the consummation of the Merger; or

 

•

by either FTAC or PGHL if stockholder approval is not obtained at the Special Meeting (subject to any adjournment or postponement thereof), provided that FTAC is not entitled to terminate on these grounds if, at the time of such termination, FTAC is in breach of certain obligations with respect to this proxy statement/prospectus and the Special Meeting.

Effect of Termination

In the event of proper termination by either FTAC or PGHL, the Merger Agreement will become void and have no effect (other than with respect to certain surviving obligations specified in the Merger Agreement), without any liability on the part of any party thereto or its respective affiliates, officers, directors, employees or stockholders, other than liability of any party thereto for any intentional and Willful Breach of the Merger Agreement by such party occurring prior to such termination.

 

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Fees and Expenses

Except for all filing fees payable pursuant to Antitrust Laws in connection with the Transactions, which shall be borne by FTAC, all fees and expenses incurred in connection with the Merger Agreement and the Transactions will be paid by the party incurring such expenses; provided that, if the Closing occurs, the Company shall bear and pay all of the transaction expenses of or payable by FTAC and the Paysafe Parties.

Amendments

The Merger Agreement may be amended by the parties thereto at any time by execution of a duly authorized agreement in writing executed on behalf of each of the parties in the same manner as the Merger Agreement and which makes reference to the Merger Agreement. FTAC would file a Current Report on Form 8-K and issue a press release to disclose any amendment to the Merger Agreement entered into by the parties. If such amendment is material to investors, a proxy statement supplement would also be sent to holders of FTAC common stock as promptly as practicable.

Governing Law; Consent to Jurisdiction

The Merger Agreement is governed by the laws of the State of Delaware law. The parties to the Merger Agreement have irrevocably submitted to the exclusive jurisdiction of federal and state courts in the State of Delaware.

Related Agreements

This section describes the material provisions of certain additional agreements entered into or to be entered into pursuant to the Merger Agreement (the “Related Agreements”) but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements, and other interested parties are urged to read such Related Agreements in their entirety.

Sponsor Agreement

Concurrently with the execution of the Merger Agreement, FTAC entered into the Sponsor Agreement. The following summary of the Sponsor Agreement is qualified by reference to the complete text of the Sponsor Agreement, a copy of which is attached as Exhibit 10.2 to the Form 8-K filed by FTAC on December 7, 2020. All stockholders are encouraged to read the Sponsor Agreement in its entirety for a more complete description of the terms and conditions thereof.

Pursuant to the terms of the Sponsor Agreement, among other things, the Sponsor Persons have agreed to (i) vote any shares of FTAC Common Stock held by such party in favor of the Transactions and other FTAC Stockholder Matters, (ii) not redeem any shares of FTAC’s Common Stock, (iii) not take any action to solicit any offers relating to an alternative business combination, (iv) use reasonable best efforts to obtain required regulatory approvals, (v) not transfer any Company Common Shares for a period beginning on the Closing Date and ending on the earlier of (A) 270 days thereafter or (B) if the volume weighted average price of the Company Common Shares equals or exceeds $12.00 per share for any 20 trading days within a 30 trading day period, 150 days thereafter and (vi) be bound to certain other obligations as described therein.

The Founder further agreed that it will exchange its Private Placement Warrants for a number of shares of FTAC Class C Common Stock equal to the shares of FTAC Class A Common Stock underlying such warrants (the “Private Placement Warrants Transfer”). Prior to the consummation of the Business Combination, the Founder will contribute all such FTAC Class C Common Stock to the LLC in exchange for exchangeable units of the LLC that will be exchangeable into Company Common Shares or cash, as determined by the LLC, on the

 

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same terms as such warrants, following the first anniversary of the Closing and expiring on the fifth anniversary of the Closing.

Additionally, as provided in the Merger Agreement, the Founder and certain of the Insiders have agreed to forfeit 7,987,877 shares of FTAC Class B Common Stock subject to the consummation of the Business Combination. All forfeited shares of FTAC Class B Common Stock shall be canceled. After such forfeiture, the Founder and such Insiders shall hold 28,687,959 shares of Class B Common Stock.

Subscription Agreements

In connection with the execution of the Merger Agreement, FTAC entered into the Subscription Agreements with the PIPE Investors. The following summary of the Subscription Agreements is qualified by reference to the complete text of the form of the Subscription Agreement, a copy of which is attached as Exhibit 10.6 to this proxy statement/prospectus. All stockholders are encouraged to read the form of Subscription Agreement in its entirety for a more complete description of the terms and conditions thereof.

Pursuant to the terms of the Subscription Agreements, the Company has agreed to issue and sell to the PIPE Investors and the PIPE Investors have agreed to buy, in the aggregate, $2,000,000,000 of Company Common Shares (the “PIPE Investment”) at a purchase price of $10.00 per share. The closing of the PIPE Investment is conditioned on the conditions set forth in the Merger Agreement having been satisfied or waived by the parties thereto and the Transactions being consummated immediately following the closing of the PIPE Investment.

The Subscription Agreements will terminate upon the earliest to occur of (i) the termination of the Merger Agreement, (ii) the mutual written agreement of the parties thereto or (iii) at a PIPE Investor’s election, on or after December 7, 2021, subject to automatic extension if any action for specific performance or other equitable relief by PGHL or the Company with respect to the Merger Agreement, the other Transaction Agreements specified in the Merger Agreement or otherwise regarding the Transactions is commenced or pending on or prior to the Termination Date.

If the closing of the PIPE Investment by any PIPE Investor does not occur prior to the consummation of the Transactions due to a breach of the Subscription Agreement by such PIPE Investor, then PGHL or one or more of its equityholders may, within thirty (30) days after the consummation of the Transactions, cause such PIPE Investor to purchase from PGHL (or from its assignee(s) or designee(s), including, if applicable, equityholders), the number of Company Common Shares that such PIPE Investor failed to purchase at the closing of the PIPE Investment, for a per share purchase price equal to $10.00 per share.

In connection with the PIPE Investment, the Company has agreed to pay (i) the FNF Subscribers a fee of 1.6% of the purchase price the FNF Subscribers will pay to the Company at Closing for the issuance of the Company Common Shares pursuant to the Subscription Agreement upon the consummation of the Business Combination and (ii) Cannae Holdings a fee of 1.6% of the purchase price Cannae Holdings will pay to the Company at Closing for the issuance of the Company Common Shares pursuant to the Subscription Agreement upon the consummation of the Business Combination. Such fees match the fees (on a percentage basis) to be received by the placement agent with respect to the PIPE Investment by the other PIPE Investors and the placement agents will receive no fees with respect to the PIPE Investment by the FNF Subscribers or Cannae Holdings.

The proceeds of the PIPE Investment will be used to fund a portion of the amount necessary to consummate the Transactions.

Amended and Restated Registration Rights Agreement

In connection with the Merger Agreement, the Company, Pi Topco, PGHL, the CVC Investors and the Blackstone Investors agreed to enter into an Amended and Restated Registration Rights Agreement (the

 

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“Registration Rights Agreement”) at the Closing. The Registration Rights Agreement will provide these holders (and their permitted transferees) with, among other things, (i) the right to require the Company, at the Company’s expense, to file a registration statement of the Company Common Shares that they hold within 45 days following the Closing Date and on customary terms for a transaction of this type and (ii) customary registration rights, including demand, piggy-back and shelf registration rights. The Registration Rights Agreement will also provide that the Company pay certain expenses of the electing holders relating to such registrations and indemnify them against certain liabilities that may arise under the Securities Act.

Shareholders Agreement

In connection with the execution of the Merger Agreement, PGHL, the Company, Pi Topco, Cannae Holdings, the Founder, the CVC Investors and the Blackstone Investors have agreed to enter into a Shareholders Agreement (the “Shareholders Agreement”) at the Closing. Pursuant to terms of the Shareholders Agreement, effective as of the date the Closing Date, the Company Board is anticipated to be comprised of eleven directors as follows: (i) four directors designated by Cannae LLC and the Founder (together, the “FTAC Investors”), (ii) four directors designated by the CVC Investors and Blackstone Investors, (iii) two directors mutually designated by Cannae, the CVC Investors and the Blackstone Investors (which such directors will be independent directors) and (iv) the chief executive officer of PGHL.

Following the Closing Date, the FTAC Investors’ right to designate directors to the Company Board is subject to (a) the amount of Company Common Shares held by the FTAC Investors at a given point in time, as compared to the Company Common Shares held by the FTAC Investors on the Closing Date and (b) the amount of Company Common Shares held by the FTAC Investors as compared to the number of Company Common Shares then outstanding at a given time. So long as the FTAC Investors hold at least 50% of the Company Common Shares held by the FTAC Investors on the Closing Date, the FTAC Investors will have the right to designate four directors and Cannae LLC will have the right to jointly with the CVC Investors and the Blackstone Investors, designate two directors. If the FTAC Investors hold less than 50% of the Company Common Shares held by the FTAC Investors on the Closing Date, they will have the right to designate (1) if the FTAC Investors hold at least 7.5% of the aggregate outstanding Company Common Shares, four directors and Cannae LLC will have the right to jointly with the CVC Investors and the Blackstone Investors, designate two directors, and to consent to any individual nominated for election to the Company Board seat initially occupied by the chief executive officer of PGHL; (2) if the FTAC Investors hold at least 6.25% (but less than 7.5%) of the aggregate outstanding Company Common Shares, two directors; and (3) if the FTAC Investors hold at least 2.5% (but less than 6.25%) of the aggregate outstanding Company Common Shares, one director.

Additionally, following the Closing Date, each of the CVC Investors’ and Blackstone Investors’ rights to designate directors to the Company Board is subject to the aggregate amount of Company Common Shares held by such investors as compared to the number of Company Common Shares outstanding at any time. If the CVC Investors or the Blackstone Investors, as the case may be, directly hold or indirectly, as set forth on the books and records of PGHL or Pi Topco, as applicable, are attributed at least 7.5% of the aggregate outstanding Company Common Shares, the CVC Investors or the Blackstone Investors, are, respectively, entitled to designate two directors. If the CVC Investors or the Blackstone Investors, as the case may be, directly hold or indirectly, as set forth on the books and records of PGHL or Pi Topco, as applicable, are attributed at least 2.5% (but less than 7.5%) of the aggregate outstanding Company Common Shares, then the CVC Investors or the Blackstone Investors, are, respectively, entitled to appoint one director. If the CVC Investors or the Blackstone Investors, as the case may be, hold at least 7.5% of the aggregate outstanding Company Common Shares, then the CVC Investors or the Blackstone Investors, are, respectively, entitled to jointly with Cannae and the Blackstone Investors (in the case of the CVC Investors) and the CVC Investors (in the case of the Blackstone Investors) designate two directors and to consent to any individual nominated for election to the Company Board seat initially occupied by the chief executive officer of PGHL. Additionally, each of the CVC Investors and the Blackstone Investors have agreed not to transfer any Company Common Shares for a period beginning on the Closing Date and ending on the earlier of (A) 180 days thereafter or (B) if the volume weighted average price of

 

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the Company Common Shares equals or exceeds $12.00 per share for any 20 trading days within a 30 trading day period, 60 days thereafter.

Omnibus Incentive Plan

Subject to the approval of the FTAC Stockholders, upon the consummation of the Business Combination, the Company will adopt the Omnibus Incentive Plan, a copy of which is attached to this proxy statement/prospectus as Annex E, which, among other things, permits the granting of nonqualified stock options, restricted stock units, performance shares, performance units, replacement awards and other awards. If approved by FTAC Stockholders, the Omnibus Incentive Plan will become effective upon the consummation of the Business Combination and have the following principal features:

 

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Types of Awards: The Omnibus Incentive Plan provides for non-qualified share options and incentive share options, share appreciation rights, restricted shares and restricted share units and other equity-based awards or cash-based awards.

 

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Eligibility: Subject to certain restrictions, the Company’s and its subsidiaries’ employees, director of officer and consultants or advisors are eligible to participate in the Omnibus Incentive Plan.

 

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Administration: The Omnibus Incentive Plan will be administered by the compensation committee of the Company’s Board, or such other committee of the Company’s Board to which it has properly delegated power, or if no such committee or subcommittee exists.

 

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Shares Available for Awards: The Omnibus Incentive Plan provides that the total number of Company Common Shares that may be issued under the Omnibus Incentive Plan is                  or the “Absolute Share Limit”; provided, however, that the amount shall be increased on the first day of each fiscal year beginning with the 2022 fiscal year in an amount equal to the least of (x)                  Company Common Shares, (y) 7.5% of the total number of Company Common Shares outstanding on the last day of the immediately preceding fiscal year, and (z) a lower number of Company Common Shares as determined by the Company’s Board. Of this amount, the maximum number of Company Common Shares for which incentive share options may be granted is                 .

A summary of the Omnibus Incentive Plan is set forth in the “Proposal No. 4—The Omnibus Incentive Plan Proposal” and a complete copy of the Omnibus Incentive Plan is attached to this proxy statement/prospectus as Annex E.

Charter Documents of the Company Following the Business Combination

Pursuant to the Merger Agreement, upon the closing of the Business Combination, the Company Charter will be amended and restated. See “Description of the Company’s Securities,” for a description of the Company’s amended and restated memorandum of association and a comparison to the provisions of the FTAC Organizational Documents.

Headquarters; Stock Symbols

After completion of the transactions contemplated by the Merger Agreement, the Company expects its Company Common Shares (including the Company Common Shares issuable in the Business Combination) and the Company Warrants to be listed on the NYSE under the proposed symbols “PSFE” and “PSFE.WS” respectively.

The mailing address of Paysafe Limited’s registered office is c/o M Q Services Ltd., Victoria Place, 31 Victoria Street, Hamilton HM10, Bermuda. It is the intention that, in the longer term, the affairs of Paysafe will be conducted so that the central management and control of Paysafe is exercised in the UK with its corporate headquarters and principal executive offices located at 25 Canada Square, 27th Floor, London, United Kingdom, E14 5LQ.

 

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Background of the Business Combination

FTAC is a blank check company formed as a corporation in Delaware on July 17, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Business Combination is the result of an extensive search for a potential initial business combination, whereby FTAC evaluated a large number of potential targets utilizing FTAC’s global network and the investing, operating and transaction experience of FTAC’s management team, advisory partners and the FTAC Board. The terms of the Business Combination are the result of arm’s-length negotiations between representatives of FTAC and representatives of PGHL over the course of three months. The following is a brief discussion of the background of these negotiations, the Merger Agreement and related transaction documents and the Business Combination.

On August 21, 2020, FTAC completed its initial public offering (the “FTAC IPO”). Prior to the consummation of the FTAC IPO, neither FTAC, nor anyone on its behalf, contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to a transaction with FTAC.

After the FTAC IPO, FTAC commenced an active search for prospective businesses and assets to acquire, reviewing a large number of potential targets. Representatives of FTAC, FTAC management and members of the FTAC Board contacted and were contacted by a number of individuals, entities and third party financial advisors with respect to acquisition opportunities.

In evaluating potential businesses and assets to acquire, FTAC, together with its advisory partners, generally surveys the landscape of potential acquisition opportunities based on its knowledge of, and familiarity with, the M&A marketplace. In general, FTAC looks for acquisition targets that are (i) of a size relevant to the public marketplace, which FTAC generally views as companies with an enterprise value of at least $6.5 billion and (ii) positioned, operationally and financially, to be successful as a public company. FTAC further looks for those transactions that it believes that, if entered into, would be well-received by the public markets and FTAC Stockholders. In particular, FTAC generally seeks to identify companies that (a) have an existing strong management team, (b) have an attractive platform with a defensible market position, (c) are positioned for both organic and in-organic growth, and (d) generate significant cash flow. FTAC also seeks to identify companies that it believes would benefit from the expertise of FTAC’s operating partners and from being a publicly-held entity, particularly with respect to access to capital for both organic growth and for use in acquisitions. FTAC generally applies these criteria when evaluating potential targets.

In connection with their evaluation of potential initial business combination opportunities, William P. Foley, II, the Founder and Chairman of FTAC, Richard N. Massey, Chief Executive Officer of FTAC, Bryan D. Coy, Chief Financial Officer of FTAC, David W. Ducommun, Senior Vice President of Corporate Finance of FTAC and Michael L. Gravelle, General Counsel and Corporate Secretary of FTAC, together with their advisory partners and other representatives of FTAC:

 

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developed a list of business combination candidates;

 

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held conversations with numerous potential targets and their management and/or stakeholders either initiated by them or by the potential target or its sponsor;

 

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identified and evaluated a number of potential target opportunities, including a combination with PGHL, prior to focusing its efforts on a business combination transaction with PGHL; and

 

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in connection with evaluating such opportunities, representatives of FTAC met and conducted preliminary discussions with representatives of, and commenced initial preliminary due diligence on, such potential target opportunities.

Representatives of FTAC considered and reached out to several other alternative acquisition targets but decided not to pursue them. The decision not to pursue the alternative acquisition targets was generally the result

 

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of one or more of (i) FTAC’s determination that these businesses did not represent as attractive a target as PGHL due to a combination of business prospects, strategy, concerns raised in preliminary diligence, management teams, structure and valuation, (ii) FTAC’s decision to pursue a business combination with PGHL or (iii) a difference in valuation expectations between FTAC, on the one hand, and a seller, on the other hand.

Given their experience in the digital commerce industry, members of FTAC management and the FTAC Board were familiar with PGHL’s business, management and reputation as a longstanding leader in the industry and considered PGHL an attractive potential acquisition target. Representatives of RBC Capital Markets, LLC (“RBC”) highlighted PGHL as a potential acquisition target and arranged for a call with representatives of FTAC on September 3, 2020 to further familiarize FTAC with PGHL and gauge whether FTAC would be interested in considering a transaction with PGHL. During the September 3rd call and a subsequent call with representatives of FTAC on September 11, 2020, RBC presented an overview of PGHL and the Paysafe business to representatives of FTAC. FTAC selected RBC to act as its financial adviser due to its knowledge of the Paysafe business and the industry more generally.

On September 16, 17 and 18, 2020 representatives of FTAC held a series of calls with representatives of Credit Suisse Securities (US) LLC (“Credit Suisse”), financial advisor to PGHL, representatives of RBC and representatives of PGHL’s management. During these calls representatives of PGHL’s management presented to FTAC an overview of PGHL and the Paysafe business.

On September 21, 2020, FTAC and its advisors were granted access by PGHL to a virtual data room containing non-public information relating to PGHL and the Paysafe business in order to facilitate FTAC’s due diligence review of PGHL. From September 21, 2020 to December 7, 2020, FTAC and its advisors continued their broader due diligence review of PGHL’s business, including holding numerous diligence calls among FTAC management, PGHL management and their respective advisors.

During the week of October 9, 2020, representatives of Credit Suisse and RBC, acting on behalf of PGHL and FTAC respectively, exchanged communications regarding certain high-level economic terms of a potential transaction, including (i) total enterprise valuation, (ii) size of private placement transaction and (iii) leverage expectations at closing.

On October 15, 2020, representatives of FTAC provided an initial non-binding indication of interest to representatives of PGHL, which contemplated, among other things, a total enterprise valuation for the post-closing combined company of $10.5 billion and a proposed pro forma equity ownership calculation.

On October 19, 2020, representatives of PGHL provided an initial draft term sheet (the “Term Sheet”) to representatives of FTAC outlining the basic parameters for a transaction between PGHL and FTAC. The initial Term Sheet contemplated, among other things, (i) a total enterprise valuation for the post-closing combined company of $10.6 billion, (ii) two tranches of earnout securities to be issued by the Company to PGHL if the price of the Company Common Shares met certain thresholds in the seven (7) year period post-Closing, (iii) the parties raising a $2.5 billion private placement, (iv) the forfeiture by the Founder of certain of its FTAC Class B Common Stock if the Available Cash Amount at Closing was less than $3.9 billion, (v) certain “lock-up” arrangements for the Sponsor Persons, the CVC Investors and the Blackstone Investors, (vi) the proposed composition of the post-closing board of directors of the Company and (vii) an updated pro forma equity ownership calculation.

On October 20, 2020, representatives of FTAC sent a revised draft of the Term Sheet to representatives of PGHL. The primary open issues in the revised term sheet were (i) the calculation of consideration to be paid to PGHL, (ii) the amount to be invested by Cannae Holdings in the PIPE Investment, (iii) the relative duration of the Sponsor Persons’ “lock-up” and the Blackstone Investors and CVC Investors “lock-up” and (iv) the proposed composition of the post-closing board of directors of the Company.

 

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Between October 22, 2020 and October 29, 2020, FTAC, PGHL, representatives from Weil, Gotshal & Manges LLP (“Weil”), legal counsel to FTAC, and representatives from Simpson Thacher & Bartlett LLP (“Simpson Thacher”), legal counsel to PGHL, negotiated and exchanged drafts of the Term Sheet. Significant areas of discussion and negotiation included the structure of the Transaction, the amount and terms of the PIPE Investment by Fidelity National Financial, Inc. and Cannae Holdings, the relative duration of the parties’ obligations under the “lock-up” and the proposed composition of the post-closing board of directors of the Company.

On October 28, 2020, PGHL and Trasimene Capital Management, LLC (a limited partner of the Founder) executed a non-disclosure agreement to facilitate the exchange of confidential information in connection with a potential transaction. Throughout the month of November 2020 through December 7, 2020, FTAC engaged in business, financial and legal due diligence review of PGHL, and representatives of each party and certain of their respective advisors (acting at the direction of their respective party) held numerous calls in furtherance of that review.

Following such initial due diligence by FTAC, as well as initial agreement on the valuation for a potential business combination with PGHL, FTAC decided to prioritize the evaluation and pursuit of a potential business combination with PGHL, assuming satisfactory results from FTAC’s further due diligence efforts.

On October 28, 2020, representatives of FTAC and representatives of PGHL met with representatives of Credit Suisse, J.P. Morgan Securities LLC (“J.P. Morgan”) and BofA Securities, Inc. (“BofA”, and together with Credit Suisse and J.P. Morgan, the “Placement Agents”) to discuss the scope and timing of raising additional capital from investors via a private placement in connection with a potential business combination between FTAC and PGHL. Given Credit Suisse’s extensive knowledge of the Company and experience with similar transactions, PGHL and FTAC determined that Credit Suisse should serve as placement agent in addition to financial advisor. FTAC and the Placement Agents subsequently entered into an engagement letter on November 3, 2020 whereby the Placement Agents were engaged to act as placement agents in connection with the PIPE Investment.

On November 4, 2020, with authorization from FTAC and PGHL, representatives of the Placement Agents began to contact potential investors to discuss their interest in making an equity investment in the Company pursuant to a private placement in connection with the potential business combination.

From November 4, 2020 through November 24, 2020, representatives of FTAC, PGHL and the Placement Agents hosted numerous discussions with potential investors regarding the possibility of making an equity investment in the Company pursuant to a private placement in connection with the potential business combination.

On November 6, 2020, representatives of FTAC reviewed the terms reflected in the Term Sheet with the members of the FTAC Board and provided an update regarding the initial discussions with potential private placement investors.

On November 9, 2020, on behalf of PGHL, a representative of Simpson Thacher delivered a draft merger agreement to Weil.

On November 10, 2020, on behalf of FTAC, a representative of Weil delivered to Simpson Thacher a draft of the subscription agreement to be provided to potential investors in the PIPE Investment.

On November 16, 2020, a representative of Simpson Thacher delivered to Weil a draft of the sponsor agreement, pursuant to which the Sponsor Persons would agree, among other things (i) to vote their shares in support of the Business Combination, (ii) not to elect to redeem any shares of FTAC Common Stock in connection with the Business Combination, (iii) not to take any action to solicit any offers relating to an alternative business combination and (iv) not to transfer any Company Common Shares for up to 270 days after the Closing (subject to certain exceptions).

 

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Later on November 16, 2020, a representative of Weil delivered to Simpson Thacher a revised draft of the merger agreement on behalf of FTAC. The November 16th draft of the merger agreement addressed the following points, among others (i) the calculation of the cash and share consideration to be paid to PGHL, (ii) the scope of representations and warranties to be provided by PGHL, (iii) the limitations imposed by the conduct of business covenants on PGHL and (iv) the required efforts of the parties with respect to obtaining regulatory approval of the proposed business combination.

On November 13, 2020, a representative of Weil delivered to the Placement Agents, for distribution to potential third party investors, a draft of the subscription agreement.

Between November 16, 2020 and November 24, 2020, representatives of FTAC, PGHL and certain of their advisors, acting at the direction of FTAC and PGHL, respectively, had a number of calls to discuss, among other things, the status of the investor interest in the PIPE Investment and feedback from potential third party investors.

On November 17, 2020, a representative of Simpson Thacher delivered to Weil drafts of: (i) the shareholders agreement, pursuant to which (a) the Sponsor Persons and certain funds related to CVC and Blackstone agreed to designation rights with respect to the composition of the post-closing Company Board and (b) the funds related to CVC and Blackstone agreed not to transfer any Company Common Shares for up to 180 days after the Closing (subject to certain exceptions); and (ii) the registration rights agreement, pursuant to which PGHL, the Founder, Cannae LLC and certain funds related to CVC and Blackstone agreed to certain registration rights with respect to the registration of securities of the Company following closing of the Business Combination. From November 16, 2020 through November 28, 2020 Weil and Simpson Thacher exchanged drafts of each of the sponsor agreement, the shareholders agreement and the registration rights agreement and held conference calls to substantially finalize each agreement.

On November 21, 2020, a representative of Simpson Thacher delivered to Weil a draft of the merger agreement, which, among others things (i) revised the mechanics for calculation of the cash and share consideration to be paid to PGHL, (ii) narrowed the scope of representations and warranties to be provided by PGHL, (iii) eased the limitations imposed by the conduct of business covenants on PGHL and (iv) enhanced the required efforts of the parties with respect to obtaining regulatory approval of the proposed business combination.

On November 22, 2020, a representative of Weil delivered to Simpson Thacher drafts of: (i) the sponsor agreement, addressing, among other things, which of the Sponsor Persons would be subject to the agreement and the required efforts of the parties with respect to obtaining regulatory approval of the proposed business combination; (ii) the shareholders agreement addressing, among other things, the relative rights of the parties to designate directors of the Company Board and the equity ownership levels necessary to retain such rights; and (iii) the registration rights agreement addressing, among other things, the form of registration statement, timing and commitments relating to the registration rights of the parties.

On November 23, 2020, a representative of Weil delivered to Simpson Thacher a draft of the merger agreement, which, among other things, (i) reflected revisions to the contemplated transaction structure, (ii) broadened the scope of certain representations and warranties to be provided by PGHL, (iii) reinserted certain limitations imposed by the conduct of business covenants on PGHL and (iv) revised the required efforts of the parties with respect to obtaining regulatory approval of the proposed business combination.

On November 24, 2020, representatives of Simpson Thacher delivered to Weil: (i) an initial draft of the disclosures schedules relating to the Merger Agreement, following which the parties and their respective legal counsel engaged in on-going discussions and negotiations regarding the items to be included in the disclosure schedules and (ii) revised drafts of the sponsor agreement, shareholders agreement and registration rights agreement.

Based on feedback from and following discussions among representatives of PGHL, the Placement Agents and certain anchor investors, it was determined that the total enterprise valuation for the post-closing combined

 

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