Reverse Stock Split FAQs
Updated as of December 13, 2022
The reverse stock split was effective at 4:01 p.m. (ET) on December 12, 2022, and the common shares traded on a split-adjusted basis when the NYSE opens for trading on December 13, 2022. Additional information concerning the reverse stock split can be found in Paysafe’s definitive proxy statement filed with the SEC on November 21, 2022.
For IRS Form 8937 Tax Basis, click here.
What is a reverse stock split?
A reverse stock split exchanges a fixed number of existing shares for a smaller number of new shares, resulting in the new shares having a higher price. At a ratio of 1-for-12, every 12 shares of Paysafe common stock will be automatically combined into 1 share and the stock price initially increases proportionately. This reduces the number of outstanding shares from ~727 million shares to ~61 million shares. No fractional shares will be issued as a result of the reverse stock split. Instead, any fractional shares that would have resulted from the split will be rounded up to the next whole number.
Why is Paysafe doing a reverse stock split?
The Company is implementing the reverse stock split with the objective of reducing Paysafe’s number of shares of common stock outstanding to a level that is better aligned with companies of our size and scope. As a result of the reverse stock split, the number of outstanding shares of Paysafe’s common stock will be reduced from ~727 million shares to ~61 million shares. Furthermore, the Company believes the reverse stock split will make the common stock more attractive to a broader range of investors.
What is the impact of the reverse stock split on the warrants?
The number of shares of common stock issued subject to warrants will automatically be proportionately decreased by the split ratio and the exercise price or conversion ratio will automatically be proportionately increased by the same split ratio. Therefore, the number of shares that you are entitled to receive on exercise of a warrant will be 1/12 of the amount stated on the warrant, and the exercise price will be 12 times the stated price. Note however that your overall position has not changed.
Will Paysafe continue to trade on the NYSE? Is there a new CUSIP?
The Common Shares will continue to trade on the NYSE under the symbol “PSFE”, but will trade under the following new CUSIP number starting December 13, 2022: G6964L 206.
How will fractional shares of Paysafe common stock be treated in the reverse stock split?
No fractional common shares will be issued as a result of the reverse stock split. Instead, any fractional shares that would have resulted from the split for any issued shares will be rounded up to the next whole number.
How does the reverse stock split impact net earnings or loss per share?
Our net earnings or loss per share will be adjusted to reflect the reduced share count from the reverse stock split. In financial statements issued after the reverse stock split becomes effective, per share net earnings or loss and other per share of common stock amounts for periods ending before the effective date of the reverse stock split will be adjusted to give retroactive effect to the reverse stock split.
Are there tax implications of the reverse stock split?
The reverse stock split is intended to qualify as a “reorganization” under Section 368 of the Code that should constitute a “recapitalization” for U.S. federal income tax purposes. Assuming the reverse stock split qualifies as a reorganization, a U.S. Shareholder generally will not recognize gain or loss upon the exchange of our common shares for a lesser number of common shares, based upon the reverse stock split ratio. A U.S. Shareholder’s aggregate basis in the lesser number of common shares received in the reverse stock split will be the same as such U.S. Shareholder’s aggregate tax basis in the common shares that such U.S. Shareholder owned immediately prior to the reverse stock split. The holding period for the common shares received in the reverse stock split will include the period during which a U.S. Shareholder held the common shares that were surrendered in the reverse stock split. The U.S. Treasury regulations provide detailed rules for allocating the tax basis and holding period of the common shares surrendered to the common shares received pursuant to the reverse stock split. U.S. Shareholders of common shares acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
Warrant FAQs
Updated to reflect the Company’s reverse stock split, which became effective at 4:01 p.m. (ET) on December 12, 2022.
How can I exercise my Paysafe warrants?
On August 21, 2021, the warrants were made DTC eligible and put on DTC’s warrant system (“WARR”) where your individual broker should be able to exercise warrants on your behalf. You should contact your individual broker for further information.
What are the terms of the warrants?
The following description is a summary of the terms of the Paysafe warrants. For more information, please see pages 172-173 of Paysafe’s registration statement on Form F-1, filed with the Securities and Exchange Commission (“SEC”) on May 19, 2021 (“F-1”).
Public Warrants
Redemption
The Company may call all such warrants for redemption if, and only if, the reported last sale price of our common shares equals or exceeds $216.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading day period ending on the third trading day before the Company sends the notice of redemption to the holders of such public warrants. In addition, the Company may only call such public warrants for redemption:
- in whole and not in part;
- at a price of $0.01 per warrant;
- upon not less than 30 days’ prior written notice of redemption to each warrantholder.
Additionally, the Company may call all such public warrants for redemption at a price of $0.10 per warrant when the price per share of our common shares equals or exceeds $120.00 provided that (i) the Reference Value equals or exceeds $120.00 per share (subject to adjustment) and (ii) if the Reference Value is less than $216.00 per share (subject to adjustment), the “private warrants” are also concurrently called for redemption on the same terms as the outstanding public warrants. After the Company has provided notice of redemption to the holders of such warrants, the holders of such warrants may elect to exercise their warrants on a “cashless basis” and receive a number of our common shares as set forth in the Warrant Agreement (a “Make-Whole Exercise”).
If and when the public warrants become redeemable, the Company may not exercise its redemption rights if the issuance of common shares upon exercise of such warrants is not exempt from registration or qualification under applicable state blue sky laws or the Company is unable to effect such registration or qualification.
A holder of a public warrant may notify the Company in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 9.8% (or such other amount as a holder may specify) (the “Maximum Percentage”) of our common shares outstanding immediately after giving effect to such exercise. By written notice to the Company, the holder of a public warrant may from time to time increase or decrease the Maximum Percentage applicable to such holder to any other percentage specified in such notice; provided, however, that any such increase shall not be effective until the sixty-first (61st) day after such notice is delivered to the Company.
Exercise
The public warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a “cashless basis,” if applicable), by certified check or bank draft payable to the order of the warrant agent, for the number of such warrants being exercised. The warrant holders do not have the rights or privileges of holders of common shares or any voting rights until they exercise their public warrants and receive our common shares.
Private Placement Public Warrants
As set forth in the Warrant Agreement, the “public warrants” that were previously issued in the private placement (i) may be exercised for cash or on a “cashless basis,” (ii) shall not be redeemable by the Company and (iii) shall only be redeemable by the Company if the “Reference Value”, defined as the last reported sales price of the shares of Class A common stock for any twenty (20) trading days within the thirty (30) trading-day period ending on the third trading day prior to the date on which notice of the redemption is given, is less than $216.00 per share.
Private Warrants
Except as otherwise provided in Section 6 of the Warrant Agreement, the terms of the “private warrants” mirror those of the public warrants. For more information, see page 173 of the F-1.
What are the tax implications of the Paysafe warrants?
The jurisdiction of the SPAC, target and post-transaction entity may cause significantly different U.S. federal income tax consequences to holders of interests in the SPAC. The Paysafe transaction consisted of a domestic SPAC combining with a foreign target and the post-transaction company remained offshore and will be a taxable event to certain U.S. holders. For a summary of the expected tax U.S. federal income tax consequences of the Business Combination to U.S. holders of FTAC Common Stock and/or FTAC Warrants, please see pages 16-17 of Paysafe’s Form F-4, filed with the SEC on December 21, 2020, as amended (“F-4”), and pages 139-150 of the F-4 for a more detailed description.