Capital restructuring at FanDuel gives shareholders a bigger slice
News on 7 Aug 2017
News on 7 Aug 2017
A merger termination clause agreed by FanDuel management earlier this year is now taking effect following the abandoned merger with DraftKings (see previous reports).
Business media reports last week indicate that the clause will result in founders Nigel and Lesley Eccles seeing their shareholding in the business reduced, and their rights as shareholders diluted as well.
Investors who bought into the company in its $70 million fund raiser in 2014 will receive one new share for every two existing shares held in terms of the restructure, whilst those who took part in the 2015 funding drive, raising $275 million, will be awarded 2.35 new shares for every existing share.
Early FanDuel backers who invested further as part of the 2014 and 2015 fundraisings will have received additional shares in line with those allocations, but they will not be entitled to additional shares based on their original investments, the reports indicate.
The number of shares allocated to the management incentive scheme has reportedly increased dramatically, with 59 new shares being issued for every one already held, but the rights attached to those have been diluted, with half becoming deferred shares. Similarly, the rights attached to the shares held by the company’s seed investors – thought to include Mr and Mrs Eccles have halved in the same way.
The changes mean that FanDuel equity owned by Shamrock, KKR and a range of other investors including NBC Sports Ventures, Google Capital and Time Warner Investments, has increased from 54 percent to 71 percent, based on the total of 4.4 million shares in issue.
The restructuring has also impacted FanDuel’s right to buy back shares issued in the 2014 and 2015 funding rounds. Before the merger-termination clause triggered, FanDuel could have bought out the 2014 investors at the end of June this year and the 2015 investors in January, although it would have had to pay at least 150 percent of the amount it received from those investors to do so.
