Vertiv Amends its Tax Receivable Agreement Resulting in Approximately $60 Million Positive Pre-Tax Impact
January 06 2022 - 4:15PM
Business Wire
Vertiv Holdings Co (“Vertiv”) (NYSE: VRT), a global provider of
critical digital infrastructure and continuity solutions, today
announced that it has entered into an agreement with VPE Holdings,
LLC, an affiliate of Platinum Equity, LLC, to amend the Tax
Receivable Agreement (“TRA”) the company entered into with VPE
Holdings, in connection with its business combination in February
2020 and to satisfy and extinguish all outstanding remaining
obligations thereunder. Vertiv will make payments totaling $100
million to VPE Holdings, with half to be paid by June 15, 2022, and
the other half by September 15, 2022, at which time all further
obligations under the Tax Receivable Agreement will terminate.
The fair value of the TRA liability recorded on Vertiv’s balance
sheet was $162 million as of September 30, 2021. The remaining
payment obligation under the amended TRA will be $100 million as of
December 31, 2021. The impact of this amendment will result in a
positive pre-tax impact to the statement of earnings of
approximately $60 million in the fourth quarter of 2021. This
benefit will not impact operating profit or adjusted operating
profit as it will be reported below operating profit on the
statement of earnings.
Fourth quarter earnings per share will be positively impacted by
the amended agreement, however, this benefit will be treated as an
adjustment and will not impact adjusted earnings per share. There
will be a $100 million impact to cash flows from financing
activities in 2022 related to the payments due under the amended
agreement.
“Given the strong liquidity of Vertiv’s business, the
opportunity to remove this liability from our balance sheet, at a
reduced cost, makes sense,” said David Fallon, Vertiv’s Chief
Financial Officer. “Doing so removes uncertainty related to the
original multiyear agreement, which contemplated payments until
2033 and will have a significant positive impact to cash flow over
the original time frame of the agreement.”
About Vertiv Holdings Co
Vertiv (NYSE: VRT) brings together hardware, software, analytics
and ongoing services to ensure its customers’ vital applications
run continuously, perform optimally and grow with their business
needs. Vertiv solves the most important challenges facing today’s
data centers, communication networks and commercial and industrial
facilities with a portfolio of power, cooling and IT infrastructure
solutions and services that extends from the cloud to the edge of
the network. Headquartered in Columbus, Ohio, USA, Vertiv employs
approximately 21,000 people and does business in more than 130
countries. For more information, and for the latest news and
content from Vertiv, visit Vertiv.com.
Cautionary Note Concerning
Forward-Looking Statements
This news release, and other statements that Vertiv may make in
connection therewith, may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act. This
includes, without limitation, statements regarding the expected
benefits associated with the termination of the Tax Receivable
Agreement. These statements constitute projections, forecasts and
forward-looking statements and are not guarantees of performance.
Vertiv cautions that forward-looking statements are subject to
numerous assumptions, risks and uncertainties, which change over
time. Words such as “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,”
“potential,” “predict,” “project,” “should,” “strive,” “would” and
similar expressions may identify forward-looking statements. Vertiv
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
The forward-looking statements contained or incorporated by
reference in this presentation are based on current expectations
and beliefs concerning future developments and their potential
effects on Vertiv. There can be no assurance that future
developments affecting Vertiv will be those that Vertiv has
anticipated. Should one or more of these risks or uncertainties
materialize, or should any of the assumptions prove incorrect,
actual results may vary in material respects from those projected
in these forward-looking statements. Vertiv has previously
disclosed risk factors in its Securities and Exchange Commission
(“SEC”) reports.
Category: Financial News
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version on businesswire.com: https://www.businesswire.com/news/home/20220106005790/en/
For investor inquiries, please contact: Lynne Maxeiner
Vice President, Global Treasury & Investor Relations Vertiv T:
+1 614-841-6776 E: lynne.maxeiner@vertiv.com
For media inquiries, please contact: Scott Deitz
FleishmanHillard for Vertiv T: +1 336-908-7759 E:
scott.deitz@fleishman.com
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