Supplemental Indenture
In connection with the Merger, on April 1, 2022, Old Welltower and New Welltower entered into a supplemental indenture (the “Supplemental Indenture”) with The Bank of New York Mellon Trust Company, N.A., to Old Welltower’s indenture, dated as of March 15, 2010 (the “Indenture”) to reconfirm Old Welltower’s obligations under the Indenture under its new name “Welltower OP Inc.” and to have New Welltower fully and unconditionally guarantee all existing and future senior notes previously issued and to be issued under the Indenture. The foregoing summary of the Supplemental Indenture does not constitute a complete description of, and is qualified in its entirety by reference to, the terms and conditions of the Supplemental Indenture, which is filed herewith as Exhibit 4.1.
LLC Conversion
As required by Section 251(g) of the DGCL, the certificate of incorporation of Old Welltower has been amended in connection with the Merger to add a “Pass-Through Vote Provision.” The Pass-Through Vote Provision requires the shareholders of New Welltower to approve any act or transaction by or involving Old Welltower (other than the election or removal of directors) that would have required the approval of the shareholders of Old Welltower if taken by Old Welltower prior to the Effective Time, by the same vote as was required by the DGCL and/or by the certificate of incorporation or bylaws of Old Welltower in effect immediately prior to the Effective Time.
Under the DGCL, a conversion of a Delaware corporation to a limited liability company requires the unanimous approval of all shareholders, voting and nonvoting. Normally, New Welltower could approve the LLC Conversion in its capacity as sole shareholder of Old Welltower. However, due to the Pass-Through Vote Provision, all of the shareholders of New Welltower also have to approve the LLC Conversion. New Welltower has over 447 million shares outstanding, held by more than 3,100 record and beneficial holders, making the unanimous shareholder approval requirement for the LLC Conversion time consuming, expensive, and likely impossible to achieve. Therefore, in order to provide the benefits of the Reorganization to New Welltower shareholders, Old Welltower included a proposal in its proxy statement for its 2022 annual shareholders’ meeting to allow the shareholders, voting as shareholders of New Welltower, to approve the removal of the Pass-Through Vote Provision so that the LLC Conversion may be approved solely by New Welltower.
As disclosed above, the LLC Conversion is expected to become effective shortly following the 2022 annual meeting of shareholders, subject to approval of New Welltower’s shareholders. New Welltower will be the managing member of and will exercise exclusive control over Welltower OP. New Welltower will initially be the sole member of Welltower OP.
Following the LLC Conversion, the business, management and board of directors of New Welltower will be identical to the business, management and board of directors of Old Welltower immediately before the LLC Conversion, except that we expect to conduct the business of the company exclusively through Welltower OP. The consolidated assets and liabilities of New Welltower immediately following the LLC Conversion will be identical to the consolidated assets and liabilities of Old Welltower immediately prior to the LLC Conversion. New Welltower does not, and following the LLC Conversion is not expected to, hold any assets directly other than certain de minimis assets that may be held for certain administrative functions. None of the properties owned by Welltower OP or its subsidiaries or any interests therein will be transferred as part of the LLC Conversion. All material indebtedness of Welltower OP immediately prior to the Merger is expected to be indebtedness of Old Welltower after the LLC Conversion. Following the LLC Conversion, Welltower OP is expected to remain the borrower under Old Welltower’s $4,000,000,000 unsecured revolving credit facility, $500,000,000 unsecured term loan facility and CAD 250,000,000 unsecured term loan facility and Welltower OP will remain the obligor under all of Old Welltower’s outstanding senior notes.
Federal Income Tax Considerations
The Company is filing as Exhibit 99.1 (incorporated by reference herein) a discussion of certain U.S. federal income tax considerations relating to the Company’s qualification and taxation as a REIT and federal income taxation of holders of the Company’s common stock, depositary shares, debt securities, and warrants. The