Pushpay enters into scheme implementation agreement...

Monday 31st October 2022

Pushpay Holdings Limited (NZSX:PPH, ASX:PPH, ‘Pushpay’ or ‘the Company’) has entered into a Scheme Implementation Agreement under which the Sixth Street and BGH Capital Consortium via Pegasus Bidco Limited (the “Sixth Street / BGH Consortium”) will acquire all of Pushpay’s shares at a price of NZ$1.34 per share in cash by means of a scheme of arrangement (“Scheme”). Sixth Street is a global investment firm and BGH Capital is an Australia and New Zealand-focused private equity firm. Together, entities associated with Sixth Street and BGH Capital currently hold, in aggregate, 20.34% of the shares in Pushpay.

Highlights

- Following a comprehensive process and a thorough consideration of strategic options, the Pushpay Board has assessed the Scheme as providing compelling value for shareholders.[1]

- Under the Scheme, Pushpay shareholders will receive a cash price of NZ$1.34 per share.[2]

- The proposed consideration of NZ$1.34 per share in cash represents:

- a 30.1% premium to Pushpay’s undisturbed[3] share price of NZ$1.03 per share on 22 April this year, since which time the ASX All Technology index has declined 12.1% and the NZX50 has declined 6.8%;[4]

- an implied equity value of US$898 million / NZ$1,539 million;[5]

- an enterprise value of US$933 million / NZ$1,599 million; and[5]

- an acquisition multiple of ~16.7x based on the midpoint of the revised FY23 Underlying EBITDAF guidance of US$56 million.[6]

- The Scheme is subject to Pushpay shareholder and Court approval, applicable regulatory approvals and other conditions as detailed in the Scheme Implementation Agreement.

Pushpay shareholder approval will be sought at a special meeting of shareholders expected to be held in Q1 2023. Pushpay shareholders do not need to take any action at the current time.

The Board (being, for this purpose, all of the Non-Conflicted Directors[1]) unanimously recommends that shareholders vote in favour of the Scheme, subject to the Scheme price being within or above the Independent Adviser’s valuation range for Pushpay shares and in the absence of a superior proposal. Subject to the same qualifications, the Non-Conflicted Directors undertake to vote, or procure the voting of, the Pushpay shares that they hold or control in favour of the Scheme.

Following a comprehensive process to review expressions of interest and test a broad range of other potentially interested parties, the Pushpay Board has assessed the Scheme as providing compelling, risk-adjusted value and certainty for shareholders.

Chairman of Pushpay, Graham Shaw, said, “Following the receipt of various unsolicited, non-binding expressions of interest to acquire the Company, the Board formed an Independent Committee, appointed external advisers and undertook a comprehensive process, with a view to exploring opportunities to enhance shareholder value.”

“In considering the options, including the possibility of continuing to implement the Company’s growth strategy as a publicly listed company, the Board adopted a long-term view of the risks and rewards of various alternatives. After a thorough assessment, the Board believes that the Sixth Street / BGH Consortium Scheme proposal currently represents the most compelling value for shareholders. Although the Board remains confident in the future of Pushpay, the transaction will accelerate a capital return to shareholders and mitigates the risks that would otherwise be involved in delivering the opportunities from executing Pushpay’s strategic plan over time. Accordingly, the Board is pleased to unanimously recommend the transaction to shareholders.”

Molly Matthews, CEO of Pushpay, said, “Pushpay will continue to focus on serving its Customers and achieving its mission of being the preferred provider of mission critical software to the US faith sector. The Company remains focused on investing in its customer service and product suite to accelerate and continue the growth opportunities the management team identifies for the business, which is a broad strategy for which both our Board and Sixth Street / BGH Consortium have indicated ongoing support.”

Background to the process

The Scheme follows the receipt of unsolicited, non-binding and conditional expressions of interest or approaches looking to acquire all the shares in Pushpay from multiple parties.

On receipt of the expressions of interest or approaches, Pushpay established an Independent Board Committee (the ‘Committee’) consisting of Lorraine Witten (Chair of the Committee), Graham Shaw (Chair of the Board), Lovina McMurchy (Independent Director) and Sumita Pandit (Independent Director) and appointed Goldman Sachs as financial adviser, Harmos Horton Lusk as lead transaction counsel and Shearman & Sterling as US counsel.

The Committee, with assistance from its advisers, undertook a comprehensive process, with a view to exploring opportunities to enhance shareholder value. The process attracted interest from numerous parties, and a select group undertook detailed due diligence.

Details of Scheme, key conditions and deal protections

The Scheme is subject to Pushpay shareholder and New Zealand High Court approvals, New Zealand Overseas Investment Office consent and the expiry or termination of applicable waiting periods under US anti-trust legislation. It is also subject to other customary conditions, including the absence of material adverse changes.

The Scheme Implementation Agreement contains customary exclusivity provisions. These restrictions are subject to exclusions which permit the Pushpay Board to engage on a competing proposal which is (or is reasonably likely to become) a superior proposal and where their fiduciary obligations require them to do so, subject to notifications being made to the Sixth Street / BGH Consortium and providing the Sixth Street / BGH Consortium with an opportunity to match any such proposal.

The full Scheme Implementation Agreement accompanies this announcement. The Appendix to this announcement sets out a summary of the Scheme process and a summary of key transaction terms and conditions.

Indicative timetable and next steps

Pushpay has, with the approval of the Takeovers Panel, appointed Grant Samuel to prepare an Independent Advisor’s Report to assist shareholders to assess the merits of the Scheme.

A Scheme Booklet containing information relating to the Scheme, the Independent Advisor’s Report, the reasons for the Non-Conflicted Directors’ unanimous recommendation, and meeting information is currently expected to be sent to Pushpay shareholders in Q1 2023.

Pushpay shareholders will have the opportunity to vote on the Scheme at a meeting in Q1 2023. If all the conditions are satisfied, the Scheme is expected to be implemented by early Q2 2023.

The Board encourages shareholders to carefully consider the materials that will be sent to them and to exercise their right to vote at the special meeting that will be called to consider the Scheme. If shareholders have questions or if they propose to buy or sell Pushpay shares before receipt of those materials, they are encouraged to seek their own professional advice.

Note that these dates are indicative and subject to change.

About Sixth Street

Sixth Street is a global investment firm with over US$60 billion in assets under management and committed capital. The firm uses its long-term, flexible capital, data-enabled capabilities, and One Team culture to develop themes and offers solutions to companies across all stages of growth. Founded in 2009, Sixth Street has more than 400 team members including over 180 investment professionals operating around the world. For more information, visit www.sixthstreet.com, and follow Sixth Street on LinkedIn, Twitter, and Instagram.

About BGH Capital

BGH Capital was established in 2017 by Robin Bishop, Ben Gray and Simon Harle to create the pre-eminent private equity firm in Australia and New Zealand. BGH is headquartered in Melbourne, Australia and is an independent firm, owned and managed by its founding partners. BGH Capital raised BGH Capital Fund I at AU$2.6 billion in 2018 and BGH Capital Fund II at AU$3.6 billion in 2022, being the largest private equity fund raised in Australia & New Zealand. BGH Capital partners with business owners and management teams to help them build and grow strong, sustainable, market-leading businesses.

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[1] Due to his association with Sixth Street, Pushpay Director John Connolly has not participated in Pushpay’s response to the receipt of unsolicited expressions of interest or the negotiation of the Scheme, and he abstains from providing a recommendation to shareholders. Accordingly, references in this announcement to the Non-Conflicted Directors means the Directors other than Mr Connolly and the Board means all of the Non-Conflicted Directors.

[2] It is currently anticipated that Bidco will acquire the Pushpay shares held by entities associated with Sixth Street and BGH Capital under the Scheme. Bidco will not pay cash for those shares.

[3] NZX closing price on Friday, 22 April 2022, being the last day of trading prior to the announcement of the receipt of expressions of interest.

[4] Index performance from Friday, 22 April 2022 to Thursday, 27 October 2022.

[5] Using an NZD:USD FX rate of 0.5835 as at 27 October 2022, net debt of US$35.1 million as at 30 September 2022, and ordinary shares outstanding of 1,141,144,570 and RSUs of 7,306,460.

[6] See Pushpay's trading and FY23 guidance update announcement dated 28 October 2022.

Contact

Gabrielle Wilson | Investor Relations | Pushpay Holdings Limited

P: +64 21 724 244 | E: investors@pushpay.com

www.pushpay.com

This announcement is authorised by the Board of Directors of Pushpay Holdings Limited.

About Pushpay

Pushpay provides a donor management system, including donor tools, finance tools and a custom community app, a church management system (ChMS), and video streaming solutions to the faith sector, non-profit organisations and education providers located predominantly in the United States (US) and other jurisdictions. Our leading solutions simplify engagement, payments and administration, enabling our Customers to increase participation and build stronger relationships with their communities.

Church Community Builder and Resi Media LLC (Resi) are subsidiaries of Pushpay Holdings Limited. Church Community Builder provides a Software as a Service (SaaS) church management system that churches use to connect and communicate with their community members, record member service history, track online giving and perform a range of administrative functions. Resi is a high growth SaaS company that provides end-to-end live video streaming solutions enabled by hardware products predominantly to the faith sector, whilst also servicing commercial, non-profit organisations and education providers in the US.

Pushpay is an award-winning company. For more information visit www.pushpay.com/investors/awards.

ENDS

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