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EVO Payments nets US$150m additional investment from Madison Dearborn Partners

EVO Payments has announced that it has received a US$150m investment from funds affiliated with Madison Dearborn Partners (MDP), a private equity firm that has been a significant shareholder of the Company since 2012. MDP’s added resources will strengthen EVO’s financial profile and enable the Company to remain focused on future strategic initiatives as it navigates the global COVID-19 pandemic.

“We have taken decisive measures to ensure our business is best positioned to continue to serve our valued customers throughout this global pandemic,” said James G. Kelly, EVO’s CEO.  “The long-term fundamentals of EVO’s business remain strong and, as the economy recovers, we believe these actions will support EVO’s continued growth through the execution of our strategic plan.”

A portion of the proceeds from MDP’s investment will be used to pay down EVO’s revolver borrowings, reducing EVO’s pro forma leverage ratio as of December 31, 2019 to 3.3x net debt to adjusted EBITDA.  The remainder of the proceeds are expected to be used to fund potential future investment opportunities. 

EVO says it is closely monitoring COVID-19 and its impact on the company’s business. While EVO’s global portfolio represents a diversified mix of merchants across Europe and North America, many of these merchants operate in markets that are subject to broad governmental restrictions on movement and commerce, resulting in substantial reductions in merchant transaction count and volumes.

In response, EVO has taken steps to align its cost structure and cash flows with the expected near-term decline in revenues caused by COVID-19. These actions include a series of initiatives to reduce fixed costs up to 20% for the remainder of fiscal 2020 and lower capital expenditures by up to 75% over the same period.  Such reductions will depend on the pace in which economic activity returns.

Given the unknown duration and extent of COVID-19’s impact on EVO’s business, the company is suspending its 2020 annual guidance published on February 27, 2020.

“We value our long-term relationship with MDP, and we welcome their strong and demonstrated commitment to the future of EVO as it navigates this global pandemic,” commented Ray Sidhom, chairman of EVO’s board of directors.

An overview of the terms of MDP’s investment is as follows:

  • MDP will purchase US$152.25m of perpetual convertible preferred stock, with net proceeds to the company of US$150m.
  • The preferred stock is non-transferable for three years.
  • The preferred stock is convertible into shares of EVO common stock at a conversion price of US$15.80 per share, a 10% premium to EVO’s five-day average stock price and a 13.3% premium to EVO’s closing stock price on Friday, March 27, 2020.
  • The preferred stock carries a 6.0% dividend, payable in kind.
  • On an as-converted basis, together with MDP’s existing shares and units, MDP will own approximately 15% of the economic interests in EVO and will have the right to vote approximately 19% of EVO’s outstanding shares.
  • Subject to certain limitations, MDP may convert the preferred stock into common stock at any time, and EVO may convert the preferred stock into common stock if the closing price of EVO’s common stock is above specified thresholds.
  • Matthew Raino, a Managing Director on MDP’s Financial & Transaction Services team, has been re-appointed to EVO’s Board of Directors, effective April 1, 2020.

J.P. Morgan acted as financial advisor to the special committee of the company’s board of directors and King & Spalding LLP acted as legal advisor in connection with the transaction.  BofA Securities, Inc. served as MDP’s financial advisor, while Latham & Watkins LLP served as MDP’s legal counsel in connection with the investment. 


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