UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Date
of report (Date of earliest event reported): December 30, 2024
Beneficient
(Exact
Name of Registrant as Specified in Charter)
| Nevada |
|
001-41715 |
|
72-1573705 |
(State
or Other Jurisdiction
of
Incorporation) |
|
(Commission
File
Number) |
|
(I.R.S.
Employer
Identification
No.) |
325 North St. Paul Street, Suite 4850
Dallas, Texas 75201
(Address of Principal Executive Offices, and Zip Code)
(214)
445-4700
Registrant’s
Telephone Number, Including Area Code
N/A
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2. below):
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☐ |
Written
communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☒ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
| Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange
on
which registered |
| Shares
of Class A common stock, par value $0.001 per share |
|
BENF |
|
Nasdaq
Stock Market LLC |
| Warrants,
each whole warrant exercisable for one share of Class A common stock, par value $0.001 per share, and one share of Series A
convertible preferred stock, par value $0.001 per share |
|
BENFW |
|
Nasdaq
Stock Market LLC |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 3.02 Unregistered Sales of Equity Securities.
Series
B-5 Primary Capital Transaction
On
December 31, 2024, Beneficient, a Nevada corporation (the “Company”), through one of its subsidiaries, closed a primary
capital transaction with a customer with respect to a limited partner interest in an investment fund with a net asset value of $1,361,926
(the “Transaction”). Pursuant to the Transaction, the Company’s customized trust vehicles acquired a limited partner
interest, and in exchange for such, the customer received 136,193 shares of the Company’s Series B-5 Resettable Convertible Preferred
Stock, par value $0.001 per share (the “Series B-5 Preferred Stock”), with such Series B-5 Preferred Stock being convertible
into shares of the Company’s Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”).
The
issuance of the Series B-5 Preferred Stock pursuant to the Transaction was not registered under the Securities Act of 1933, as amended
(the “Securities Act”), and was issued in reliance upon the exemption provided in Section 4(a)(2) of the Securities
Act and Regulation D promulgated thereunder.
The
Series B-5 Preferred Stock is convertible into Class A Common Stock initially at a conversion price of $0.6940 per share (the “B-5
Conversion Price”). The B-5 Conversion Price is only subject to customary adjustments and is otherwise fixed. A total of 1,962,435
shares of Class A Common Stock may be issued upon conversion of the Series B-5 Preferred Stock. The information in Item 5.03
concerning the material terms of the Series B-5 Preferred Stock is incorporated by reference herein.
Item 3.03 Material Modifications to Rights of Security Holders.
The
disclosure required by this Item 3.03 is included in Item 5.03 of this Current Report on Form 8-K and is incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Series
B-5 Preferred Stock
On
December 30, 2024, the Company filed a certificate of designation (the “B-5 Certificate of Designation”) with the Secretary
of State of Nevada, effective as of the time of filing, designating the rights, preferences, privileges and restrictions of the shares
of the Series B-5 Preferred Stock. The material terms of the Series B-5 Preferred Stock are described below. The total number of authorized
shares of the Series B-5 Preferred Stock is 468,481 shares.
Optional
Conversion
Each
share of Series B-5 Preferred Stock is convertible, at the option of the holder thereof upon two business days’ written notice
to the Company, into a number of shares of Class A Common Stock that is equal to $10.00 divided by the B-5 Conversion Price in effect
as of the date of such notice (the “B-5 Conversion Rate”). The B-5 Conversion Price is subject only to customary adjustment
and is otherwise fixed at the initial conversion price.
Mandatory
Conversion
Each
outstanding share of Series B-5 Preferred Stock will automatically convert into a number of shares of Class A Common Stock (the “B-5
Mandatory Conversion”) as is determined by the B-5 Conversion Rate then in effect on the date (the “B-5 Mandatory Conversion
Date”) that is the earliest to occur of: (a) the last day of the month in which the fifth anniversary of the B-5 Original Issue
Date occurs, if either the Company has filed all annual reports on Form 10-K and quarterly reports on Form 10-Q that are then required
to have been filed in the preceding twelve months with the United States Securities and Exchange Commission (the “SEC”) under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or a resale registration statement with respect to
the shares of Class A Common Stock underlying the Series B-5 Preferred Stock (the “B-5 Resale Registration Statement”) has
become effective and is in full force and effect at the time of such B-5 Mandatory Conversion and (b) if the conditions of clause (a)
are not met on the date that is the last day of the month in which the fifth anniversary of the B-5 Original Issue Date occurs, the first
date thereafter on which any shares of Series B-5 Preferred Stock may be resold pursuant to Rule 144 under the Securities Act, or the
B-5 Resale Registration Statement has become effective. Notwithstanding the foregoing, the Series B-5 Preferred Stock shall not convert
into Class A Common Stock to the extent such conversion would cause a holder to exceed (i) 4.99% (the “B-5 Beneficial Ownership
Limitation”) of the number of shares of the Class A Common Stock outstanding immediately after giving effect to the issuance of
shares of Class A Common Stock issuable upon conversion of Series B-5 Preferred Stock held by the applicable holder or (ii) the aggregate
number of shares of Class A Common Stock that the Company may issue upon conversion of the Series B-5 Preferred Stock without breaching
the Company’s obligations under the rules and regulations of Nasdaq (the number of shares which may be issued without violating
such rules and regulations, the “Exchange Cap”). To the extent a conversion would cause a holder to exceed the B-5 Beneficial
Ownership Limitation or Exchange Cap, as applicable, the conversion of the portion of such conversion that would exceed the B-5 Beneficial
Ownership Limitation or Exchange Cap, as applicable, shall be delayed until the first day the conversion of such portion would not cause
the holder to exceed the B-5 Beneficial Ownership Limitation or, with respect to the Exchange Cap, when stockholder approval as required
by the applicable rules and regulations of Nasdaq has been obtained. Further, to the extent any such share of Series B-5 Preferred Stock
has not otherwise automatically converted into shares of Class A Common Stock, the B-5 Conversion Price for such shares shall be subject
to additional resets on the terms described in the B-5 Certificate of Designation on the last date of each month.
Ranking
Series
B-5 Preferred Stock will, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company, rank:
(a) pari passu to the Class A Common Stock; (b) junior with respect to the Company’s Series
A Convertible Preferred Stock, par value $0.001 per share, Series B-1 Resettable Convertible
Preferred Stock, par value $0.001 per share, Series B-2 Resettable Convertible Preferred
Stock, par value $0.001 per share, Series B-3 Resettable Convertible Preferred Stock, par value $0.001 per share, and Series B-4 Resettable
Convertible Preferred Stock, par value $0.001 per share; (c) senior, pari passu or junior with respect to any other series
of preferred stock, as set forth in the Certificate of Designation with respect to such preferred stock; and (d) junior to all existing
and future indebtedness of the Company.
Liquidation
Preference
In
the event of any liquidation or dissolution of the Company, the holders of Series B-5 Preferred Stock shall be entitled receive, pro
rata with the holders of the Company’s Class A Common Stock, and any other shares of preferred stock of the Company identified
as “Designated Preferred Stock,” a per share amount equal to such amount per share as would have been payable had all shares
of Series B-5 Preferred Stock been converted to Class A Common Stock pursuant to Section 8 of the B-5 Certificate of Designation
(without giving effect to any ownership limitations therein) immediately prior to such liquidation or dissolution of the Company (the
“Liquidation Preference”). The Series B-5 Preferred Stock shall be a series of Designated Preferred Stock.
Dividends
Dividends
will be paid on the Series B-5 Preferred Stock on an as-converted basis when, as, and if paid on the Class A Common Stock.
Voting
Rights
Except
as required by law, the holders of Series B-5 Preferred Stock shall not be entitled to vote at any meeting of the stockholders for election
of members of the Board of Directors of the Company or for any other purpose or otherwise to participate in any action taken by the Company
or the stockholders thereof, or to receive notice of any meeting of stockholders.
The
foregoing summary of the B-5 Certificate of Designation does not purport to be complete and is subject to, and qualified in its entirety
by, such document, which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On
January 6, 2025, the Company issued a press release announcing the closing of the Transaction.
A
copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
The
information in this Item 7.01 (including Exhibit 99.1) is being furnished pursuant to Item 7.01 and shall not be deemed to be “filed”
for the purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities of that section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act, except as expressly set forth in such filing.
Item 9.01 Exhibits and Financial Statements.
(d)
Exhibits.
Cautionary
Note Regarding Forward-Looking Statements
Except
for the historical information contained herein, the matters set forth in this Current Report on Form 8-K are forward-looking statements
within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking
statements contained in this Current Report include, without limitation, statements related to the Transaction and the issuance of Class
A Common Stock upon conversion of the Series B-5 Preferred Stock. These and other forward-looking statements are based on management’s
current views and assumptions and involve risks and uncertainties that could significantly affect expected results. Important factors
that could cause actual results to differ materially from those expressed in the forward-looking statements include, among other things,
the risks, uncertainties, and factors set forth under “Risk Factors” in the Company’s most recent Annual Report on
Form 10-K and its subsequently filed Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date they are made.
The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events, or circumstances
or other changes affecting such statements except to the extent required by applicable law.
Forward-looking
statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and,
except as required by law, the Company assumes no obligation and does not intend to update or revise these forward-looking statements,
whether as a result of new information, future events, or otherwise.
Important
Information and Where You Can Find It
This
Current Report on Form 8-K may be deemed to be solicitation material in respect of a vote of stockholders to approve the issuance of
Class A Common Stock upon conversion of the Series B-5 Preferred Stock. In connection with the requisite stockholder approval, the Company
will file with the SEC a preliminary proxy statement and a definitive proxy statement, which will be sent to the stockholders of the
Company, seeking such approvals related to the issuance of Class A Common Stock upon conversion of the Series B-5 Preferred Stock.
INVESTORS
AND SECURITY HOLDERS OF THE COMPANY AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN AVAILABLE, THE PROXY STATEMENT AND ANY OTHER
RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE TRANSACTION DESCRIBED HEREIN, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE TRANSACTION. Investors and
security holders will be able to obtain a free copy of the proxy statement, as well as other relevant documents filed with the SEC containing
information about the Company, without charge, at the SEC’s website (http://www.sec.gov). Copies of documents filed with the SEC
by the Company can also be obtained, without charge, by directing a request to Investor Relations, Beneficient at 325 North St. Paul
Street, Suite 4850, Dallas, Texas 75201 or email investors@beneficient.com.
Participants
in the Solicitation of Proxies in Connection with Transaction
The
Company and certain of its directors, executive officers and employees may be deemed to be participants in the solicitation of proxies
in respect of the requisite stockholder approvals under the rules of the SEC. Information regarding the Company’s directors and
executive officers is available in its Annual Report on Form 10-K, which was filed with the SEC on July 9, 2024, and certain current
reports on Form 8-K filed by the Company. Other information regarding the participants in the solicitation of proxies with respect to
the transaction described herein and a description of their direct and indirect interests, by security holdings or otherwise, will be
contained in the proxy statement and other relevant materials to be filed with the SEC. Free copies of these documents, when available,
may be obtained as described in the preceding paragraph.
Not
an Offer of Securities
The
information in this Current Report on Form 8-K is for informational purposes only and shall not constitute, or form a part of, an offer
to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities. The securities that are the subject
of the transaction described herein have not been registered under the Securities Act and may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
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BENEFICIENT |
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By: |
/s/
Gregory W. Ezell |
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Name: |
Gregory
W. Ezell |
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Title: |
Chief
Financial Officer |
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|
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Dated:
January 6, 2025 |
Exhibit
3.1
CERTIFICATE
OF DESIGNATION OF
SERIES
B-5 RESETTABLE CONVERTIBLE
PREFERRED STOCK OF
BENEFICIENT
(Pursuant
to NRS 78.1955)
Beneficient,
a corporation organized and existing under the laws of the State of Nevada (the “Corporation”), does hereby certify
that, pursuant to the authority conferred on its board of directors (the “Board of Directors”) by its articles of
incorporation (the “Articles of Incorporation”) and in accordance with Section 78.1955 of the Nevada Revised Statutes,
the Board of Directors adopted the following resolution establishing a series of 468,481 shares of Preferred Stock of the Corporation
designated as Series B-5 Resettable Convertible Preferred Stock.
BE
IT RESOLVED, that pursuant to the authority conferred on the Board of Directors of this Corporation by the Articles of Incorporation,
a series of Preferred Stock, $0.001 par value, of the Corporation be and hereby is established and created, and that the designation
and number of shares thereof and the voting and other powers, preferences and relative, participating, optional or other rights of the
shares of such series and the qualifications, limitations and restrictions thereof are as follows:
| 1. | Designation
and Number. A series of Preferred Stock, designated as Series B-5 Resettable Convertible
Preferred Stock (“Series B-5 Preferred Stock”), is hereby established.
The number of authorized shares of Series B-5 Preferred Stock shall initially be 468,481
shares. |
| 2. | No
Sinking Fund. There shall be no sinking fund for the payment of dividends or liquidation
preferences on Series B-5 Preferred Stock or the redemption of any shares thereof. |
| 3. | Rank.
Series B-5 Preferred Stock will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Corporation, rank: (a) pari passu to the Corporation’s
common stock; (b) junior with respect to the Corporation’s Series A Convertible Preferred
Stock, par value $0.001 per share, Series B-1 Resettable Convertible Preferred Stock, par
value $0.001 per share, Series B-2 Resettable Convertible Preferred Stock, par value $0.001
per share, Series B-3 Resettable Convertible Preferred Stock, par value $0.001 per share
Series B-4 Resettable Convertible Preferred Stock, par value $0.001 per share; (c) senior,
pari passu or junior with respect to any other series of preferred stock, as set forth
in the Certificate of Designation with respect to such preferred stock; and (d) junior to
all existing and future indebtedness of the Corporation. |
| 4. | Liquidation
Preference. In the event of any liquidation or dissolution of the Corporation, the holders
of Series B-5 Preferred Stock shall be entitled receive, pro rata with the holders of the
Common Stock, and any other shares of preferred stock of the Corporation identified as “Designated
Preferred Stock,” a per share amount equal to such amount per share as would have been
payable had all shares of Series B-5 Preferred Stock been converted to Common Stock pursuant
to Section 8 (without giving effect to the limitations in Sections 8.4 or 10) immediately
prior to such liquidation or dissolution of the Corporation (the “Liquidation Preference”).
The Series B-5 Preferred Stock shall be a series of Designated Preferred Stock. |
| 4.1. | Adjustment.
For purposes of this Section 4, in the event that the shares of Series B-5 Preferred Stock
have not been converted into shares of the Corporation’s Class A Common Stock, par
value $0.001 per share (“Class A Common Stock”), and in the event that
the Corporation either: (a) subdivides (by stock split, reclassification or otherwise) the
outstanding shares of Series B-5 Preferred Stock into a greater number of shares of Series
B-5 Preferred Stock; or (b) combines or consolidates (by reverse stock split) the outstanding
shares of Series B-5 Preferred Stock into a smaller number of shares of Series B-5 Preferred
Stock, then the Liquidation Preference shall be proportionately decreased or increased, as
appropriate, simultaneously with the occurrence of such event. |
| 4.2. | Consolidation
or Merger of the Corporation. The consolidation or merger of the Corporation with or
into any other corporation, trust or entity or of any other corporation, trust or entity
with or into the Corporation, or the sale, lease, exchange offer, tender offer or any other
transfer, or conveyance of all or substantially all of the property or business of the Corporation,
shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation. |
| 4.3. | No
Further Rights. After payment of the full amount of the Liquidation Preference, the holders
of Series B-5 Preferred Stock will have no right or claim to any of the remaining assets
of the Corporation by virtue of their ownership of Series B-5 Preferred Stock. |
| 5. | No
Voting Rights. Except as required by law, the holders of Series B-5 Preferred Stock shall
not be entitled to vote at any meeting of the stockholders for election of members of the
Board of Directors of the Corporation or for any other purpose or otherwise to participate
in any action taken by the Corporation or the stockholders thereof, or to receive notice
of any meeting of stockholders. |
| 6. | Dividend
Rights. Dividends will be paid on the Series B-5 Preferred Stock on an as-converted basis
when, as, and if paid on the Class A Common Stock. |
| 7. | Redemption.
The outstanding shares of Series B-5 Preferred Stock shall not be redeemable by the Corporation. |
| 8. | Optional
Conversion. Each share of Series B-5 Preferred Stock is convertible, at the option of
the holder thereof upon two business days’ written notice to the Corporation, into
a number of shares of Class A Common Stock that is equal to the Stated Value divided by the
Conversion Price (as defined below) in effect as of the date of such notice (the “Conversion
Rate”). The Conversion Price shall be subject to reset on each date (each such
date, a “Reset Date”) that is the last day of each month following the
date of issuance of the Series B-5 Preferred Stock (the “Original Issue Date”).
On each Reset Date, the Conversion Price shall be increased or decreased to the Prevailing
Market Price (as defined below), provided that in no event shall the reset Conversion Price
be (a) lower than the greater of (i) 50% of the initial Conversion Price and (ii) $2.00 or
(b) higher than the initial Conversion Price, in each case subject to adjustments for stock
dividends, splits or combinations, reorganizations, recapitalizations or similar transactions.
|
| 8.1. | As
used herein, the term “Stated Value” shall mean $10.00 per share of Series
B-5 Preferred Stock. |
| 8.2. | As
used herein, the term “Conversion Price” shall initially mean $0.6940
per share. |
| 8.3. | As
used herein, the term “Prevailing Market Price” shall mean the five day
trailing volume weighted average price of the Class A Common Stock on the Nasdaq Capital
Market or such other national securities exchange on which the Class A Common Stock is listed
for trading (“Nasdaq”) as of the applicable Reset Date as reported by
Bloomberg Financial Markets or an equivalent reporting service as determined by the Corporation.
|
| 8.4. | Principal
Market Regulation. The Corporation shall not issue any shares of Class A Common Stock
upon conversion of any Series B-5 Preferred Stock or otherwise pursuant to the terms of this
Certificate of Designation if the issuance of such shares of Class A Common Stock would exceed
the aggregate number of shares of Class A Common Stock that the Corporation may issue upon
conversion of the Series B-5 Preferred Stock without breaching the Corporation’s obligations
under the rules and regulations of Nasdaq (the number of shares which may be issued without
violating such rules and regulations, the “Exchange Cap”), except that
such limitation shall not apply in the event that the Corporation obtains the approval of
its stockholders as required by the applicable rules and regulations of Nasdaq for issuances
of shares of Class A Common Stock in excess of the Exchange Cap. Until such approval is obtained,
shares of Series B-5 Preferred Stock shall not convert into Class A Common Stock to the extent
such conversion would cause the Corporation to issue shares of Class A Common Stock in excess
of the Exchange Cap; provided that the conversion of the portion of such conversion that
would not exceed the Exchange Cap shall not be delayed pursuant to this Section 8; provided,
further that, the conversion of the portion of such conversion that would exceed the Exchange
Cap shall be delayed until the first day the conversion of such portion would not cause the
Corporation to exceed the Exchange Cap. Further, to the extent any such share of Series B-5
Preferred Stock has not otherwise automatically converted into shares of Class A Common Stock
pursuant to Section 9, the Conversion Price for such shares shall be subject to additional
resets on the terms described in Section 8 hereof on the last date of each month. |
| 9. | Mandatory
Conversion. Each outstanding share of Series B-5 Preferred Stock will automatically convert
into a number of shares of Class A Common Stock (the “Mandatory Conversion”)
as is determined by the Conversion Rate then in effect on the date (the “Mandatory
Conversion Date”) that is the earliest to occur of: (a) the last day of the month
in which the fifth anniversary of the Original Issue Date occurs, if either the Corporation
has filed all annual reports on Form 10-K and quarterly reports on Form 10-Q that are then
required to have been filed in the preceding twelve months with the United States Securities
and Exchange Commission (the “SEC”) under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), or a resale registration statement
with respect to the shares of Class A Common Stock underlying the Series B-5 Preferred Stock
(the “Resale Registration Statement”) has become effective and is in full
force and effect at the time of such Mandatory Conversion and (b) if the conditions of clause
(a) are not met on the date that is the last day of the month in which the fifth anniversary
of the Original Issue Date occurs, the first date thereafter on which any shares of Series
B-5 Preferred Stock may be resold pursuant to Rule 144 under the Securities Act of 1933,
as amended, or the Resale Registration Statement has become effective. Notwithstanding the
foregoing, the Series B-5 Preferred Stock shall not convert into Class A Common Stock to
the extent such conversion would cause a holder to exceed the Beneficial Ownership Limitation
(as defined below) under Section 10 or the Exchange Cap under Section 8.4 hereof and to the
extent a conversion would cause a holder to exceed the Beneficial Ownership Limitation or
Exchange Cap, as applicable, the conversion of the portion of such conversion that would
exceed the Beneficial Ownership Limitation or Exchange Cap, as applicable, shall be delayed
until the first day the conversion of such portion would not cause the holder to exceed the
Beneficial Ownership Limitation or, with respect to the Exchange Cap, when stockholder approval
has been obtained. Further, to the extent any such share of Series B-5 Preferred Stock has
not otherwise automatically converted into shares of Class A Common Stock pursuant to this
Section 9, the Conversion Price for such shares shall be subject to additional resets on
the terms described in Section 8 hereof on the last date of each month. |
| 10. | Beneficial
Ownership Limitation. The Corporation shall not effect any conversion of the Series B-5
Preferred Stock, including, without limitation, a Mandatory Conversion, and a holder of the
Series B-5 Preferred Stock shall not have the right to receive dividends hereunder or convert
any portion of the Series B-5 Preferred Stock, to the extent that, after giving effect to
such a conversion, such holder would (together with such holder’s affiliates and any
persons acting as a group together with such holder or any of such holder’s affiliates
(such persons, “Attribution Parties”)) own in excess of the Beneficial
Ownership Limitation. For purposes of the foregoing sentence, the number of shares of Class
A Common Stock beneficially owned by such holder and its affiliates and Attribution Parties
shall include the number of shares of Class A Common Stock received as shares pursuant to
a dividend or issuable upon conversion of the Series B-5 Preferred Stock with respect to
which such determination is being made, but shall exclude the number of shares of Class A
Common Stock which are issuable upon (a) conversion of the remaining, unconverted Series
B-5 Preferred Stock beneficially owned by such holder or any of its affiliates or Attribution
Parties and (b) exercise or conversion of the unexercised or unconverted portion of any other
securities of the Corporation subject to a limitation on conversion or exercise analogous
to the limitation contained herein (including, without limitation, the Series B-5 Preferred
Stock) beneficially owned by such holder or any of its affiliates or Attribution Parties.
Except as set forth in the preceding sentence, for purposes of this Section 10, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder, it being acknowledged by the holder that the
Corporation is not representing to the holder that such calculation is in compliance with
Section 13(d) of the Exchange Act and the holder is solely responsible for any schedules
required to be filed in accordance therewith (other than as it relates to a holder relying
on the number of shares issued and outstanding as provided by the Corporation pursuant to
this Section 10). In addition, a determination as to any group status as contemplated above
shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this Section 10, in determining the number
of outstanding shares of Class A Common Stock, a holder may rely on the number of outstanding
shares of Class A Common Stock as stated in the most recent of the following: (i) the Corporation’s
most recent periodic or annual report filed with the SEC, as the case may be, (ii) a more
recent public announcement by the Corporation or (iii) a more recent written notice by the
Corporation or the Corporation’s transfer agent setting forth the number of shares
of Class A Common Stock outstanding. |
| 10.1. | As
used herein, the term “Beneficial Ownership Limitation” shall initially
mean 4.99% of the number of shares of the Class A Common Stock outstanding immediately after
giving effect to the issuance of shares of Class A Common Stock issuable upon conversion
of Series B-5 Preferred Stock held by the applicable holder. A holder, upon at least sixty-one
(61) days advance notice to the Corporation, may terminate, waive, increase or decrease the
Beneficial Ownership Limitation provisions of this Section 10. Notwithstanding the foregoing,
without Stockholder Approval, the Beneficial Ownership Limitation shall not exceed the Cap. |
| 11. | No
Fractional Shares. The Corporation shall not issue any fractional shares of Class A Common
Stock upon conversion of shares of Series B-5 Preferred Stock. If the conversion would result
in the issuance of a fraction of a share of Class A Common Stock, the Corporation shall round
such fraction of a share of Class A Common Stock up to the nearest whole share. |
| 12. | Adjustment
for Reclassification, Exchange, and Substitution. If at any time or from time to time
after the Original Issue Date, the shares of Class A Common Stock issuable upon the conversion
of the Series B-5 Preferred Stock shall be changed into the same or a different number of
shares of any class or classes of stock, whether by recapitalization, reclassification, reorganization,
merger, exchange, consolidation, sale of assets or otherwise (other than by a Class A Common
Stock Event (as defined below) or a stock dividend or distribution provided for elsewhere
in this Certificate of Designation), then, in any such event, the Series B-5 Preferred Stock
shall thereafter convert into the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification, reorganization, merger, exchange,
consolidation, sale of assets or other change by a holder of the number of shares of Class
A Common Stock into which such shares of Series B-5 Preferred Stock would have been converted
immediately prior to such recapitalization, reclassification, reorganization, merger, exchange,
consolidation, sale of assets or other change, all subject to further adjustment as provided
herein or with respect to such other securities or property by the terms thereof. |
| 13. | Adjustment
Upon Class A Common Stock Event. In the event that a Class A Common Stock Event occurs
at any time or from time to time after the Original Issue Date, the Conversion Price in effect
immediately prior to such event shall, simultaneously with the occurrence of such Class A
Common Stock Event, be proportionately decreased or increased, as appropriate. The Conversion
Price shall be readjusted in the same manner upon the happening of each subsequent Class
A Common Stock Event. |
| 13.1. | Class
A Common Stock Event. As used herein, the term “Class A Common Stock Event”
means: (1) the declaration or payment of any dividend or other distribution on the Class
A Common Stock, without consideration, payable to one or more stockholders in additional
shares of Class A Common Stock or other securities or rights convertible into, or entitling
the holder thereof to receive, directly or indirectly, additional shares of Class A Common
Stock; (2) a subdivision (by stock split, reclassification or otherwise) of the outstanding
shares of Class A Common Stock into a greater number of shares of Class A Common Stock; or
(3) a combination or consolidation (by reverse stock split) of the outstanding shares of
Class A Common Stock into a smaller number of shares of Class A Common Stock. |
| 14. | Transfer
Restrictions. The shares of Series B-5 Preferred Stock may not be sold, assigned or otherwise
transferred without the written consent of the Corporation. Any such sale, assignment or
transfer shall be void ab initio and of no effect. For avoidance of doubt, this Section
14 shall not apply to shares of Class A Common Stock issued upon conversion of the Series
B-5 Preferred Stock. |
| 15. | Notice.
Except as may otherwise be provided for herein, all notices referred to herein shall be in
writing, and all notices hereunder shall be deemed to have been given upon the earlier of
receipt of such notice or four business days after the mailing of such notice, if sent by
registered mail, with postage pre-paid, addressed: (a) if to the Corporation, to the attention
of its corporate secretary or to an agent of the Corporation designated as permitted by the
Corporation’s Articles of Incorporation, as amended; (b) if to any holder of Series
B-5 Preferred Stock, to such holder at the address of such holder as listed in the stock
record books of the Corporation (which may include the records of the Corporation’s
transfer agent); or (c) to such other address as the Corporation or holder, as the case may
be, shall have designated by notice similarly given. |
Exhibit
99.1
Beneficient
Enters into $1.36 Million GP Primary Capital Transaction
DALLAS,
January 6, 2025 (GLOBE NEWSWIRE) — Beneficient (NASDAQ: BENF) (“Ben” or the “Company”), a technology-enabled
platform providing exit opportunities and primary capital solutions and related trust and custody services to holders of alternative
assets through its proprietary online platform AltAccess, today announced it has closed on the financing of a $1.36 million primary capital
commitment for 8F Fund, LP (“Fund”), a fund managed by 8F Asset Management, a global asset manager that manages private equity
funds that invest in vertically integrated aquaculture production and processing facilities. The transaction represents Ben’s first
GP Primary transaction since its recently announced Public Stockholder Enhancement Transactions. In exchange for an interest in the Fund,
the Fund received approximately $1.36 million in stated value of shares of the Company’s Resettable Convertible Preferred Stock
(the “Preferred Stock”), which is convertible at the election of the holder into shares of the Company’s Class A common
stock, subject to the terms and conditions of the transaction documents. As a result of the transaction, the collateral for Company’s
ExAlt loan portfolio is expected to increase by approximately $1.36 million of interests in alternative assets.
“Closing
this transaction underscores our commitment to executing on our core liquidity and primary capital business plan by delivering innovative
capital solutions for holders and managers of alternative assets,” said, Beneficient management. “We believe this financing
reflects our ability to drive shareholder value while supporting impactful, vertically integrated investment strategies that enhance
the value of the collateral backing our ExAlt loan portfolio. We look forward to building on this momentum in 2025 as we continue to
evaluate additional opportunities that align with our strategic objectives.”
Upon
closing of the previously announced Public Stockholder Enhancement Transactions, the Company believes this transaction will result in
the addition of approximately $450K (and an aggregate of approximately $10.23 million) of tangible book value attributable to the Company’s
stockholders.
Beneficient’s
GP Primary Commitment Program is focused on providing primary capital solutions and financing anchor commitments to general partners
during their fundraising efforts while immediately deploying capital into our equity. Through the program, Beneficient seeks to help
satisfy the up to $330 billion of potential demand for primary commitments to meet fundraising needs.
Reconciliation
of Non-GAAP Financial Measures
The
following tables reconciles these non-GAAP financial measures to the most comparable GAAP financial measures as of September 30, 2024
on an actual basis and pro forma assuming the Transactions occurred on September 30, 2024.
| (dollars in thousands) | |
Actual | | |
Pro forma – Transactions (1) | | |
Pro forma -Transactions
and GP
Primary (3 | |
| Tangible Book Value | |
| | | |
| | | |
| | |
| Total equity (deficit) | |
| (13,192 | ) | |
| (13,192 | ) | |
| (11,831 | ) |
| Less: Goodwill and intangible assets | |
| (13,014 | ) | |
| (13,014 | ) | |
| (13,014 | ) |
| Plus: Total temporary equity | |
| 125,526 | | |
| 125,526 | | |
| 125,526 | |
| Tangible book value | |
| 99,320 | | |
| 99,320 | | |
| 100,681 | |
| | |
Actual | | |
Pro forma – Transactions (1) | | |
Pro forma -Transactions
and GP
Primary (3) | |
| Tangible book value attributable to Ben public company stockholders | |
| | | |
| | | |
| | |
| Tangible book value | |
| 99,320 | | |
| 99,320 | | |
| 100,681 | |
| Less: Tangible book value attributable to Beneficient Holdings noncontrolling interest holders | |
| (99,320 | ) | |
| (89,388 | ) | |
| (90,454 | ) |
| Tangible book value attributable to Ben’s public company stockholders | |
| - | | |
| 9,932 | (2) | |
| 10,227 | (4) |
| | |
| | | |
| | | |
| | |
Market Capitalization of Ben’s Class A and Class B common stock as of January 3, 2024 (5) | |
$ | 6,048 | | |
| | | |
| | |
| (1) | Assumes
the Transactions closed on September 30, 2024 including that the Beneficient Holdings limited
partnership agreement was amended to provide that Ben, as the indirect holder of the Class
A Units and certain Designated Class S Ordinary Units of Beneficient Holdings, would receive
in the event of a liquidation of Beneficient Holdings 10% of the first $100 million of distributions
of Beneficient Holdings following the satisfaction of the debts and liabilities of Beneficient
Holdings on a consolidated basis. |
| (2) | Pro
forma for the Transactions, represents 10% of the first $100 million of distributions of
Beneficient Holdings in the event of the liquidation of Beneficient Holdings following the
satisfaction of the debts and liabilities Beneficient Holdings on a consolidated basis. |
| (3) | Assumes
the Transactions closed on September 30, 2024 including that the Beneficient Holdings limited
partnership agreement was amended to provide that Ben, as the indirect holder of the Class
A Units and certain Designated Class S Ordinary Units of Beneficient Holdings, would receive
in the event of a liquidation of Beneficient Holdings (i) 10% of the first $100 million of
distributions of Beneficient Holdings following the satisfaction of the debts and liabilities
of Beneficient Holdings on a consolidated basis and (ii) 33.3333% of the net asset value
of the added alternative assets of up to $5 billion in connection with ExAlt Plan liquidity
and primary capital transactions entered after December 22, 2024. |
| (4) | Pro
forma for the Transactions, represents (i) 10% of the first $100 million of distributions
of Beneficient Holdings in the event of the liquidation of Beneficient Holdings following
the satisfaction of the debts and liabilities Beneficient Holdings on a consolidated basis
and (ii) 33.3333% of the net asset value of the added alternative assets of up to $5 billion
in connection with ExAlt Plan liquidity and primary capital transactions entered after December
22, 2024. |
| (5) | Based
upon the closing price of the Class A common stock as reported by Nasdaq as of market close
on January 3, 2025. |
About
Beneficient
Beneficient
(Nasdaq: BENF) – Ben, for short – is on a mission to democratize the global alternative asset investment market by providing
traditionally underserved investors − mid-to-high net worth individuals, small-to-midsized institutions and General Partners
seeking exit options, anchor commitments and valued-added services for their funds− with solutions that could help them unlock
the value in their alternative assets. Ben’s AltQuote® tool provides customers with a range of potential exit options within
minutes, while customers can log on to the AltAccess® portal to explore opportunities and receive proposals in a secure online environment.
Its
subsidiary, Beneficient Fiduciary Financial, L.L.C., received its charter under the State of Kansas’ Technology-Enabled Fiduciary
Financial Institution (TEFFI) Act and is subject to regulatory oversight by the Office of the State Bank Commissioner.
For
more information, visit www.trustben.com or follow us on LinkedIn.
Contacts
Matt
Kreps: 214-597-8200, mkreps@darrowir.com
Michael
Wetherington: 214-284-1199, mwetherington@darrowir.com
Investor
Relations: investors@beneficient.com
Important
Information and Where You Can Find It
This
press release may be deemed to be solicitation material in respect of a vote of stockholders to approve an amendment to approve the issuance
of the Company’s Class A common stock upon conversion of the Series B-5 Preferred Stock pursuant to the transaction. In connection
with the requisite stockholder approval, Ben will file with the Securities and Exchange Commission (the “SEC”) a preliminary
proxy statement and a definitive proxy statement, which will be sent to the stockholders of Ben, seeking such approvals related to the
transaction.
INVESTORS
AND SECURITY HOLDERS OF BEN AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN AVAILABLE, THE PROXY STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BEN AND THE TRANSACTION. Investors and security holders will be able to obtain
a free copy of the proxy statement, as well as other relevant documents filed with the SEC containing information about Ben, without
charge, at the SEC’s website (http://www.sec.gov). Copies of documents filed with the SEC by Ben can also be obtained, without
charge, by directing a request to Investor Relations, Beneficient, 325 North St. Paul Street, Suite 4850, Dallas, Texas 75201, or email
investors@beneficient.com.
Participants
in the Solicitation of Proxies in Connection with Transaction
Ben
and certain of its directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect
of the requisite stockholder approvals under the rules of the SEC. Information regarding Ben’s directors and executive officers
is available in its annual report on Form 10-K for the fiscal year ended March 31, 2024, which was filed with the SEC on July 9, 2024
and certain current reports on Form 8-K filed by Ben. Other information regarding the participants in the solicitation of proxies with
respect to the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will
be contained in the proxy statement and other relevant materials to be filed with the SEC. Free copies of these documents, when available,
may be obtained as described in the preceding paragraph.
Not
an Offer of Securities
The
information in this communication is for informational purposes only and shall not constitute, or form a part of, an offer to sell or
the solicitation of an offer to sell or the solicitation of an offer to buy any securities. The securities that are the subject of the
transaction have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.
Forward
Looking Statements
Except
for the historical information contained herein, the matters set forth in this press release are forward-looking statements within the
meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements
include, but are not limited to, statements regarding the Transactions and the Agreement, including receipt of required approvals and
satisfaction of other customary closing conditions and excepted timing of closing of the Transactions, and expectations of future plans,
strategies, and benefits of the Transactions. The words “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,”
“potential,” “predict,” “project,” “should,” “would” and similar expressions
may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking
statements are based on our management’s beliefs, as well as assumptions made by, and information currently available to, them.
Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual
results may differ materially from those projected.
Important
factors that could cause actual results to differ materially from those expressed in the forward-looking statements include, among others:
the ultimate outcome of the transaction, including obtaining the requisite vote of securityholders; the Company’s ability to meet
expectations regarding the timing and completion of the transaction; and the risks, uncertainties, and factors set forth under “Risk
Factors” in the Company’s most recent Annual Report on Form 10-K and its subsequently filed Quarterly Reports on Form 10-Q.
Forward-looking statements speak only as of the date they are made. The Company assumes no obligation to update forward-looking statements
to reflect actual results, subsequent events, or circumstances or other changes affecting such statements except to the extent required
by applicable law.
Forward-looking
statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and,
except as required by law, the Company assumes no obligation and does not intend to update or revise these forward-looking statements,
whether as a result of new information, future events, or otherwise.
Beneficient (NASDAQ:BENFW)
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Beneficient (NASDAQ:BENFW)
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