Item 2.01 Completion of Acquisition or Disposition of
Assets
On
December 28, 2020 (“Closing Date”) Freedom Finance,
JSC, (“Buyer”) a wholly owned subsidiary of Freedom
Holding Corp. (“FRHC”) completed the acquisition of all
of the issued and outstanding ordinary shares Bank Kassa Nova JSC,
a joint stock company incorporated in the Republic of Kazakhstan
(“Bank”) from ForteBank JSC, a joint stock company
incorporated in the Republic of Kazakhstan,
(“ForteBank”) and all of the issued and outstanding
preferred shares of the Bank from Mr. Bulat Zhamitovich Utemuratov
(“Utemuratov”). As a condition to closing the
acquisition of the preferred shares, FRHC also acquired all of the
outstanding subordinated loans of the Bank from Maglink Limited, a
Cyprus limited company and Global Development LLP, a Kazakhstani
limited liability company, as described in more detail below. The
acquisitions of the ordinary shares, preferred shares and
subordinated loans are collectively referred to herein as the
“Bank Acquisition”.
The
acquisition of the ordinary shares and the preferred shares was
completed in accordance with the terms of the previously announced
Ordinary Share Purchase and Sale Agreement, dated July 29, 2020,
between Buyer and ForteBank (the “Ordinary Shares SPA”)
and the Preferred Shares Sale and Purchase Agreement, dated
September 17, 2020, between Buyer and Utemuratov (the
“Preferred Shares SPA”) disclosed in the
Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission (the “Commission”)
on August 3, 2020, as amended by the Company’s Amended
Current Report on Form 8-K/A filed with the Commission on September
23, 2020.
In
connection with the closing of the Preferred Shares SPA, on
December 23, 2020, FRHC completed the acquisition of three
outstanding subordinated loans of the Bank from Global Development
and one outstanding subordinated loan of the Bank from Maglink
Limited. These four subordinated loans are collectively referred to
herein as the “Subordinated Loans”. Each of the
Subordinated Loans was assigned by its current holder to FRHC
pursuant to an assignment agreement identified in the following
table. The terms and conditions of each of the four assignment
agreements are materially the same except as described in the
following table.
|
Assignment Agreement of the Subordinated Loan Agreement Dated
20.06.2011 No. 2
|
Assignment Agreement of the Subordinated Loan Agreement Dated
23.06.2011 No. 4
|
Assignment Agreement of the Subordinated Loan Agreement Dated
30.06.2016 No. 5
|
Assignment Agreement of the Subordinated Loan Agreement
Dated
21 June 2011
|
|
|
|
|
|
Assignor
|
Global
Development LLP
|
Global
Development LLP
|
Global
Development LLP
|
Maglink
Limited
|
Assignee
|
FRHC
|
FRHC
|
FRHC
|
FRHC
|
Debtor
|
Bank
|
Bank
|
Bank
|
Bank
|
Loan Currency Denomination
|
KZT
|
KZT
|
KZT
|
USD
|
Loan Principal Amount(1)
|
$3,377,820
|
$118,938
|
$4,020,795
|
$2,000,000
|
Accrued but Unpaid Interest at 12/22/2020(1)
|
$1,943
|
$4,174
|
$87,907
|
$11,758
|
Consideration Paid for Assignment to FRHC
|
$3,379,763
|
$123,112
|
$4,108,702
|
$2,011,758
|
Maturity Date
|
24 July 2033
|
24 July
2033
|
24 July
2033
|
20 June
2033
|
|
|
|
|
|
(1)
Loan principal amounts and accrued but unpaid
interest amounts of the Subordinated Loans included in this table
are as of December 22, 2020, the date payment to Global Development
and Maglink Limited was originated. For purposes of this table,
loans denominated in KZT have been converted to U.S. dollar
equivalent amounts based on the KZT to U.S. dollar conversion rate
on December 22, 2020, of 420.3895 KZT to $1, as reported by the
Central Bank of Russia on its website www.cbr.ru.
Pursuant
to the terms and conditions of the assignment agreements identified
in the foregoing table (the “Assignment Agreements”),
the respective loan holder (assignor) has assigned it respective
loan or loans to FRHC (assignee) in exchange for the consideration.
Each loan holder has assigned all of its rights under its
applicable loan agreement with the Bank (debtor) to FRHC, including
the right to demand payment of the loan principal amount, all
accrued but unpaid interest, all other fees and amounts incurred
under the loan agreements, and performance by the Bank of all other
obligations under the loan agreements. The Assignment Agreements
assign to FRHC all rights of the Global Development and Maglink
Limited under the loan agreements. Pursuant to the Assignment
Agreements, Global Development and Maglink Limited each warranted
that its respective loan agreements were properly approved and are
valid and enforceable, and that each is the respective legal owner
of the rights under its respective loan agreements and that those
right are not subject to claims of third parties. Should a party to
an Assignment Agreement fail to fulfill its obligations under such
Assignment Agreement, the defaulting party is required to pay
default interest of 0.1% daily of any unpaid amount up to an
aggregate of 10%. FRHC has agreed to pay on behalf of Global
Development and Maglink Limited any tax or other mandatory charges
incurred by them in connection with the assignments, to ensure
Global Development and Maglink Limited each receive the full amount
of consideration set forth in the respective Assignment Agreements.
FRHC has the right to apply international treaties to avoid double
taxation to decrease any amounts owed to Global Development and or
Maglink Limited for any tax or other mandatory charges incurred by
sellers in connection with the assignments. The Assignment
Agreements are governed by the laws of the Republic of Kazakhstan
and any legal disputes will be resolved by the courts of the
Republic of Kazakhstan.
The
total purchase price of the Bank Acquisition was $52,909,575, which
was paid in cash.
The
foregoing description of the Ordinary Shares SPA, the Preferred
Shares SPA and the Assignment Agreements and the transactions
contemplated by those agreements (including, without limitation,
the Bank Acquisition) in this Current Report on Form 8-K are only
summaries and are qualified in their entirety by reference to the
complete text of the (i) Ordinary Shares SPA, which was attached as
Exhibit 2.01 to the Company’s Current Report on Form 8-K
filed with the Commission on August 3, 2020, (ii) Preferred Shares
SPA, which was attached as Exhibit 2.02 to the Company’s
Amended Current Report on Form 8-K/A filed with the Commission on
September 23, 2020, and (iii) Assignment Agreements, which are
attached as Exhibits 2.03, 2.04, 2.05 and 2.06, respectively, to
this Current Report on Form 8-K, all of which are hereby
incorporated by reference into this Item 2.01.
Special Note About Forward-Looking Statements
This
Current Report on Form 8-K contains “forward-looking”
statements. All forward-looking statements are subject to
uncertainty and changes in circumstances. Forward-looking
statements are not guarantees of future results or performance and
involve risks, assumptions and uncertainties that could cause
actual events or results to differ materially from the events or
results described in, or anticipated by, the forward-looking
statements. Factors that could materially affect such
forward-looking statements include economic, business and
regulatory risks and other factors identified in FRHC’s
periodic and current reports filed with the Commission. All
forward-looking statements are made only as of the date of this
Current Report on Form 8-K and FRHC assumes no obligation to update
forward-looking statements to reflect subsequent events or
circumstances. Readers should not place undue reliance on these
forward-looking statements.