Change Healthcare Inc. (the “Company”) understands that on June 18, 2020, (A) BCP Summit Holdings L.P. (“BCP”), a stockholder of the Company and an affiliate of certain investment funds associated with or designated by The Blackstone Group Inc. that were previously significant stockholders of the Company, entered into (i) a Margin Loan Agreement dated as of June 18, 2020 (the “BCP Loan Agreement”) with the lenders party thereto (each, a “BCP Lender”) and the administrative agent party thereto and (ii) Pledge and Security Agreements of even date, in each case between one of the BCP Lenders, as secured party (each, a “BCP Secured Party” and, collectively, the “BCP Secured Parties”) and BCP, as pledgor (the “BCP Pledge Agreements”), and (B) BFIP Summit Holdings L.P. (“BFIP” and, together with BCP, the “Borrowers”), a stockholder of the Company and an affiliate of an investment fund associated with or designated by The Blackstone Group Inc. that was previously a stockholder of the Company, entered into (i) a Margin Loan Agreement dated as of June 18, 2020 (the “BFIP Loan Agreement” and, together with the BCP Loan Agreement, the “Loan Agreements”) with the lenders party thereto (each, a “BFIP Lender” and, together with the BCP Lenders, the “Lenders”) and the administrative agent party thereto and (ii) Pledge and Security Agreements of even date, in each case between one of the BFIP Lenders, as secured party (each, a “BFIP Secured Party” and, collectively, the “BFIP Secured Parties” and, the BFIP Secured Parties together with the BCP Secured Parties, the “Secured Parties”) and BFIP, as pledgor (the “BFIP Pledge Agreements”, and collectively with the BCP Pledge Agreements, the “Pledge Agreements” and, the Pledge Agreements together with the BCP Loan Agreement and the BFIP Loan Agreement, the “Loan Documents”).
The Company also understands that pursuant to the Pledge Agreements, to secure borrowings under the Loan Agreements, the Borrowers have pledged an aggregate of 59,046,102 shares (collectively, the “Pledged Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”). The Pledged Shares represented approximately 19.5% of the Company’s issued and outstanding Common Stock as of March 31, 2020.
The Company also understands that the Loan Agreements contain customary default provisions, and that in the event of a default under the Loan Agreements by the Borrowers, the Secured Parties may foreclose upon any and all shares of Common Stock pledged to them and may seek recourse against the Borrowers.
The Company did not independently verify the foregoing disclosure. In addition, the Company is not a party to the Loan Documents and has no obligations thereunder, but has delivered letter agreements to each of the Lenders in which it has, among other things, agreed, subject to applicable law and stock exchange rules, not to take any actions that are intended to materially hinder or delay the exercise of any remedies by the Lenders under the Pledge Agreements.
