Stockholders' Equity

3 Months Ended

Mar. 31, 2014

Stockholders' Equity

Stockholders' Equity

18. Stockholders’ Equity

Refer to Note 2 for a description of the initial public offering and associated reorganization of the Company.

The Company’s authorized capital stock consists of 500,000,000 shares of Class A common stock, par value $.00001 per share, 500,000,000 shares of Class B common stock, par value $.00001 per share, 500,000,000 shares of Class C common stock, par value $.00001 per share, and 100,000,000 shares of blank check preferred stock.

As of March 31, 2014, there were 12,037,816 shares of the Company’s Class A common stock issued and 12,033,887 shares outstanding. Additionally, there were 14,001,583 and 13,161,563 shares of the Company’s Class B common stock issued and outstanding, respectively, as of March 31, 2014.

Class A Common Stock

Holders of Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of Class A common stock are entitled to share ratably (based on the number of shares of Class A common stock held) if and when any dividend is declared by the JGWPT Holdings Inc.’s board of directors.  Upon dissolution, liquidation or winding up, Holders of Class A common stock are entitled to a pro rata distribution of any assets available for distribution to common stockholders, and do not have preemptive, subscription, redemption or conversion rights.

Class B Common Stock

Shares of Class B common stock will only be issued in the future to the extent that additional Common Interests are issued by Holdings LLC, in which case JGWPT Holdings Inc. would issue a corresponding number of shares of Class B common stock.

Holders of Class B common stock are entitled to ten votes for each share held of record on all matters submitted to a vote of stockholders.  Holders of Class B common stock do not have any right to receive dividends and upon liquidation, dissolution or winding up and will only be entitled to receive an amount per share equal to the $0.00001 par value. Holders of Class B common stock do not have preemptive rights to purchase additional shares of Class B common stock.

Subject to the terms and conditions of the operating agreement of Holdings LLC, each Common Interestholder has the right to exchange their Common Interests in Holdings LLC together with the corresponding number of shares of Class B common stock, for shares of Class A common stock, or at the option of Holdings LLC, cash equal to the market value of one share of JGWPT Holdings Inc.’s Class A common stock.

Class C Common Stock

Holders of Class C common stock generally are not entitled to vote on any matters. Holders of Class C common stock are entitled to share ratably (based on the number of shares of Class C common stock held) if and when any dividend is declared by the Company’s board of directors.  Upon dissolution, liquidation or winding up, holders of Class C common stock will be entitled to a pro rata distribution of any assets available for distribution to common stockholders (except the de minimis par value of the Class B common stock), and do not have preemptive rights to purchase additional shares of Class C common stock.

Subject to the terms and conditions of the operating agreement of Holdings LLC, PGHI Corp. and its permitted transferees have the right to exchange the non-voting common interests in Holdings LLC they hold for shares of Class C common stock, or at the option of Holdings LLC, cash equal to the market value of JGWPT Holdings Inc.’s Class C common stock.

Each share of Class C common stock may, at the option of the holder, be converted at any time into a share of Class A common stock on a one-for-one basis.

Preferred Stock

JGWPT Holdings Inc.’s certificate of incorporation provides that the board of directors has the authority, without action by the stockholders, to designate and issue up to 100,000,000 shares of preferred stock in one or more classes or series and to fix the powers, rights, preferences, and privileges of each class or series of preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, and the number of shares constituting any class or series, which may be greater than the rights of the holders of the common stock.  No preferred stock had been issued or was outstanding as of March 31, 2014.

Warrants Issued to PGHI Corp.

In connection with the IPO and restructuring, the Class C Profits Interests of Holdings LLC held by PGHI Corp. were cancelled and holders received in-exchange warrants to purchase shares of Class A common stock. The warrants issued in respect of the Tranche C-1 profit interests entitle the holders thereof to purchase up to 483,217 shares of Class A common stock and have an exercise price of $35.78 per share. The warrants issued in respect of the Tranche C-2 profits interests also entitle the holders thereof to purchase up to 483,217 shares of Class A common stock and have an exercise price of $63.01 per share.  All of the warrants issued are exercisable beginning on May 13, 2014 (180 days after the consummation of the IPO), terminate on January 8, 2022, and may not be transferred.

Holdings LLC Operating Agreement

Pursuant to the operating agreement of Holdings LLC, the holders of Holdings LLC Common Interests (other than the Company) entered into an exchange agreement under which they have the right, subject to terms of the operating agreement as described therein, to exchange their Common Interests and an equal number of shares of the Company’s “vote-only” Class B common stock for an equivalent number of shares of the Company’s Class A common stock, or in the case of PGHI Corp., an equivalent number of shares of the Company’s Class C common stock. During the three months ended March 31, 2013, 814,190 Common Interests in Holdings LLC, in addition to an equal number of shares of the Company’s Class B common stock, were exchanged for 814,190 shares of the Company’s Class A common stock pursuant to the operating agreement.