Redeemable Non-controlling Interests

3 Months Ended

Mar. 31, 2020

Redeemable Non-controlling Interests

Redeemable Non-controlling Interests

(15)     Redeemable Non-controlling Interests

The Company owns 66% of eService, the Company’s Polish subsidiary. The eService shareholders’ agreement includes a provision whereby PKO Bank Polski has the option to compel the Company to purchase the shares of eService held by PKO Bank Polski, at a price per share based on the fair value of the shares. The option expires on January 1, 2024. Because the exercise of this option is not solely within the Company’s control, the Company has classified this interest as RNCI and presents the redemption value as temporary within the mezzanine equity section of the unaudited condensed consolidated balance sheets. At each balance sheet date, the RNCI is reported at its redemption value, which represents the estimated fair value, with a corresponding adjustment to accumulated deficit.

As of March 31, 2020, EVO, Inc. owns 50.3% of EVO, LLC. The EVO, LLC operating agreement includes a provision whereby Blueapple may deliver a sale notice to EVO, Inc., upon receipt of which EVO, Inc. will use its commercially reasonable best efforts to pursue a public offering of shares of its Class A common stock and use the net proceeds therefrom to purchase LLC Interests from Blueapple. Upon receipt of such a sale notice, the Company may elect, at the Company’s option (determined solely by its independent directors (within the meaning of the rules of the NASDAQ stock market (“Nasdaq”)) who are disinterested), to cause EVO, LLC to instead redeem the applicable LLC Interests for cash; provided that Blueapple consents to any election by the Company to cause EVO, LLC to redeem the LLC Interests based on the fair value of the Company’s Class A common shares on such date. Because this option is not solely within the Company’s control, the Company has classified this interest as RNCI and reports the redemption value as temporary within the mezzanine equity section of the unaudited condensed consolidated balance sheets and is reported at redemption value, which represents fair value, with a corresponding adjustment to accumulated deficit.

The following table details the components of RNCI for the three months ended March 31, 2020 and for the year ended December 31, 2019:

	March 31, 2020						December 31, 2019
	Blueapple		eService		Total		Blueapple		eService		Total
	(In thousands)
Beginning balance	$	902,258	$	150,190	$	1,052,448	$	885,986	$	124,107	$	1,010,093
Net (loss) income		(8,201)		913		(7,288)		(14,567)		7,855		(6,712)
Loss on OCI		(20,389)		(4,787)		(25,176)		241		(470)		(229)
Purchase of Blueapple Class B common stock in connection with secondary offerings		—		—		—		(48,447)		—		(48,447)
Decrease in maximum redemption amount in connection with purchase of Blueapple Class B common stock		—		—		—		(2,843)		—		(2,843)
(Decrease) increase in the maximum redemption amount		(371,674)		(49,813)		(421,487)		93,845		28,173		122,018
Allocation of eService fair value RNCI adjustment to Blueapple		20,708		—		20,708		(11,957)		—		(11,957)
Distributions		—		—		—		—		(9,475)		(9,475)
Ending balance	$	522,702	$	96,503	$	619,205	$	902,258	$	150,190	$	1,052,448