No payday loans for these execs…

February 24, 2012

Last week, Advance America (AEA) announced that it was being acquired in a $780 million deal by Grupo Elektra, which the press release notes is “Latin America’s leading specialty retailer and financial services company focused on the under-served market.” Advance America describes itself as “the leading provider of non-bank cash advance services in the United States.” That’s a much more PC-way of saying that they serve (and often overcharge) poor people for basic financial services.

I first wrote about the growing number of publicly-traded payday lenders back in 2004 for Slate and have followed the stocks on and off for years. So when I saw this 8-K that Advance America filed two days after the deal was announced, I couldn’t help but take a closer look.

On the surface, the filing is pretty routine, not unlike a lot of the 8-Ks we see at this time of year announcing various bonus programs based on 2011 results. Indeed, the 8-K filed February 17 is pretty similar to the one that Advance America filed in 2011 right around this time. There’s really just one key difference: the 250,000 RSUs that CEO J. Patrick O’Shaughnessy gets and the 100,000 RSUs that CFO James A. Ovenden gets as part of the deal. As the filing goes on to note:

The CEO’s modified Change of Control Agreement, which was filed as Exhibit 10.2 to the February 16 Form 8-K, provides that, immediately prior to the effective time of the Merger, unvested shares of the CEO’s 2012 Equity Grant would convert into a right to receive —Merger Consideration (as specified in the February 16 Form 8-K), less any amounts required to be withheld under applicable laws, fifty percent of which would vest at the effective time and be paid as provided in the Merger Agreement. The remaining fifty percent, plus interest at the prime rate from the Effective Time, would be paid on the earlier of the first anniversary of the effective time or the termination of his employment,…

At $10.50 a share, that works out to a nice bonus of $1.3 million immediately and another $1.3 million to come for the CEO and $750K for the CFO.

Or perhaps it could be more. A quick skim shows that at least a dozen law firms are “investigating” the deal. Whether that means someone else will come along with a higher offer for Advance America remains to be seen. But it’s pretty clear that Messrs. O’Shaughnessy and Ovenden have done well in the deal.

Image source: Payday loans sign via Shutterstock

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Over at footnotedPro, we’re watching for buried disclosures that help professional investors stay ahead of the market. Our 2012 M&A report, published last month, lists 10 companies that we see as likely acquisition targets. Last year, three of our top 10 announced deals within a few months. For more information about the report, or to inquire about a trial subscription to footnotedPro, contact us.

 

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