“We are pleased to have entered into an agreement to honour our TRA commitments, which will allow us to make full use of the tax base reached at the time of Clarivate`s initial carve-out and create incremental cash flow and shareholder value,” said Jerre Steaderre, Executive Chairman and CEO of Clarivate Analytics. “Since I joined Clarivate in May, we have fought hard for the rationalization and concentration of our business. Billing TRA under acceptable conditions eliminates the complexity of reporting and simplifies our structure while improving our ability to create shareholder value. LONDON and PHILADELPHIA, 22.08.2019 /PRNewswire/ — Clarivate Analytics plc (NYSE: CCC; CCC.WS), a world leader in trusted knowledge and analysis to accelerate the pace of innovation, announced today that it has entered into an agreement (the Release Agreement) to pay $200 million to terminate the tax receivable agreement (TRA) with the company`s shareholders on May 10, 2019, including Clarivate`s first listing to NYSE, including Onex and BPEA. As of June 30, 2019, Clarivate had a TRA liability of $264.6 million. The passage of tax reform last December gave investors greater security when it comes to corporate tax rates in the near future. One consequence is the increased interest of some investors in acquiring payment rights under existing tax receivable agreements (TRAs). In short, ACCORDS are agreements made by a company (a “pubco”) as part of an IPO to monetize Pubco`s tax attributes after the IPO for the benefit of owners prior to the IPO and investors who acquire payment rights under TRAs to such pre-IPO owners. Our previous article on ARTs focused on some ways in which tax reform could affect the value of TRA payment rights. Since the introduction of tax reform, we have seen a marked increase in investor interest in the acquisition of TRA payment rights, including through hedge funds, family offices and private trust funds. This article describes some of the functions of an AED that an investor should analyze before acquiring rights under an AER. Forward-Looking StatementsThis press release and oral statements regarding the information contained in this press release contain forward-looking statements regarding Clarivate Analytics. Our ability to terminate the TRA and fulfill our obligations under the Release Agreement depends on our ability to arrange the financing of the corresponding payment that we must make. Forward-looking statements, including those relating to our expectation of the end of the TRA as expected in this press release, provide Clarivate Analytics` current expectations or forecasts for future events and expectations.
These statements include risks and uncertainties, including factors beyond Clarivate Analytics` control, such as market disruptions or other events that may prevent us from arranging the necessary financing, which may result in significant discrepancies in actual results. Clarivate Analytics undertakes no commitment to update or revise any statements contained in this document, whether on the basis of new information, future events or otherwise. It is anticipated that the provisions of this agreement will not result in a double payment of an amount (including interest) required by tax receivables agreements. This transaction was reviewed and approved by a special committee of the Board of Directors, established for this purpose, without any involvement of the directors associated with Onex and the BPEA. Gladriel Shobe Associate Professor, Brigham Young University Law School Payments under Article III of tax receivables contracts will be reduced to 85% of all tax costs (such as public and local taxes) resulting from Medifax`s restructuring, provided that this reduction does not exceed the amounts payable under the tax receivables contracts as a result of Medifax`s restructuring alone.