Item 8.01 Other Matters.
As previously announced, onJuly 28, 2020 ,On Deck Capital, Inc. (the "Company") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Enova International, Inc., aDelaware corporation ("Enova"), andEnergy Merger Sub, Inc. , aDelaware corporation and an indirect wholly owned subsidiary of Enova ("Merger Sub"), pursuant to which, subject to the satisfaction or waiver of certain conditions, Merger Sub will be merged with and into the Company, with the Company surviving the merger as an indirect wholly owned subsidiary of Enova (the "Merger"). Nine complaints have been filed against the Company and the individual members of the Company's board of directors (the "Board") in relation to the Merger: Doaty v. Breslow, et al., C.A. No. 2020-0763 (Del. Ch.) (the "Doaty Action"); Sabatini v.On Deck Capital, Inc. , et al., Case No. 1:20-cv-01166-UNA (D. Del.) (the "Sabatini Action"); Senteno v.On Deck Capital, Inc. , et al., Case No. 1:20-cv-01179-UNA (D. Del.) (the "Senteno Action"); Aboubih v.On Deck Capital, Inc. , et al., Case No. 1:20-cv-07319 (S.D.N.Y.) (the "Aboubih Action"); Morrison v.On Deck Capital, Inc. , et al., Index No. 654179/2020 (N.Y. Sup. Ct.,N.Y. Cnty .) (the "Morrison Action"); Ward v.On Deck Capital, Inc. , et al., Case No. 1:20-cv-07639 (S.D.N.Y.) (the "Ward Action"); Bushansky v.On Deck Capital, Inc. , et al., Case No. 1:20-cv-02819 (D. Col .) (the "Bushansky Action"); Yap v.On Deck Capital, Inc. , et al., Case No. 1:20-cv-02888 (D.Col ) (the "Yap Action"); Heydel v.On Deck Capital, Inc. , et al., Case No. 1:20-cv-04589 (E.D.N.Y.) (the "Heydel Action" and together with the Doaty Action, the Sabatini Action, the Senteno Action, the Aboubih Action, the Morrison Action, the Ward Action, the Bushansky Action, and the Yap Action, the "Actions"). The Doaty Action and the Morrison Action generally allege, among other things, that the members of the Board breached their fiduciary duties by entering into the Merger Agreement and the Board failed to disclose material information in a preliminary proxy statement/prospectus relating to the Merger included in a registration statement on Form S-4 filed by Enova with theSecurities and Exchange Commission (the "SEC") onAugust 25, 2020 , the definitive version of which was filed by the Company with theSEC onSeptember 8, 2020 and by Enova with theSEC onSeptember 9, 2020 (the "Proxy Statement/Prospectus"). The Sabatini Action, the Senteno Action, the Aboubih Action, the Ward Action, the Bushansky Action, the Yap Action, and the Heydel Action allege, among other things, that the defendants violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended, and certain rules promulgated thereunder by omitting supposedly material information from the Proxy Statement/Prospectus. The Actions seek, among other things, an injunction against proceeding with the shareholder vote on the Merger or consummating the Merger absent corrective disclosures, and damages (in an unspecified amount), as well as expenses and attorneys' fees. The Company and Enova believe that the claims asserted in the Actions are without merit and that no supplemental disclosures are required under applicable law. However, in an effort to put the claims that were or could have been asserted to rest, to avoid nuisance, minimize costs and avoid potential transaction delays, and without admitting any liability or wrongdoing, the Company has determined to voluntarily supplement the Proxy Statement/Prospectus as described in this Current Report on Form 8-K to address claims asserted in the Actions, and the plaintiffs in the Actions have agreed to voluntarily dismiss the Actions in light of, among other things, this supplemental disclosure. Nothing in this Current Report on Form 8-K shall be deemed an admission of the legal necessity or materiality of any of the disclosures set forth herein. To the contrary, the Company and the other defendants specifically deny all allegations in the Actions that any additional disclosure was or is required and expressly maintain that, to the extent applicable, they have complied with their respective legal obligations. Supplemental Disclosures The additional disclosures in this Current Report on Form 8-K supplement the disclosures contained in, and should be read in conjunction with, the Proxy Statement/Prospectus, which should be read in its entirety. To the extent that information in this Current Report on Form 8-K differs from or updates information contained in the Proxy Statement/Prospectus, the information in this Current Report on Form 8-K shall supersede or supplement the information in the Proxy Statement/Prospectus. Capitalized terms used herein, but not otherwise defined, shall have the meanings ascribed to such terms in the Proxy Statement/Prospectus. Background of the Merger
The disclosure under the heading "Background of the Merger" is hereby
supplemented by amending and restating the entirety of the fourth paragraph on
page 45 of the Proxy Statement/Prospectus as follows:
Starting in
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significant uncertainty of being able to reach agreement on alternative financing in its decision to enter into the merger agreement.
The disclosure under the heading "Background of the Merger" is hereby supplemented by adding the underlined language to the fourth sentence of the fifth paragraph on page 45 of the Proxy Statement/Prospectus:
All of the confidentiality agreements contained customary standstill provisions which included so-called "don't ask, don't waive" language, and that would automatically terminate upon the entry by OnDeck into a definitive acquisition agreement with a third party.
The disclosure under the heading "Background of the Merger" is hereby
supplemented by adding the following sentence after the second sentence of the
first full paragraph on page 51 of the Proxy Statement/Prospectus as follows:
During that discussion, OnDeck management provided an overview of the status of
OnDeck's restart to loan originations, which showed that loan originations
through
Opinion ofEvercore Group L.L.C. The disclosure under the heading "The Merger - Opinion ofEvercore Group L.L.C. - Summary of Evercore's Financial Analyses - On Deck Analyses - Selected Public Company Trading Analysis" is hereby amended by deleting everything (including the tables) under this heading before the paragraph that begins "Based on the multiples it derived for the OnDeck selected companies…" on page 62 of the Proxy Statement/Prospectus, and replacing them with the paragraphs and the tables below: Evercore reviewed and compared certain financial information of OnDeck to corresponding financial multiples and ratios for selected publicly traded specialty finance and FinTech lenders that were deemed by Evercore to be similar to OnDeck in one or more respects, including, without limitation, business model and business mix (for purposes of this section, the "OnDeck selected companies"). For each of the OnDeck selected companies, Evercore calculated the closing price per share of the company's common stock as ofJuly 27, 2020 as a multiple of such company's estimated earnings per share, or "EPS," for calendar years 2020 and 2021, referred to below as 2020E EPS and 2021E EPS, respectively, and as a multiple of such company's tangible book value per share as ofMarch 31, 2020 (or most recently available), referred to below as "TBVPS." Estimated financial data of the OnDeck selected companies were based on publicly available research analysts' estimates. The OnDeck selected companies and the results of these analyses were as follows:
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Company Financial Metric 2020E EPS 2021E EPS TBVPS
Specialty Finance Non-Bank - Consumer /
3.0x 5.1x 0.59x Curo Group Holdings Corp. 5.5x 3.1x NM Elevate Credit, Inc. 9.7x 6.9x 0.53x Enova International Inc. 6.1x 4.0x 2.52x Newtek Business Services Corp. 12.7x NM 1.21x Regional Management Corp. 13.3x 5.6x 0.72x World Acceptance Corporation 23.7x 12.3x 1.37x
NM 23.0x NM LendingClub Corporation NM NM 0.45x
Specialty Finance Banks-Consumer /
7.4x 9.3x 1.17x CIT Group Inc. NM 7.9x 0.37x Live Oak Bancshares, Inc. NM 29.9x 1.18x Marlin Business Services Corp. NM 5.1x 0.48x Medallion Financial Corp. NM 3.9x 1.76x Meta Financial Group, Inc. 6.8x 6.7x 1.38x Small Capitalization Technology Firms for Small and Midsized Businesses Blucora, Inc. NM 21.9x NM GAIN Capital Holdings, Inc. 2.4x 6.1x 0.80x
Note: NM means not meaningful because multiples were below 0.0x or above 30.0x.
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Financial Metric High Low Median
Specialty Finance Non-Bank-Consumer / Small & Midsized Businesses 2020E EPS
23.7x 3.0x 9.7x 2021E EPS 12.3x 3.1x 5.3x TBVPS 2.52x 0.53x 0.96x
Tech-Enabled Consumer Firms-Small & Medium Enterprise Lenders 2020E EPS
NM NM NM 2021E EPS 23.0x 23.0x 23.0x TBVPS 0.45x 0.45x 0.45x
Specialty Finance Banks-Consumer / Small & Midsized Businesses 2020E EPS
7.4x 6.8x 7.1x 2021E EPS 29.9x 3.9x 7.3x TBVPS 1.76x 0.37x 1.18x Small Capitalization Technology Firms for Small & Midsized Businesses 2020E EPS 2.4x 2.4x 2.4x 2021E EPS 21.9x 6.1x 14.0x TBVPS 0.80x 0.80x 0.80x Overall 2020E EPS 23.7x 2.4x 7.1x 2021E EPS 29.9x 3.1x 6.7x TBVPS 2.52x 0.37x 0.99x
Note: NM means not meaningful because multiples were below 0.0x or above 30.0x.
The disclosure under the heading "The Merger - Opinion ofEvercore Group L.L.C. - Summary of Evercore's Financial Analysis - Enova Analyses - Selected Public Company Trading Analysis" is hereby amended by deleting everything (including the tables) under this heading before the paragraph that begins "Based on the multiples it derived for the Enova selected companies…" on page 66 of the Proxy Statement/Prospectus, and replacing them with the paragraphs and the tables below: Evercore reviewed and compared certain financial information of Enova to corresponding financial multiples and ratios for selected publicly traded specialty finance, FinTech, and installment and pawn lenders that were deemed by Evercore to be similar to Enova in one or more respects, including, without limitation, business model and business mix (for purposes of this section, the "Enova selected companies"). For each of the Enova selected companies, Evercore calculated the closing price per share of the company's common stock as ofJuly 27, 2020 as a multiple of such company's estimated earnings per share, or "EPS," for calendar years 2020 and 2021, referred to below as 2020E EPS and 2021E EPS, respectively, and as a multiple of such company's tangible book value per share as ofMarch 31, 2020 (or most recently available), referred to below as "TBVPS." Estimated financial data of the Enova selected companies were based on publicly available research analysts' estimates. The Enova selected companies and the results of these analyses were as follows:
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Company Financial Metric 2020E EPS 2021E EPS TBVPS
Specialty Finance Non-Bank - Consumer /
3.0x 5.1x 0.59x Curo Group Holdings Corp. 5.5x 3.1x NM Elevate Credit, Inc. 9.7x 6.9x 0.53x Newtek Business Services Corp. 12.7x NM 1.21x Regional Management Corp. 13.3x 5.6x 0.72x World Acceptance Corporation 23.7x 12.3x 1.37x
Tech-Enabled Consumer Firms -
NM 23.0x NM LendingClub Corporation NM NM 0.45x On Deck Capital, Inc. NM NM 0.22x
Specialty Finance Banks - Consumer /
7.4x 9.3x 1.17x CIT Group Inc. NM 7.9x 0.37x Live OakBancshares, Inc. NM 29.9x 1.18x Marlin Business Services Corp. NM 5.1x 0.48x Medallion Financial Corp. NM 3.9x 1.76x Meta Financial Group, Inc. 6.8x 6.7x 1.38x Installment and Pawn Lenders EZCORP, Inc. NM 7.3x 0.87x FirstCash, Inc. 21.1x 16.0x 11.33x OneMain Holdings, Inc. 16.8x 6.3x 2.64x
Note: NM means not meaningful because multiples were below 0.0x or above 30.0x.
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Financial Metric High Low Median
Specialty Finance Non-Bank - Consumer / Small & Midsized Businesses 2020E EPS
23.7x 3.0x 11.2x 2021E EPS 12.3x 3.1x 5.6x TBVPS 1.37x 0.53x 0.72x
Tech-Enabled Consumer Firms - Small & Medium Enterprise Lenders 2020E EPS
NM NM NM 2021E EPS 23.0x 23.0x 23.0x TBVPS 0.45x 0.22x 0.34x
Specialty Finance Banks-Consumer / Small & Midsized Businesses 2020E EPS
7.4x 6.8x 7.1x 2021E EPS 29.9x 3.9x 7.3x TBVPS 1.76x 0.37x 1.18x Installment and Pawn Lenders 2020E EPS 21.1x 16.8x 18.9x 2021E EPS 16.0x 6.3x 7.3x TBVPS 11.33x 0.87x 2.64x Overall 2020E EPS 23.7x 3.0x 11.2x 2021E EPS 29.9x 3.1x 6.9x TBVPS 11.33x 0.22x 1.02x
Note: NM means not meaningful because multiples were below 0.0x or above 30.0x.
Certain Unaudited Prospective Information
The disclosure under the heading "Certain Unaudited Prospective Information" is hereby supplemented by amending and restating the entirety of table set forth under the subheading "OnDeck Projections" on page 71 of the Proxy Statement/Prospectus as follows: The following table presents a summary of the OnDeck Projections:
2020E 2021E 2022E 2023E 2024E (Dollars in millions) Originations$1,191 $1,780 $2,052 $2,257 $2,483 Net revenues(1) 101.3 149.6 191.4 215.8 240.0 Income (loss) from operations, before provision for income taxes (71.3) (21.4) 13.7 30.9 47.6
Net income (loss) attributable to
787 899 1,077 1,225 1,351
The disclosure under the heading "Certain Unaudited Prospective Information" is hereby supplemented by adding the following paragraphs and table before the subheading titled "Enova Projections and OnDeck Adjusted Enova Projections" on page 71 of the Proxy Statement/Prospectus as follows: Scenario 1 In connection with the OnDeck Board's consideration of the merger and other strategic alternatives available to OnDeck, OnDeck management prepared certain unaudited financial projections regarding OnDeck's future financial performance for the years 2020 through 2024 on a stand-alone basis, assuming OnDeck would continue as an independent company without giving effect to the merger, which is referred to herein as Scenario 1. Scenario 1 was provided to the OnDeck Board and to the potential counterparties involved in the Process. As further described in "The Merger-Background of the Merger" beginning on page 44 of this proxy statement/prospectus, (i) Evercore was not directed to, and did
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not, rely on Scenario 1 in connection with its financial analyses and opinion as
described in the section titled "The Merger-Opinion of
2020E 2021E 2022E 2023E 2024E (Dollars in millions) Originations$1,399 $2,029 $2,186 $2,404 $2,644 Net revenues 97.8 183.3 213.7 232.6 258.8 Income (loss) from operations, before (74.9) 12.3 32.4 44.1 62.7 provision for income taxes Net income (loss) attributable to On Deck (69.4) 14.3 30.1 25.9 32.6Capital, Inc. common stockholders Total Assets 872 989 1,151 1,305 1,441
Forward Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" regarding
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Annual Report on Form 10-K filed with theSEC onFebruary 27, 2020 , Enova's Quarterly Report on Form 10-Q filed with theSEC onMay 5, 2020 , Enova's Quarterly Report on Form 10-Q filed with theSEC onJuly 29, 2020 , Enova's Registration Statement on Form S-4, as amended, filed with theSEC onSeptember 4, 2020 and any further disclosures Enova makes in Current Reports on Form 8-K. Enova's SEC filings are available electronically on Enova's investor website at ir.Enova.com or theSEC's website at www.sec.gov. OnDeck and Enova assume no obligation to update these forward-looking statements or this communication, or to update, supplement or correct the information set forth in this communication. All subsequent written and oral forward-looking statements attributable to OnDeck, Enova or any person acting on behalf of either party are expressly qualified in their entirety by the cautionary statements referenced above. Additional Information and Where to Find It In connection with the proposed merger, Enova has filed with theSEC a registration statement on Form S-4 to register the shares to be issued in connection with the proposed merger. The registration statement includes a proxy statement of OnDeck / prospectus of Enova which has been sent to the stockholders of OnDeck seeking their approval of the respective merger-related proposals. STOCKHOLDERS OF ONDECK ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4 AND THE RELATED PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ONDECK, ENOVA AND THE PROPOSED MERGER. Investors and security holders may obtain copies of these documents and any other documents filed with or furnished to theSEC by OnDeck or Enova free of charge through the website maintained by theSEC at www.sec.gov, from OnDeck at its website investors.OnDeck.com, or from Enova at its website ir.Enova.com. Participants in the Solicitation OnDeck, Enova and their respective directors and certain of their respective executive officers and employees may be deemed to be participants in the . . .
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