Vivid Seats terminates tax agreement, eliminates dual-class structure

Vivid Seats Inc. (NASDAQ: SEAT) announced it entered into a Corporate Simplification Agreement to eliminate its dual-class stock structure and terminate its Tax Receivable Agreement in exchange for 403,022 shares of Class A common stock.

The agreement eliminates $6 million in cash payments that would have been due in the first quarter of 2026 under the Tax Receivable Agreement terms. The company stated it will retain 100% of realized tax savings that previously would have been payable to former TRA parties, resulting in up to $180 million of lifetime savings.

Vivid Seats expects to reduce annual cash tax payments to approximately $3 million, with future taxes primarily from taxable income in foreign jurisdictions. The company also expects approximately $1 million in annual savings from reduced compliance and financial reporting costs associated with a single-class stock structure.

"This agreement results in near-term cash savings while enhancing our long-term cash flow profile with substantial tax amortization offsetting domestic income for the foreseeable future," said Stan Chia, Chief Executive Officer. "Our streamlined corporate structure will also reduce costs while simplifying financial reporting."

Former TRA parties will exchange all outstanding Class B common stock shares and corresponding units of Vivid Seats' operating subsidiary for Class A common stock on a one-for-one basis. Following the transactions, Vivid Seats will have approximately 10.7 million shares of Class A common stock outstanding, including shares issued to Hoya Topco, LLC as consideration for the agreement.

A special committee of independent and disinterested directors approved the agreement and transactions. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal advisors to the special committee, while Latham & Watkins LLP advised Hoya Topco, LLC.

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