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Subsequent events | 6 Months Ended
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Jun. 30, 2024
Subsequent Events [Abstract] |
Subsequent events | Subsequent events On July 26, 2024, the Company closed its IPO of 56,882,051 shares of its common stock at a price of $78.00 per share, with a subsequent exercise in full by the underwriters of their option to purchase from the Company an additional 8,532,307 shares of common stock that closed on July 31, 2024. The net proceeds to the Company from the IPO, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, were $4,875 million. Prior to and upon consummation of the offering, the Company engaged in the following formation and other transactions: (a)Capital structure and noncontrolling interests In exchange for cash proceeds of $1 million, Lineage, Inc. redeemed all outstanding shares of Series A Preferred Stock, which represents $1,000 per share plus all accrued and unpaid dividends thereon. The Operating Partnership converted to a Maryland limited partnership and its Agreement of Limited Partnership was executed concurrently, along with a Unit Designation for Legacy Units of the Operating Partnership. All Class A units in the Operating Partnership held by Lineage, Inc. were reclassified into common units of the Operating Partnership (“Partnership Common Units”) and Series A Preferred Units. The pre-existing Class A, Class B, and Class C units of the Operating Partnership that were held by non-Company LPs described in Note 2, Capital structure and noncontrolling interests were reclassified into Legacy Units of the Partnership (“Legacy OP Units”). Legacy OP Units carry forward pre-existing rights of the Non-Company LPs, which enables BG Cold to continue accruing Founders Equity Share and the holders of a limited number of Class A units of the Operating Partnership with special redemption and/or top-up rights to maintain those rights. All Legacy OP Units will ultimately be exchanged for Partnership Common Units over a period of up to three years following the initial closing of the IPO, which may in turn be redeemed at the request of the holder thereof. Upon a holder’s request for such redemption, the Company has the discretion to redeem Partnership Common Units for shares of Lineage, Inc.’s common stock or cash. The Ninth Amended and Restated Operating Agreement of LLH was executed, which created a new form of interest in LLH called an LLH Operating Partnership Equivalent Unit (“OPEU”). OPEUs are capital interests in LLH that allow their holders to share in the profits of LLH on a pari-passu basis with the Operating Partnership. BG Maverick, LLC (“BG Maverick”) held all Class D interests in LLH prior to the IPO, which entitled the holder to a formulaic distribution of profits of LLH. The payment of this distribution in respect of these interests was contingent upon the occurrence of a liquidity event, which was deemed to take place with the IPO. Upon the completion of its IPO, the Company recorded a liability of $184 million due to BG Maverick in respect of its Class D interests. Such Class D interests were subsequently reclassified as OPEUs. In addition, in connection with the termination of the operating services agreement described below, BG Maverick’s Class D distribution rights were increased by $200 million. This cumulative liability was settled partially in the form of a reimbursement to Lineage of previous Advance Distributions paid by the Company as described in Note 2, Capital structure and noncontrolling interests, which reduced the liability to $186 million. This remaining liability was reclassified into OPEUs held by BG Maverick. Following these transactions, BG Maverick held 2,447,990 OPEUs. Immediately after the reclassification of the Class D interests into the OPEUs, LLH repurchased 986,492 OPEUs in exchange for cash proceeds of $75 million. The remaining 1,461,148 OPEUs represent a noncontrolling interest in the consolidated financial statements of Lineage, Inc. In connection with the IPO, the seller in the Kloosterboer acquisition (“Kloosterboer Co-Investor”) (holders of Convertible Redeemable Noncontrolling Interests - Preference Shares) had the right to convert the preference shares into securities that track the economic performance of certain Operating Partnership interests. The Kloosterboer Co-Investor did not exercise this right. As a result, upon the completion of the IPO, the redeemable noncontrolling interest recognized in the consolidated financial statements of Lineage, Inc. was reclassified into a liability. The Company and the Operating Partnership exchanged all outstanding vested Management Profits Interests Class C units for a combination of less than 80,950 shares of Lineage, Inc. common stock and 2,204,162 Legacy Class B Units of the Operating Partnership. (b)Debt On July 26, 2024, the Company used a portion of the net proceeds from the IPO to repay in full the remaining outstanding DDTL principal balance of $2,400 million, along with $7 million in accrued interest and fees. As a result of the full repayment, the Company will record a $6 million loss on extinguishment of debt related to the write-off of unamortized deferred financing costs previously capitalized for the DDTL. On July 30, 2024, Moody’s Ratings assigned a first-time Baa2 issuer rating to the Company, with a stable outlook. On August 6, 2024, Fitch Ratings assigned a first-time BBB+ issuer rating to the Company, with a stable outlook. These assigned ratings qualified as an investment grade rating event under the terms of the Credit Agreement and allowed the Company to elect the contractual interest rate margin to be based on the Company’s debt rating instead of the total leverage ratio, effective August 1, 2024, which reduced the RCF and TLA interest rate from Adjusted Term SOFR + 1.60% to Adjusted Term SOFR +1.05%. Upon receipt of the Fitch Rating, the RCF and TLA interest rate was further reduced to Adjusted Term SOFR + 0.925%. On August 9, 2024, the Company used a portion of the net proceeds from the IPO to repay in full the remaining outstanding CMBS 5 principal balance of $1,298 million, along with $8 million in accrued interest and fees. As a result of the full repayment, the Company will record a $4 million loss on extinguishment of debt related to the write-off of unamortized deferred financing costs previously capitalized for the CMBS 5. Through August 9, 2024, the Company used a portion of the net proceeds from the IPO to make net repayments on the RCF of $822 million. (c)Stock-based compensation The Pre-IPO Incentive Award Plan described in further detail in Note 14, Stock-based compensation was amended and restated in connection with the IPO (the “Incentive Award Plan”). The Incentive Award Plan increased the maximum number of shares of common stock which can be issued under the plan from 1,000,000 to 12,500,000, and specifies that awards of Long-Term Incentive Plan units (“LTIP Units”) count as shares for the purpose of the share limit under the Incentive Award Plan. LTIP Units are a special class of partnership interests in the Operating Partnership which may be issued to eligible participants. Upon the adoption of the Incentive Award Plan, the Company granted the following awards to plan participants: (1)Stock payment awards of 215,149 shares of the Company’s common stock as one-time bonuses in connection with the IPO. (2)Stock payment awards of 179,838 shares of the Company’s common stock in settlement of their vested LVCP units. (3)654,690 time-vesting RSUs as replacements of unvested LLH Value Creation Plan units that were unvested at the IPO and LLH Value Creation Plan units that did not have any value. (4)291,511 time-vesting RSUs as part of the annual equity award program. (5)1,066,763 time-vesting RSUs or LTIP Units as replacements of unvested Management Profits Interest Class C units and vested Management Profits Interest Class C units that held no intrinsic value. (6)498,691 time-based LTIP Units as annual equity awards. Stock payment awards contain no ongoing vesting requirements and stock-based compensation expense for such awards is recorded immediately. The Company will recognize stock-based compensation expense for time-based RSUs and time-based LTIP Units over their respective vesting terms. Vesting for all unvested BGLH Restricted Units was accelerated in connection with the IPO, resulting in stock-based compensation expense of $5 million. All unvested Management Profits Interest Class C units were canceled, and holders of such awards were granted replacement time-based RSUs, or time-based LTIP Unit awards. Holders of unvested Management Profits Interest Class C units and Management Profits Interest Class C units that were vested but held no intrinsic value were replaced with time-based RSUs. As described in Note 14, Stock-based compensation, no stock-based compensation expense was recorded associated with the outstanding LLH Value Creation Plan units prior to the IPO. Upon the consummation of the IPO, the qualifying liquidity event vesting criteria was met for certain awards and such awards fully vested, resulting in stock-based compensation expense and a corresponding liability of $26 million. This liability was immediately settled by either issuing stock payment awards or paying cash to the holders of such vested LLH Value Creation Plan units. All unvested LLH Value Creation Plan units were canceled upon the consummation of the IPO, and holders of such awards received time-based RSUs as replacement awards. Additionally, holders of vested LLH Value Creation Plan units that did not have any value because the Lineage, Inc. stock price was not greater than the threshold specified in their award also received time-based RSU awards. (d)Related-party balances The Company terminated the operating services agreement (i.e., operating, consulting, strategic development, and financial services) it had between LLH and Bay Grove Management. Additionally, LLH entered into a transition services agreement with Bay Grove Management. Under this agreement, Bay Grove Management will provide certain transition services to support capital deployment and mergers and acquisitions activity for the three years following the IPO in exchange for annual consideration of $8 million, paid in equal quarterly installments. (e)Rollover Holder Put Option Rollover equity in the form of BGLH units was previously issued as consideration in various business combinations. Some of those sellers who received rollover equity in BGLH were provided with separate classes of equity of BGLH that included special one-time redemption features with minimum value guarantees and/or the alternative option to elect cash or equity top-up rights to achieve a certain minimum equity valuation at a specified date (collectively, the “BGLH Guarantee Rights”). Prior to the IPO, the obligations in respect of the BGLH Guarantee Rights resided with BGLH. In connection with the IPO, Lineage, Inc. has agreed to provide successive repurchase rights and cash and equity top-up rights to the rollover equity holders that mirror those given by BGLH to its investors (the “Rollover Holder Put Option”). Pursuant to the Rollover Holder Put Option, BGLH has the right to (i) distribute (in various installments from September 2024 through December 2025 (the “Rollover Holder Put Exercise Window”) up to 2,036,738 shares of our common stock to its investors holding BGLH Guarantee Rights, and such investors have the individual right to cause Lineage to purchase any or all of such shares of our common stock distributed to such persons by BGLH for an amount equal to the guaranteed minimum value intrinsic to the BGLH Guarantee Rights (at a guaranteed minimum price or, in some cases, if greater, the then-current fair market value of the shares of our common stock), which amounts differ for different such investors, or (ii) in some cases demand a top-up, through a cash payment or through the issuance of additional shares of our common stock without payment therefor, or any combination thereof, in the amount by which the guaranteed minimum value exceeds the then current fair market value of the shares of our common stock (if at all) at various specified times during the Rollover Holder Put Exercise Window. The Rollover Holder Put Option represents a written put option on shares of Lineage, Inc. common stock, which the Company will account for as a separate, freestanding financial instrument from the shares of common stock underlying the option (the “Rollover Holder Put Option Liability”). Upon execution of the IPO, the Company recorded the Rollover Holder Put Option Liability at its fair value of $103 million, with a corresponding reduction in Retained earnings (accumulated deficit) attributable to BGLH. On July 31, 2024, the Company purchased Luik Natie in Belgium for estimated maximum purchase price of $52 million, inclusive of possible contingent earn-out payments. The purpose of this acquisition is to expand the Company’s warehousing network in the port city of Antwerp-Bruges, Belgium and grow the related transportation and freight forwarding services in the region.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 855 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/855/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 855 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147483399/855-10-50-2 + Details
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