SAN FRANCISCO – Visa said it has deposited $700 million into an account earmarked for litigation costs, a move that essentially acts as the repurchase of class B shares owned by credit unions and banks.
Under the litigation reserve plan, when Visa funds the account, only class B shareholders bear the expense. So, as Visa funds the account, it reduces the conversion price for class B shares into class A shares. Each class B share now is now convertible to 0.5824 class A shares. The prior exchange rate was 0.6296 class A shares for every class B share.
Visa set aside $3 billion of proceeds from its March 2008 initial public offering to cover potential liabilities in lawsuits alleging Visa conspired violate antitrust laws. The account provides coverage and potential payments for judgments or settlements in U.S. legal cases against Visa, and acts to protect Visa's common shareholders from direct losses.
In December the company deposited $1.1 billion into the litigation escrow account.
