Visa on Tuesday said it has deposited $500 million into an account earmarked for litigation costs, a move that essentially acts as a repurchase of class B shares from credit unions and banks.
Visa created the litigation account as part of its 2008 initial public offering as a way of protecting shareholders from direct losses related to lawsuits. The $500 million will give the fund a balance of $1.8 billion.
Credit unions and banks are the sole holders of Visa's class B shares.
Under the plan, when Visa funds the account, only class B shareholders bear the expense. Thus, as Visa funds the account, it reduces the conversion price for class B shares into class A shares. Each class B share is now convertible to 0.5550 class A shares. The prior exchange rate was 0.5824 class A shares for every class B share.
Visa shares closed down 1.3% yesterday at $71.49.
