Fifth Third Bancorp entered into an agreement with Fidelity National Information Services Inc., or FIS, and Worldpay Inc. on Dec. 27, 2019, related to its tax receivable agreement with Worldpay.
The agreement grants Fifth Third and Worldpay the ability to terminate and settle certain cash flows to be paid under Fifth Third's tax receivable agreement with Worldpay.
Worldpay may be obligated to pay up to a total of about $366 million to Fifth Third to terminate and settle certain remaining cash flows Fifth Third expected to receive under the tax receivable agreement from 2021 to 2035, totaling about $720 million.
If exercised, some of the obligations would be settled with four quarterly payments starting in April 2020. A second set of the obligations would be settled with four quarterly payments starting in April 2022, and a third set would be settled with four quarterly payments starting in April 2023.
Fifth Third expects to recognize a pretax gain and corresponding receivable of about $344 million in the fourth quarter associated with these options.
The agreement does not impact a total of about $195 million of other tax receivable agreement payments that are expected to be recognized in the fourth quarters of 2020, 2021, 2022, 2023 and 2024 and which are expected to be received in the first quarters of 2021, 2022, 2023, 2024 and 2025, respectively.