Better World Acquisition Corp. (“Better World”) (Nasdaq: BWAC), an
ESG-focused special purpose acquisition company, today announced it
has entered into a Business Combination Agreement (the “Agreement”)
with Heritage Distilling Holding Company, Inc. (“Heritage” or the
“Company”), a leading craft distiller of innovative premium brands.
The parent company following the consummation of the transaction,
Heritage Distilling Group, Inc., will be a new Delaware holding
company (the “Combined Company” or “Pubco”) that will be led by
Justin Stiefel, Co-Founder and Chief Executive Officer of Heritage.
Pubco’s common stock is expected to be listed on the Nasdaq Capital
Market following the consummation of the transaction under the
ticker symbol “CASK”.
For the past nine years, Heritage has been the
most awarded craft distillery in North America by the American
Distilling Institute, and has been recognized for its innovative
brand family of premium whiskies, gins, vodkas, rums and
ready-to-drink cocktails. As one of the largest independent craft
distilleries on the West Coast, Heritage aims to become the leading
national craft spirits company. Working collectively with Native
American tribes across the country, Heritage is focused on creating
a national craft spirits network, with the goal of providing
economic benefits to tribes across the country. In collaboration
with the Chehalis tribe, Mr. Stiefel successfully worked to
overturn a 184-year-old Federal law banning distilling spirits on
tribal lands, positioning Heritage to advance its unique operating
model.
As a result of the business combination,
Heritage expects to become one of the only publicly-traded, pure
play craft distilleries. The proposed transaction combines
Heritage’s brands with Better World’s consumer products and
beverage expertise. Better World brings marketing, finance and
capital markets experience that the parties believe will accelerate
the growth of Heritage’s business.
Following the closing of the transaction, and
assuming no redemptions by Better World stockholders in connection
with the stockholder vote to approve the transaction, it is
anticipated the Combined Company will have approximately $44
million in cash, prior to the payment of the parties’ expenses
related to the business combination.
“Heritage was built on a foundation of
innovation, which has enabled us to become one of the most awarded
craft spirits distilleries in North America today. Our goal is to
become the industry’s leading craft spirits distillery with a
national distribution footprint,” commented Mr. Stiefel. “The
collective strength of Heritage’s and Better World’s experience in
beverages and business development will strongly support our
expansion and financial growth. We are excited about the
opportunity to grow our business as a public company, with access
to the capital markets and additional balance sheet strength as a
result of this transaction.”
Rosemary Ripley, Chief Executive Officer of
Better World, stated “Better World’s commitment was to invest in a
differentiated growth business with strong ESG credentials.
Heritage exemplifies our commitment to support remarkable leaders
building a profitable company with a strong social and
environmental mission. While furthering the economic empowerment of
Native American communities, Heritage has developed a unique,
capital-light business model with recurring revenue. We are excited
to collaborate with Heritage and its Tribal Beverage Network to
accelerate its future success.”
Heritage Distilling Highlights (Pro Forma for Proposed
Business Combination)
- Pure play craft distillery developing a national distribution
footprint working with the second largest U.S. beverage distributor
and a network of Native American tribal partners.
- Better World CEO, Rosemary Ripley, who will join Pubco’s board
of directors following the closing, provides significant CPG
expertise from companies such as Kraft Foods, Miller Brewing,
Philip Morris, Heineken NV and Zevia, as well as private equity and
M&A experience with over $40 billion in transactions.
- With a global market of $23 billion in 2022, craft distilling
represents a significant addressable market, and is projected by
The Business Research Company to grow 31% per annum through
2026.
- National wholesale distribution growth strategy enhanced by
proprietary tribal channel with – limited capital expenditures:
- Heritage founded the Tribal Beverage Network (TBN) to
collaborate with Native American tribes to develop Heritage-branded
distilleries and tasting rooms, to sell existing Heritage brands
and to advise the tribes on developing new brands.
- Creates compelling social and economic benefits for
participating tribal communities while allowing the tribes another
channel through which to exercise tribal sovereignty.
- Differentiated distribution channel with unique access to a
network of Native American tribal properties, generating recurring
revenue based on tax-advantaged sales.
- Distribution agreement with the second largest spirits
distributor in the U.S. (with a current market share of
approximately 20%).
- Downside protection for 18 months (or 24 months if elected by
Better World’s sponsor) for Better World public stockholders who do
not redeem their shares in connection with the transaction:
- Approximately $20 million in estimated asset value derived from
aged barrels of spirits and minority interest.
- Contingent Value Right (“CVR”) to be issued to Better World
stockholders who do not redeem their shares will provide downside
protection ranging from approximately $4.00 to $6.00 per share,
depending on the level of redemptions and the duration of the CVR
period.
Summary of Transaction
Pursuant to the Agreement, each of Heritage and
Better World will merge with newly-formed subsidiaries of Pubco,
which itself is a newly-formed subsidiary of Better World. As a
result of such mergers, Heritage stockholders will receive new
shares of Pubco and Better World security holders will exchange
their securities of Better World for securities of Pubco. The
shares of Pubco common stock to be issued to the Heritage equity
holders will have an aggregate value equal to $77.5 million,
subject to adjustment for certain indebtedness of Heritage as
determined in accordance with the Agreement, with each share of
Pubco common stock valued at $10.00 per share. Cash proceeds
released from Better World's trust account, which currently has
approximately $44 million in cash, after any stockholder
redemptions and payment of transaction expenses and other Better
World liabilities, will remain with the combined company. Heritage
and Better World are contributing into a CVR escrow account an
aggregate of the equivalent of 4,000,000 shares of Pubco common
stock and RSUs that will settle into shares of Pubco common stock.
The CVRs will provide Better World’s public stockholders who do not
redeem their shares in connection with the transaction with
downside protection. The transaction implies a Pubco pro forma
enterprise value of $122.2 million immediately after closing of the
business combination assuming no redemptions by Better World
stockholders and a redemption price of $10.52 per share.
As merger consideration, each Better World public stockholder
who participates in the business combination will receive:
- One share of Pubco common stock.
- One CVR, which provides the holder with a 10% per annum
preferred simple return including downside protection ranging from
approximately $4.00 to $6.00 per share (depending on the level of
redemptions and the duration of the CVR period) during the 18-month
period following the closing, which may be extended by six months
at the option of Better World’s sponsor.
As merger consideration, each Heritage stockholder who
participates in the business combination will receive:
- Approximately 4.15 shares of Pubco common stock for each share
of Heritage common stock held by a stockholder based on Heritage’s
current capitalization and net debt adjustments.
- In addition, Heritage stockholders have the contingent right to
receive up to 3,000,000 earnout shares from Pubco as additional
consideration if the applicable earnout milestones (based on net
revenues and stock price) as set forth in the Agreement are
achieved by Pubco.
Pubco also will assume certain convertible
notes, warrants and RSUs issued by Heritage.
Assuming no redemptions by Better World’s public
stockholders, it is estimated that the current security holders of
Heritage will own approximately 47% of the issued and outstanding
shares in the Combined Company at closing of the transaction.
The transaction has been unanimously approved by
the boards of directors of both Better World and Heritage.
Completion of the transaction is subject to approval by equity
holders of each company and certain other conditions specified in
the Agreement. The transaction is currently expected to close in
the second quarter of 2023.
The description of the transactions
contemplated by the Agreement (collectively, the “Transaction”)
contained herein is only a summary and is qualified in its entirety
by reference to the Agreement, a copy of which will be filed by
Better World with the U.S. Securities and Exchange Commission
(“SEC”) as an exhibit to a Current Report on Form 8-K. In addition,
Pubco intends to file a registration statement on Form S-4 with the
SEC, which will include a proxy statement/prospectus, and will file
other documents regarding the proposed Transaction with the
SEC.
Ellenoff Grossman & Schole LLP is serving as
legal advisor to Better World. Pryor Cashman LLP is serving as
legal advisor to Heritage.
About Better World Acquisition Corp.
Better World is a blank check company formed for
the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business
combination with one or more businesses. While Better World may
pursue an acquisition in any business industry or sector, it
intends to concentrate its efforts on identifying businesses that
benefit from strong Environmental, Social and Governance (“ESG”)
profiles.
About Heritage Distilling Holding Company,
Inc.
Heritage Distilling Company, Inc.®, currently a subsidiary of
Heritage Distilling Holding Company, Inc., was founded in 2011 by
Justin and Jennifer Stiefel. Heritage is among the premier
independent, craft spirits distilleries in the United States
offering a variety of whiskeys, vodkas, gins and rums produced
mainly from local, sustainably sourced ingredients. Heritage is the
most awarded craft distillery in North America by the American
Distilling Institute for the past nine years out of more than 2,600
craft distilleries. To accelerate its national wholesale
distribution growth strategy, Heritage founded the Tribal Beverage
Network (TBN) to collaborate with Native American tribes and
develop Heritage-branded distilleries, brands, and tasting rooms
and to develop brands unique to the tribes, to serve patrons of
tribal casinos and entertainment venues, creating compelling social
and economic benefits for participating tribal communities while
allowing the tribes another channel through which to exercise
tribal sovereignty. Heritage is a majority women-owned
enterprise.
Forward-Looking Statements
Certain statements included in this press release are not
historical facts, but are forward-looking statements.
Forward-looking statements generally are accompanied by words such
as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,”
“intend,” “expect,” “should,” “would,” “plan,” “future,” “outlook,”
and similar expressions that predict or indicate future events or
trends or that are not statements of historical matters, but the
absence of these words does not mean that a statement is not
forward-looking. These forward-looking statements include, but are
not limited to, statements regarding estimates and forecasts of
other performance metrics and projections of market opportunity.
These statements are based on various assumptions, whether or not
identified in this press release and on the current expectations of
Better World’s and Heritage’s respective management and are not
predictions of actual performance. These forward-looking statements
are provided for illustrative purposes only and are not intended to
serve as, and must not be relied on by any investor as, a
guarantee, an assurance, a prediction or a definitive statement of
fact or probability. Actual events and circumstances are difficult
or impossible to predict and will differ from assumptions. Many
actual events and circumstances are beyond the control of Better
World and Heritage. Some important factors that could cause actual
results to differ materially from those in any forward-looking
statements could include, without limitation, changes in business,
market, financial, political and legal conditions.
These forward-looking statements are subject to a number of
risks and uncertainties, including, without limitation, the
inability of the parties to successfully or timely consummate the
Transaction; the failure to realize the anticipated benefits of the
Transaction; the ability of Better World prior to the Transaction,
and the Combined Company following completion of the Transaction,
to maintain (in the case of Better World) and to obtain and
maintain (in the case of the Combined Company) the listing of
Better World’s shares prior to the Transaction, and, following the
Transaction, the Combined Company’s shares, on Nasdaq; costs
related to the Transaction; the failure to satisfy the conditions
to the consummation of the Transaction, including the approval of
the Business Combination Agreement by the stockholders of Better
World, the risk that the Transaction may not be completed by the
stated deadline and the potential failure to obtain an extension of
the stated deadline; the inability to complete a transaction
financing; the outcome of any legal proceedings that may be
instituted against Better World or Heritage related to the
Transaction; the attraction and retention of qualified directors,
officers, employees and key personnel of Better World and Heritage
prior to the Transaction, and the Combined Company following the
Transaction; the ability of the Combined Company to compete
effectively in a highly competitive market; the ability to protect
and enhance Heritage’s corporate reputation and brand; the impact
from future regulatory, judicial, and legislative changes in
Heritage’s industry; the uncertain effects of the COVID-19 pandemic
or other public health matters; competition from larger companies
that have greater resources, technology, relationships and/or
expertise; the future financial performance of the Combined Company
following the Transaction, including the ability of future revenues
to meet projected annual projections; the ability of the Combined
Company to forecast and maintain an adequate rate of revenue growth
and appropriately plan its expenses; the Combined Company’s ability
to manage a complex set of marketing relationships and realize
projected revenues from subscriptions, advertisements, product
sales and/or services; ; Heritage’s ability to execute its business
plans and strategy; the Combined Company’s ability to secure the
attention and focus of its distributor and retailer buyers to
support the level of growth anticipated in the Combined Company’s
business plans; the Combined Company’s ability to negotiate terms
with Native American tribes in accordance with the Combined
Company’s business plans; the potential difficulty of enforcing
certain provisions in agreements with Native American tribes due to
their sovereign status; the ability to ensure product consistency,
quality control and presentation of the Heritage brand and products
in locations owned by third parties; the length of time required to
receive approval from Native American tribes, various related
entities and Federal regulators with regulatory oversight of the
Federal-tribal relationship; and those factors set forth in
documents of Better World or Pubco filed, or to be filed, with the
SEC; . You should carefully consider the foregoing factors and the
other risks and uncertainties that will be described in the “Risk
Factors” section of the registration statement on Form S-4 and
related proxy statement/prospectus and other documents to be filed
by Better World or Pubco from time to time with the SEC. These
filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
The foregoing list of risks is not exhaustive.
Participants in the Solicitation
Better World and Heritage and their respective directors and
executive officers may be considered participants in the
solicitation of proxies with respect to the proposed transaction
described in this press release under the rules of the SEC.
Information about the directors and executive officers of Better
World is set forth in its Annual Report on Form 10-K for the year
ended December 31, 2021, filed with the SEC on March 31, 2022, and
is available free of charge at the SEC’s website at www.sec.gov or
by directing a request to: Better World Acquisition Corp., 775 Park
Avenue, New York, New York 10021. Information regarding the persons
who may, under the rules of the SEC, be deemed participants in the
solicitation of the Better World stockholders in connection with
the proposed Transaction will be set forth in the registration
statement on Form S-4 containing a proxy statement/prospectus to be
filed by Pubco with the SEC with respect to the proposed
Transaction. These documents can be obtained free of charge from
the sources indicated herein.
Important Information About the Transaction and Where to
Find It
This press release relates to a proposed Transaction between
Better World and Heritage. This press release does not constitute
an offer to sell or exchange, or the solicitation of an offer to
buy or exchange, any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, sale or
exchange would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. In connection
with the Transaction described herein, Better World and Heritage
intend to file relevant materials with the SEC, including a
registration statement on Form S-4 to be filed by Pubco, which will
include a proxy statement/prospectus. Security holders are
encouraged to carefully review such information, including the risk
factors and other disclosures therein. The proxy
statement/prospectus will be sent to all stockholders of Better
World. Better World and Pubco will also file other documents
regarding the proposed Transaction with the SEC. Before
making any voting or investment decision, investors and security
holders of Better World are urged to read the registration
statement, the proxy statement/prospectus and all other relevant
documents filed or that will be filed with the SEC in connection
with the proposed Transaction as they become available because they
will contain important information about the proposed
Transaction.
Non-Solicitation
This press release does not constitute, and should not be
construed to be, a proxy statement or the solicitation of a proxy,
consent or authorization with respect to any securities or in
respect of the proposed business combination described herein and
shall not constitute an offer to sell or a solicitation of an offer
to buy any securities nor shall there be any sale of securities in
any state or jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of the U.S. Securities Act of 1933, as
amended.
Contacts:
InvestorsScott Ecksteinheritage@ksca.com(212)
896 1210
MediaAnne Donohoeheritage@kcsa.com(732) 620
0033
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