See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
Notes to Condensed Consolidated Financial Statements
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
One Madison Corporation
(the “Company”) is a blank check company incorporated in the Cayman Islands on July 13, 2017. The Company was formed
for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination
with one or more businesses that the Company had not identified at the time of its formation (“Initial Business Combination”).
Although the Company is not limited to a particular industry or geographic region for purposes of consummating its Initial Business
Combination, the Company intends to focus on North American or Western European Consumer Products related businesses with a particular
sub-focus on companies in one of the following categories: (i) consumer products or services, (ii) food and beverage and (iii)
adjacent manufacturing or industrial services businesses linked to a consumer end- user. The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the “Securities Act,” as modified
by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
On December 26, 2018,
Ranger Packaging LLC (the “Subsidiary”), a wholly owned subsidiary of the Company, was formed for the purpose of maintaining
an Escrow account pursuant to the Stock Purchase Agreement. See Note 2 and Note 3.
All activities
through March 31, 2019 relate to the Company’s formation and the Initial Public Offering (“Initial Public
Offering”) and since the closing of the Initial Public Offering, a search for a business combination as described
below. The Company will not generate any operating revenues until after completion of its Initial Business Combination, at
the earliest. The Company has generated non-operating income in the form of interest income on cash and cash equivalents from
the proceeds derived from the Initial Public Offering.
On January 22, 2018,
the Company consummated the Initial Public Offering of 30,000,000 units (the “Units” and, with respect to the Company’s
Class A ordinary shares, $0.0001 par value per share, included in the Units being offered, the “Public Shares”) generating
gross proceeds of $300,000,000 which is described in Note 4. The Company’s founder, Omar M. Asali, along with certain other
investors, including the Company’s executive officers, (collectively, the “Anchor Investors”), Vivoli Holdings
LLC, an entity beneficially owned by Mr. Asali, and BSOF Master Fund L.P., a Cayman Islands exempted limited partnership, and
BSOF Master Fund II L.P., a Cayman Islands exempted limited partnership, both affiliates of The Blackstone Group L.P. (together,
the “BSOF Entities”) purchased an aggregate of 8,000,000 warrants (“Private Placement Warrants”) at a
price of $1.00 per warrant, or approximately $8,000,000 in the aggregate, in a private placement simultaneously with the
closing of the Initial Public Offering (the “Private Placement”). The Private Placement Warrants are included in additional
paid-in capital on the condensed consolidated balance sheet. See Note 5.
Trust Account
The proceeds held in
the U.S. based trust account at Morgan Stanley & Co. maintained by Continental Stock Transfer & Trust Company, acting as
trustee (“Trust Account”), will be invested only in U.S. government treasury bills with a maturity of one hundred eighty
(180) days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940
and that invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the
consummation of the Initial Business Combination or (ii) the distribution of the Trust Account proceeds as described below. The
remaining proceeds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective
acquisitions and continuing general and administrative expenses.
The Company’s
Amended and Restated Memorandum and Articles of Association provide that, other than the withdrawal of interest to pay income taxes,
if any, none of the funds held in the Trust Account will be released until the earlier of: (i) the completion of the Initial Business
Combination; (ii) the redemption of any Class A ordinary shares included in the Units (the “Public Shares”) sold in
the Initial Public Offering that have been properly tendered in connection with a shareholder vote to amend the Company’s
Amended and Restated Memorandum and Articles of Association to modify the substance or timing of its obligation to redeem 100%
of such Class A ordinary shares if it does not complete the Initial Business Combination within 24 months from the closing of the
Initial Public Offering; and (iii) the redemption of 100% of the Class A ordinary shares included in the Units sold in the Initial
Public Offering if the Company is unable to complete an Initial Business Combination within 24 months from the closing of the Initial
Public Offering, (subject to the requirements of law). The proceeds deposited in the Trust Account could become subject to the
claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public shareholders.
Initial Business Combination
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, although
substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward consummating an
Initial Business Combination. The Initial Business Combination must occur with one or more target businesses that together have
an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions,
deferred legal fees and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the Initial
Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect an Initial Business
Combination.
The Company, after
signing a definitive agreement for an Initial Business Combination, will either (i) seek shareholder approval of the Initial Business
Combination at a meeting called for such purpose in connection with which shareholders may seek to redeem their shares, regardless
of whether they vote for or against the Initial Business Combination, for cash equal to their pro rata share of the aggregate amount
then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including
interest but less taxes payable, or (ii) provide shareholders with the opportunity to sell their Public Shares to the Company by
means of an offer (and thereby avoid the need for a shareholder vote) for an amount in cash equal to their pro rata share of the
aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business
Combination, including interest but less taxes payable. The decision as to whether the Company will seek shareholder approval of
the Initial Business Combination or will allow shareholders to sell their Public Shares in a tender offer will be made by the Company,
solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms
of the transaction would otherwise require the Company to seek shareholder approval, unless a vote is required by law or under
NYSE rules. If the Company seeks shareholder approval, it will complete its Initial Business Combination only if a majority of
the outstanding ordinary shares of the Company, voted are voted in favor of the Initial Business Combination. However, in no event
will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. In
such case, the Company would not proceed with the redemption of its Public Shares and the related Initial Business Combination,
and instead may search for an alternate Initial Business Combination.
If the Company holds
a shareholder vote or there is a tender offer for shares in connection with an Initial Business Combination, a public shareholder
will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit
in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest
but less taxes payable. As a result, such Class A ordinary shares are classified as temporary equity upon the completion of the
Initial Public Offering, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) 480, “
Distinguishing Liabilities from Equity
.”
Pursuant to the Company’s
Amended and Restated Memorandum and Articles of Association, if the Company is unable to complete the Initial Business Combination
by January 22, 2020, 24 months from the closing of the Initial Public Offering, the Company will (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to
lawfully available funds therefor, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released
to the Company to pay income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number
of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders
(including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s
board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands’
law to provide for claims of creditors and the requirements of other applicable law. The Company’s Sponsor, the BSOF Entities
and the Anchor Investors, together with any permitted transferees (collectively, the “initial shareholders”), have
agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares (as defined
below) held by them if the Company fails to complete the Initial Business Combination within 24 months of the closing of the Initial
Public Offering. However, if initial shareholders acquire Public Shares in or after the Initial Public Offering, they will be entitled
to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete the Initial Business
Combination within the prescribed time period.
In the event of a liquidation,
dissolution or winding up of the Company after an Initial Business Combination, the Company’s shareholders are entitled to
share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made
for each class of shares, if any, having preference over the ordinary shares. The Company’s shareholders have no preemptive
or other subscription rights. There are no sinking fund provisions applicable to the ordinary shares, except that the Company will
provide its shareholders with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate
amount then on deposit in the Trust Account, upon the completion of the Initial Business Combination, subject to the limitations
described herein.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited
condensed consolidated financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted
in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the
SEC, and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary
for a fair presentation of the financial position as of March 31, 2019 and the results of operations and cash flows for the periods
presented. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have
been omitted pursuant to such rules and regulations. Interim results are not necessarily indicative of results for a full year.
In connection with
our assessment of going concern considerations in accordance with Financial Accounting Standards Board’s Accounting Standards
Updated (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going
Concern”, we determined that the mandatory liquidation and subsequent dissolution raises substantial doubt about the Company’s
ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the
Company be required to liquidate after the end of business on January 22, 2020.
The accompanying unaudited
condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and
notes thereto included in the Form 10-K filed by the Company with the SEC on February 28, 2019.
Principles of Consolidation
The condensed consolidated
financial statements include the accounts of the Company’s Subsidiary. All significant intercompany accounts and transactions
have been eliminated.
Emerging Growth Company
The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of
any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply
with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration
statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with
the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition
period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised
and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the
new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s
condensed consolidated financial statements with another public company which is neither an emerging growth company nor an emerging
growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences
in accounting standards used.
Use of Estimates
The preparation of
condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed
consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible
that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated
financial statements, which management considered in formulating its estimate, could change in the near-term due to one or more
future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers
all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of March
31, 2019 and December 31, 2018, the Company did not have any cash equivalents.
Cash Held in Escrow
Pursuant to the Stock
Purchase Agreement (see Note 3), the Company is responsible for reasonable and documented out-of-pocket fees, costs and expenses
incurred by the Seller’s legal and accounting advisors related to the preparation of the Proxy Statement and the Financial
Statements. Under the terms stipulated in the Stock Purchase Agreement, the Company is obligated to deposit $1,000,000 into an
Escrow account for this purpose. The Company shall contribute funds from time to time to this Escrow account to ensure the account
holds at least $250,000 until all fees, costs and expenses are fully paid and settled.
On December 28, 2018,
the Company funded $1,000,000 to an Escrow account held by its Subsidiary. As of March 31, 2019 and December 31, 2018, the balance
in the Escrow account totaled $1,003,978 and $1,000,000, respectively, including interest earned of $3,978 as of March 31, 2019.
No interest was earned as of December 31, 2018.
Concentration of Credit Risk
Financial instruments
that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which,
at times may exceed the Federal depository insurance coverage of $250,000. At March 31, 2019, the Company had not experienced
losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of
the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “
Fair Value Measurements
and Disclosures
” approximates the carrying amounts represented in the accompanying condensed consolidated balance sheet,
primarily due to their short-term nature.
Deferred Offering Costs
The Company complies
with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A— “Expenses
of Offering.” Deferred Offering costs of approximately $1,745,000 consist principally of costs incurred in connection with
the Initial Public Offering. These costs, together with the underwriters’ discounts and commissions in the Initial Public
Offering, were charged to additional paid-in capital upon completion of the Initial Public Offering.
Redeemable Ordinary Shares
As discussed in Note
1, all of the 30,000,000 Class A ordinary shares sold as parts of the Units in the Initial Public Offering contain a redemption
feature which allows for the redemption of such shares under the Company’s Amended and Restated Memorandum and Articles of
Association. In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security
to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all
of the entity’s equity instruments, are excluded from the provisions of FASB ASC 480. Although the Company has not specified
a maximum redemption threshold, its Amended and Restated Memorandum and Articles of Association provides that in no event will
the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001.
The Company recognizes
changes in redemption value immediately as they occur and will adjust the carrying value of the security at the end of each reporting
period. Increases or decreases in the carrying amount of redeemable Class A ordinary shares shall be affected by charges against
additional paid in capital.
Accordingly, at March
31, 2019 and December 31, 2018, 28,171,931 and 28,619,612, respectively, of 30,000,000 Class A ordinary shares included in the
Units were classified outside of permanent equity.
Private Placement Warrants
Each whole Private
Placement Warrant is exercisable for one whole share of the Company’s Class A ordinary share or one whole Class C ordinary
share at a price of $11.50 per share. A portion of the purchase price of the Private Placement Warrants was added to the proceeds
from the Initial Public Offering to be held in the Trust Account such that at the closing of the Initial Public Offering, $300,000,000
was held in the Trust Account. If the Initial Business Combination is not completed within 24 months from the closing of the Initial
Public Offering, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the
redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire
worthless. The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by
the initial Anchor Investors, Vivoli Holdings, LLC or the BSOF Entities who purchased such warrants or their respective permitted
transferees. See Note 5.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740,
“Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable
to differences between the condensed consolidated financial statements carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
There were no unrecognized
tax benefits as of March 31, 2019 and December 31, 2018. FASB ASC 740 prescribes a recognition threshold and a measurement attribute
for the condensed consolidated financial statements recognition and measurement of tax positions taken or expected to be taken
in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense. No amounts were accrued for the payment of interest and penalties at March 31, 2019 and December 31, 2018. The Company
is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from
its position. The Company has been subject to income tax examinations by major taxing authorities since inception.
There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance
with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in
the Company’s condensed consolidated financial statements.
Net Income (Loss) Per Ordinary Share
Net income (loss)
per ordinary share is computed by dividing net income applicable to ordinary shares by the weighted average number of shares outstanding
for the period. The Company has not considered the effect of the warrants sold in the Initial Public Offering and Private Placement
to purchase an aggregate of 28,171,931 Class A ordinary shares in the calculation of diluted income (loss) per share, since their
inclusion would be anti-dilutive under the treasury stock method. As a result, diluted income (loss) per common share is the same
as basic income (loss) per ordinary share for the period.
The Company’s condensed consolidated statement of operations includes a presentation of net income
(loss) per share for ordinary shares subject to redemption in a manner similar to the two-class method. Net income per ordinary
share, basic and diluted for Class A ordinary shares is calculated by dividing the interest income earned on the trust account,
net of any applicable income tax expense, by the weighted average number of Class A ordinary shares outstanding for the period
from the issuance of such shares through March 31, 2019 and 2018. Net loss per ordinary share, basic and diluted for Class B ordinary
shares is calculated by dividing the net income, less income attributable to Class A ordinary shares, by the weighted average number
of Class B ordinary shares outstanding for the period.
Recent Accounting Pronouncements
The Company’s management does not believe that any recently issued, but not yet effective, accounting
pronouncements, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial
statements.
Subsequent Events
The Company evaluates subsequent events and transactions that occur after the condensed consolidated balance
sheet date for potential recognition or disclosure. Any material events that occur between the condensed consolidated balance sheet
date and the date the condensed consolidated financial statements were issued are disclosed as subsequent events, while the condensed
consolidated financial statements are adjusted to reflect any conditions that existed at the balance sheet date.
NOTE 3. ENTRY INTO STOCK PURCHASE AGREEMENT FOR BUSINESS
COMBINATION
On December 12, 2018, the Company, entered into a Stock Purchase Agreement (the “Stock Purchase
Agreement”) with Rack Holdings L.P., a Delaware limited partnership (“Seller”), and Rack Holdings, Inc., a Delaware
corporation and a direct wholly owned subsidiary of Seller (“Rack Holdings”), collectively known as “Ranpak”,
pursuant to which the Company will acquire all of the issued and outstanding equity interests of Rack Holdings from Seller, on
the terms and subject to the conditions set forth in the Stock Purchase Agreement. The transactions set forth in the Stock Purchase
Agreement will result in a “Business Combination” involving the Company for purposes of the Company’s Amended
and Restated Articles of Incorporation. The Stock Purchase Agreement and the transactions contemplated thereby were unanimously
approved by the Board of Directors of the Company.
Ranpak is the global
leader in fiber-based, environmentally sustainable protective packaging solutions that safeguard products in commerce and industrial
supply chains. Ranpak, founded in 1972, is headquartered in Concord Township, Ohio and has approximately 550 employees.
Consideration
Subject to the terms
and conditions set forth in the Stock Purchase Agreement, the Company has agreed to pay to Seller at the closing of the Business
Combination (“Closing”) $950,000,000 in cash in consideration for the acquisition of Rack Holdings, which amount will
be (i) adjusted by the difference between the net working capital of Rack Holdings and its subsidiaries as of Closing as measured
against normalized level of working capital of $22,000,000 (which could be a downward or upward adjustment), (ii) increased by
the amount of cash of Rack Holdings and its subsidiaries as of Closing and (iii) reduced by the amount of debt and unpaid transaction
expenses of Rack Holdings and its subsidiaries as of Closing. The purchase price paid at Closing will be based on an estimate of
the amount of the foregoing adjustments and will be subject to a customary post-Closing true-up.
Financing for the Business
Combination and for related transaction expenses will consist of (i) $300,000,000 of proceeds from the Company’s Initial
Public Offering on deposit in the trust account (plus any interest income accrued thereon since the Initial Public Offering), net
of any redemptions of the Company’s ordinary shares in connection with the shareholder vote to be held in connection with
the transactions contemplated by the Stock Purchase Agreement, (ii) $150,000,000 of proceeds from the Forward Purchase Agreements
entered into in connection with the Initial Public Offering, (iii) $142,000,000 of proceeds from subscription agreements entered
into in connection with the Business Combination and (iv) up to $650,000,000 of senior secured credit facilities provided by Goldman
Sachs Merchant Banking Division.
Conditions to Closing
The Closing is subject
to certain customary closing conditions, including approval by the Company’s shareholders of the additional equity issuances
relating to the equity financing, the expiration or termination of the applicable waiting periods under the Hart-Scott Rodino Antitrust
Improvements Act of 1976, as amended, and the German Act Against Restraints on Competition, the accuracy of the parties’
respective representations and warranties and compliance with the parties’ respective covenant obligations (each to certain
specified materiality standards), and the absence of a “Material Adverse Effect” on Rack Holdings and its subsidiaries.
Termination
The Stock Purchase
Agreement contains customary termination rights, including (i) by mutual written consent of the parties; (ii) by either party if
(a) the Closing has not occurred on or prior to July 12, 2019, unless such party’s failure to comply in all material respects
with the covenants and agreements contained in the Stock Purchase Agreement causes the failure of the Business Combination to be
consummated by such time, (b) the consummation of the Business Combination is permanently enjoined or prohibited by the terms of
a final, non-appealable governmental order or a statute, rule or regulation, (c) the representations, warranties or covenants of
the other party are breached such that there is a failure of the related closing condition (subject to a 30-day cure period) or
(d) the Company does not obtain the approval of its shareholders upon a vote taken thereon at the Company shareholder meeting;
and (iii) by Seller if (a) the Company’s Board of Directors withdraws its recommendation that shareholders approve the transaction,
(b) the Company shareholder approval is not obtained at the Company’s first call of its shareholder meeting or (c) the Company
fails to consummate the Business Combination on the 10th business day following the satisfaction or waiver of the last condition
to closing (subject to a further 10-business-day cure period).
Representations, Warranties and Covenants
The parties to the
Stock Purchase Agreement have made customary representations, warranties and covenants in the Stock Purchase Agreement, including,
among others, covenants with respect to the conduct of Rack Holdings during the period between execution of the Stock Purchase
Agreement and Closing. Seller is not providing the Company with an indemnity in connection with the Business Combination for inaccuracies
in Seller’s or Rack Holding’s representations or warranties or for breaches of Seller’s or Rack Holding’s
covenant obligations. The Company has purchased a representation and warranty liability insurance policy on customary terms, which
provides limited protection to the Company for inaccuracies in Seller’s and Rack Holding’s representations and warranties
and for certain pre-closing taxes of Rack Holdings and its subsidiaries. The representation and warranty liability insurance policy
is subject to certain significant coverage limits and exclusions and therefore does not provide comprehensive protection to the
Company for these matters.
Consent of Forward Contract Parties
On November 12, 2018,
subsequently amended concurrently with the execution of the Stock Purchase Agreement, the Company entered into a consent (the “FPA
Consent”) with parties to the Forward Purchase Agreements, as amended (the “Forward Purchase Agreements” or “FPAs”),
dated October 5, 2017 and amended on December 15, 2017 and January 5, 2018, that have committed to purchase substantially all of
the Forward Purchase Shares pursuant to which, among other things, the consenting FPA parties consented to the entry into the Stock
Purchase Agreement.
Subscription Agreements
On November 12, 2018,
subsequently amended concurrently with the execution of the Stock Purchase Agreement, the Company entered into Subscription Agreements
(each, a “Subscription Agreement”) with certain equity financing sources (the “Subscribing Parties”) for
the purchase and sale of 14,200,000 shares of the Company’s Class A ordinary shares, par value $0.0001 per share (“Class
A Shares”), or Class C ordinary shares, par value $0.0001 per share (“Class C Shares”), for an aggregate purchase
price of $142,000,000. The closing of the transactions contemplated by the Subscription Agreements will occur immediately prior
to the completion of the Business Combination. The funding of such amounts is subject to customary conditions, including the satisfaction
or waiver of the conditions to Closing set forth in the Stock Purchase Agreement. The Subscription Agreements automatically terminate
upon the termination of the Stock Purchase Agreement or upon the mutual written consent of the Company and the Subscribing Parties.
Voting Agreement
On December 7, 2018,
concurrently with the execution of the Stock Purchase Agreement, the Company and the BSOF Entities entered into an Amended and
Restated Voting Agreement (the “Voting Agreement”), pursuant to which the BSOF Entities, holders of 4,000,000 Class
A Shares, agree to vote any Class A Shares they hold in favor of any shareholder approvals sought by the Company in connection
with the Business Combination and not to exercise any right of redemption in respect of such Class A Shares.
The Voting Agreement
requires the BSOF Entities to obtain prior written consent of the Company before transferring any Class A shares prior to the termination
of the Voting Agreement. The Voting Agreement will automatically terminate upon the first to occur of (i) the completion of the
Business Combination, (ii) the termination of the Stock Purchase Agreement and (iii) prior to the completion of the Business Combination
by the mutual written consent of the Company and the BSOF Entities.
FPA Assignment and Assumption Agreement
Concurrently with the
execution of the Stock Purchase Agreement, Mr. Asali (the “Assignor”) entered into the FPA assignment and assumption
(the “FPA Assignment and Assumption Agreement”) agreement with Gerard Griffin, a Managing Director of the Sponsor,
pursuant to which the Assignor, on the terms and subject to the conditions set forth therein, (i) assigned to Mr. Griffin the right
and obligation to acquire 350,000 Class A Shares and 116,677 warrants to purchase Class A Shares under the terms of the Assignor’s
Forward Purchase Agreement and (ii) sold to Mr. Griffin 87,500 Class B ordinary shares, par value $0.0001 per share, (the “Class
B Shares”) at the same price per share at which the Assignor purchased such Class B Shares from the Company. The assignment
contemplated by the FPA Assignment and Assumption Agreement does not relieve the Assignor of his obligations with respect to the
portion of the Forward Purchase Agreement commitment assigned thereunder. Mr. Griffin agreed to waive any Claim (as defined in
the Forward Purchase Agreement) in or to any distributions by the Company from the Trust Account and agreed not to seek recourse
against the Trust Account for any reason whatsoever. Finally, Mr. Griffin acknowledged and agreed to the transfer restrictions
on the Class B Shares under the FPA pursuant to which the Assignor acquired the Class B Shares from the Company.
Reallocation Agreement
On November 12, 2018,
subsequently amended concurrently with the execution of the Stock Purchase Agreement, the Company entered into a reallocation agreement
(the “Reallocation Agreement”) with the parties to the Forward Purchase Agreements for the Business Combination under
the Forward Purchase Agreements and the Subscription Agreements, pursuant to which the Class B Shares issued and the rights to
acquire warrants to purchase Class A Shares arising under the Forward Purchase Agreements have been reallocated among all equity
financing sources, including two new equity sources, one of whom is a related party, on a pro rata basis on the aggregate amount
of equity financing provided by such equity financing source under the Forward Purchase Agreements and the Subscription Agreements.
The reallocation was effective as of the execution of the Stock Purchase Agreement.
Debt Financing
Concurrently with the
execution of the Stock Purchase Agreement, the Company entered into a debt commitment letter (the “Debt Commitment Letter”)
with Goldman Sachs Lending Partners LLC and certain affiliated investment entities thereof (collectively, the “Lenders”),
pursuant to which the Lenders have committed to provide senior secured credit facilities subject to the conditions set forth in
the Debt Commitment Letter. The aggregate commitment consists of a $450,000,000 First Lien Term Facility, a $45,000,000 Revolving
Facility, a $100,000,000 First Lien Contingency Term Facility and a $100,000,000 Second Lien Contingency Term Facility. The Company
has the ability to bring in additional revolving lenders to provide up to $30,000,000 additional commitments under the Revolving
Facility within fifteen (15) business days after the date of the Debt Commitment Letter. The obligations of the Lenders to provide
debt financing under the Debt Commitment Letter are subject to a number of conditions.
Class B Share Consent
Concurrently with the
execution of the Stock Purchase Agreement, shareholders holding more than two-thirds of the Company’s Class B Shares, entered
into a consent (the “Class B Share Consent”) pursuant to which such shareholders, on behalf of themselves and all other
holders of Class B Shares, waived the anti-dilution protection benefiting the Class B Shares under the terms of the Company’s
Amended and Restated Memorandum and Articles of Association with respect to (i) the Class A Shares and Class C Shares to be issued
pursuant to the Subscription Agreements and (ii) any Class A Shares or Class C Shares to be issued by the Company in connection
with the exchange of any of the Company’s outstanding Private Placement Warrants. As such, assuming no other equity securities
are issued in connection with the Business Combination and assuming no redemption of Class A Shares by the Company’s shareholders,
on the business day following the consummation of the Business Combination, each Class B Share will convert into one Class A Share
or Class C Share as applicable.
As of March 31, 2019
and December 31, 2018, the Company accrued approximately $7,621,000 and $2,586,000, respectively, in professional fees related
to the Business Combination which is included in Professional fees on the Condensed Consolidated Statements of Operations.
Further information regarding
the Business Combination is set forth in (i) the proxy statement/prospectus included on Amendment No. 2 to Form S-4 (File No.
333-230030) filed with the SEC on April 23, 2019 and (ii) the Current Report on Form 8-K (File No. 181232234) filed with the SEC
on December 13, 2018. The proxy statement/prospectus was declared effective by the SEC as of May 2, 2019.
NOTE 4. INITIAL PUBLIC OFFERING
In the Initial Public
Offering, the Company sold 30,000,000 units at a price of $10.00 per unit (the “Units”). The Anchor Investors, Vivoli
Holdings LLC, and the BSOF Entities purchased an aggregate of 8,000,000 warrants at a price of $1.00 per warrant in a private placement
that occurred simultaneously with the completion of the Initial Public Offering. See Note 5.
Each Unit consists
of one of the Company’s Class A ordinary shares, $0.0001 par value, and one-half of one warrant (each, a “Warrant”
and, collectively, the “Warrants”). Each whole Warrant entitles the holder to purchase one Class A ordinary share at
a price of $11.50 per share. No fractional shares will be issued upon separation of the Units and only whole Warrants will trade.
Each Warrant will become exercisable on the later of 30 days after the completion of the Company’s Initial Business Combination
or 12 months from the closing of the Initial Public Offering and will expire five years after the completion of the Company’s
Initial Business Combination or earlier upon redemption or liquidation. Once the Warrants become exercisable, the Company may redeem
the outstanding Warrants in whole and not in part at a price of $0.01 per Warrant upon a minimum of 30 days’ prior written
notice of redemption, if and only if the last sale price of the Company’s Class A ordinary shares equals or exceeds $18.00
per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the
Company sent the notice of redemption to the Warrant holders.
The Company paid an
underwriting discount of 2.0% of the per Unit offering price to the underwriters at the closing of the Initial Public Offering,
with an additional fee (the “Deferred Discount”) of 3.5% of the gross offering proceeds payable upon the Company’s
completion of an Initial Business Combination. The Deferred Discount will become payable to the underwriters from the amounts held
in the Trust Account solely in the event the Company completes its Initial Business Combination.
NOTE 5. PRIVATE PLACEMENT
The Anchor Investors,
Vivoli Holdings LLC, and the BSOF Entities, purchased an aggregate of 8,000,000 Private Placement Warrants at $1.00 per warrant
($8,000,000 in aggregate) in a private placement that closed simultaneously with the closing of the Initial Public Offering. Each
Private Placement Warrant is exercisable to purchase one Class A ordinary share or Class C ordinary share at $11.50 per share.
If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire
worthless.
Subsequently, on March
27, 2019, the Company entered into a warrant exchange agreement (the “Warrant Exchange Agreement”) with certain holders
(the “Investors”) of the Company’s Private Placement Warrants to purchase Class A shares, par value $0.0001 per
share, of the Company, which were issued to such Investors on the date of the Company’s Initial Public Offering pursuant
to private placement agreements. Under the terms of the Warrant Exchange Agreement, the Private Placement Warrants held by the
Investors will be deemed automatically canceled in full and in consideration therefor, the Company will issue to each Investor
on a private placement basis, Class A Shares or Class C shares, par value $0.0001 per share, of the Company, based upon an exchange
ratio of 10 Private Placement Warrants for one Class A Share or Class C Share, as applicable (the “Warrant Exchange”).
The Investors collectively hold 7,429,256 Private Placement Warrants (out of a total of 8,000,000 outstanding
Private Placement Warrants), which will be cancelled in exchange for an aggregate 742,926 Class A shares or Class C shares to be
issued pursuant to the Warrant Exchange Agreement. The closing of the Warrant Exchange will occur immediately prior to, and subject
to, the closing of the Business Combination.
NOTE 6. RELATED PARTY TRANSACTIONS
Founder Shares
On July 18, 2017, pursuant to a securities subscription agreement (the “Securities Subscription
Agreement”) the Company issued 8,625,000 shares of Class B ordinary shares (the “Founder Shares”) to the Sponsor
in exchange for a capital contribution of $25,000. This number included an aggregate of up to 1,125,000 shares that were subject
to forfeiture as the over-allotment option was not exercised by the underwriters (Note 7). In October 2017, the Company issued
3,750,000 Founder Shares to the Anchor Investors, for $0.01 per share in connection with the Forward Purchase Agreements prior
to the offering. In January 2018, the Sponsor transferred 240,000 Founder Shares to the Company’s independent directors at
their original purchase price. Subsequently 60,000 of the 240,000 Founder Shares were forfeited back to the Sponsor due to the
resignation of one of the Company’s directors in May 2018. In January 2018, the Sponsor transferred 525,000 Founder Shares
to the BSOF Entities. In March 2018, the Underwriters’ over-allotment option expired and as a result the Sponsor forfeited
1,125,000 Class B ordinary shares. This forfeiture is reflected in the accompanying condensed consolidated statement of changes
in shareholders’ equity as of March 31, 2019. In October 2018, the Sponsor sold 100,000 Founder Shares to the Company’s
Chief Financial Officer and 423,000 Founder Shares to certain employees of the Sponsor at 0.006 per share. As of March 31, 2019,
the Sponsor owned 6,272,000 Class B ordinary shares.
The Founder Shares
will automatically convert into Class A ordinary shares (or Class C ordinary shares, at the election of the holder) upon the consummation
of an Initial Business Combination at a ratio such that the number of Class A ordinary shares and Class C ordinary shares issuable
upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the
total number of Public Shares, plus (ii) the sum of (a) the total number of Class A ordinary shares and Class C ordinary
shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed
issued, by the Company in connection with or in relation to the consummation of the Initial Business Combination (including forward
purchase shares, but not forward purchase warrants), excluding any Class A ordinary shares or equity-linked securities exercisable
for or convertible into Class A ordinary shares issued, or to be issued, to any seller in the Initial Business Combination and
any Private Placement Warrants issued to the Sponsor upon conversion of Working Capital Loans, minus (b) the number of Public Shares
redeemed by Public Shareholders in connection with the Initial Business Combination.
The Sponsor, its controlled
affiliates and any director, officer or employee of the Sponsor who is also serving in any such role or position at the Company,
including Mr. Asali (each, a “sponsor-affiliate”
provided
that such term does not refer to any of the Company’s
non-executive directors), have agreed not to transfer, assign or sell any of their Founder Shares and any Class A ordinary shares
or Class C ordinary shares issued upon conversion thereof until the earlier to occur of: (a) the third anniversary after the completion
of the Initial Business Combination or (b) the waiver of such restrictions on transfer by Anchor Investors representing over 50.0%
of the Forward Purchase Shares (except to certain permitted transferees and subject to certain exceptions). The initial shareholders
(other than the Sponsor, its controlled affiliates or any sponsor-affiliate) have agreed not to transfer, assign or sell any of
their Founder Shares and any Class A ordinary shares or Class C ordinary shares issued upon conversion thereof until the earlier
to occur of: (i) one year after the completion of the Initial Business Combination or (ii) the date on which the Company completes
a liquidation, merger, share exchange or other similar transaction after the Initial Business Combination that results in all of
the Company’s ordinary shareholders having the right to exchange their ordinary shares for cash, securities or other property
(except to certain permitted transferees and subject to certain exceptions). Any permitted transferees will be subject to the same
restrictions and other agreements of the initial shareholders with respect to any Founder Shares. Notwithstanding the foregoing,
if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150
days after the Initial Business Combination, the Founder Shares held by the initial shareholders (other than the Sponsor’s
Founder Shares that are subject to the earnout condition in the Securities Subscription Agreement, between the Company and the
Sponsor, as amended) will be released from the lock-up.
In December 2017, the
Company amended the Securities Subscription Agreement dated July 18, 2017 to include an “earnout” clause which requires
the forfeiture of certain Founder Shares by the Sponsor under certain circumstances as described in the agreement.
See also “Reallocation
Agreement” in Note 3.
Administrative Service Fee
The Company has agreed,
commencing on the effective date of the Initial Public Offering through the earlier of the Company’s consummation of an Initial
Business Combination and its liquidation, to pay its Sponsor a monthly fee of $10,000 for office space, and secretarial
and administrative services. The Company paid the Sponsor $30,000 and $20,000, respectively, for the three months ended March 31,
2019 and 2018, and is included in Administration fee – related party on the Condensed Consolidated Statements of Operations.
Promissory Note - Sponsor
In July 2017, the Sponsor
agreed to loan the Company up to $200,000 for the payment of costs related to the Initial Public Offering pursuant to a promissory
note, under which the Company borrowed an aggregate of $148,844 for the payment of such cost. The loan was non-interest bearing,
unsecured and was due on the earlier of March 31, 2018 or the closing of the Initial Public Offering. As of March 31, 2019, the
Company had repaid all outstanding borrowings under the promissory note from the proceeds of the Initial Public Offering not placed
in the Trust Account.
Promissory Note - Working Capital
In order to finance
transaction costs in connection with an Initial Business Combination, an affiliate of the Sponsor may, but is not obligated to,
loan the Company funds as may be required (“Working Capital Loans”). If the Company completes an Initial Business Combination,
the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise,
the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that an Initial Business
Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital
Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans, other than the interest on such
proceeds that may be released for working capital purposes. The Working Capital Loans would either be repaid upon consummation
of an Initial Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital
Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants
would be identical to the Private Placement Warrants.
Concurrently with the execution of the Stock Purchase Agreement (see Note 3), the Company issued a $4,000,000
promissory note to certain equity financing sources for the Business Combination under the Forward Purchase Agreements and the
Subscription Agreements in exchange for $4,000,000 of financing. The note is non-interest bearing and payable on the earliest of
(a) the date on which a Business Combination is consummated, (b) 30 days after the date on which the Stock Purchase Agreement is
terminated in accordance with its terms, and (c) the date that is nine months after the date of the note, December 12, 2018. The
proceeds from the note shall be used for the purpose of paying working capital expenses, including expenses incurred in connection
with the Initial Business Combination. At March 31, 2019, the note totaled $4,000,000 and is included in the liability section
on the Condensed Consolidated Balance Sheet.
NOTE 7. COMMITMENTS & CONTINGENCIES
Registration Rights
The holders of the
Founder Shares and Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any
Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion
of Working Capital Loans) will be entitled to registration rights pursuant to the registration rights agreement entered into concurrently
with the closing of the Initial Public Offering. The holders of these securities are entitled to make up to three demands, excluding
short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the consummation of a Business Combination. However, the registration
rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become
effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the
filing of any such registration statements.
Forward Purchase Agreement
In October 2017, the
Company entered into Forward Purchase Agreements pursuant to which certain investors agreed to purchase an aggregate of 15,000,000
Class A ordinary shares and Class C ordinary shares (collectively, the “Forward Purchase Shares”), plus an aggregate
of 5,000,000 redeemable warrants (the “Forward Purchase Warrants”), for an aggregate purchase price of $10.00
per Class A ordinary share or Class C ordinary share, as applicable, in a Private Placement to occur concurrently with the closing
of the Initial Business Combination. In connection with these agreements, the Company issued to such investors an aggregate of
3,750,000 Founder Shares for $0.01 per share and received gross proceeds of $37,500. The Founder Shares issued to such investors
are subject to similar contractual conditions and restrictions as the Founder Shares issued to the Sponsor. The Anchor Investors
will have redemption rights with respect to any Public Shares they own. The Forward Purchase Agreements also provide that the investors
are entitled to a right of first refusal with respect to any proposed issuance of additional equity or equity-linked securities
(including Working Capital Loans that are convertible into Private Placement Warrants) by the Company for capital raising purposes,
or if the Company offers or seeks commitments for any equity or equity-linked securities to backstop any such capital raise, in
connection with the closing of the Initial Business Combination (other than the Units the Company offered in the Initial Public
Offering their component Public Shares and Public Warrants, the Founder Shares (and Class A ordinary shares and/or Class C ordinary
shares for which such Founder Shares are convertible), the Forward Purchase Shares, the Forward Purchase Warrant and the Private
Placement Warrants) and registration rights with respect to the (A) Forward Purchase Shares, Forward Purchase Warrants, and Class
A ordinary shares and Class C ordinary shares underlying their Forward Purchase Warrants and their Founder Shares, and (B) any
other Class A ordinary shares or warrants acquired by the Anchor Investors, including any time after we complete our Initial Business
Combination. The Class C ordinary shares have identical terms as the Class A ordinary shares, except the Class C ordinary shares
do not grant their holders any voting rights. The Amended and Restated Memorandum and Articles of Association provide that the
Class C ordinary shares may be converted into Class A ordinary shares on a one-for-one basis at the election of the holder with
65 days written notice or upon the transfer of such Class C ordinary shares to a non-affiliate of the holder.
See also “Consent
of Forward Contract Parties,” “FPA Assignment and Assumption Agreement,” “Reallocation Agreement,”
and “Class B Share Consent” in Note 3.
Deferred Legal Fees
The Company is obligated
to pay deferred legal fees of $800,000 upon the consummation of a Business Combination for services in connection with the Initial
Public Offering. If no Business Combination is consummated, the Company will not be obligated to pay such fee.
Debt Commitment Letter
See also “Debt
Commitment Letter” in Note 3.
Subscription Agreements
See also “Subscriptions
Agreement” in Note 3.
NOTE 8. SHAREHOLDERS’ EQUITY
Class A Ordinary
Shares
— The Company is authorized to issue 200,000,000 shares of Class A ordinary shares with a par value of $0.0001
per share. Holders of the Company’s Class A ordinary shares are entitled to one vote for each share. As of March 31, 2019,
there were 30,000,000 shares of Class A, of which 28,171,931 shares were classified outside of permanent equity. As of December
31, 2018, there were 30,000,000 shares of Class A, of which 28,619,612 shares were classified outside of permanent equity.
Class B Ordinary
Shares
— The Company is authorized to issue 25,000,000 shares of Class B ordinary shares with a par value of $0.0001
per share. Of these shares, 2,250,000 shares are subject to forfeiture upon satisfaction of certain conditions as defined in the
Securities Subscription Agreement. Holders of the Company’s Class B ordinary shares are entitled to one vote for each share.
The Company initially issued 8,625,000 Class B ordinary shares on July 18, 2017. This number included an aggregate of 1,125,000
ordinary shares that were forfeited since the over-allotment option in the Initial Public Offering was not exercised by the underwriters.
In connection with these Forward Purchase Agreements discussed in Note 7, the Company issued to such investors an aggregate of
3,750,000 Founder Shares for $0.01 per share and received gross proceeds of $37,500.
As of March 31, 2019
and December 31, 2018, there were 11,250,000 Class B ordinary shares issued and outstanding. This number excludes an aggregate
of 1,125,000 ordinary shares, which were forfeited in March 2018 as the over-allotment option was not exercised by the underwriters.
Class C Ordinary
Shares
— The Company is authorized to issue 200,000,000 shares of Class C ordinary shares with a par value of $0.0001
per share. Following the consummation of the Company’s Initial Business Combination, each issued Class C ordinary share shall
be converted into one Class A ordinary share, subject to any necessary adjustments for any share splits, capitalizations, consolidations
or similar transactions occurring in respect of the Class A ordinary shares or the Class C ordinary shares, (i) upon receipt by
the Company of 65 days’ notice in writing from the registered holder of such Class C ordinary share to convert such Class
C ordinary share, or (ii) automatically upon the transfer by the registered holder of such Class C ordinary share, whether or not
for value, to a third party, except for transfers to a nominee or “affiliate” (as such term is defined in the Securities
Exchange Act of 1934, as amended) of such holder in a transfer that will not result in a change in beneficial ownership or to a
person that already holds Class A ordinary shares. At March 31, 2019 and December 31, 2018, there are no Class C ordinary shares
issued or outstanding.
Holders of Class A
ordinary shares and Class B ordinary shares will vote together as a single class on all matters submitted to a vote of shareholders
except as required by law. The holders of Class C ordinary shares will not have the right to vote in general meetings of the Company.
Preference Shares
— The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share. At March 31, 2019
and December 31, 2018, there are no preference shares issued or outstanding.
Warrants
—
Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation
of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a)
30 days after the completion of an Initial Business Combination or (b) 12 months from the closing of the Initial Public Offering;
provided in each case that the Company has an effective registration statement under the Securities Act covering the Class A ordinary
shares issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits
holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the
Securities Act). The Company has agreed that as soon as practicable, but in no event later than 30 business days, after the closing
of the Initial Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the
registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the Public Warrants. The Company
will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement,
and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the
warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not
effective by the sixtieth (60th) day after the closing of the Initial Business Combination, warrant holders may, until such time
as there is an effective registration statement and during any period when the Company will have failed to maintain an effective
registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act or another exemption. The Public Warrants will expire five years after the completion of the Initial Business Combination or
earlier upon redemption or liquidation of the Company.
The Private Placement
Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private
Placement Warrants and the Class A ordinary shares and Class C ordinary shares issuable upon exercise of the Private Placement
Warrants will not be transferable, assignable or salable until 30 days after the completion of an Initial Business Combination,
subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are
held by the initial Anchor Investors who purchased such warrants or their permitted transferees. If the Private Placement Warrants
are held by someone other than such Anchor Investors or their permitted transferees, the Private Placement Warrants will be redeemable
by the Company and exercisable by such holders on the same basis as the Public Warrants. See Note 5.
The Company may call
the Public Warrants for redemption (except with respect to the Private Placement Warrants):
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●
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in whole and not in part;
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|
●
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at a price of $0.01 per warrant;
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|
●
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upon a minimum of 30 days’ prior written notice of redemption; and
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●
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if, and only if, the last reported closing price of the public shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
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If the Company calls
the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants
to do so on a “cashless basis,” as described in the warrant agreement.
The exercise price
and number of Class A ordinary shares or Class C ordinary shares, as applicable, issuable upon exercise of the warrants may be
adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation.
However, the warrants will not be adjusted for issuance of Class A ordinary shares or Class C ordinary shares at a price below
its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants upon exercise. If the
Company is unable to complete an Initial Business Combination within the Combination Period and the Company liquidates the funds
held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they
receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly,
the warrants may expire worthless.
On March 28, 2019,
the Company announced that its Board of Directors had approved a warrant repurchase program, authorizing the Company to repurchase
Public Warrants. The Board of Directors authorized an aggregate expenditure of up to $10 million for this program. Pursuant
to the approved repurchase plan, repurchases may be made by the Company from time to time in open-market or privately-negotiated
transactions as permitted by securities laws and other legal requirements, and subject to market conditions and other factors.
Under the repurchase program, there is no time limit for repurchases, nor is there a minimum number of Public Warrants that the
Company intends to repurchase. Public Warrants that are repurchased by the Company will be cancelled and retired. This repurchase
program may be suspended or discontinued at any time without prior notice.
NOTE 9. TRUST ACCOUNT AND FAIR VALUE MEASUREMENTS
The Company classifies
its U.S. Treasury and equivalent securities as held-to-maturity in accordance with ASC 320 “Investments – Debt and
Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold
until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying condensed consolidated
balance sheets and adjusted for the amortization or accretion of premiums or discounts. The Trust also maintains a cash account
totaling $4,059 as of March 31, 2019. At March 31, 2019, cash and marketable securities held in the Trust Account totaled $306,893,588
and is included in the asset section on the condensed consolidated balance sheets.
The gross holding gains
and fair value of held-to-maturity securities at March 31, 2019 are as follows:
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Held-To-Maturity
|
|
Carrying Value at
March 31,
2019
|
|
|
Gross Unrealized
Holding Loss
|
|
|
Quoted prices in Active Markets (Level 1)
|
|
March 31, 2019
|
|
U.S. Treasury Securities (Mature on 4/18/2019)
|
|
$
|
306,889,529
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|
|
$
|
(9,620
|
)
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|
$
|
306,879,909
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