ENTRY INTO STOCK PURCHASE AGREEMENT FOR BUSINESS COMBINATION | 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 “Charter”). 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 ordinary shares, par value $0.0001 per share (“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 (“Charter”) 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. On January 24, 2019, the Company entered into an amendment to the Stock Purchase Agreement, pursuant to which, the closing cash consideration is payable in immediately available funds as follows: (x) €140,000,000 in Euros (which payment will be credited against the closing cash consideration in an amount equal to $160,825,000 (the “Euro Payment Credit”) based on an agreed currency exchange ratio of 1.00:1.14875 EUR:USD) and (y) an amount in U.S. dollars equal to the closing cash consideration less the Euro Payment Credit. Other than as specifically discussed, this Annual Report does not assume the closing of the Business Combination. As of December 31, 2018, the Company accrued $2,585,553 in professional fees related to the Business Combination and is included in Professional fees on the Consolidated Statements of Operations. |