As filed with the Securities and Exchange Commission on
November 5, 2014
Registration No. 333-198988
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
UNDER THE SECURITIES ACT OF 1933
QUINPARIO ACQUISITION CORP. 2
Delaware |
6770 |
47-1347291 |
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(State or other
jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
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c/o Quinpario Partners LLC
12935 N. Forty Drive, Suite 201
St. Louis, MO 63141
(314) 548-6200
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
12935 N. Forty Drive, Suite 201
St. Louis, MO 63141
(314) 548-6200
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Jeffry N. Quinn, Chairman of the Board
Quinpario Acquisition Corp. 2
c/o Quinpario Partners LLC
12935 N. Forty Drive, Suite 201
St. Louis, MO 63141
(314) 548-6200
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Quinpario Acquisition Corp. 2
c/o Quinpario Partners LLC
12935 N. Forty Drive, Suite 201
St. Louis, MO 63141
(314) 548-6200
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
David Alan
Miller, Esq. Jeffrey M. Gallant, Esq. Graubard Miller The Chrysler Building 405 Lexington Avenue New York, New York 10174 (212) 818-8800 (212) 818-8881 – Facsimile |
Christian O. Nagler, Esq. Kirkland & Ellis LLP 601 Lexington Avenue New York, NY 10022 (212) 446-4800 |
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Approximate date of
commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following
box. o
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. o
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer o |
Accelerated filer o |
Non-accelerated filer x (Do not check if a smaller reporting company) |
Smaller reporting company o |
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CALCULATION OF REGISTRATION FEE
| Title of each Class of Security being registered |
Amount being Registered |
Proposed Maximum Offering Price Per Security(1) |
Proposed Maximum Aggregate Offering Price(1) |
Amount of Registration Fee |
||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Units, each
consisting of one share of Common Stock, $.0001 par value, and one Warrant |
40,250,000 Units(2) |
$ | 10.00 | $ | 402,500,000 | $ | 51,842.00 | |||||||||||
Shares of
Common Stock, $.0001 par value, included as part of the Units |
40,250,000 Shares(2) |
— | — | — | (3) | |||||||||||||
Warrants
included as part of the Units(4) |
40,250,000 Warrants(2) |
— | — | — | (3) | |||||||||||||
Total |
$ | 402,500,000 | $ | 51,842.00 | (5) | |||||||||||||
(1) |
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o). |
(2) |
Includes 5,250,000 Units and 5,250,000 shares of Common Stock and 5,250,000 Warrants underlying such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover over-allotments, if any. |
(3) |
No fee pursuant to Rule 457(g). |
(4) |
Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. |
(5) |
Filing fee previously paid. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not
complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 5,
2014
PRELIMINARY PROSPECTUS
PRELIMINARY PROSPECTUS
Quinpario Acquisition Corp. 2
$350,000,000
35,000,000 Units
35,000,000 Units
Quinpario Acquisition Corp. 2 is a newly-organized blank check
company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other
similar business combination, which we refer to throughout this prospectus as our initial business combination, with one or more businesses or
entities, which we refer to throughout this prospectus as a target business. Our efforts to identify a target business will not be limited to a
particular industry or geographic region, although we intend to focus our search for target businesses that operate in the specialty chemicals and
performance materials industries. We do not have any specific business combination under consideration and we have not (nor has anyone on our behalf),
directly or indirectly, contacted any prospective target business or had any discussions, formal or otherwise, with respect to such a
transaction.
This is an initial public offering of our securities. Each unit
has an offering price of $10.00 and consists of one share of our common stock and one warrant. Each warrant entitles the holder thereof to purchase
one-half of one share of our common stock at a price of $5.75 per half share, subject to adjustment as described in this prospectus. Warrants may be
exercised only for a whole number of shares of common stock. No fractional shares will be issued upon exercise of the warrants. Each warrant will
become exercisable on the later of 30 days after the completion of an initial business combination or 12 months from the date of this prospectus, and
will expire five years after the completion of an initial business combination, or earlier upon redemption.
If we are unable to consummate a business combination within 24
months from the closing of this offering, we will redeem 100% of the public shares using the funds in our trust account described
below.
We have granted the underwriters a 45-day option to purchase up to
5,250,000 units (over and above the 35,000,000 units referred to above) solely to cover over-allotments, if any.
Our sponsor and its designees have committed to purchase from us
an aggregate of 18,000,000 warrants, or “private warrants,” at $0.50 per warrant (for a total purchase price of $9,000,000). These purchases
will take place on a private placement basis simultaneously with the consummation of this offering. Each private warrant is exercisable to purchase
one-half of one share of our common stock at $5.75 per half share. Our sponsor and its designees have also agreed that if the over-allotment option is
exercised by the underwriters, they will purchase from us at a price of $0.50 per warrant an additional number of private warrants (up to a maximum of
2,100,000 private warrants) pro rata with the amount of the over-allotment option exercised so that at least $10.00 per share sold to the public in
this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These additional private warrants will be
purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option.
All of the proceeds we receive from this private placement will be placed in the trust account.
There is presently no public market for our units, shares of
common stock or warrants. We intend to apply to have our units listed on the Nasdaq Capital Market, or Nasdaq, under the symbol
“QPACU” on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on
Nasdaq. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless
Deutsche Bank Securities Inc. informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the
Securities and Exchange Commission, or the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and
issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, the common
stock and warrants will be traded on Nasdaq under the symbols “QPAC” and “QPACW,” respectively. We cannot assure you
that our securities will continue to be listed on Nasdaq after this offering.
We are an “emerging growth company” as defined in the
Jumpstart Our Business Startups Act of 2012 and will therefore be subject to reduced public company reporting requirements.
Investing in our securities involves a high degree of risk. See
“Risk Factors” beginning on page 19 of this prospectus for a discussion of information that should be considered in connection with an
investment in our securities. Investors will not be entitled to protections normally offered to investors in Rule 419 blank check
offerings.
Neither the SEC nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal
offense.
| Price to Public |
Underwriting Discounts and Commissions(1) |
Proceeds, Before Expenses, to us |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Per Unit
|
$ | 10.00 | $ | 0.55 | $ | 9.45 | ||||||||
Total
|
$ | 350,000,000 | $ | 19,250,000 | $ | 330,750,000 | ||||||||
(1) |
Includes $0.35 per unit, or $12.25 million in the aggregate (or approximately $14.10 million in the aggregate if the underwriters’ overallotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in our trust account. These funds will be released only on completion of our initial business combination, as described in this prospectus. Please see the section titled “Underwriting” for further information relating to the underwriting arrangements agreed to between us and the underwriters in this offering. |
Upon consummation of the offering, $10.00 per unit sold to the public in this offering (whether or not the over-allotment option has been
exercised in full or part) will be deposited into a United States-based account maintained by Continental Stock Transfer & Trust Company, acting as
trustee. Except as described in this prospectus, these funds will not be released to us until the earlier of the completion of our initial business
combination and our redemption of the shares of common stock sold in this offering upon our failure to consummate a business combination within the
required time period.
The underwriters are offering the units on a firm commitment
basis. The underwriters expect to deliver the units to purchasers on or about __________, 2014.
| Deutsche Bank Securities |
Cantor Fitzgerald & Co. | |||||
|---|---|---|---|---|---|---|
_______________, 2014
You should rely only on the information contained in this
prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell securities in any
jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any
date other than the date on the front of this prospectus.
TABLE OF CONTENTS
| Page |
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|---|---|---|---|---|---|---|
SUMMARY
|
1 | |||||
SUMMARY
FINANCIAL DATA |
18 | |||||
RISK FACTORS
|
19 | |||||
CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS |
42 | |||||
USE OF
PROCEEDS |
43 | |||||
DIVIDEND
POLICY |
47 | |||||
DILUTION
|
48 | |||||
CAPITALIZATION
|
50 | |||||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
51 | |||||
PROPOSED
BUSINESS |
56 | |||||
MANAGEMENT
|
73 | |||||
PRINCIPAL
STOCKHOLDERS |
85 | |||||
CERTAIN
TRANSACTIONS |
88 | |||||
DESCRIPTION OF
SECURITIES |
91 | |||||
SHARES
ELIGIBLE FOR FUTURE SALE |
96 | |||||
MATERIAL U.S.
FEDERAL INCOME TAX CONSIDERATIONS |
98 | |||||
UNDERWRITING
|
106 | |||||
LEGAL MATTERS
|
113 | |||||
EXPERTS
|
113 | |||||
WHERE YOU CAN
FIND ADDITIONAL INFORMATION |
113 | |||||
INDEX TO
FINANCIAL STATEMENTS |
F-1 | |||||
i
This summary only highlights the more
detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider
in making an investment decision. You should read this entire prospectus carefully, including the information under “Risk Factors” and our
financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this
prospectus:
• |
references in this prospectus to “we,” “us” or “our company” refer to Quinpario Acquisition Corp. 2; |
• |
references in this prospectus to “insider shares” refer to the 10,062,500 shares of common stock issued prior to this offering, which include up to an aggregate of 1,312,500 shares of common stock subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part; |
• |
references in this prospectus to “initial stockholders” refer to the holders of the insider shares; |
• |
references in this prospectus to our “management” or our “management team” refer to our officers and directors; |
• |
references in this prospectus to our “public shares” and “public warrants” refer to shares of our common stock and warrants which are being sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and references to “public stockholders” and “public warrantholders” refer to the holders of our public shares and public warrants, including our sponsor and management team to the extent they purchase public shares or public warrants, provided that their status as “public stockholders” and “public warrantholders” shall exist only with respect to such public shares or public warrants; |
• |
references to “private warrants” refer to the warrants we are selling privately to our sponsor and its designees upon consummation of this offering; |
• |
references in this prospectus to our “sponsor” refer to Quinpario Partners 2, LLC; and |
• |
except as specifically provided otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. |
You should rely only on the
information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We
are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted.
General
We are a blank check company formed
under the laws of the State of Delaware on July 15, 2014. We were formed for the purpose of entering into a merger, share exchange, asset acquisition,
stock purchase, recapitalization, reorganization or other similar business combination, which we refer to throughout this prospectus as our initial
business combination, with one or more businesses or entities, which we refer to throughout this prospectus as a target business. To date, our efforts
have been limited to organizational activities as well as activities related to this offering. We have not selected any target business on which to
concentrate our search for our initial business combination.
Our efforts to identify a target
business will not be limited to a particular industry or geographic region, although we intend to focus our search for target businesses that operate
in the specialty chemicals and performance materials industries. Our management team
1
intends to focus on acquiring companies that will increase stockholder value by growing revenue (through organic growth and acquisitions) and improving the efficiency of business operations of the acquired company. We intend to focus primarily on acquiring companies with an enterprise value between $700 million and $2 billion. We believe that the acquisition and operation of an established business will provide a foundation from which to build a diversified business platform.
We will either (1) seek stockholder
approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of
whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust
account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby
avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of
taxes payable), in each case subject to the limitations described herein. The decision as to whether we will seek stockholder approval of our proposed
business combination or allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our 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 us to seek stockholder
approval. Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial business
combinations and related conversions of public shares for cash upon consummation of such initial business combinations even when a vote is not required
by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders to sell their shares pursuant to the tender offer rules
of the Securities and Exchange Commission, or SEC. In that case, we will file tender offer documents with the SEC which will contain substantially the
same financial and other information about the initial business combination as is required under the SEC’s proxy rules. We will consummate our
initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder
approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination.
We will have until 24 months from the
closing of this offering to consummate our initial business combination. If we are unable to consummate our initial business combination within such
time period, we will, as promptly as possible but not more than ten business days thereafter, redeem 100% of our outstanding public shares for a pro
rata portion of the funds held in the trust account and then seek to dissolve and liquidate. In such event, our warrants will expire worthless. We
expect the per share redemption price to be $10.00 per share of common stock (regardless of whether the underwriters exercise their over-allotment
option in full or in part), without taking into account any interest earned on such funds. However, we may not be able to distribute such amounts as a
result of claims of creditors which may take priority over the claims of our public stockholders.
Pursuant to Nasdaq listing rules, our
initial business combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in
the trust account at the time of the execution of a definitive agreement for such business combination, although this may entail simultaneous
acquisitions of several target businesses. The fair market value of the target will be determined by our board of directors based upon one or more
standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The target
business or businesses that we acquire may have a collective fair market value substantially in excess of 80% of the trust account
balance.
We currently anticipate structuring our
initial business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our
initial business combination where we merge directly with the target business or where we
2
acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of trust account balance test.
Management Operating and Investing
Experience
Over the course of their careers, the
members of our management team have developed a broad international network of contacts and corporate relationships we believe will serve as a useful
source of investment opportunities. We will seek to capitalize on the global network and investing and operating experience of our management team to
identify, acquire and operate one or more businesses in the specialty chemicals and performance materials industries within or outside of the United
States, although we may pursue a business combination outside these industries. In the event we elect to pursue an investment outside of these
industries, our management’s expertise related to that industry may not be directly applicable to its evaluation or operation, and the information
contained herein regarding these industries might not be relevant to an understanding of the business that we elect to acquire.
Our executive officers all have deep
knowledge of the chemicals and performance materials industries, experience in managing global businesses, and experience operating in a public-company
environment. Moreover, they have experience with mergers and acquisitions, including business and financial analysis, negotiations, structuring and
execution.
A majority of our management team
served as executive officers and/or directors of Quinpario Acquisition Corp., or Quinpario 1, a former blank check company which raised $172.5
million in its initial public offering in August 2013 and completed its initial business combination in June 2014. We believe that
potential sellers of target businesses will view the fact that our management team has successfully closed a business combination with a vehicle
similar to our company as a positive factor in considering whether or not to enter into a business combination with us. However, past performance by
our management team is not a guarantee of success with respect to any business combination we may consummate.
A majority of our executive
officers are also partners in our sponsor and Quinpario Partners LLC, a privately owned investment and operating company founded by our Chairman of the
Board, Jeffry N. Quinn, and focused on the specialty chemicals and performance materials sector. Quinpario Partners LLC is also our sponsor’s
managing member. Mr. Quinn and his partners formed Quinpario Partners LLC after leaving Solutia Inc. (formerly NYSE: SOA), a global specialty chemical
and performance materials company, following its sale to Eastman Chemical Company (NYSE: EMN). Mr. Quinn was Solutia’s Chairman, President and
Chief Executive Officer, and our three other managers were also senior executives of Solutia.
3
All have corporate management experience, extensive operational expertise and significant transactional experience.
We believe our management team has the
skills and experience to identify, evaluate and consummate a business combination and is positioned to assist businesses we acquire. However, there is
no assurance that we will complete an initial business combination nor is there any guarantee that such an initial business combination will be
successful. The members of our management team are not required to devote any specific amount of time to our business (although we expect
them to devote a reasonable amount of their time to our business) and are concurrently involved with other businesses. There is no guarantee that
our current officers and directors will continue in their respective roles, or in any other role, after our initial business combination, and their
expertise may only be of benefit to us until our initial business combination is completed, if at all.
If any of our officers or directors
becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary
or contractual obligations, he may be required to present such business combination opportunity to such entity prior to presenting such business
combination opportunity to us. See the section titled “Management — Conflicts of Interest” for complete details on the
pre-existing fiduciary duties or contractual obligations of our management team.
Emerging Growth Company Status
We are an emerging growth company as
defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and will remain such for up to five years. However, if our non-convertible
debt issued within a three-year period or our total revenues exceed $1 billion or the market value of our shares of common stock that are held by
non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth
company as of the following fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the
extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or
revised accounting standards.
Private Placements
In September 2014, our sponsor purchased
an aggregate of 10,062,500 shares of our common stock, which we refer to throughout this prospectus as the “insider shares,” for an aggregate
purchase price of $25,000, or approximately $0.002 per share. The managing member of our sponsor is Quinpario Partners LLC, and the managing member of
Quinpario Partners LLC is our Chairman of the Board, Jeffry N. Quinn. Our sponsor subsequently transferred a portion of its insider shares to members
of our management team. The insider shares held by our initial stockholders, which include our sponsor and management team, includes an aggregate of up
to 1,312,500 shares subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that
our initial stockholders will collectively own 20.0% of our issued and outstanding shares after this offering (assuming they do not purchase units in
this offering). Neither our sponsor nor any member of our management team has indicated any intention to purchase units in this
offering.
The insider shares are identical to the
shares of common stock included in the units being sold in this offering. However, the holders have entered into written agreements with us (A)
to vote the insider shares in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our amended and
restated certificate of incorporation with respect to our pre-business combination activities prior to the consummation of such a business combination
unless we provide dissenting public stockholders with the opportunity
4
to convert their public shares in connection with any such vote, (C) not to convert any shares (including the insider shares) into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination (or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our amended and restated certificate of incorporation relating to stockholders’ rights or pre-business combination activity and (D) that the insider shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. Additionally, the holders have agreed not to transfer, assign or sell any of the insider shares (except to certain permitted transferees) until (1) with respect to 20% of the insider shares, the consummation of our initial business combination and (2) with respect to the remaining 80% of the insider shares, the earlier of one year after the date of the consummation of our initial business combination or if after 150 days after our initial business combination, the closing price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30 trading day period. Notwithstanding the foregoing, these transfer restrictions will be removed earlier if, after our initial business combination, we consummate a subsequent (i) liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property or (ii) consolidation, merger or other change in the majority of our management team.
In addition, our sponsor has committed
that it and its designees will purchase an aggregate of 18,000,000 private warrants at a price of $0.50 per warrant ($9,000,000 in the aggregate) in a
private placement that will occur simultaneously with the closing of this offering. Our sponsor and its designees have also agreed that if the
over-allotment option is exercised by the underwriters, they will purchase from us at a price of $0.50 per warrant an additional number of private
warrants (up to a maximum of 2,100,000 private warrants) pro rata with the amount of the over-allotment option exercised so that at least $10.00 per
share sold to the public in this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These
additional private warrants will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the
exercise of the over-allotment option. The proceeds from the private placement of the private warrants will be added to the proceeds of this offering
and placed in an account in the United States maintained by Continental Stock Transfer & Trust Company, as trustee.
The private warrants are identical to
the warrants included in the units sold in this offering except the private warrants will be non-redeemable and may be exercised on a cashless basis,
at the holder’s option, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. The purchasers
have also agreed not to transfer, assign or sell any of the private warrants or underlying securities (except to the same permitted transferees as the
insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the private warrants must agree
to, each as described above) until 30 days after the completion of our initial business combination.
Our executive offices are located at
12935 N. Forty Drive, Suite 201, St. Louis, Missouri 63141, and our telephone number is (314) 548-6200.
5
The Offering
In making your decision on whether to
invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we
face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act.
You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the
other risks set forth in the section below entitled “Risk Factors.”
Securities
offered |
35,000,000 units, at $10.00 per unit, each unit consisting of one share of common stock and one warrant. Each warrant offered in this offering
is exercisable to purchase one-half of one share of our common stock. Warrants may be exercised only for a whole number of shares of common stock. No
fractional shares will be issued upon exercise of the warrants. |
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We
structured each warrant to be exercisable for one-half of one share of our common stock at a price of $5.75 per half share, as compared to warrants
issued by some other similar companies which are exercisable for one whole share, in order to reduce the dilutive effect of the warrants upon
completion of a business combination as compared to units that each contain a warrant to purchase one whole share, thus making us, we believe, a more
attractive merger partner for target businesses. However, this unit structure may cause our units to be worth less than if they included a warrant to
purchase one full share. |
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Listing of our
securities and proposed symbols |
We
anticipate the units, and the shares of common stock and warrants once they begin separate trading, will be listed on Nasdaq under the symbols
“QPACU,” “QPAC” and “QPACW,” respectively. |
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Each
of the common stock and warrants may trade separately on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc.
informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the SEC containing an audited
balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will
begin. |
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6
Once
the shares of common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into
the component pieces. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of common stock and
warrants. |
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We
will file a Current Report on Form 8-K with the SEC, including an audited balance sheet, promptly upon the consummation of this offering, which is
anticipated to take place three business days from the date the units commence trading. The audited balance sheet will reflect our receipt of the
proceeds from the exercise of the over-allotment option if the over-allotment option is exercised on the date of this prospectus. If the over-allotment
option is exercised after the date of this prospectus, we will file an amendment to the Form 8-K or a new Form 8-K to provide updated financial
information to reflect the exercise of the over-allotment option. |
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Shares of common
stock: |
||||||
Number
outstanding before this offering |
10,062,500 shares1 |
|||||
Number to be
outstanding after this offering and sale of private warrants |
43,750,000 shares2 |
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Warrants: |
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Number
outstanding before this offering |
0 |
|||||
Number to be
outstanding after this offering and sale of private warrants |
53,000,000 warrants3 |
|||||
Exercisability |
Each
warrant offered in this offering is exercisable to purchase one-half of one share of our common stock. |
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1 |
This number includes an aggregate of 1,312,500 insider shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters. |
2 |
Assumes the over-allotment option has not been exercised and an aggregate of 1,312,500 insider shares have been forfeited. |
3 |
Assumes the over-allotment option has not been exercised. |
7
Exercise
price |
$5.75
per half share, subject to adjustment as provided for herein. No public warrants will be exercisable for cash unless we have an effective and current
registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of
common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the public
warrants is not effective within a specified period following the consummation of our initial business combination, public warrant holders may, until
such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration
statement, exercise warrants on a cashless basis. |
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Exercise
period |
The
warrants will become exercisable on the later of 30 days after the completion of an initial business combination or 12 months from the closing of this
offering. The warrants will expire at 5:00 p.m., New York City time, on the fifth anniversary of our completion of an initial business combination, or
earlier upon redemption. |
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Redemption |
We may
redeem the outstanding warrants (excluding the private warrants), in whole and not in part, at a price of $0.01 per warrant: |
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• at any time while the warrants are exercisable, |
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• upon a minimum of 30 days’ prior written notice of redemption, |
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• if, and only if, the last sales price of our shares of common stock equals or exceeds $24.00 per share for any 20 trading
days within a 30 trading day period (the “30-day trading period”) ending three business days before we send the notice of redemption,
and |
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• if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying
such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of
redemption. |
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If the
foregoing conditions are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled
redemption date. However, the price of the shares of common stock may fall below the |
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8
$24.00
trigger price as well as the $11.50 warrant exercise price after the redemption notice is issued. |
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The
redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a substantial premium to the initial
exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price
declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the
warrants. |
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If we
call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so
on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of
common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by
the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The
“fair market value” shall mean the average reported last sale price of the shares of common stock for the 10 trading days ending on the third
trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether we will exercise our option to require all
holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including the price of our shares of common
stock at the time the warrants are called for redemption, our cash needs at such time and concerns regarding dilutive stock
issuances. |
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Offering proceeds
to be held in the trust account |
$341,000,000 of the net proceeds of this offering (or $392,450,000 if the over-allotment option is exercised in full), plus the $9,000,000 we
will receive from the sale of the private warrants (or $10,050,000 if the over-allotment option is exercised in full), for an aggregate of $350,000,000
(or $402,500,000 if the over-allotment option is exercised in full) or $10.00 per unit sold to the public in this offering (whether or not the
over-allotment option is exercised in full or in part), will be placed in an account in the United States maintained by Continental Stock Transfer
& Trust Company, acting as trustee pursuant to an agreement to be signed on the |
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9
date
of this prospectus. The remaining $1,300,000 of net proceeds of this offering will not be held in the trust account. |
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Except
as set forth below, the proceeds held in the trust account will not be released until the earlier of: (1) the completion of our initial business
combination within the required time period and (2) our redemption of 100% of the outstanding public shares if we have not completed a business
combination in the required time period. Therefore, unless and until our initial business combination is consummated, the proceeds held in the trust
account will not be available for our use for any expenses related to this offering or expenses which we may incur related to the investigation and
selection of a target business and the negotiation of an agreement to acquire a target business. |
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Notwithstanding the foregoing, there can be released to us from the trust account (1) any interest earned on the funds in the trust account
that we need to pay our income or other tax obligations and (2) any remaining interest earned on the funds in the trust account that we need for our
working capital requirements. With these exceptions, expenses incurred by us may be paid prior to a business combination only from the net proceeds of
this offering not held in the trust account of approximately $1,300,000; provided, however, that in order to meet our working capital needs following
the consummation of this offering if the funds not held in the trust account and interest earned on the funds held in the trust account available to us
are insufficient, our sponsor, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time or at any
time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a non-interest bearing promissory note. The
notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to
$1,500,000 of the notes may be converted upon consummation of our business combination into additional private warrants at a price of $0.50 per
warrant. Our stockholders have approved the issuance of the warrants (and underlying shares of common stock) upon conversion of such notes, to the
extent the holder wishes to so convert them at the time of the consummation of our initial |
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10
business combination. If we do not complete a business combination, the loans will not be repaid. |
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Limited payments
to insiders |
There
will be no fees, reimbursements or other cash payments paid to our sponsor, officers, directors or their affiliates prior to or in connection with the
consummation of a business combination (regardless of the type of transaction that it is) other than: |
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• repayment at the closing of this offering of non-interest bearing loans in an aggregate amount of up to $300,000 made by our
sponsor; |
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• payment of $10,000 per month to Quinpario Partners LLC for office space and related services; and |
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• reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on our behalf, such as
identifying and investigating possible business targets and business combinations. |
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There
is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available
proceeds not deposited in the trust account and the interest income earned on the amounts held in the trust account, such expenses would not be
reimbursed by us unless we consummate an initial business combination. Our audit committee will review and approve all reimbursements and payments made
to any sponsor or member of our management team, or our or their respective affiliates, and any reimbursements and payments made to members of our
audit committee will be reviewed and approved by our Board of Directors, with any interested director abstaining from such review and
approval. |
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Stockholder
approval of, or tender offer in connection with, initial business combination |
In
connection with any proposed initial business combination, we will either (1) seek stockholder approval of such initial business combination at a
meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed
business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our
stockholders with the opportunity to sell their shares to us by means of |
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11
a
tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in
the trust account (net of taxes payable), in each case subject to the limitations described herein. If we determine to engage in a tender offer, such
tender offer will be structured so that each stockholder may tender all of his, her or its shares rather than some pro rata portion of his, her or its
shares. If enough stockholders tender their shares so that we are unable to satisfy any applicable closing condition set forth in the definitive
agreement related to our initial business combination, or we are unable to maintain net tangible assets of at least $5,000,001, we will not consummate
such initial business combination. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow
stockholders to sell their shares to us in a tender offer will be made by us, solely in our 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 us to seek stockholder approval. Unlike other blank
check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related
conversions of public shares for cash upon consummation of such initial business combinations even when a vote is not required by law, we will have the
flexibility to avoid such stockholder vote and allow our stockholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Securities
Exchange Act of 1934, as amended, or Exchange Act, which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC
which will contain substantially the same financial and other information about the initial business combination as is required under the SEC’s
proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and,
solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business
combination. |
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We
chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act.
However, if we seek to |
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12
consummate an initial business combination with a target business that imposes any type of working capital closing condition or requires us to
have a minimum amount of funds available from the trust account upon consummation of such initial business combination, our net tangible asset
threshold may limit our ability to consummate such initial business combination (as we may be required to have a lesser number of shares converted or
sold to us in any tender offer) and may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a
result, we may not be able to consummate such initial business combination and we may not be able to locate another suitable target within the
applicable time period, if at all. |
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Our
sponsor (including its officers, directors, members, employees and affiliates) and our officers and directors have agreed (1) to vote any of their
insider shares and any public shares purchased in or after this offering in favor of any proposed business combination, (2) not to convert any shares
(including the insider shares) in connection with a stockholder vote to approve a proposed initial business combination and (3) not to sell any shares
(including the insider shares) in a tender offer in connection with any proposed business combination. None of our sponsor, officers, directors or
their affiliates has indicated any intention to purchase units in this offering or any units or shares of common stock in the open market or in private
transactions. However, if a significant number of stockholders vote, or indicate an intention to vote, against a proposed business combination, our
sponsor, officers, directors or their affiliates could make such purchases in the open market or in private transactions in order to influence the
vote. Notwithstanding the foregoing, our officers, directors, sponsor and their affiliates will not make purchases of shares of common stock if the
purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company’s
stock. |
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Conversion
rights |
At any
meeting called to approve an initial business combination, any public stockholder voting either for or against such proposed business combination will
be entitled to demand that his shares of common stock be converted for a pro rata portion of the amount then in the trust |
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13
account (initially $10.00 per share, plus any pro rata interest earned on the funds held in the trust account and not previously released to
us to pay our taxes or for working capital). |
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Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert
or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 15% or
more of the shares of common stock sold in this offering without our prior written consent. We believe this restriction will prevent an individual
stockholder or “group” from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt
to use the conversion right as a means to force us or our management to purchase its shares at a substantial premium to the then current market
price. |
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We may
require public stockholders, whether they are a record holder or hold their shares in “street name,” to either tender their certificates to
our transfer agent at any time through the vote on the business combination or to deliver their shares to the transfer agent electronically using
Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. There is a nominal cost associated with
this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the
tendering broker $45 and it would be up to the broker whether or not to pass this cost on to the converting holder. |
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Liquidation if no
business combination |
If we
are unable to complete our initial business combination within 24 months from the closing of this offering, we will (i) cease all operations except for
the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding
public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, divided by the number of then
outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject
to |
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14
the
approval of our remaining holders of common stock and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to
our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. The holders of the insider shares
will not participate in any redemption distribution. Holders of warrants will receive no proceeds in connection with the redemption or
liquidation. |
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We may
not have funds sufficient to pay or provide for all creditors’ claims. Although we will seek to have all third parties (including any vendors or
other entities we engage after this offering) and any prospective target businesses enter into valid and enforceable agreements with us waiving any
right, title, interest or claim of any kind in or to any monies held in the trust account, there is no guarantee that they will execute such
agreements. There is also no guarantee that the third parties would not challenge the enforceability of these waivers and bring claims against the
trust account for monies owed them. Quinpario Partners LLC has agreed that it will be liable to ensure that the proceeds in the trust account are not
reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or
products sold to us, but it may not be able to satisfy its indemnification obligations if it is required to do so. Furthermore, it will have no
personal liability under this indemnity as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement
with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account. |
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If we
are unable to conclude our initial business combination and we expend all of the net proceeds of this offering not deposited in the trust account,
without taking into account any interest earned on the trust account, we expect that the initial per-share redemption price will be approximately
$10.00. The proceeds deposited in the trust account could, however, become subject to claims of our creditors that are in preference to the claims of
our stockholders. In addition, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us that is not dismissed,
the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our |
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15
bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. Therefore, the actual
per-share redemption price may be less than $10.00. |
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We
will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account. If such funds are insufficient, Quinpario
Partners LLC has agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and
has agreed not to seek repayment for such expenses. |
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16
Risks
We are a newly formed company that has
conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate
no operating revenues. In making your decision on whether to invest in our securities, you should take into account not only the background of our
management team, but also the special risks we face as a blank check company, as well as the fact that this offering is not being conducted in
compliance with Rule 419 promulgated under the Securities Act of 1933, as amended, and, therefore, you will not be entitled to protections normally
afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this
offering, please see “Proposed Business — Comparison to offerings of blank check companies subject to Rule 419.” You should
carefully consider these and the other risks set forth in the section entitled “Risk Factors.”
17
SUMMARY FINANCIAL DATA
The following table summarizes the
relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any
significant operations to date, and accordingly only balance sheet data is presented.
| As of September 12, 2014 |
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|---|---|---|---|---|---|---|---|---|---|---|---|
| Actual |
As Adjusted (1) |
||||||||||
Balance
Sheet Data: |
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Working
capital (deficiency) |
$ | (47,278 | ) | $ | 339,062,722 | (2) | |||||
Total assets
|
84,385 | 351,312,722 | (3) | ||||||||
Total
liabilities |
71,663 | 12,250,000 | (4) | ||||||||
Value of
common stock subject to possible conversion/tender |
— | 334,062,720 | (5) | ||||||||
Stockholders’ equity |
12,722 | 5,000,002 | |||||||||
(1) |
Includes the $9,000,000 we will receive from the sale of the private warrants. |
(2) |
The “as adjusted” calculation equals actual working capital of ($47,278) as of September 12, 2014, plus $350,000,000 in cash held in trust from the proceeds of this offering, plus $1,300,000 in cash held outside the trust account, plus $60,000 to reduce liabilities related to offering costs at September 12, 2014 paid out of the proceeds from this offering, less $12,250,000 of deferred underwriting commissions. |
(3) |
The “as adjusted” calculation equals actual total assets of $84,385 as of September 12, 2014 plus $350,000,000 in cash held in trust from the proceeds of this offering, plus $1,300,000 in cash held outside the trust account, less payment of $71,663 of liabilities as of September 12, 2014. |
(4) |
The “as adjusted” calculation represents deferred underwriting commissions. |
(5) |
The “as adjusted” value of common stock subject to possible conversion/tender is derived by taking 33,406,272 shares of common stock which may be converted, representing the maximum number of shares that may be converted or sold while maintaining at least $5,000,001 in net tangible assets after the offering, multiplied by a conversion/tender price of $10.00. |
The “as adjusted” information
gives effect to the sale of the units we are offering, including the application of the related gross proceeds and the payment of the estimated
remaining costs from such sale and the repayment of the accrued and other liabilities required to be repaid.
The “as adjusted” working
capital and total assets amounts include the $350,000,000 to be held in the trust account, which, except for limited situations described in this
prospectus, will be available to us only upon the consummation of our initial business combination within the time period described in this prospectus.
If our initial business combination is not so consummated, the trust account, less amounts we are permitted to withdraw as described in this
prospectus, will be distributed solely to our public stockholders (subject to our obligations under Delaware law to provide for claims of
creditors).
We will consummate our initial business
combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority
of the outstanding shares of common stock voted are voted in favor of the business combination.
18
An investment in our securities
involves a high degree of risk. You should consider carefully all of the risks described below, which we believe represent the material risks related
to the offering, together with the other information contained in this prospectus, before making a decision to invest in our units. If any of the
following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price
of our securities could decline and you could lose all or part of your investment. This prospectus also contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of
specific factors, including the risks described below.
Risks Associated with Our Business
We are a newly-formed blank check company with no
operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business
objective.
We are a newly-formed blank check
company with no operating results to date. Therefore, our ability to commence operations is dependent upon obtaining financing through the public
offering of our shares. Since we do not have an operating history, you will have no basis upon which to evaluate our ability to achieve our business
objective, which is to acquire an operating business. We have not conducted any discussions and we have no plans, arrangements or understandings with
any prospective acquisition candidates. We will not generate any revenues until, at the earliest, after the consummation of our initial business
combination.
Our independent registered public accounting firm’s
report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going
concern.”
As of September 12, 2014, we had $24,385
in cash and cash equivalents and a working capital deficiency of $47,278. Further, we have incurred and expect to continue to incur significant costs
in pursuit of our acquisition plans. Management’s plans to address this need for capital through this offering are discussed in the section of
this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our plans to
raise capital and to consummate our initial business combination may not be successful. These factors, among others, raise substantial doubt about our
ability to continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might
result from our inability to consummate this offering or our inability to continue as a going concern.
If we are unable to consummate our initial business
combination, our public stockholders may be forced to wait more than 24 months before receiving distributions from the trust
account.
We will have until 24 months from the
closing of this offering to consummate our initial business combination. We have no obligation to return funds to investors prior to such date unless
we consummate our initial business combination prior thereto and only then in cases where investors have sought to convert their shares. Only after the
expiration of this full time period will holders of our common stock be entitled to distributions from the trust account if we are unable to complete
our initial business combination. Accordingly, investors’ funds may be unavailable to them until after such date and to liquidate your investment,
public security holders may be forced to sell their public shares, potentially at a loss.
19
Our public stockholders may not be afforded an
opportunity to vote on our proposed business combination.
We will either (1) seek stockholder
approval of our initial business combination at a meeting called for such purpose at which public stockholders may seek to convert their shares,
regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in
the trust account (net of taxes payable), or (2) provide our public stockholders with the opportunity to sell their shares to us by means of a tender
offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the
trust account (net of taxes payable), in each case subject to the limitations described elsewhere in this prospectus. Accordingly, it is possible that
we will consummate our initial business combination even if holders of a majority of our public shares do not approve of the business combination we
consummate. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their
shares to us in a tender offer will be made by us, solely in our 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 us to seek stockholder approval. For instance, Nasdaq rules currently
allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval if we were seeking to
issue more than 20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring a
business combination that required us to issue more than 20% of our outstanding shares, we would seek stockholder approval of such business combination
instead of conducting a tender offer.
You will not be entitled to protections normally afforded
to investors of blank check companies.
Since the net proceeds of this offering
are intended to be used to complete our initial business combination with a target business that has not been identified, we may be deemed to be a
“blank check” company under the U.S. securities laws. However, since we will have net tangible assets in excess of $5,000,001 upon the
successful consummation of this offering and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are
exempt from rules promulgated by the SEC to protect investors of blank check companies such as Rule 419. Accordingly, investors will not be afforded
the benefits or protections of those rules which would, for example, completely restrict the transferability of our securities, require us to complete
our initial business combination within 18 months of the effective date of the initial registration statement and restrict the use of interest earned
on the funds held in the trust account. Because we are not subject to Rule 419, our units will be immediately tradable, we will be entitled to withdraw
interest income earned on the funds held in the trust account prior to the completion of our initial business combination and we will have a longer
period of time to complete such a business combination than we would if we were subject to such rule.
We may issue shares of our capital stock to complete our
initial business combination, which would reduce the equity interest of our stockholders and likely cause a change in control of our
ownership.
Our certificate of incorporation
authorizes the issuance of up to 135,000,000 shares of common stock, par value $.0001 per share, and 1,000,000 shares of preferred stock, par value
$.0001 per share. Immediately after this offering and the purchase of the private warrants (assuming no exercise of the underwriters’
over-allotment option), there will be 64,750,000 authorized but unissued shares of common stock available for issuance (after appropriate reservation
for the issuance of the shares upon full exercise of our outstanding warrants).
20
Although we have no commitment as of the date of this offering, we may issue a substantial number of additional shares of common stock or shares of preferred stock, or a combination of common stock and preferred stock, to complete our initial business combination. The issuance of additional shares of common stock or preferred stock:
• |
may significantly reduce the equity interest of investors in this offering; |
• |
may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock; |
• |
may cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and |
• |
may adversely affect prevailing market prices for our shares of common stock. |
We may incur significant indebtedness in order to
consummate our initial business combination.
If we find it necessary to incur
significant indebtedness in connection with our initial business combination, it could result in:
• |
default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt obligations; |
• |
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
• |
our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and |
• |
our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding. |
The funds held in the trust account may not earn
significant interest and, as a result, we may be limited to the funds held outside of the trust account to fund our search for target businesses, to
pay our tax obligations and to complete our initial business combination.
Of the net proceeds of this offering,
$1,300,000 is anticipated to be available to us initially outside the trust account to fund our working capital requirements. We will depend on
sufficient interest being earned on the proceeds held in the trust account to provide us with additional working capital we will need to identify one
or more target businesses and to complete our initial business combination, as well as to pay any tax obligations that we may owe. Interest rates on
permissible investments for us have been less than 1% over the last several years. Accordingly, if we do not earn a sufficient amount of interest on
the funds held in the trust account and use all of the funds held outside of the trust account, we may not have sufficient funds available with which
to structure, negotiate or close our initial business combination. In such event, we would need to borrow funds from our sponsor, officers or directors
to operate or may be forced to liquidate. Our sponsor, officers and directors are under no obligation to loan us any funds. If we are unable to obtain
the funds necessary, we may be forced to cease searching for a target business and may be unable to complete our initial business
combination.
21
If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption price received by stockholders may be less than
$10.00.
Our placing of funds in the trust
account may not protect those funds from third party claims against us. Although we will seek to have all vendors and service providers we engage and
prospective target businesses we negotiate with execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account for the benefit of our public stockholders, they may not execute such agreements. Furthermore, even if such entities execute
such agreements with us, they may seek recourse against the trust account. A court may not uphold the validity of such agreements. Accordingly, the
proceeds held in the trust account could be subject to claims which could take priority over those of our public stockholders. If we are unable to
complete an initial business combination within the required time period, Quinpario Partners LLC has agreed that it will be liable to ensure that the
proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for
services rendered or contracted for or products sold to us, but only if such a vendor or prospective target business does not execute such a waiver.
However, it may not be able to meet such obligation. Therefore, the distribution from the trust account to each holder of shares of common stock may be
less than $10.00, plus interest, due to such claims.
Additionally, if we are forced to file a
bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject
to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of
our stockholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our holders of shares of common stock
at least $10.00.
Our stockholders may be held liable for claims by third
parties against us to the extent of distributions received by them.
If we have not completed our initial
business combination within 24 months from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares of common stock, which
redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under
Delaware law to provide for claims of creditors and the requirements of other applicable law. We may not properly assess all claims that may be
potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them
(but no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, third
parties may seek to recover from our stockholders amounts owed to them by us.
If we are forced to file a bankruptcy
case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the
trust account to our public stockholders promptly after expiration of the 24-month deadline, this may be viewed or interpreted as giving preference to
our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed
as having breached their fiduciary duties to our
22
creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public holders of common stock from the trust account prior to addressing the claims of creditors. Claims may be brought against us for these reasons.
If we do not maintain a current and effective prospectus
relating to the shares of common stock issuable upon exercise of the warrants, public holders will only be able to exercise such warrants on a
“cashless basis.”
If we do not maintain a current and
effective prospectus relating to the shares of common stock issuable upon exercise of the public warrants at the time that holders wish to exercise
such warrants, they will only be able to exercise them on a “cashless basis.” As a result, the number of shares of common stock that holders
will receive upon exercise of the public warrants will be fewer than it would have been had such holders exercised their warrants for cash. Under the
terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current and effective prospectus
relating to the shares of common stock issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure you that
we will be able to do so. If we are unable to do so, the potential “upside” of the holder’s investment in our company may be reduced.
Notwithstanding the foregoing, the private warrants and any other warrants that may be issued to our officers, directors, sponsor or their affiliates
as described elsewhere in this prospectus may be exercisable for unregistered shares of common stock for cash even if the prospectus relating to the
shares of common stock issuable upon exercise of the warrants is not current and effective.
An investor will be able to exercise a warrant only if
the issuance of shares of common stock upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state
of residence of the holder of the warrants.
No public warrants will be exercisable
for cash and we will not be obligated to issue shares of common stock unless the shares of common stock issuable upon such exercise has been registered
or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. At the time that the warrants
become exercisable, we expect to continue to be listed on a national securities exchange, which would provide an exemption from registration in every
state. Accordingly, we believe holders in every state will be able to exercise their warrants as long as our prospectus relating to the shares of
common stock issuable upon exercise of the warrants is current. However, we cannot assure you of this fact. If the shares of common stock issuable upon
exercise of the warrants are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the warrants
may be deprived of any value, the market for the warrants may be limited and they may expire worthless if they cannot be sold.
We may amend the terms of the warrants in a way that may
be adverse to holders with the approval by the holders of a majority of the then outstanding warrants.
We will be issuing 35,000,000 warrants
to purchase 17,500,000 shares of common stock as part of the units offered by this prospectus in addition to the 18,000,000 private warrants to
purchase 9,000,000 shares of common stock. Our warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer
& Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any
holder to cure any ambiguity or correct any defective provision. The warrant agreement requires the approval by the holders of a majority of the then
outstanding warrants (including the private warrants) in order to make any change that adversely affects the interests of the registered holders, or
26,500,001 warrants. Upon
23
consummation of this offering, our sponsor and its designees will own 18,000,000 of the outstanding warrants (assuming they do not purchase any units in this offering). Therefore, we would only need approval from holders of 8,500,001 public warrants to amend the terms of the warrants.
Since we are not limited to a particular industry or
target business with which to complete our initial business combination, we are unable to currently ascertain the merits or risks of the industry or
business in which we may ultimately operate.
Although we intend to focus our search
on target businesses in the specialty chemicals and performance materials industries, we may consummate our initial business combination with a company
in any industry we choose and are not limited to any particular industry or type of business. Accordingly, there is no current basis for you to
evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may ultimately
acquire. To the extent we complete our initial business combination with a financially unstable company or an entity in its development stage, we may
be affected by numerous risks inherent in the business operations of those entities. If we complete our initial business combination with an entity in
an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our management
will endeavor to evaluate the risks inherent in a particular industry or target business, we may not properly ascertain or assess all of the
significant risk factors. An investment in our shares may not ultimately prove to be more favorable to investors in this offering than a direct
investment, if an opportunity were available, in a target business.
Our officers and directors may not have significant
experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire.
We may consummate a business combination
with a target business in any geographic location or industry we choose. Our officers and directors may not have enough experience or sufficient
knowledge relating to the jurisdiction of the target or its industry to make an informed decision regarding our initial business
combination.
The requirement that the target business or businesses
that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account at the time of the
execution of a definitive agreement for our initial business combination may limit the type and number of companies that we may complete such a
business combination with.
Pursuant to the Nasdaq listing rules,
the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the
trust account at the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and
number of companies that we may complete a business combination with. If we are unable to locate a target business or businesses that satisfy this fair
market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the funds in the trust
account.
Our management may not be able to maintain control of a
target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management
will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure a business combination
so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a target
business, but we will only complete such business combination if the post-transaction company, in which our public stockholders own shares, acquires
50% or more of the
24
outstanding voting securities of the target or otherwise acquire a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company, in which our public stockholders own shares, owns 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business.
Our ability to successfully effect our initial business
combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our
initial business combination. While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of
these individuals may not prove to be correct.
Our ability to successfully effect our
initial business combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of our
key personnel, at least until we have consummated our initial business combination. None of our officers are required to commit any specified amount of
time to our affairs and, accordingly, they will have conflicts of interest in allocating management time among various business activities, including
identifying potential business combinations and performing and monitoring the related due diligence. We do not have employment agreements with, or
key-man insurance on the life of, any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect on
us.
The role of our key personnel after our
initial business combination, however, remains to be determined. Although some of our key personnel may serve in senior management or advisory
positions following our initial business combination, it is likely that most, if not all, of the management of the target business will remain in
place. While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of these individuals may
not prove to be correct. These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend
time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory
issues which may adversely affect our operations.
Our key personnel may negotiate employment or consulting
agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation
following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business
combination is the most advantageous.
Our key personnel will be able to remain
with the company after the consummation of our initial business combination only if they are able to negotiate employment or consulting agreements or
other appropriate arrangements in connection with the business combination.
25
Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business.
Our officers and directors will allocate their time to
other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest
could have a negative impact on our ability to consummate our initial business combination.
Our officers and directors are not
required to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations and
their other commitments. We presently expect each of our employees to devote such amount of time as they reasonably believe is necessary to our
business (which could range from only a few hours a week while we are trying to locate a potential target business to a majority of their
time as we move into serious negotiations with a target business for a business combination). We do not intend to have any full time
employees prior to the consummation of our initial business combination. All of our officers and directors are engaged in several other business
endeavors and are not obligated to devote any specific number of hours to our affairs. If our officers’ and directors’ other business affairs
require them to devote more substantial amounts of time to such affairs, it could limit their ability to devote time to our affairs and could have a
negative impact on our ability to consummate our initial business combination. These conflicts may not be resolved in our favor.
Our officers and directors or their affiliates have
pre-existing fiduciary and contractual obligations and accordingly, may have conflicts of interest in determining to which entity a particular business
opportunity should be presented.
Our officers and directors or their
affiliates have pre-existing fiduciary and contractual obligations to other companies, including companies that are engaged in business activities
similar to those intended to be conducted by us. Accordingly, they may participate in transactions and have obligations that may be in conflict or
competition with our consummation of our initial business combination. As a result, a potential target business may be presented by our management team
to another entity prior to its presentation to us and we may not be afforded the opportunity to engage in a transaction with such target business. For
a more detailed description of the pre-existing fiduciary and contractual obligations of our management team, and the potential conflicts of interest
that such obligations may present, see the section titled “Management — Conflicts of Interest.”
The shares beneficially owned by our sponsor, officers
and directors will not participate in liquidation distributions and, therefore, our officers and directors may have a conflict of interest in
determining whether a particular target business is appropriate for our initial business combination.
Our sponsor and our officers and
directors have waived their right to convert their insider shares or any other shares of common stock acquired in this offering or thereafter, or to
receive distributions with respect to their insider shares upon our liquidation if we are unable to consummate our initial business combination.
Accordingly, the insider shares will be worthless if we do not consummate our initial business combination. The private warrants and any other warrants
they acquire will also be worthless if we do not consummate an initial business combination. The personal and financial interests of our sponsor,
officers and directors may influence their motivation in timely identifying and selecting a target business and completing a business combination.
Consequently, our directors’ and officers’ discretion
26
in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders’ best interest.
Nasdaq may delist our securities from quotation on its
exchange which could limit investors’ ability to make transactions in our securities and subject us to additional trading
restrictions.
We anticipate that our securities will
be listed on Nasdaq, a national securities exchange, upon consummation of this offering. Although, after giving effect to this offering, we meet the
minimum initial listing standards of Nasdaq on a pro forma basis, which generally only requires that we meet certain requirements relating to
stockholders’ equity, market capitalization, aggregate market value of publicly held shares and distribution, our securities may not continue to
be listed on Nasdaq in the future prior to an initial business combination. Generally, we must maintain a minimum amount in stockholders’ equity
(generally $2,500,000) and a minimum number of holders of our securities (generally 300 round-lot holders). Additionally, in connection with our
initial business combination, we will be required to demonstrate compliance with NASDAQ’s initial listing requirements, which are more rigorous
than NASDAQ’s continued listing requirements, in order to continue to maintain the listing of our securities on NASDAQ. We may not be able to meet
those initial listing requirements at that time.
If Nasdaq delists our securities from
trading on its exchange, we could face significant material adverse consequences, including:
• |
a limited availability of market quotations for our securities; |
• |
reduced liquidity with respect to our securities; |
• |
a determination that our shares are a “penny stock,” which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares; |
• |
a limited amount of news and analyst coverage for our company; and |
• |
a decreased ability to issue additional securities or obtain additional financing in the future. |
We may only be able to complete one business combination
with the proceeds of this offering, which will cause us to be solely dependent on a single business which may have a limited number of products or
services.
It is likely we will consummate our
initial business combination with a single target business, although we have the ability to simultaneously acquire several target businesses. By
consummating a business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and
regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of
losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a
single industry. Accordingly, the prospects for our success may be:
• |
solely dependent upon the performance of a single business, or |
• |
dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
This lack of diversification may subject
us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to our initial business combination.
27
Alternatively, if we determine to
simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our
purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and
delay our ability, to complete the business combination. With multiple business combinations, we could also face additional risks, including additional
burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional
risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.
If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
The ability of our public stockholders to exercise their
conversion rights or sell their shares to us in a tender offer may not allow us to effectuate the most desirable business combination or optimize our
capital structure.
If our initial business combination
requires us to use substantially all of our cash to pay the purchase price, because we will not know how many public stockholders may exercise
conversion rights or seek to sell their shares to us in a tender offer, we may either need to reserve part of the trust account for possible payment
upon such conversion or sale, or we may need to arrange third party financing to help fund our initial business combination. In the event that the
acquisition involves the issuance of our stock as consideration, we may be required to issue a higher percentage of our stock to make up for a
shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than
desirable levels. This may limit our ability to effectuate the most attractive business combination available to us.
We may be unable to consummate an initial business
combination if a target business requires that we have a certain amount of cash at closing, in which case public stockholders may have to remain
stockholders of our company and wait until our redemption of the public shares to receive a pro rata share of the trust account or attempt to sell
their shares in the open market.
A potential target may make it a closing
condition to our initial business combination that we have a certain amount of cash in excess of the $5,000,001 of net tangible assets we are required
to have pursuant to our organizational documents available at the time of closing. If the number of our public stockholders electing to exercise their
conversion rights has the effect of reducing the amount of money available to us to consummate an initial business combination below such minimum
amount required by the target business and we are not able to locate an alternative source of funding, we will not be able to consummate such initial
business combination and we may not be able to locate another suitable target within the applicable time period, if at all. In that case, public
stockholders may have to remain stockholders of our company and wait the full 24 months in order to be able to receive a pro rata portion of the trust
account, or attempt to sell their shares in the open market prior to such time, in which case they may receive less than a pro rata share of the trust
account for their shares.
If we hold a stockholder meeting to approve any initial
business combination, we will offer each public stockholder the option to vote in favor of the proposed business combination and still seek conversion
of his, her or its shares.
In connection with any meeting held to
approve an initial business combination, we will offer each public stockholder (but not our initial stockholders) the right to have his, her or its
shares of common stock converted to cash (subject to the limitations described elsewhere in this prospectus) regardless of whether such stockholder
votes for or against such proposed
28
business combination. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination. Accordingly, public stockholders owning 33,406,272 shares of common stock sold in this offering may exercise their conversion rights and we could still consummate a proposed business combination so long as a majority of shares voted at the meeting are voted in favor of the proposed business combination. This threshold and the ability to seek conversion while voting in favor of a proposed business combination may make it more likely that we will consummate our initial business combination.
Public stockholders that fail to vote either in favor of
or against a proposed business combination will not be able to have his shares converted to cash.
If we hold a meeting to approve a
proposed business combination, public stockholders must vote either in favor of or against a proposed business combination in order to have his, her or
its shares converted to cash. If a public stockholder fails to vote in favor of or against a proposed business combination, whether that stockholder
abstains from the vote or simply does not vote, that stockholder would not be able to have his shares of common stock so converted to
cash.
Public stockholders, together with any affiliates of
theirs or any other person with whom they are acting in concert or as a “group,” will be restricted from seeking conversion rights with
respect to more than 15% of the shares of common stock sold in this offering.
In connection with any meeting held to
approve an initial business combination, we will offer each public stockholder (but not our initial stockholders) the right to have his, her, or its
shares of common stock converted into cash. Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person
with whom he is acting in concert or as a “group” will be restricted from seeking conversion rights with respect to more than 15% of the
shares of common stock sold in this offering. Generally, in this context, a stockholder will be deemed to be acting in concert or as a group with
another stockholder when such stockholders agree to act together for the purpose of acquiring, voting, holding or disposing of our equity securities.
Accordingly, if you purchase more than 15% of the shares of common stock sold in this offering and our proposed business combination is approved, you
will not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold such additional shares of common
stock or sell them in the open market. The value of such additional shares may not appreciate over time following our initial business combination, and
the market price of our shares of common stock may not exceed the per-share conversion price.
In connection with any stockholder meeting called to
approve a proposed initial business combination, we may require public stockholders who wish to convert their shares of common stock to comply with
specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising
their rights.
In connection with any stockholder
meeting called to approve a proposed initial business combination, each public stockholder will have the right, regardless of whether he is voting for
or against such proposed business combination, to demand that we convert his shares of common stock into a share of the trust account. We may require
public stockholders who wish to convert their shares of common stock in connection with a proposed business combination to either tender their
certificates to our transfer agent at any time prior to the vote taken at the stockholder meeting relating to such business combination or to deliver
their shares to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal
29
At Custodian) System. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes a short time to deliver shares through the DWAC System, this may not be the case. Accordingly, if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to convert may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their shares.
If, in connection with any stockholder meeting called to
approve a proposed business combination, we require public stockholders who wish to convert their shares of common stock to comply with the delivery
requirements for conversion, such converting stockholders may be unable to sell their securities when they wish to in the event that the proposed
business combination is not approved.
If we require public stockholders who
wish to convert their shares of common stock to comply with specific delivery requirements for conversion described above and such proposed business
combination is not consummated, we will promptly return such certificates to the tendering public stockholders. Accordingly, investors who attempted to
convert their shares in such a circumstance will be unable to sell their securities after the failed acquisition until we have returned their
securities to them. The market price for our shares of common stock may decline during this time and you may not be able to sell your securities when
you wish to, even while other stockholders that did not seek conversion may be able to sell their securities.
Because of our structure, other companies may have a
competitive advantage and we may not be able to consummate an attractive business combination.
We expect to encounter intense
competition from entities other than blank check companies having a business objective similar to ours, including venture capital funds, leveraged
buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in
identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other
resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe
that there are numerous potential target businesses that we could acquire with the net proceeds of this offering, our ability to compete in acquiring
certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage
in pursuing the acquisition of certain target businesses. Furthermore, seeking stockholder approval of our initial business combination may delay the
consummation of a transaction. Additionally, the insider shares and our outstanding warrants, and the future dilution they represent, may not be viewed
favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating our initial
business combination.
Our ability to consummate an attractive business
combination may be impacted by the market for initial public offerings.
Our efforts to identify a prospective
target business will not be limited to any particular industry or geographic region, although it is very likely that our target will want to be a
public reporting company. If the market for initial public offerings is limited, we believe there will be a greater number of attractive target
businesses open to being acquired by us as a means to achieve publicly held status. Alternatively, if the market for initial public offerings is
robust, we
30
believe that there will be fewer attractive target businesses amenable to being acquired by us to become a public reporting company. Accordingly, during periods with strong public offering markets, it may be more difficult for us to complete an initial business combination.
We may be unable to obtain additional financing, if
required, to complete our initial business combination or to fund the operations and growth of the target business, which could compel us to
restructure or abandon a particular business combination.
Although we believe that the net
proceeds of this offering will be sufficient to allow us to consummate a business combination, because we have not yet identified any prospective
target business, the capital requirements for any particular transaction remain to be determined. If the net proceeds of this offering prove to be
insufficient, either because of the size of the business combination, the depletion of the available net proceeds in search of a target business, or
the obligation to convert into cash a significant number of shares of common stock, we will be required to seek additional financing. Such financing
may not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a
particular business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek
an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the
operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued
development or growth of the target business. None of our officers, directors or sponsor is required to provide any financing to us in connection with
or after our initial business combination.
Our initial stockholders will control a substantial
interest in us and thus may influence certain actions requiring a stockholder vote.
Upon consummation of this offering, our
initial stockholders will collectively own 20% of our issued and outstanding shares of common stock (assuming they do not purchase any units in this
offering). None of our sponsor, officers, directors or their affiliates has indicated any intention to purchase units in this offering or any units or
shares from persons in the open market or in private transactions. However, our sponsor, officers, directors or their affiliates could determine in the
future to make such purchases in the open market or in private transactions, to the extent permitted by law. In connection with any vote for a proposed
business combination, our sponsor, as well as all of our officers and directors, have agreed to vote the shares of common stock owned by them
immediately before this offering as well as any shares of common stock acquired in this offering or in the aftermarket in favor of such proposed
business combination.
Our board of directors is and will be
divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year.
It is unlikely that there will be an annual meeting of stockholders to elect new directors prior to the consummation of our initial business
combination, in which case all of the current directors will continue in office until at least the consummation of the business combination.
Accordingly, you may not be able to exercise your voting rights under corporate law for up to 24 months. If there is an annual meeting, as a
consequence of our “staggered” board of directors, fewer than half of the board of directors will be considered for election and our sponsor,
because of its ownership position, will have considerable influence regarding the outcome. Accordingly, our sponsor will continue to exert control at
least until the consummation of our initial business combination.
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We may not hold an annual meeting of stockholders until
after the consummation of our initial business combination.
In accordance with Nasdaq corporate
governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq.
Under Section 211(b) of the Delaware General Corporation Law, we are, however, required to hold an annual meeting of stockholders for the purposes of
electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. It is unlikely that there
will be an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be
in compliance with Section 211(b) of the Delaware General Corporation Law, which requires an annual meeting. Therefore, if our stockholders want us to
hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an
application to the Delaware Court of Chancery in accordance with Section 211(c) of the Delaware General Corporation Law.
Our initial stockholders paid an aggregate of $25,000, or
approximately $0.002 per share, for the insider shares and, accordingly, you will experience immediate and substantial dilution from the purchase of
our shares of common stock.
The difference between the public
offering price per share and the pro forma net tangible book value per share of common stock after this offering constitutes the dilution to the
investors in this offering. Our initial stockholders acquired the insider shares at a nominal price, significantly contributing to this dilution. Upon
consummation of this offering, you and the other new investors will incur an immediate and substantial dilution of approximately 95.2% or $9.52 per
share (the difference between the pro forma net tangible book value per share $0.48, and the initial offering price of $10.00 per unit). This is
because investors in this offering will be contributing approximately 99.99% of the total amount paid to us for our outstanding securities after this
offering but will only own 80% of our outstanding common stock. Accordingly, the per-share purchase price you will be paying substantially exceeds our
per share net tangible book value.
Our outstanding warrants may have an adverse effect on
the market price of shares of common stock and make it more difficult to effect a business combination.
We will be issuing warrants to purchase
17,500,000 shares of common stock as part of the units offered by this prospectus and the private warrants to purchase 9,000,000 shares of common
stock. We may also issue additional warrants to our sponsor, officers, directors or their affiliates upon conversion of promissory notes issued to such
entities or individuals for loans made to supplement our working capital requirements, as described elsewhere in this prospectus. To the extent we
issue shares of common stock to effect a business combination, the potential for the issuance of a substantial number of additional shares upon
exercise of these warrants could make us a less attractive acquisition vehicle in the eyes of a target business. Such securities, when exercised, will
increase the number of issued and outstanding shares of common stock and reduce the value of the shares issued to complete the business combination.
Accordingly, our warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants could have an adverse effect on the market price for our
securities or on our ability to obtain future financing. If and to the extent these warrants are exercised, you may experience dilution to your
holdings.
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We may redeem the warrants at a time that is not
beneficial to public investors.
We may call the public warrants for
redemption at any time after the redemption criteria described elsewhere in this prospectus have been satisfied. If we call the public warrants for
redemption, public stockholders may be forced to accept a nominal redemption price or sell or exercise the warrants when they may not wish to do
so.
Our management’s ability to require holders of our
warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of the warrants
than they would have received had they been able to exercise their warrants for cash.
If we call our public warrants for
redemption after the redemption criteria described elsewhere in this prospectus have been satisfied, our management will have the option to require any
holder that wishes to exercise its warrant (including any warrants held by our sponsor, officers, directors or their permitted transferees) to do so on
a “cashless basis.” If our management chooses to require holders to exercise their warrants on a cashless basis, the number of shares of
common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash. This will have
the effect of reducing the potential “upside” of the holder’s investment in our company.
Because each warrant is exercisable for only one-half of
one share of our common stock, the units may be worth less than units of other blank check companies.
Each warrant is exercisable for one-half
of one share of common stock. Warrants may be exercised only for a whole number of shares of common stock. No fractional shares will be issued upon
exercise of the warrants. This is different from other offerings similar to ours whose units include one share of common stock and one warrant to
purchase one whole share. We have established the components of the units in this way in order to reduce the dilutive effect of the warrants upon
completion of a business combination since the warrants will be exercisable in the aggregate for half of the number of shares compared to units that
each contain a warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless,
this unit structure may cause our units to be worth less than if it included a warrant to purchase one whole share.
If our security holders exercise their registration
rights, it may have an adverse effect on the market price of our shares of common stock and the existence of these rights may make it more difficult to
effect our initial business combination.
The holders of the insider shares are
entitled to demand that we register the resale of the insider shares and the holders of the private warrants are entitled to demand that we register
the resale of the private warrants (and underlying securities) and any securities our sponsor, officers, directors or their affiliates may be issued in
payment of working capital loans made to us. The presence of these additional securities trading in the public market may have an adverse effect on the
market price of our securities. In addition, the existence of these rights may make it more difficult to effectuate our initial business combination or
increase the cost of acquiring the target business, as the stockholders of the target business may be discouraged from entering into a business
combination with us or will request a higher price for their securities because of the potential effect the exercise of such rights may have on the
trading market for our shares of common stock.
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If we are deemed to be an investment company, we may be
required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our
initial business combination.
A company that, among other things, is
or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning, trading or holding
certain types of securities would be deemed an investment company under the Investment Company Act of 1940. Since we will invest the proceeds held in
the trust account, it is possible that we could be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated
principal activities will subject us to the Investment Company Act of 1940. To this end, the proceeds held in the trust account may be invested by the
trustee only in United States government treasury bills, notes or bonds having a maturity of 180 days or less or in money market funds meeting the
applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in U.S. treasuries. By restricting
the investment of the proceeds to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the
Investment Company Act of 1940.
If we are nevertheless deemed to be an
investment company under the Investment Company Act of 1940, we may be subject to certain restrictions that may make it more difficult for us to
complete our initial business combination, including:
• |
restrictions on the nature of our investments; and |
• |
restrictions on the issuance of securities. |
In addition, we may have imposed upon us
certain burdensome requirements, including:
• |
registration as an investment company; |
• |
adoption of a specific form of corporate structure; and |
• |
reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations. |
Compliance with these additional
regulatory burdens would require additional expense for which we have not allotted.
The determination for the offering price of our units is
more arbitrary compared with the pricing of securities for an operating company in a particular industry.
Prior to this offering there has been no
public market for any of our securities. The public offering price of the units was negotiated between us and the representative of the underwriters.
Factors considered in determining the price of the shares of units include:
• |
the history of other similarly structured blank check companies; |
• |
prior offerings of those companies; |
• |
our prospects for acquiring an operating business at attractive values; |
• |
our capital structure; |
• |
securities exchange listing requirements; |
• |
market demand; |
• |
expected liquidity of our securities; and |
• |
general conditions of the securities markets at the time of the offering. |
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However, although these factors were
considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry
since we have no historical operations or financial results to compare them to.
The requirement that we complete our initial business
combination within 24 months from the closing of this offering may give potential target businesses leverage over us in negotiating our initial
business combination.
We have 24 months from the closing of
this offering to complete our initial business combination. Any potential target business with which we enter into negotiations concerning a business
combination will be aware of this requirement. Consequently, such target business may obtain leverage over us in negotiating a business combination,
knowing that if we do not complete a business combination with that particular target business, we may be unable to complete a business combination
with any other target business. This risk will increase as we get closer to the time limit referenced above.
We may not obtain a fairness opinion with respect to the
target business that we seek to acquire and therefore you may be relying solely on the judgment of our board of directors in approving a proposed
business combination.
We will only be required to obtain a
fairness opinion with respect to the target business that we seek to acquire if it is an entity that is affiliated with any of our officers, directors
or sponsor. In all other instances, we will have no obligation to obtain an opinion. Accordingly, investors will be relying solely on the judgment of
our board of directors in approving a proposed business combination.
We may acquire a target business that is affiliated
with our officers, directors or sponsor.
While we do not currently intend to
pursue an initial business combination with a company that is affiliated with our officers, directors or sponsor, we are not prohibited from
pursuing such a transaction. We are also not prohibited from consummating a business combination where any of our officers, directors,
sponsor or their affiliates acquire a minority interest in the target business alongside our acquisition. These affiliations could cause our
officers or directors to have a conflict of interest in analyzing such transactions due to their personal and financial
interests.
We may not be required to obtain an opinion from an
independent investment banking firm as to the fair market value of the target business we are seeking to acquire.
We will not be required to obtain an
opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target
business we are seeking to acquire, as to the fair market value of such target business if our board of directors independently determines that the
target business complies with the 80% threshold. Accordingly, investors will be relying solely on the judgment of our board of directors in valuing
such target business or businesses, and our board of directors may not properly value such target business or businesses.
Resources could be spent researching acquisitions that
are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another
business.
It is anticipated that the investigation
of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will
require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to complete a
specific business combination,
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the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific target business, we may fail to consummate the business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
Compliance with the Sarbanes-Oxley Act of 2002 will
require substantial financial and management resources and may increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act of
2002, or the Sarbanes-Oxley Act, requires that we evaluate and report on our system of internal controls and may require that we have such system of
internal controls audited. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal
penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley
Act also requires that our independent registered public accounting firm report on management’s evaluation of our system of internal controls. A
target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of
the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any
such acquisition. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of
adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting
obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a
negative effect on the trading price of our stock.
We are an “emerging growth company” and we
cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to
investors.
We are an “emerging growth
company,” as defined in the JOBS Act. We will remain an “emerging growth company” for up to five years. However, if our non-convertible
debt issued within a three-year period or revenues exceeds $1 billion, or the market value of our shares of common stock that are held by
non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth
company as of the following fiscal year. As an emerging growth company, we are not being required to comply with the auditor attestation requirements
of section 404 of the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised
accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As such,
our financial statements may not be comparable to companies that comply with public company effective dates. We cannot predict if investors will find
our shares of common stock less attractive because we may rely on these provisions. If some investors find our shares of common stock less attractive
as a result, there may be a less active trading market for our shares and our share price may be more volatile.
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
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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 an election to opt out is irrevocable. We have 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, we, as an emerging growth company, will not adopt the new or revised standard until the time private companies are required to adopt the new or revised standard. This may make comparison of our 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 accountant standards used.
If we effect our initial business combination with a
company located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our
operations.
We may effect our initial business
combination with a company located outside of the United States. If we did, we would be subject to any special considerations or risks associated with
companies operating in the target business’ home jurisdiction, including any of the following:
• |
rules and regulations or currency conversion or corporate withholding taxes on individuals; |
• |
tariffs and trade barriers; |
• |
regulations related to customs and import/export matters; |
• |
longer payment cycles; |
• |
tax issues, such as tax law changes and variations in tax laws as compared to the United States; |
• |
currency fluctuations and exchange controls; |
• |
challenges in collecting accounts receivable; |
• |
cultural and language differences; |
• |
employment regulations; |
• |
crime, strikes, riots, civil disturbances, terrorist attacks and wars; and |
• |
deterioration of political relations with the United States. |
We may not be able to adequately address
these additional risks. If we are unable to do so, our operations may suffer.
If we effect our initial business combination with a
target business located outside of the United States, the laws applicable to such target business will likely govern all of our material agreements and
we may not be able to enforce our legal rights.
If we effect our initial business
combination with a target business located outside of the United States, the laws of the country in which such target business is domiciled will govern
almost all of the material agreements relating to its operations. The target business may not be able to enforce any of its material agreements in such
jurisdiction and appropriate remedies to enforce its rights under such material agreements may not be available in this new jurisdiction. The system of
laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The
inability to enforce or obtain a remedy under any of our future agreements could result in a
37
significant loss of business, business opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws.
Provisions in our amended and restated certificate of
incorporation and bylaws and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for
our common stock and could entrench management.
Our amended and restated certificate of
incorporation and bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best
interests. Our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of
directors being elected in each year. As a result, at a given annual meeting only one-third of the board of directors may be considered for election.
Since our “staggered board” may prevent our stockholders from replacing a majority of our board of directors at any given annual meeting, it
may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders. Moreover, our board of
directors has the ability to designate the terms of and issue new series of preferred stock.
We are also subject to anti-takeover
provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult the removal of
management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our
securities.
Because we must furnish our stockholders with target
business financial statements prepared in accordance with U.S. generally accepted accounting principles or international financial reporting standards
as issued by the IASB, we will not be able to complete our initial business combination with prospective target businesses unless their financial
statements are prepared in accordance with U.S. generally accepted accounting principles.
The federal proxy rules require that a
proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma
financial statement disclosure in periodic reports. These financial statements may be required to be prepared in accordance with, or be reconciled to,
accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards, or IFRS, depending
on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the Public Company
Accounting Oversight Board (United States), or PCAOB. We will include the same financial statement disclosure in connection with any tender offer
documents we use, whether or not they are required under the tender offer rules. Additionally, to the extent we furnish our stockholders with financial
statements prepared in accordance with IFRS, such financial statements will need to be audited in accordance with U.S. GAAP at the time of the
consummation of the business combination. These financial statement requirements may limit the pool of potential target businesses we may
acquire.
There is currently no market for our securities and a
market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
There is currently no market for our
securities. Stockholders therefore have no access to information about prior market history on which to base their investment decision. Following this
offering, the price of our securities may vary significantly due to one or more potential
38
business combinations and general market or economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.
We may be subject to an increased rate of tax on our
income if we are treated as a personal holding company.
Depending on the date and size of our
initial business combination, it is possible that we could be treated as a “personal holding company” for U.S. federal income tax purposes. A
U.S. corporation generally will be classified as a personal holding company for U.S. federal income tax purposes in a given taxable year if more than
50% of its ownership (by value) is concentrated, within a certain period of time, in five or fewer individuals (without regard to their citizenship or
residency and including as individuals for this purpose certain entities such as certain tax-exempt organizations, pension funds, and charitable
trusts), and at least 60% of its income is comprised of certain passive items. See the section titled “Material U.S. Federal Tax Considerations
— Company — Personal Holding Company Status” for more detailed information.
Risks applicable to the specialty chemicals and performance
materials industries
We intend to focus our search on target
businesses operating in the specialty chemicals and performance materials industries. We believe that the following risks will apply to us following
the consummation of our initial business combination with a target business operating in such industries. If we elect to pursue an investment outside
of these industries, the disclosure below would not be relevant to an understanding of the business that we elect to acquire.
Volatility in costs for strategic raw material and energy
commodities or disruption in the supply of these commodities could adversely affect financial results.
Companies in the specialty chemicals and
performance materials industries are reliant on strategic raw material and energy commodities for operations and utilize risk management tools,
including hedging, as appropriate, to mitigate short-term market fluctuations in raw material and energy costs. These risk mitigation measures cannot
eliminate all exposure to market fluctuations. In addition, natural disasters, plant interruptions, changes in laws or regulations, war or other
outbreak of hostilities or terrorism, and breakdown or degradation of transportation infrastructure used for delivery of strategic raw material and
energy commodities, could adversely impact both the cost and availability of these commodities.
The specialty chemicals and performance materials
industries could be materially adversely affected by disruptions to manufacturing operations or related infrastructure.
Significant limitation on a
company’s ability to manufacture products due to disruption of manufacturing operations or related infrastructure could have a material adverse
effect on its sales revenue, costs, results of operations, and financial condition. Disruptions could occur due to internal factors such as computer or
equipment malfunction (accidental or intentional), operator error, or process failures; or external factors such as natural disasters, pandemic
illness, changes in laws or regulations, war or other outbreak of hostilities or terrorism, cyber attacks, or breakdown or degradation of
transportation infrastructure used for delivery of supplies to or for delivery of products to customers.
Legislative or regulatory actions could increase a
company’s future compliance costs.
The facilities and businesses of
companies in the specialty chemicals and performance materials industries are subject to complex health, safety and environmental laws and regulations,
which require and will continue to require significant expenditures to remain in
39
compliance with such laws and regulations. Accruals for such costs and associated liabilities are subject to changes in estimates on which the accruals are based. The amount accrued generally reflects a company’s assumptions about remediation requirements at the contaminated site, the nature of the remedy, the outcome of discussions with regulatory agencies and other potentially responsible parties at multi-party sites, and the number and financial viability of other potentially responsible parties. Changes in the estimates on which the accruals are based, unanticipated government enforcement action, or changes in health, safety, environmental, chemical control regulations, and testing requirements could result in higher costs. Pending and proposed U.S. Federal legislation and regulation increase the likelihood that manufacturing sites will in the future be impacted by regulation of greenhouse gas emissions and energy policy, which legislation and regulation, if enacted, may result in capital expenditures, increases in costs for raw materials and energy, limitations on raw material and energy source and supply choices, and other direct compliance costs.
The specialty chemicals and performance materials
industries are highly competitive and include competitors with greater resources than ours.
The specialty chemicals and performance
materials industries in which we will seek to compete are highly competitive. Competition in these industries is based on a number of factors, such as
price, product, quality and service. Competitors may have greater financial, technological and other resources and may be better able to withstand
changes in market conditions. In addition, competitors may be able to respond more quickly than us to new or emerging technologies and changes in
customer requirements. Consolidation of competitors or customers may also adversely affect any potential business we enter. Furthermore, global
competition and customer demands for efficiency will continue to make price increases difficult.
Companies in the specialty chemicals and performance
materials industries tend to operate in cyclical business segments and financial results are likely to fluctuate
accordingly.
A substantial portion of sales in the
specialty chemicals and performance materials industries are to customers involved, directly or indirectly, in the commercial and residential real
estate, aerospace, automotive and construction, industrial and energy related industries, all of which are, by their nature, cyclical industries. A
downturn in these industries would and has in the past, and may again in the future, result in lower demand for products among customers involved in
those industries and a reduced ability to pass on cost increases to these customers.
If the target business is unable to protect its
intellectual property rights, sales and financial performance could be adversely affected.
Patents and trademarks may be of
material importance to the operations of any business in the specialty chemicals and performance materials industries. Its performance may depend in
part on an ability to establish, protect and enforce such intellectual property and to defend against any claims of infringement, which could involve
complex legal, scientific and factual questions and uncertainties.
Such a business may have to rely on
litigation to enforce intellectual property rights and contractual rights. In addition, it may face claims of infringement that could interfere with
its ability to use technology or other intellectual property rights that are material to its business operations. If litigation that it initiates is
unsuccessful, it may not be able to protect the value of its intellectual property. In the event a claim of infringement is successful, it may be
required to pay royalties or license fees to continue to use technology or other intellectual property rights that it had been using or may be unable
to obtain necessary licenses from third parties at a reasonable cost or within a reasonable period of time.
40
If an acquisition candidate is unable to
obtain licenses on reasonable terms, it may be forced to cease selling or using its products that incorporate the challenged intellectual property, or
to redesign or, in the case of trademark claims, rename its products to avoid infringing the intellectual property rights of third parties, which may
not be possible and may be time-consuming. Any litigation of this type, whether successful or unsuccessful, could result in substantial costs and
diversions of resources. Their intellectual property rights may not have the value that we believe them to have, which could result in a competitive
disadvantage or adversely affect its business and financial performance.
Legal proceedings may have a materially negative impact
on future results of operations.
Acquisition candidates in the specialty
chemicals and performance materials industries are, and may in the future be, subject to various lawsuits and other legal proceedings, including
proceedings related to contract, environmental and other regulatory matters. Such companies may also become subject to lawsuits by customers,
distributors and employees alleging personal injury or product liability associated with their products and businesses. Adverse judgments or rulings in
these legal proceedings, or the filing of additional environmental or other damage claims, may have a materially negative impact on an acquisition
candidate’s future results of operations, cash flows and financial condition. Additionally, such a company may incur significant administrative
and legal costs associated with defending or settling litigation.
Products and manufacturing processes are subject to
technological change and a company’s business will suffer if it fails to keep pace.
Many of the markets in which our
acquisition candidates’ products (and their corresponding manufacturing processes) compete are subject to technological change and new product
introductions and enhancements. Companies must continue to enhance existing products and to develop and manufacture new products with improved
capabilities to continue to be a market leader. Such companies must also continue to make improvements in manufacturing processes and productivity to
maintain their competitive position. When a company invests in new technologies, processes or production facilities, it will face risks related to
construction delays, cost over-runs and unanticipated technical difficulties. An inability to anticipate, respond to, capitalize on or utilize changing
technologies could have an adverse effect on an acquisition candidate’s consolidated results of operations, financial condition and cash flows in
any given period.
41
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
The statements contained in this
prospectus that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements
regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that
refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking
statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these
words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about
our:
• |
ability to complete our initial business combination; |
• |
success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
• |
officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements; |
• |
potential ability to obtain additional financing to complete our initial business combination; |
• |
pool of prospective target businesses; |
• |
the ability of our officers and directors to generate a number of potential investment opportunities; |
• |
potential change in control if we acquire one or more target businesses for stock; |
• |
the potential liquidity and trading of our securities; |
• |
the lack of a market for our securities; |
• |
use of proceeds not held in the trust account or available to us from interest income on the trust account balance; or |
• |
financial performance following this offering. |
The forward-looking statements contained
in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future
developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of
which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or
implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading
“Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual
results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities
laws.
42
USE OF PROCEEDS
We estimate that the net proceeds of
this offering, in addition to the funds we will receive from the sale of the private warrants (all of which will be deposited into the trust account),
will be used as set forth in the following table:
| Without Over-Allotment Option |
Over-Allotment Option Exercised |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Gross
proceeds |
||||||||||
From offering
|
$ | 350,000,000 | $ | 402,500,000 | ||||||
From private
placement |
9,000,000 | 10,050,000 | ||||||||
Total gross
proceeds |
359,000,000 | 412,550,000 | ||||||||
Offering
expenses (1) |
||||||||||
Underwriting
discount (excluding deferred portion) |
7,000,000 | (2) | 8,050,000 | (2) | ||||||
Legal fees
|
250,000 | 250,000 | ||||||||
Nasdaq listing
fee |
75,000 | 75,000 | ||||||||
Printing and
engraving expenses |
55,000 | 55,000 | ||||||||
Accounting
fees |
30,000 | 30,000 | ||||||||
FINRA filing
fee |
61,000 | 61,000 | ||||||||
SEC
registration fee |
52,000 | 52,000 | ||||||||
Miscellaneous
expenses |
177,000 | 177,000 | ||||||||
Total offering
expenses |
7,700,000 | 8,750,000 | ||||||||
Net
proceeds |
||||||||||
Held in the
trust account |
350,000,000 | 402,500,000 | ||||||||
Not held in
the trust account |
1,300,000 | 1,300,000 | ||||||||
Total net
proceeds |
$ | 351,300,000 | $ | 403,800,000 | ||||||
Use of net
proceeds not held in the trust account(3)(4) |
||||||||||
Legal,
accounting and other third party expenses attendant to the search for target businesses and to the due diligence investigation, structuring and
negotiation of our initial business combination |
$ | 335,000 | 26 | % | ||||||
Due diligence
of prospective target businesses by officers, directors and sponsor |
150,000 | 12 | % | |||||||
Legal and
accounting fees relating to SEC reporting obligations |
150,000 | 12 | % | |||||||
Payment of
administrative fee to Quinpario Partners LLC ($10,000 per month for up to 24 months) |
240,000 | 18 | % | |||||||
Corporate and
franchise taxes |
225,000 | 17 | % | |||||||
Working
capital to cover miscellaneous expenses, D&O insurance, general corporate purposes, liquidation obligations and reserves |
200,000 | 15 | % | |||||||
Total
|
$ | 1,300,000 | 100 | % | ||||||
(1) |
A portion of the offering expenses, including the SEC registration fee, the FINRA filing fee, the non-refundable portion of the Nasdaq listing fee and a portion of the legal and audit fees, have been paid from the funds we received from Quinpario Partners LLC described below. These funds will be repaid out of the proceeds of this offering available to us. |
(2) |
The underwriting discount of 2.0% is payable at the closing of the offering. Additionally, a deferred underwriting fee of 3.5% is payable upon consummation of our initial business combination and will be held in the trust account until consummation of such business combination. No discounts or commissions will be paid with respect to the purchase of the private warrants. |
43
(3) |
The amount of proceeds not held in the trust account will remain constant at $1,300,000 even if the over-allotment is exercised. In addition, interest income earned on the amounts held in the trust account (after payment of taxes owed on such interest income) will be available to us to pay for our working capital requirements. We estimate the interest earned on the trust account will be approximately $350,000 over a 24-month period assuming an interest rate of approximately 0.05% per year. |
(4) |
These expenses are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring our initial business combination based upon the level of complexity of that business combination. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would be deducted from our excess working capital. |
Our sponsor has committed that it and/or
its designees will purchase the private warrants (for an aggregate purchase price of $9,000,000) from us on a private placement basis simultaneously
with the consummation of this offering. Each private warrant entitles the holder to purchase one-half of one share of our common stock at $5.75 per
half share. Our sponsor and its designees have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from
us at a price of $0.50 per warrant an additional number of private warrants (up to a maximum of 2,100,000 private warrants) pro rata with the amount of
the over-allotment option exercised so that at least $10.00 per share sold to the public in this offering is held in trust regardless of whether the
over-allotment option is exercised in full or part. These additional private warrants will be purchased in a private placement that will occur
simultaneously with the purchase of units resulting from the exercise of the over-allotment option. All of the proceeds we receive from these purchases
will be placed in the trust account described below.
The rules of the NASDAQ Capital Market
provide that at least 90% of the gross proceeds from this offering and the private placement be deposited in a trust account. Of the net proceeds of
this offering and the sale of the private placement warrants, $350,000,000, or $402,500,000 if the over-allotment option is exercised in full, will be
placed in an account in the United States maintained by Continental Stock Transfer & Trust Company, as trustee. The funds held in the trust account
will be invested only in United States government treasury bills, notes or bonds having a maturity of 180 days or less, or in money market funds
meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in U.S. treasuries, so
that we are not deemed to be an investment company under the Investment Company Act. Except with respect to (1) interest earned on the funds held in
the trust account that may be released to us to pay our income or other tax obligations and (2) interest earned on the funds held in the trust account
that may be released to us for our working capital requirements, the proceeds will not be released from the trust account until the earlier of the
completion of our initial business combination or our redemption of 100% of the outstanding public shares if we have not completed a business
combination in the required time period. The proceeds held in the trust account may be used as consideration to pay the sellers of a target business
with which we complete our initial business combination. Any amounts not paid as consideration to the sellers of the target business may be used to
finance operations of the target business.
The payment to Quinpario Partners LLC,
an affiliate of our sponsor, of a monthly fee of $10,000 is for general and administrative services including office space, utilities and secretarial
support. This arrangement is being agreed to by Quinpario Partners LLC for our benefit and is not intended to provide our officers or directors with
compensation in lieu of a salary. We believe, based on rents and fees for similar services in St. Louis, Missouri, that the fee charged by Quinpario
Partners LLC is at least as favorable as we could have obtained from an unaffiliated person. This arrangement will terminate upon completion of our
initial business combination or the distribution of the trust account to our public stockholders. Other than the $10,000 per month fee, no compensation
of any kind will be paid to our sponsor, members of our management team or any of our or their respective affiliates, for services rendered to
us
44
prior to or in connection with the consummation of our initial business combination (regardless of the type of transaction that it is). However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations. Since the role of present management after our initial business combination is uncertain, we have no ability to determine what remuneration, if any, will be paid to those persons after our initial business combination.
Regardless of whether the over-allotment
option is exercised in full, the net proceeds from this offering available to us out of trust for our working capital requirements in searching for our
initial business combination will be approximately $1,300,000. In addition, interest earned on the funds held in the trust account (after payment of
taxes owed on such interest income) may be released to us to fund our working capital requirements in searching for our initial business combination.
We intend to use the after-tax interest earned for miscellaneous expenses such as paying fees to consultants to assist us with our search for a target
business and for director and officer liability insurance premiums, with the balance being held in reserve in the event due diligence, legal,
accounting and other expenses of structuring and negotiating business combinations exceed our estimates, as well as for reimbursement of any
out-of-pocket expenses incurred by our sponsor, officers and directors in connection with activities on our behalf as described below.
The allocation of the net proceeds
available to us outside of the trust account, along with the available interest earned on the funds held in the trust account, represents our best
estimate of the intended uses of these funds. In the event that our assumptions prove to be inaccurate, we may reallocate some of such proceeds within
the above described categories. If our estimate of the costs of undertaking in-depth due diligence and negotiating our initial business combination is
less than the actual amount necessary to do so, or the amount of interest available from the trust account is insufficient as a result of the current
low interest rate environment, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable.
In this event, we could seek such additional capital through loans or additional investments from members of our management team, but such members of
our management team are not under any obligation to advance funds to, or invest in, us.
We will likely use substantially all of
the net proceeds of this offering, including the funds held in the trust account, to acquire a target business and to pay our expenses relating
thereto. To the extent that our capital stock is used in whole or in part as consideration to effect our initial business combination, the proceeds
held in the trust account which are not used to consummate a business combination will be disbursed to the combined company and will, along with any
other net proceeds not expended, be used as working capital to finance the operations of the target business. Such working capital funds could be used
in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and
development of existing or new products.
To the extent we are unable to
consummate a business combination, we will pay the costs of liquidation from our remaining assets outside of the trust account. If such funds are
insufficient, Quinpario Partners LLC has agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than
$15,000) and has agreed not to seek repayment of such expenses.
As of September 12, 2014, our sponsor
loaned to us an aggregate of $46,663 to be used to pay a portion of the expenses of this offering referenced in the line items above for SEC
registration fee, FINRA filing fee, the non-refundable portion of the Nasdaq listing fee and a portion of the legal and audit fees and expenses. The
loan is payable without interest on the
45
earlier of (i) January 31, 2015, (ii) the date on which we consummate our initial public offering or (iii) the date on which we determine to not proceed with our initial public offering. The loan will be repaid out of the proceeds of this offering available to us for payment of offering expenses.
We believe that, upon consummation of
this offering, we will have sufficient available funds (which includes amounts that may be released to us from the trust account) to operate for up to
the next 24 months, assuming that our initial business combination is not consummated during that time. However, if necessary, in order to meet our
working capital needs following the consummation of this offering, our sponsor, officers and directors or their affiliates may, but are not obligated
to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by
a non-interest bearing promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at
the lender’s discretion, up to $1,500,000 of the notes may be converted upon consummation of our business combination into additional private
warrants at a price of $0.50 per warrant. Our stockholders have approved the issuance of the warrants and underlying securities upon conversion of such
notes, to the extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete
our initial business combination, the loans will not be repaid.
If we seek stockholder approval of our
initial business combination instead of conducting a tender offer to allow our public stockholders to seek conversion of their shares, our sponsor,
directors, officers, advisors or their affiliates may also purchase shares in privately negotiated transactions either prior to or following the
completion of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have
not formulated any terms or conditions for such any transactions. If they engage in such transactions, they will not make any such purchases when they
are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the
Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the
Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time
of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules.
We may not complete a business
combination that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock”
rules). The agreement for our business combination, however, may require as a closing condition that we have a minimum net worth or a certain amount of
cash. If too many public stockholders exercise their conversion rights so that we cannot satisfy the net tangible asset requirement or any net worth or
cash requirements, we would not proceed with the business combination, and instead may search for an alternate business combination.
A public stockholder will be entitled to
receive funds from the trust account (including interest earned on his, her or its portion of the trust account to the extent not previously released
to us) only in the event of (1) our redemption of 100% of the outstanding public shares if we have not completed a business combination in the required
time period, (2) if that public stockholder elects to convert shares of common stock in connection with a stockholder vote to approve our proposed
initial business combination or a vote to amend the provisions of our amended and restated certificate of incorporation relating to stockholders’
rights or pre-business combination activity or (3) if that public stockholder sells shares to us in any tender offer in connection with a proposed
initial business combination. In no other circumstances will a public stockholder have any right or interest of any kind to or in the trust
account.
46
DIVIDEND POLICY
We have not paid any cash dividends on
our shares of common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of
cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent
to completion of our initial business combination. The payment of any dividends subsequent to our initial business combination will be within the
discretion of our board of directors at such time. It is the present intention of our board of directors to retain all earnings, if any, for use in our
business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future. In addition, our
board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future, except if we
increase the size of the offering pursuant to Rule 462(b) under the Securities Act, in which case we will effect a stock dividend immediately prior to
the consummation of the offering in such amount as to maintain our initial stockholders’ ownership at 20.0% of our issued and outstanding shares
of our common stock upon the consummation of this offering. Further, if we incur any indebtedness in connection with our initial business combination,
our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
47
DILUTION
The difference between the public
offering price per share, assuming no value is attributed to the warrants included in the units we are offering by this prospectus and the private
warrants, and the pro forma net tangible book value per share after this offering constitutes the dilution to investors in this offering. Such
calculation does not reflect any dilution associated with the sale and exercise of warrants, including the private warrants. Net tangible book value
per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of
shares of common stock which may be converted into cash), by the number of outstanding shares of common stock.
At September 12, 2014, our net tangible
book value was a deficiency of $47,278, or approximately ($0.01) per share. After giving effect to the sale of 35,000,000 shares of common stock
included in the units we are offering by this prospectus, and the deduction of underwriting discounts and estimated expenses of this offering, and the
sale of the private warrants, our pro forma net tangible book value at September 12, 2014 would have been $5,000,001 or $0.48 per share, representing
an immediate increase in net tangible book value of $0.49 per share to the initial stockholders and an immediate dilution of 95.2% per share or $9.52
to new investors not exercising their conversion rights. For purposes of presentation, our pro forma net tangible book value after this offering is
$334,062,720 less than it otherwise would have been because if we effect a business combination, the ability of public stockholders (but not our
sponsor) to exercise conversion rights or sell their shares to us may result in the conversion or tender of up to 33,406,272 shares sold in this
offering.
The following table illustrates the
dilution to the new investors on a per-share basis, assuming no value is attributed to the warrants included in the units and the private
warrants:
Public
offering price |
$ | 10.00 | ||||||||
Net tangible
book value before this offering |
$ | (0.01 | ) | |||||||
Increase
attributable to new investors and private sales |
0.49 | |||||||||
Pro forma net
tangible book value after this offering |
0.48 | |||||||||
Dilution to
new investors |
$ | 9.52 | ||||||||
Percentage of
dilution to new investors |
95.2 | % |
The following table sets forth
information with respect to our initial stockholders and the new investors:
| Shares Purchased |
Total Consideration |
Average Price per Share |
|||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number |
Percentage |
Amount |
Percentage |
||||||||||||||||||||
Initial
stockholders |
8,750,000 | (1) | 20 | % | $ | 25,000 | 0.01 | % | $ | 0.002 | |||||||||||||
New investors
|
35,000,000 | 80 | % | 350,000,000 | 99.99 | % | $ | 10.00 | |||||||||||||||
| 43,750,000 | 100.0 | % | $ | 350,025,000 | 100.0 | % | |||||||||||||||||
(1) |
Assumes the over-allotment option has not been exercised and an aggregate of 1,312,500 insider shares have been forfeited as a result thereof. |
48
The pro forma net tangible book value
per share after the offering is calculated as follows:
Numerator: |
||||||
Net tangible
book value before the offering |
$ | (47,278 | ) | |||
Net proceeds
from this offering and private placement of private warrants |
351,300,000 | |||||
Plus: Offering
costs accrued for and paid in advance, excluded from tangible book value before this offering |
60,000 | |||||
Less: Deferred
underwriters’ commission |
(12,250,000 | ) | ||||
Less: Proceeds
held in the trust account subject to conversion/tender |
(334,062,720 | ) | ||||
| $ | 5,000,002 | |||||
Denominator: |
||||||
Shares of
common stock outstanding prior to this offering |
8,750,000 | (1) | ||||
Shares of
common stock to be sold in this offering |
35,000,000 | |||||
Less: Shares
subject to conversion/tender |
(33,406,272 | ) | ||||
| 10,343,728 |
(1) |
Assumes that the underwriters’ over-allotment option has not been exercised and an aggregate of 1,312,500 insider shares have been forfeited as a result thereof. |
49
CAPITALIZATION
The following table sets forth our
capitalization at September 12, 2014 and as adjusted to give effect to the sale of our units offered by this prospectus and the private warrants and
the application of the estimated net proceeds derived from the sale of such securities:
| September 12, 2014 |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Actual |
As Adjusted (1) |
||||||||||
Note payable
to related party(2) |
$ | 46,663 | $ | — | |||||||
Deferred
underwriting commission |
— | 12,250,000 | |||||||||
Shares of
common stock, $.0001 par value, -0- and 33,406,272 shares which are subject to possible conversion/tender |
— | 334,062,720 | |||||||||
Stockholders’ equity: |
|||||||||||
Preferred
stock, $.0001 par value, 1,000,000 shares authorized; none issued or outstanding |
— | — | |||||||||
Common stock,
$.0001 par value, 135,000,000 shares authorized; 10,062,500 shares issued and outstanding, actual; 10,343,728 shares (3) issued and
outstanding (excluding 33,406,272 shares subject to possible conversion/tender), as adjusted |
1,006 | 1,034 | |||||||||
Additional
paid-in capital |
23,994 | 5,011,246 | |||||||||
Deficit
accumulated during the development stage |
(12,278 | ) | (12,278 | ) | |||||||
Total
stockholders’ equity: |
12,722 | 5,000,002 | |||||||||
Total
capitalization |
$ | 59,385 | $ | 351,312,722 | |||||||
(1) |
Includes the $9,000,000 we will receive from the sale of the private warrants. |
(2) |
Note payable to related party is a promissory note issued in the aggregate amount of up to $300,000 to our sponsor. The note is non-interest bearing and is payable on the earliest to occur of (i) January 31, 2015, (ii) the consummation of this offering or (iii) the date on which we determine not to proceed with this offering. |
(3) |
Assumes the over-allotment option has not been exercised and an aggregate of 1,312,500 insider shares have been forfeited as a result thereof. |
50
We were formed on July 15, 2014 for the
purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business
combination with one or more target businesses. Our efforts to identify a target business will not be limited to a particular industry or geographic
region, although we intend to focus our search for target businesses that operate in the specialty chemicals and performance materials
industries.
We intend to utilize cash derived from
the proceeds of this offering and the private placement of the private warrants, our securities, debt or a combination of cash, securities and debt, in
effecting our initial business combination. The issuance of additional shares of common stock or preferred stock in our initial business
combination:
• |
may significantly dilute the equity interest of our investors in this offering who would not have pre-emption rights in respect of any such issuance; |
• |
may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock; |
• |
will likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and |
• |
may adversely affect prevailing market prices for our securities. |
Similarly, if we issue debt securities,
it could result in:
• |
default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to pay our debt obligations; |
• |
acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant; |
• |
our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and |
• |
our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding. |
We have neither engaged in any
operations nor generated any revenues to date. Our entire activity since inception has been to prepare for our proposed fundraising through an offering
of our equity securities.
As indicated in the accompanying
financial statements, at September 12, 2014, we had $24,385 in cash and cash equivalents and a working capital deficiency of $47,278. Further, we have
incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management’s plans to address this
uncertainty through this offering are discussed above. Our plans to raise capital or to consummate our initial business combination may not be
successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern.
Liquidity and Capital Resources
Our liquidity needs have been satisfied
to date through receipt of $25,000 from the sale of the insider shares and a loan from our sponsor in an aggregate amount of $46,663 that is more fully
described below. We estimate that the net proceeds from (1) the sale of the units in
51
this offering, after deducting offering expenses of approximately $700,000 and underwriting discounts and commissions (excluding the deferred portion) of $7,000,000 (or $8,050,000 if the over-allotment option is exercised in full) and (2) the sale of the private warrants for a purchase price of $9,000,000 (or $10,050,000 if the over-allotment option is exercised in full), will be $351,300,000 (or $403,800,000 if the over-allotment option is exercised in full). $350,000,000 (or $402,500,000 if the over-allotment option is exercised in full) will be held in the trust account. The remaining $1,300,000 in either case will not be held in the trust account and will be available for our use.
We intend to use substantially all of
the net proceeds of this offering, including the funds held in the trust account, to acquire a target business or businesses and to pay our expenses
relating thereto. To the extent that our capital stock is used in whole or in part as consideration to effect our initial business combination, the
remaining proceeds held in the trust account as well as any other net proceeds not expended will be used as working capital to finance the operations
of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’
operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay
any operating expenses or finders’ fees which we had incurred prior to the completion of our initial business combination if the funds available
to us outside of the trust account were insufficient to cover such expenses.
We believe that, upon consummation of
this offering, the $1,300,000 of net proceeds not held in the trust account, plus the interest earned on the trust account balance (net of income and
other tax obligations) that may be released to us to fund our working capital requirements which we anticipate will be approximately $350,000, will be
sufficient to allow us to operate for at least the next 24 months, assuming that a business combination is not consummated during that time. Over this
time period, we will be using these funds for identifying and evaluating prospective acquisition candidates, performing business due diligence on
prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate
documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and
consummating the business combination. We anticipate that we will incur approximately:
• |
$335,000 of expenses for the search for target businesses and for the legal, accounting and other third-party expenses attendant to the due diligence investigations, structuring and negotiating of our initial business combination; |
• |
$150,000 of expenses for the due diligence and investigation of a target business by our officers, directors and sponsor; |
• |
$150,000 of expenses in legal and accounting fees relating to our SEC reporting obligations; |
• |
$240,000 for the payment of the administrative fee to Quinpario Partners LLC (of $10,000 per month for up to 24 months); |
• |
$225,000 for corporate and franchise taxes; and |
• |
$200,000 for general working capital that will be used for miscellaneous expenses, liquidation obligations and reserves, including director and officer liability insurance premiums. |
If our estimates of the costs of
undertaking in-depth due diligence and negotiating our initial business combination is less than the actual amount necessary to do so, or the amount of
interest available to us from the trust account is less than we expect as a result of the current interest rate environment, we may have insufficient
funds available to operate our
52
business prior to our initial business combination. Moreover, we may need to obtain additional financing either to consummate our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Related Party Transactions
As of September 12, 2014, our sponsor
loaned an aggregate of $46,663 to us, on a non-interest bearing basis, for payment of offering expenses on our behalf. The loan is payable without
interest on the earlier of (i) January 31, 2015, (ii) the date on which we consummate our initial public offering or (iii) the date on which we
determine to not proceed with our initial public offering. The loan will be repaid out of the proceeds of this offering not being placed in the trust
account.
We are obligated, commencing on the date
of this prospectus, to pay Quinpario Partners LLC a monthly fee of $10,000 for general and administrative services.
Our sponsor has committed that it and/or
its designees will purchase an aggregate of 18,000,000 private warrants at $0.50 per private warrant (for a total purchase price of $9,000,000) from
us. These purchases will take place on a private placement basis simultaneously with the consummation of this offering. Our sponsor and its designees
have also agreed that if the over-allotment option is exercised by the underwriters, they will purchase from us at a price of $0.50 per warrant an
additional number of private warrants (up to a maximum of 2,100,000 private warrants) pro rata with the amount of the over-allotment option exercised
so that at least $10.00 per share sold to the public in this offering is held in trust regardless of whether the over-allotment option is exercised in
full or part. These additional private warrants will be purchased in a private placement that will occur simultaneously with the purchase of units
resulting from the exercise of the over-allotment option.
We do not believe we will need to raise
additional funds following this offering in order to meet the expenditures required for operating our business. However, in order to finance
transaction costs in connection with an intended initial business combination, our sponsor, officers, directors or their affiliates may, but are not
obligated to, loan us funds as may be required. In the event that the initial business combination does not close, we may use a portion of the working
capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Such
loans would be evidenced by non-interest bearing promissory notes. The notes would either be paid upon consummation of our initial business
combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon consummation of our business
combination into additional private warrants at a price of $0.50 per warrant. We believe the purchase price of these units will approximate the fair
value of such warrants when issued. However, if it is determined, at the time of issuance, that the fair value of such warrants exceeds the purchase
price, we would record compensation expense for the excess of the fair value of the warrants on the day of issuance over the purchase price in
accordance with ASC 718 — Compensation — Stock Compensation.
Controls and Procedures
We are not currently required to
maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal
control requirements of the Sarbanes-Oxley Act for the fiscal year ending
53
December 31, 2015. As of the date of this prospectus, we have not completed an assessment, nor have our auditors tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Target businesses we may consider for our initial business combination may have internal controls that need improvement in areas such as:
• |
staffing for financial, accounting and external reporting areas, including segregation of duties; |
• |
reconciliation of accounts; |
• |
proper recording of expenses and liabilities in the period to which they relate; |
• |
evidence of internal review and approval of accounting transactions; |
• |
documentation of processes, assumptions and conclusions underlying significant estimates; and |
• |
documentation of accounting policies and procedures. |
Because it will take time, management
involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and
market expectations for our operation of a target business, we may incur significant expense in meeting our public reporting responsibilities,
particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we
expect, thus increasing our exposure to financial fraud or erroneous financing reporting.
Once our management’s report on
internal controls is complete, we will retain our independent auditors to audit and render an opinion on such report when required by Section 404. The
independent auditors may identify additional issues concerning a target business’ internal controls while performing their audit of internal
control over financial reporting.
Quantitative and Qualitative Disclosures about Market
Risk
The net proceeds of this offering,
including amounts in the trust account, will be invested in United States government treasury bills, bonds or notes having a maturity of 180 days or
less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest
solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate
risk.
Off-Balance Sheet Arrangements;
Commitments and Contractual Obligations; Quarterly Results
As of the date of this prospectus, we
did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual
obligations. No unaudited quarterly operating data is included in this prospectus as we have conducted no operations to date.
JOBS Act
On April 5, 2012, the JOBS Act was
signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We
will qualify as an “emerging growth company’’ and under the JOBS Act will be allowed to comply with new or revised accounting
pronouncements based on the effective date for
54
private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of
evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the
JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions, we may not be required to, among other things, (i)
provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of
the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the
auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv)
disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the
chief executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the
completion of our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier.
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Introduction
We are a Delaware blank check company
incorporated on July 15, 2014 formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar business combination with one or more target businesses. Our efforts to identify a prospective target business will not
be limited to a particular industry or geographic region, although we intend to focus our search for target businesses that operate in the specialty
chemicals and performance materials industries.
Over the course of their careers, the
members of our management team have developed a broad international network of contacts and corporate relationships we believe will serve as a useful
source of investment opportunities. We will seek to capitalize on the global network and investing and operating experience of our management team to
identify, acquire and operate one or more businesses in the specialty chemicals and performance materials industries within or outside of the United
States, although we may pursue a business combination outside these industries. In the event we elect to pursue an investment outside of these
industries, our management’s expertise related to that industry may not be directly applicable to its evaluation or operation, and the information
contained herein regarding these industries might not be relevant to an understanding of the business that we elect to acquire.
We believe our management team has the
skills and experience to identify, evaluate and consummate a business combination and is positioned to assist businesses we acquire. However, there is
no assurance that we will complete an initial business combination nor is there any guarantee that such an initial business combination will be
successful. The members of our management team are not required to devote any significant amount of time to our business and are concurrently involved
with other businesses. There is no guarantee that our current officers and directors will continue in their respective roles, or in any other role,
after our initial business combination, and their expertise may only be of benefit to us until our initial business combination is completed, if at
all.
All of our executive officers served as
executive officers of Quinpario 1, a former blank check company which raised $172.5 million in its initial public offering in August 2013. In June
2014, Quinpario 1 consummated its initial business combination with Jason Partners Holdings Inc. in a transaction valued at approximately $670 million.
Quinpario 1’s stockholders approved the business combination, with 89% of the shares voting, 100% of which were voted in favor of the transaction,
allowing for the swift completion of the business combination only 11 months after Quinpario 1’s initial public offering. In excess of 85% of the
amount initially placed into trust remained in trust at the closing. In addition, as a part of the transaction, Quinpario 1 raised approximately $460
million in debt and $45 million in a preferred stock financing. This allowed the company to gain access to over $80 million in additional working
capital at closing to fund operations and to be used for future acquisitions. We believe that potential sellers of target businesses will view the fact
that our management team has successfully closed a business combination with a vehicle similar to our company as a positive factor in considering
whether or not to enter into a business combination with us. However, past performance by our management team is not a guarantee of success with
respect to any business combination we may consummate.
Business Strategy
Our management team intends to focus on
acquiring companies that will increase stockholder value by growing revenue (through organic growth and acquisitions) and improving the efficiency of
business operations of the acquired company. We intend to focus primarily on acquiring companies valued between $700 million and $2 billion of
enterprise
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value. We believe that the acquisition and operation of an established business will provide a foundation from which to build a diversified business platform. Consistent with this strategy, we believe the following general criteria and guidelines are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into a business combination with a target business that does not meet these criteria and guidelines.
• |
Opportunities for Platform Growth: We intend to seek to acquire one or more businesses or assets that we can grow both organically and through acquisitions. Particularly in regard to the specialty chemicals and performance materials industries, we may initially consider those sectors that complement our management team’s background, such as composites and carbon fibers, filtration and biomaterials, alternative energy and storage, specialty films and packaging, ceramics and inorganics, plastics and compounds, electronic chemicals and materials, specialty resins and plastics, chemicals and additives, and specialty fluids and lubricants. |
• |
History of and Potential for Strong Free Cash Flow Generation: We intend to seek to acquire one or more businesses that have the potential to generate strong free cash flow (i.e., companies that typically generate cash in excess of that required to maintain or expand the business’ asset base). We intend to focus on one or more businesses that have recurring revenue streams and low working capital and capital expenditure requirements. We may also seek to prudently leverage this cash flow in order to enhance stockholder value. |
• |
Established Companies with Proven Track Records: We intend to seek to acquire established companies, particularly those focused on industries connected to the specialty chemicals and performance materials industries with sound historical financial performance. We intend to typically focus on companies with a history of strong operating and financial results. Although we are not restricted from doing so, we do not currently intend to acquire start-up companies. |
• |
Experienced and Motivated Management Teams: We intend to seek to acquire businesses that have strong, experienced management teams with a substantial personal economic stake in the performance of the acquired business. We intend to focus on management teams with a proven track record of driving revenue growth, enhancing profitability and generating strong free cash flow. We also intend to focus on companies where we expect that the operating expertise of our officers and directors will complement the target’s management team. |
• |
Strong Competitive Industry Position: We intend to seek to acquire businesses focused on the specialty chemicals and performance materials industries that have strong fundamentals, although we may acquire businesses in other industries. The factors we may consider include growth prospects, competitive dynamics and position, level of consolidation, need for capital investment, potential for improvement and barriers to entry. We intend to focus on companies that have a leading or niche market position. We will likely analyze the strengths and weaknesses of target businesses relative to their competitors, focusing on technology, global positioning, product quality and services, customer loyalty, cost impediments associated with customers switching to competitors, intellectual property protection and brand positioning. We also intend seek to acquire one or more businesses that demonstrate advantages or have the potential to become advantaged when compared to their competitors, which may help to protect their market position and profitability. |
These criteria are not intended to be
exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that our management may deem relevant.
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Competitive Strengths
We believe our competitive strengths to
be the following:
Status as a
public company
We believe our structure will make us an
attractive business combination partner to target businesses. As an existing public company, we offer a target business an alternative to the
traditional initial public offering through a merger or other business combination. In this situation, the owners of the target business would exchange
their shares of stock in the target business for shares of our stock or for a combination of shares of our stock and cash, allowing us to tailor the
consideration to the specific needs of the sellers. We believe target businesses might find this method a more certain and cost effective method to
becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in
marketing, roadshow and public reporting efforts that will likely not be present to the same extent in connection with a business combination with us.
Furthermore, once the business combination is consummated, the target business will have effectively become public, whereas an initial public offering
is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, that could prevent the offering
from occurring. Once public, we believe the target business would then have greater access to capital and an additional means of providing management
incentives consistent with stockholders’ interests than it would have as a privately-held company. It can offer further benefits by augmenting a
company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our status as a
public company will make us an attractive business partner, some potential target businesses may view the inherent limitations in our status as a blank
check company as a deterrent and may prefer to effect a business combination with a more established entity or with a private company.
Financial
position
With funds held in trust available for
our initial business combination initially in the amount of $350,000,000 (or $402,500,000 if the over-allotment option is exercised in full), we offer
a target business a variety of options such as providing the owners of a target business with shares in a public company and a public means to sell
such shares, providing cash for stock, and providing capital for the potential growth and expansion of its operations or strengthening its balance
sheet by reducing its debt ratio. Because we are able to consummate our initial business combination using our cash, debt or equity securities, or a
combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid
to the target business to fit its needs and desires. However, since we have no specific business combination under consideration, we have not taken any
steps to secure third party financing and it may not be available to us.
Management
Operating and Investing Experience
Our executive officers all have deep
knowledge of the chemicals and performance materials industries, experience in managing global businesses, and experience operating in a public-company
environment. Moreover, they have experience with mergers and acquisitions and raising debt and equity capital, including business and financial
analysis, negotiations, structuring and execution. A majority of our management team served as executive officers and/or directors of
Quinpario 1 which consummated its business combination in June 2014. Additionally, a majority of our executive officers are partners in
Quinpario Partners LLC, which is a privately owned investment and operating company founded by our Chairman of the Board, Jeffry N. Quinn, and focused
on the specialty chemicals and performance materials sector. Mr. Quinn and his partners formed Quinpario after leaving Solutia Inc. (formerly NYSE:
SOA), a global specialty chemical and performance materials company, following its sale to Eastman Chemical Company (NYSE: EMN). All of our executive
officers have corporate management experience, extensive operational expertise and significant transactional
58
experience. See the section titled “Management” for further details on our management team’s qualifications and backgrounds.
Effecting Our Initial Business Combination
General
We are not presently engaged in, and we
will not engage in, any substantive commercial business for an indefinite period of time following this offering. We intend to utilize cash derived
from the proceeds of this offering and the private placement of private warrants, our capital stock, debt or a combination of these in effecting our
initial business combination. Although substantially all of the net proceeds of this offering and the private placement of private warrants are
intended to be applied generally toward effecting a business combination as described in this prospectus, the proceeds are not otherwise being
designated for any more specific purposes. Accordingly, investors in this offering are investing without first having an opportunity to evaluate the
specific merits or risks of any one or more business combinations. Our initial business combination may involve the acquisition of, or merger with, a
company which does not need substantial additional capital but which desires to establish a public trading market for its shares, while avoiding what
it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control
and compliance with various Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company that
may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous business combinations with more
than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business
combination.
We Have Not
Identified a Target Business
We do not have any specific business
combination under consideration and we have not (nor has anyone on our behalf), directly or indirectly, contacted any prospective target business or
had any discussions, formal or otherwise, with respect to such a transaction. Additionally, we have not contacted any of the prospective target
businesses that Quinpario 1 had considered and rejected while such entity was a blank check company searching for target businesses to acquire. We do
not currently intend to contact any of such targets; however, we may do so in the future if we become aware that the valuations, operations, profits or
prospects of such target business, or the benefits of any potential transaction with such target business, would be attractive. Additionally, we have
not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable acquisition candidate, nor have we
engaged or retained any agent or other representative to identify or locate such an acquisition candidate. We have also not conducted any research with
respect to identifying the number and characteristics of the potential acquisition candidates. As a result, we may not be able to locate a target
business, and we may not be able to engage in a business combination with a target business on favorable terms or at all.
Subject to the limitation that a target
business have a fair market value of at least 80% of the balance in the trust account at the time of the execution of a definitive agreement for our
initial business combination, as described below in more detail, we will have virtually unrestricted flexibility in identifying and selecting a
prospective acquisition candidate. We have not established any other specific attributes or criteria (financial or otherwise) for prospective target
businesses. Accordingly, there is no basis for investors in this offering to evaluate the possible merits or risks of the target business with which we
may ultimately complete a business combination. To the extent we effect our initial business combination with a
59
financially unstable company or an entity in its early stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. Although our management will endeavor to evaluate the risks inherent in a particular target business, we may not properly ascertain or assess all significant risk factors.
Sources of Target
Businesses
While we have not yet identified any
acquisition candidates, we believe (based on our management’s business knowledge and past experience) that there are numerous acquisition
candidates. We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community.
Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These
sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these sources will
have read this prospectus and know what types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring
to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or
discussions they may have, as well as attending trade shows or conventions. While we do not presently anticipate engaging the services of professional
firms or other individuals that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals in the future,
in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the
terms of the transaction. We have no present intention to enter into a business combination with a target business that is affiliated with any of our
officers, directors or sponsor. However, we are not restricted from entering into any such transactions and may do so if (1) such transaction is
approved by a majority of our disinterested and independent directors (if we have any at that time) and (2) we obtain an opinion from an independent
investment banking firm that the business combination is fair to our unaffiliated stockholders from a financial point of view. As of the date of this
prospectus, there are no affiliated entities that we would consider as a business combination target.
Selection of a
Target Business and Structuring of Our Initial Business Combination
Subject to the limitation that a target
business have a fair market value of at least 80% of the balance in the trust account at the time of the execution of a definitive agreement for our
initial business combination, as described below in more detail, our management will have virtually unrestricted flexibility in identifying and
selecting a prospective target business. Except for the general criteria and guidelines set forth above under the caption “Business
Strategy,” we have not established any specific attributes or criteria (financial or otherwise) for prospective target businesses.
Furthermore, we do not have any specific requirements with respect to the value of a prospective target business as compared to our net assets or the
funds held in the trust account.
Any evaluation relating to the merits of
a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our
management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, we will conduct an
extensive due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as
review of financial and other information which is made available to us. This due diligence review will be conducted either by our management or by
unaffiliated third parties we may engage.
The time and costs required to select
and evaluate a target business and to structure and complete our initial business combination remain to be determined. Any costs incurred
with
60
respect to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise complete a business combination.
Fair Market Value
of Target Business
Pursuant to Nasdaq listing rules, the
target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust
account at the time of the execution of a definitive agreement for our initial business combination, although we may acquire a target business whose
fair market value significantly exceeds 80% of the trust account balance. We currently anticipate structuring a business combination to acquire 100% of
the equity interests or assets of the target business or businesses. We may, however, structure a business combination where we merge directly with the
target business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target
management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or
acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it
not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or
more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the
post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a
transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we
would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders
immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business
combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction
company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% trust account balance
test. In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities to the sellers of such businesses
and/or seek to raise additional funds through a public or private offering of debt or equity securities. Since we have no specific business combination
under consideration, we have not entered into any such fund raising arrangement and have no current intention of doing so. The fair market value of the
target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and
potential sales, earnings, cash flow and/or book value). If our board is not able to independently determine that the target business has a sufficient
fair market value, we will obtain an opinion from an unaffiliated, independent investment banking firm, or another independent entity that commonly
renders valuation opinions on the type of target business we are seeking to acquire, with respect to the satisfaction of such criteria. We will not be
required to obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on
the type of target business we are seeking to acquire, as to the fair market value if our board of directors independently determines that the target
business complies with the 80% threshold.
Lack of Business
Diversification
We expect to complete only a single
business combination, although this process may entail the simultaneous acquisitions of several operating businesses. Therefore, at least initially,
the prospects for our success may be entirely dependent upon the future performance of a single business operation. Unlike other entities which may
have the resources to complete several business combinations of entities operating in multiple industries or multiple areas of
61
a single industry, it is probable that we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating our initial business combination with only a single entity, our lack of diversification may:
• |
subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination, and |
• |
result in our dependency upon the performance of a single operating business or the development or market acceptance of a single or limited number of products, processes or services. |
If we determine to simultaneously
acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other acquisitions, which may make it more difficult for us, and delay our ability, to
complete the business combination. With multiple acquisitions, we could also face additional risks, including additional burdens and costs with respect
to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the
subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.
Limited Ability
to Evaluate the Target Business’ Management Team
Although we intend to scrutinize the
management team of a prospective target business when evaluating the desirability of effecting our initial business combination, our assessment of the
target business’ management team may not prove to be correct. In addition, the future management team may not have the necessary skills,
qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors, if any, in the target business
following our initial business combination remains to be determined. While it is possible that some of our key personnel will remain associated in
senior management or advisory positions with us following our initial business combination, it is unlikely that they will devote their full time
efforts to our affairs subsequent to our initial business combination. Moreover, they would only be able to remain with the company after the
consummation of our initial business combination if they are able to negotiate employment or consulting agreements in connection with the business
combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for them to receive
compensation in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business
combination. While the personal and financial interests of our key personnel may influence their motivation in identifying and selecting a target
business, their ability to remain with the company after the consummation of our initial business combination will not be the determining factor in our
decision as to whether or not we will proceed with any potential business combination. Additionally, our officers and directors may not have
significant experience or knowledge relating to the operations of the particular target business.
Following our initial business
combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We may not have the ability to
recruit additional managers, or that any such additional managers we do recruit will have the requisite skills, knowledge or experience necessary to
enhance the incumbent management.
Stockholders May
Not Have the Ability to Approve an Initial Business Combination
In connection with any proposed business
combination, we will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which
stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata
share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the
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opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. If we determine to engage in a tender offer, such tender offer will be structured so that each stockholder may tender all of his, her or its shares rather than some pro rata portion of his, her or its shares. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our 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 us to seek stockholder approval. Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for cash upon consummation of such initial business combination even when a vote is not required by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC’s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination.
We chose our net tangible asset
threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act of 1933, as amended. However, if
we seek to consummate an initial business combination with a target business that imposes any type of working capital closing condition or requires us
to have a minimum amount of funds available from the trust account upon consummation of such initial business combination, our net tangible asset
threshold may limit our ability to consummate such initial business combination (as we may be required to have a lesser number of shares converted or
sold to us) and may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be
able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at
all. Public shareholders may therefore have to wait 24 months from the closing of this offering in order to be able to receive a pro rata share of the
trust account.
Our sponsor and our officers and
directors have agreed (1) to vote any shares of common stock owned by them in favor of any proposed business combination, (2) not to convert any shares
of common stock in connection with a stockholder vote to approve a proposed initial business combination and (3) not sell any shares of common stock in
any tender in connection with a proposed initial business combination.
None of our officers, directors, sponsor
or their affiliates has indicated any intention to purchase units or shares of common stock in this offering or from persons in the open market or in
private transactions. However, if we hold a meeting to approve a proposed business combination and a significant number of stockholders vote, or
indicate an intention to vote, against such proposed business combination, our officers, directors, sponsor or their affiliates could make such
purchases in the open market or in private transactions in order to influence the vote. Notwithstanding the foregoing, our officers, directors, sponsor
and their affiliates will not make purchases of shares of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange
Act, which are rules designed to stop potential manipulation of a company’s stock.
Conversion
Rights
At any meeting called to approve an
initial business combination, any public stockholder, whether voting for or against such proposed business combination, will be entitled to
demand
63
that his shares of common stock be converted for a full pro rata portion of the amount then in the trust account (initially $10.00 per share, plus any pro rata interest earned on the funds held in the trust account and not previously released to us to pay our taxes or for working capital). Alternatively, we may provide our public stockholders with the opportunity to sell their shares of our common stock to us through a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account.
Notwithstanding the foregoing, a public
stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section
13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 15% or more of the shares of common stock sold in this
offering. Accordingly, if you purchase more than 15% of the shares of common stock sold in this offering and our proposed business combination is
approved, you will not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold such additional
shares of common stock or sell them in the open market. Such a public stockholder would still be entitled to vote against a proposed business
combination with respect to all shares of common stock owned by him or his affiliates. We believe this restriction will prevent stockholders from
accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt to use the conversion right as a means
to force us or our management to purchase their shares at a substantial premium to the then current market price.
Our sponsor, as well as our officers and
directors, will not have conversion rights with respect to any shares of common stock owned by them, directly or indirectly, whether acquired prior to
this offering or purchased by them in this offering or in the aftermarket.
We may also require public stockholders
who wish to convert, whether they are a record holder or hold their shares in “street name,” to either tender their certificates to our
transfer agent at any time through the vote on the business combination or to deliver their shares to the transfer agent electronically using
Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option.
There is a nominal cost associated with
the above-referenced delivery process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will
typically charge the tendering broker $45.00 and it would be up to the broker whether or not to pass this cost on to the holder. However, this fee
would be incurred regardless of whether or not we require holders to deliver their shares prior to the vote on the business combination in order to
exercise conversion rights. This is because a holder would need to deliver shares to exercise conversion rights regardless of the timing of when such
delivery must be effectuated. However, in the event we require stockholders to exercise conversion rights prior to the consummation of the proposed
business combination and the proposed business combination is not consummated, this may result in an increased cost to stockholders.
Any request to convert such shares once
made, may be withdrawn at any time up to the vote on the proposed business combination. Furthermore, if a holder of a public share of common stock
delivered his certificate in connection with an election of their conversion and subsequently decides prior to the applicable date not to elect to
exercise such rights, he may simply request that the transfer agent return the certificate (physically or electronically).
If the initial business combination is
not approved or completed for any reason, then our public stockholders who elected to exercise their conversion rights would not be entitled to convert
their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any shares delivered by public
holders.
64
Liquidation if No
Business Combination
If we do not complete a business
combination within 24 months from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the trust account, including any interest but net of franchise taxes and income taxes payable
with respect to interest earned on the trust account, divided by the number of then outstanding public shares, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject
(in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law.
Under the Delaware General Corporation
Law, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a
dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our outstanding public
shares in the event we do not complete our initial business combination within the required time period may be considered a liquidation distribution
under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the Delaware General Corporation Law intended to
ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be
brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period
before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to
the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of
our trust account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not complete our initial
business combination within the required time period is not considered a liquidation distribution under Delaware law and such redemption distribution
is deemed to be unlawful, then pursuant to Section 174 of the Delaware General Corporation Law, the statute of limitations for claims of creditors
could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution. If we are
unable to complete a business combination within the prescribed time frame, we will (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including any interest but net of franchise taxes and income taxes
payable with respect to interest earned on the trust account, divided by the number of then outstanding public shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to
applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our
board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible
following our 24th month and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be
liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the
third anniversary of such date.
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Because we will not be complying with
Section 280 of the Delaware General Corporation Law, Section 281(b) of the Delaware General Corporation Law requires us to adopt a plan, based on facts
known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us
within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to
searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers,
etc.) or prospective target businesses.
We will seek to have all third parties
(including any vendors or other entities we engage after this offering) and any prospective target businesses enter into valid and enforceable
agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account. As a result,
the claims that could be made against us will be limited, thereby lessening the likelihood that any claim would result in any liability extending to
the trust. We therefore believe that any necessary provision for creditors will be reduced and should not have a significant impact on our ability to
distribute the funds in the trust account to our public stockholders. Nevertheless, there is no guarantee that vendors, service providers and
prospective target businesses will execute such agreements. In the event that a potential contracted party was to refuse to execute such a waiver, we
will execute an agreement with that entity only if our management first determines that we would be unable to obtain, on a reasonable basis,
substantially similar services or opportunities from another entity willing to execute such a waiver. Examples of instances where we may engage a third
party that refused to execute a waiver would be the engagement of a third party consultant who cannot sign such an agreement due to regulatory
restrictions, such as our auditors who are unable to sign due to independence requirements, or whose particular expertise or skills are believed by
management to be superior to those of other consultants that would agree to execute a waiver or a situation in which management does not believe it
would be able to find a provider of required services willing to provide the waiver. There is also no guarantee that, even if they execute such
agreements with us, they will not seek recourse against the trust account. Quinpario Partners LLC has agreed that it will be liable to pay debts and
obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us.
However, it may not be able to satisfy its indemnification obligations if it is required to so as we have not required it to retain any assets to
provide for its indemnification obligations, nor have we taken any further steps to ensure that it will be able to satisfy any indemnification
obligations that arise. Additionally the agreement entered into by Quinpario Partners LLC specifically provides that it will have no liability as to
any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with us waiving any right, title, interest or
claim of any kind they may have in or to any monies held in the trust account. Moreover, it will not be liable to our public stockholders and instead
will only have liability to us. As a result, if we liquidate, the per-share distribution from the trust account could be less than $10.00 due to claims
or potential claims of creditors. We will distribute to all of our public stockholders, in proportion to their respective equity interests, an
aggregate sum equal to the amount then held in the trust account, inclusive of any interest not previously released to us, plus any remaining net
assets (subject to our obligations under Delaware law to provide for claims of creditors as described below).
We anticipate notifying the trustee of
the trust account to begin liquidating such assets promptly after such date and anticipate it will take no more than 10 business days to effectuate
such distribution. Our sponsor has waived their rights to participate in any liquidation distribution with respect to the insider shares. We will pay
the costs of any subsequent liquidation from our remaining assets outside of the trust account and from the interest income on the balance of the trust
account (net income and other tax obligations)
66
that will be released to us to fund our working capital requirements. If such funds are insufficient, Quinpario Partners LLC has agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and has agreed not to seek repayment of such expenses.
Our public stockholders shall be
entitled to receive funds from the trust account only in the event of our failure to complete our initial business combination in the required time
period or if the stockholders seek to have us convert their respective shares of common stock upon a business combination which is actually completed
by us upon an amendment to our amended and restated certificate of incorporation relating to stockholders’ rights or pre-business combination
activity. In no other circumstances shall a stockholder have any right or interest of any kind to or in the trust account.
If we are forced to file a bankruptcy
case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to
applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our
stockholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public stockholders at least $10.00
per share.
If we are forced to file a bankruptcy
case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the
trust account to our public stockholders promptly after 24 months from the closing of this offering, this may be viewed or interpreted as giving
preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board
may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our
company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. Claims may be
brought against us for these reasons.
Amended and
Restated Certificate of Incorporation
Our amended and restated certificate of
incorporation contains certain requirements and restrictions relating to this offering that will apply to us until the consummation of our initial
business combination. If we seek to amend any provisions of our amended and restated certificate of incorporation relating to stockholder’s rights
or pre-business combination activity, we will provide dissenting public stockholders with the opportunity to convert their public shares in connection
with any such vote. Our sponsor and officers and directors have agreed to waive any conversion rights with respect to any insider shares and any public
shares they may hold in connection with any vote to amend our amended and restated certificate of incorporation. Specifically, our amended and restated
certificate of incorporation provides, among other things, that:
• |
we shall either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein; |
67
• |
we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination; |
• |
if our initial business combination is not consummated within 24 months of the closing of this offering, then our existence will terminate and we will distribute all amounts in the trust account and any net assets remaining outside the trust account on a pro rata basis to all of our public holders of shares of common stock; |
• |
upon the consummation of this offering, $350,000,000, or $402,500,000 if the over-allotment option is exercised in full, shall be placed into the trust account; |
• |
we may not consummate any other business combination, merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar transaction prior to our initial business combination; and |
• |
prior to our initial business combination, we may not issue (i) any shares of common stock or any securities convertible into common stock, or (ii) any securities that participate in any manner in the proceeds of the trust account, or that vote as a class with the common stock sold in this offering on our initial business combination. |
Competition
In identifying, evaluating and selecting
a target business, we may encounter intense competition from other entities having a business objective similar to ours. Many of these entities are
well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these
competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with
those of many of these competitors. While we believe there may be numerous potential target businesses that we could acquire with the net proceeds of
this offering, our ability to compete in acquiring certain sizable target businesses may be limited by our available financial
resources.
The following also may not be viewed
favorably by certain target businesses:
• |
our obligation to seek stockholder approval of our initial business combination or engage in a tender offer may delay the completion of a transaction; |
• |
our obligation to convert shares of common stock held by our public stockholders may reduce the resources available to us for our initial business combination; |
• |
our outstanding warrants, and the potential future dilution they represent; |
• |
our obligation to either repay or issue private warrants upon conversion of up to $1,500,000 of working capital loans that may be made to us by our sponsor, officers, directors or their affiliates; and |
• |
our obligation to register the resale of the insider shares, as well as the private warrants (and underlying securities) and any securities issued to our sponsor, officers, directors or their affiliates upon conversion of working capital loans. |
Any of these factors may place us at a
competitive disadvantage in successfully negotiating our initial business combination. Our management believes, however, that our status as a public
entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held entities having a
similar business objective as ours in acquiring a target business with significant growth potential on favorable terms.
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If we succeed in effecting our initial
business combination, there will be, in all likelihood, intense competition from competitors of the target business. Subsequent to our initial business
combination, we may not have the resources or ability to compete effectively.
Facilities
We currently maintain our principal
executive offices at 12935 N. Forty Drive, Suite 201, St. Louis, Missouri 63141. The cost for this space is included in the $10,000 per-month fee
Quinpario Partners LLC, an affiliate of our sponsor, will charge us for general and administrative services commencing upon the date of this prospectus
pursuant to a letter agreement between us and Quinpario Partners LLC. We believe, based on rents and fees for similar services in St. Louis, Missouri,
that the fee charged by Quinpario Partners LLC is at least as favorable as we could have obtained from an unaffiliated person. We consider our current
office space, combined with the other office space otherwise available to our executive officers, adequate for our current operations.
Employees
We have four executive officers, none of
whom is paid a salary by us. These individuals are not obligated to devote any specific number of hours to our matters and intend to devote only as
much time as they deem necessary to our affairs. The amount of time they will devote in any time period will vary based on whether a target business
has been selected for the business combination and the stage of the business combination process the company is in. Accordingly, once a suitable target
business to acquire has been located, management will spend more time investigating such target business and negotiating and processing the business
combination (and consequently spend more time on our affairs) than had been spent prior to locating a suitable target business. We do not intend to
have any full time employees prior to the consummation of our initial business combination.
Periodic Reporting and Audited Financial
Statements
We will register our units, common stock
and warrants under the Exchange Act prior to the completion of this offering and will have reporting obligations, including the requirement that we
file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual report will contain
financial statements audited and reported on by our independent registered public accountants.
We will provide stockholders with
audited financial statements of the prospective target business as part of any proxy solicitation materials or tender offer documents sent to
stockholders to assist them in assessing the target business. These financial statements will need to be prepared in accordance with or reconciled to
U.S. GAAP or IFRS as issued by the IASB. To the extent we furnish our stockholders with financial statements prepared in accordance with IFRS, such
financial statements will need to be audited in accordance with U.S. GAAP at the time of the consummation of the business combination. A particular
target business identified by us as a potential acquisition candidate may not have the necessary financial statements. To the extent that this
requirement cannot be met, we may not be able to acquire the proposed target business.
We may be required by the Sarbanes-Oxley
Act to have our internal control procedures audited for the fiscal year ending December 31, 2015. A target company may not be in compliance with the
provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to
achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
We are an emerging growth company as
defined in the JOBS Act and will remain such for up to five years. However, if our non-convertible debt issued within a three-year period or
our
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total revenues exceed $1 billion or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards.
Legal Proceedings
There is no material litigation,
arbitration, governmental proceeding or any other legal proceeding currently pending or known to be contemplated against us or any members of our
management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding in the 10 years
preceding the date of this prospectus.
Comparison to Offerings of Blank Check Companies Subject to
Rule 419
The following table compares and
contrasts the terms of our offering and the terms of an offering of blank check companies under Rule 419 promulgated by the SEC assuming that the gross
proceeds, underwriting discounts and underwriting expenses for the Rule 419 offering are the same as this offering and that the underwriters will not
exercise their over-allotment option. None of the terms of a Rule 419 offering will apply to this offering because we will have net tangible assets in
excess of $5,000,001 upon the successful consummation of this offering and will file a Current Report on Form 8-K, including an audited balance sheet
demonstrating this fact.
| Terms of the Offering |
Terms Under a Rule 419 Offering |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Escrow of
offering proceeds |
$350,000,000 of
the net offering proceeds and proceeds from the sale of the private warrants will be deposited into a trust account in the United States maintained by
Continental Stock Transfer & Trust Company, acting as trustee. |
$297,675,000 of
the offering proceeds would be required to be deposited into either an escrow account with an insured depositary institution or in a separate bank
account established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial interests in the
account. |
||||||||
Investment of
net proceeds |
The $350,000,000
of net offering proceeds and proceeds from the sale of the private warrants held in the trust account will only be invested in United States government
treasury bills, bonds or notes with a maturity of 180 days or less or in money market funds meeting the applicable conditions under Rule 2a-7
promulgated under the Investment Company Act of 1940 and that invest solely in U.S. treasuries. |
Proceeds could be
invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act of 1940 or in securities that are
direct obligations of, or obligations guaranteed as to principal or interest by, the United States. |
||||||||
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| Terms of the Offering |
Terms Under a Rule 419 Offering | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Limitation on
fair value or net assets of target business |
The initial target
business that we acquire must have a fair market value equal to at least 80% of the balance in our trust account at the time of the execution of a
definitive agreement for our initial business combination. |
We would be
restricted from acquiring a target business unless the fair value of such business or net assets to be acquired represent at least 80% of the maximum
offering proceeds. |
||||||||
Trading of
securities issued |
The units may
commence trading on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading on
the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. informs us of its decision to allow earlier separate
trading, provided we have filed with the SEC a Current Report on Form 8-K, which includes an audited balance sheet reflecting our receipt of the
proceeds of this offering. |
No trading of the
shares of common stock would be permitted until the completion of our initial business combination. During this period, the securities would be held in
the escrow or trust account. |
||||||||
Election to
remain an investor |
We will either (1)
give our stockholders the opportunity to vote on the business combination or (2) provide our public stockholders with the opportunity to sell their
shares of our common stock to us in a tender offer for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account,
less taxes. If we hold a meeting to approve a proposed business combination, we will send each stockholder a proxy statement containing information
required by the SEC. Alternatively, if we do not hold a meeting and instead conduct a tender offer, we will conduct such tender offer in accordance
with the tender offer rules of the SEC and file tender offer documents with the SEC which will contain substantially the same financial and other
information about the initial business combination as we would have included in a proxy statement. |
A prospectus
containing information required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the company, in
writing, within a period of no less than 20 business days and no more than 45 business days from the effective date of the post-effective amendment, to
decide whether he or she elects to remain a stockholder of the company or require the return of his or her investment. If the company has not received
the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow account would
automatically be returned to the stockholder. Unless a sufficient number of investors elect to remain investors, all of the deposited funds in the
escrow account must be returned to all investors and none of the securities will be issued. |
||||||||
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| Terms of the Offering |
Terms Under a Rule 419 Offering | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Business
combination deadline |
Pursuant to our
amended and restated certificate of incorporation, if we are unable to complete our initial business combination within 24 months from the closing of
this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter, redeem 100% of the outstanding public shares, which redemption will completely extinguish public stockholders’ rights as
stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject
(in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. |
If an acquisition
has not been consummated within 18 months after the effective date of the initial registration statement, funds held in the trust or escrow account
would be returned to investors |
||||||||
Interest earned
on the funds in the trust account |
There can be
released to us, from time to time, any interest earned on the funds in the trust account (1) that we may need to pay our tax obligations and (2) any
remaining interest that we need for our working capital requirements. |
All interest
earned on the funds in the trust account will be held in the trust account for the benefit of public stockholders until the earlier of the completion
of our initial business combination and our liquidation upon failure to effect our initial business combination within the allotted
time. |
||||||||
Release of
funds |
Except for (1)
interest earned on the funds in the trust account that we may need to pay our tax obligations and (2) any remaining interest that we may need for our
working capital requirements that may be released to us from the interest earned on the trust account balance, the proceeds held in the trust account
will not be released until the earlier of the completion of our initial business combination and our liquidation upon failure to effect our initial
business combination within the allotted time. |
The proceeds held
in the escrow account would not be released until the earlier of the completion of our initial business combination or the failure to effect our
initial business combination within the allotted time. |
||||||||
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Directors and Executive Officers
Our current directors and executive
officers are as follows:
| Name |
Age |
Position |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Jeffry N.
Quinn |
55 | Chairman of the Board |
||||||||
D. John
Srivisal |
36 | President and Chief Executive Officer |
||||||||
A. Craig
Ivey |
57 | Vice
President — Operations |
||||||||
Sara F.
Melly |
34 | Vice President, General Counsel and Secretary |
||||||||
Edgar G.
Hotard |
61 | Director |
||||||||
W. Thomas
Jagodinski |
57 | Directior |
||||||||
Ilan
Kaufthal |
67 | Director |
||||||||
Roberto
Mendoza |
68 | Director |
||||||||
Dr. John
Rutledge |
66 | Director |
||||||||
Shlomo
Yanai |
62 | Director |
||||||||
Jeffry N. Quinn is our Chairman
of our Board of Directors, and has served in such role since our inception in July 2014. He is also the founder, Chairman, Chief Executive Officer of
our sponsor and founder, Chairman, Chief Executive Officer and Managing Member of our sponsor’s managing member, Quinpario Partners LLC, and has
served in such roles since July 2014 and July 2012, respectively. Mr. Quinn was President, Chief Executive Officer and Chairman of Quinpario 1 from its
inception in May 2013 until its business combination with Jason Industries, Inc. in June 2014 and has continued to serve as chairman of the board and a
director of Jason Industries since the business combination.
Prior to forming Quinpario Partners LLC,
Mr. Quinn was President, Chief Executive Officer and Chairman of the Board of Solutia Inc. (formerly NYSE: SOA), a global specialty chemical and
performance materials company. From May 2004 to July 2012, Mr. Quinn served as the President and Chief Executive Officer of Solutia, and served as the
Chairman of the Board from February 2006 to July 2012. Mr. Quinn became President and Chief Executive Officer of Solutia shortly after it had filed for
bankruptcy. Over eight years as Chief Executive Officer of Solutia, Mr. Quinn oversaw its transformation from a domestically oriented commodity
chemical company to one of the world’s leading specialty chemical firms. Solutia was sold to Eastman Chemical in July 2012 for approximately $4.7
billion. Mr. Quinn joined Solutia in 2003 as Executive Vice President, Secretary, and General Counsel. In mid-2003 he added the duties of Chief
Restructuring Officer to help prepare the company for its eventual filing for reorganization under Chapter 11. During his tenure at Solutia, the
company completed a number of divestitures and acquisitions as it reshaped its portfolio of businesses. It also completed a number of debt and equity
offerings. Prior to joining Solutia, Mr. Quinn was Executive Vice President, Chief Administrative Officer, Secretary and General Counsel for Premcor
Inc. (formerly NYSE: PCO), which at the time was one of the nation’s largest independent refiners. At that time Premcor was a portfolio company of
Blackstone Capital Partners, a private equity fund. As general counsel of Premcor, Mr. Quinn was involved in the company’s initial public offering
and listing on the New York Stock Exchange in 2002. Premcor was eventually sold to Valero Energy Corporation (NYSE: VLO) in 2005. Prior to Premcor, Mr.
Quinn was Senior Vice President-Law & Human Resources, Secretary and General Counsel for Arch Coal, Inc. (NYSE: ACI). Mr. Quinn started at Arch
Coal in 1986 when it was known as Arch Mineral Corporation. He became General Counsel in 1989. For the next eleven years Mr. Quinn was a member of the
executive management team that grew Arch from a small regional coal producer to the nation’s second largest coal company. Mr. Quinn was involved
in a number of mergers and acquisitions at Arch Coal, including the 1987 acquisition of the coal
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business of Diamond Shamrock Corporation, the 1997 merger with Ashland Coal, Inc., the 1998 acquisition of the U.S. business of Atlantic Richfield Company, and many other smaller transactions as well as the company’s initial public offering in 1997 as part of the Ashland Coal merger. In addition to serving on the board of Jason Industries, Inc. (NASDAQ: JASN), Mr. Quinn is a member of the board of directors of Tronox Limited (NYSE: TROX), a fully integrated producer and marketer of titanium ore and titanium dioxide pigment, Ferro Corporation (NYSE: FOE), a global supplier of technology-based performance materials and chemicals for manufacturers, and W.R. Grace & Co. (NYSE: GRA), a global supplier of catalysts, engineered and packaging materials and specialty construction chemicals and building materials. Mr. Quinn received both a bachelor’s degree in Mining Engineering and a Juris Doctorate degree from the University of Kentucky.
Mr. Quinn is well qualified to serve as
Chairman of our board of directors due to his background in analyzing, reviewing and managing investments in companies in a variety of industries, as
well as his experience in public company governance.
D. John Srivisal is our President
and Chief Executive Officer, and has served in such roles since September 2014. He is also a partner in our sponsor and in Quinpario Partners LLC, and
has served in such roles since July 2014 and July 2012, respectively. Mr. Srivisal was previously Vice President and Chief Financial Officer of
Quinpario 1 and served in such positions from its inception in May 2013 until its business combination with Jason Industries, Inc. in June 2014. From
January 2009 to July 2012, Mr. Srivisal was Vice President, Transaction Execution for Solutia Inc. In that role Mr. Srivisal had global responsibility
for merger, acquisition, divestiture and joint venture transactions. Mr. Srivisal served as the lead strategist, negotiator and decision-maker
responsible for completing over 20 transactions that were critical to the transformation and reshaping of Solutia’s portfolio of businesses.
Before being named to this position in January 2009, Mr. Srivisal served as Solutia’s Director of Planning and Coordination from June 2004. In
this role, Mr. Srivisal had chief of staff responsibilities for Mr. Quinn and played a leading role in managing the company’s reorganization
process and securing a global settlement with Solutia’s various constituents that resulted in Solutia’s emergence from bankruptcy. During his
tenure at Solutia from June 2004 to July 2012, Mr. Srivisal also played a key role in Solutia’s financing transactions, including Solutia’s
exit financing and relisting on the NYSE following its emergence from bankruptcy, various acquisition-related financings, and several equity and debt
offerings and refinancings. Mr. Srivisal has over fifteen years of transaction experience that includes acting on behalf of Solutia as well as advising
companies, creditors, financial sponsors and government entities in a variety of industries on recapitalizations, restructurings, financings, leveraged
buyouts, mergers, acquisitions, divestitures and joint ventures. Before joining Solutia, Mr. Srivisal was a restructuring investment banker at
Rothschild Inc. where he executed numerous in-court and out-of-court restructuring, financing and M&A transactions. He began his career in the
mergers and acquisitions group at Peter J. Solomon Company. Mr. Srivisal graduated magna cum laude with a Bachelor of Science degree in Economics
(concentration in Finance) and a minor in Mathematics from the Wharton School of the University of Pennsylvania.
A. Craig Ivey is our Vice
President — Operations, and has served in such role since inception in July 2014. He is also an operating partner in our sponsor and in Quinpario
Partners LLC, and has served in such roles since July 2014 and July 2012, respectively. Mr. Ivey was previously Vice President — Operations of
Quinpario 1 and served in such position from its inception in May 2013 until its business combination with Jason Industries, Inc. in June 2014. Mr.
Ivey was previously President and General Manager of the Performance Films Division for Solutia Inc. from August 2011 to July 2012. The Performance
Films division is a leader in aftermarket window film with annual revenues of $300 million and operations in Europe, Asia and the Americas. As
President and General Manager, Mr. Ivey had responsibility for all commercial, manufacturing, technology, and strategic aspects of the business. During
his tenure at Performance Films, the division completed an acquisition of Southwall
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Technologies Inc. This synergistic acquisition was foundational in expanding the business’ global manufacturing footprint and securing a world class technology base. Mr. Ivey joined Solutia at the company’s inception in 1997 and possesses over 30 years of manufacturing, supply chain, business and leadership expertise. From March 2011, prior to being named as President and General Manager for Performance Films in August 2011, Mr. Ivey served as Vice President — Photovoltaics in Solutia’s Advanced Interlayers division, in addition to his role (beginning in January 2010) as Vice President of Business Operations — Asia Pacific Region, based in Shanghai, where he was instrumental in growing Solutia’s presence across Asian markets. While in Asia, he led the consolidation of regional headquarters and operations to Shanghai, providing the skills and staff to support a 20% year on year (2009-2011) increase in revenue and establishing the foundation for future growth. From January 2008 to January 2010 he served as Vice President — Supply Chain of the Nylon Division. In this role, Mr. Ivey led the development of a global supply chain network, establishing operations and providing service across four continents. Mr. Ivey also has an operations background and served as Plant Manager and Manufacturing Director for Solutia’s largest production facility in Pensacola, Florida. While in this role, he led the transformation of the facility from a traditional fiber-based operation to an engineered resins platform, successfully implementing both process and cultural changes. The conversion of the manufacturing footprint to an engineered resin platform was fundamental in allowing Solutia’s Nylon business to compete on a global scale. Mr. Ivey also has significant business integration experience, having led a number integration and divesture activities while at Solutia. Prior to joining Solutia, he served in various engineering and operations roles with Monsanto Company, Chevron Corporation and Olin Corporation. Mr. Ivey earned his bachelor’s degree in Chemical Engineering from Auburn University.
Sara F. Melly is our Vice
President, General Counsel and Secretary, and has served in such roles since October 2014. She is also a Vice President and General Counsel of
our sponsor and Quinpario Partners LLC, serving in those roles since October 2014. From 2005 to October 2014, Ms. Melly was an attorney
with Armstrong Teasdale LLP, a regional law firm based in St. Louis, Missouri. During her tenure at Armstrong Teasdale, Ms. Melly was made a
partner of the firm and focused her practice on representing corporate creditors in loan workouts, out-of-court restructuring transactions,
acquisitions and divestitures, collateral recovery, bankruptcy proceedings and commercial litigation. She represented clients in front of
Federal and state trial courts in Missouri and Illinois, the Missouri Court of Appeals and the Supreme Court of Missouri. Ms. Melly
graduated magna cum laude with a Bachelor of Arts degree in Political Science from the University of Arkansas and cum laude
with a Juris Doctorate degree from the Saint Louis University School of Law.
Edgar G. Hotard has served as
a director since November 2014. Mr. Hotard serves as an Operating Partner at HAO Capital, a private equity firm based in Beijing and Hong Kong,
which provides growth capital to Chinese companies, since November 2010 and as a Venture Partner at ARCH Venture Partners, a provider of
seed / early stage venture capital for technology firms in life sciences, physical sciences and advanced materials, since June 2002. He also
serves as Executive Chairman of SIAD Engineering (Hangzhou) Co. Ltd., the China subsidiary of SIAD Macchine Impianti S.p.A, a global
supplier of compressors and air separation equipment, a position he has held since January 2013. Previously, Mr. Hotard served as an advisor to
the Asia practice of Monitor Group, a global strategy-consulting firm and as non-executive Chairman of Monitor Group (China), from June
2000 to November 2010. Prior to that, Mr. Hotard served as President and Chief Operating Officer of Praxair, Inc. (“Praxair”)
(NYSE:PX), a worldwide provider of industrial gases, including atmospheric, process and specialty gases, from July 1992 until his retirement
in January 1999. In 1992, he co-led the spin-off of Praxair from Union Carbide Corporation (formerly NYSE:UK), a commodity and specialty
chemical and polymers company where he served as Corporate Vice President from July 1990 to July 1992. Mr. Hotard currently serves as a member
of the Board of Directors of
75
Albany International Corp. (NYSE:AIN), a global advanced materials processing company serving the paper and aerospace industry, a position he has held since November 2006 and as a member of the Board of Directors of Baosteel Metals, a subsidiary of Baosteel Group Co. Ltd., since January 2013 and as a member of the Board of Directors of SIAD Macchine Impianti S.p.A. since May 2013. Previously, he served as a member of the Board of Directors of various public companies, including Global Industries Inc. (formerly NASDAQ:GLBL), a global offshore oil and gas engineering and construction service company, from 1999 to September 2011; Solutia Inc. (formerly NYSE:SOA), a performance materials specialty chemical manufacturer with global operations, from February 2011 to July 2012 and Shona Energy Company, Inc. (formerly TSX-V:SHO), an oil and natural gas exploration, development and production company, from July 2011 to December 2012. In addition, Mr. Hotard was a founding sponsor of the China Economic and Technology Alliance and a joint MBA program between Renmin University, Beijing, China and the School of Management of the State University of Buffalo, New York.
Mr. Hotard is well qualified to serve
as an independent director due to his background in the advanced materials processing and energy industries, his experience in public and
private company governance and private equity, as well as his prior experience with Quinpario 1.
W. Thomas Jagodinski has
served as a director since November 2014. Mr. Jagodisnki has been a private investor since September 2007. Mr. Jagodinski has served as a member
of the Board of Directors of Lindsay Corporation (NYSE:LNN), a global company focused on providing irrigation and infrastructure
solutions, since July 2008 and currently serves as Chairman of the Audit Committee. He has also served as a member of the Board of Directors
and as Audit Committee Chair of Centrus Energy Corp. (formerly known as USEC prior to its emergence from bankruptcy) (NYSE:LEU), a supplier
of enriched uranium fuel for international and domestic commercial nuclear power plants, since September 2014. Previously, Mr. Jagodinski
was a member of the Board of Directors of Phosphate Holdings, Inc., a U.S. producer and marketer of DAP, the most common form of phosphate
fertilizer, from May 2009 until June 2014, where he served as Chairman of Board. Additionally, from August 2013 through June 2014, he
served as a member of the Board of Directors of Quinpario 1. Previously, Mr. Jagodinski served as a member of the Board of Directors of Solutia
Inc. from March 2008 until July 2012. Prior to that, Mr. Jagodinski was President, Chief Executive Officer and Director of Delta and Pine
Land Company (“D&PL”) (formerly NYSE: DLP), a leader in the cotton seed industry, from September 2002 until the company was
acquired in June 2007. From June 2002 until August 2002, he served as D&PL’s Executive Vice President and from September 2000
until June 2002, he served as Senior Vice President, Chief Financial Officer, Treasurer and Assistant Secretary. Mr. Jagodinski was also
D&PL’s Vice President-Finance, Treasurer and Assistant Secretary from February 1993 until September 2000 and held various other
financial positions at D&PL, from October 1991, when he joined the company, until February 1993. Prior to D&PL, Mr. Jagodinski held
various positions in the audit division at Arthur Andersen from 1983 to 1991 and Senior Accountant at Price Waterhouse from 1978 to 1983.
Mr. Jagodinski is a licensed Certified Public Accountant and a member of the AICPA, TSCPA and was MSCPA. Mr. Jagodinski received a Bachelor of
Business Administration degree (Accounting) from the University of Mississippi.
Mr. Jagodinski is well qualified to
serve as an independent director due to his background in specialty chemicals and fertilizers, his experience in public and private company
governance and accounting, including his service on an audit committee and a compensation committee, as well as his prior experience with
Quinpario 1.
Ilan Kaufthal has served as a
director since November 2014. Mr. Kaufthal is Chairman of East Wind Advisors, a specialized investment banking firm serving companies in the
media, education, consumer/retail and information industries, and has held such position since May
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2011. From July 2008 to July 2013, Mr. Kaufthal served as Senior Advisor at Irving Place Capital. Earlier in his career, he was Vice Chairman of Investment Banking at Bear Stearns & Co. from May 2000 to July 2008, Vice Chairman and Head of Mergers and Acquisitions at Schroder & Co. from February 1987 to May 2000, and SVP and CFO at NL Industries from May 1971 to February 1987. Mr. Kaufthal serves on the board of directors of the following public companies: Cambrex Corporation (NYSE: CBM), a supplier to the pharmaceutical industries, Blyth, Inc. (NYSE: BTH), a multi level marketing company based in Greenwich, Connecticut and Tronox Limited (NYSE:TROX), a fully integrated producer and marketer of titanium ore and titanium dioxide pigment. He previously served as a director of Quinpario 1. Mr. Kaufthal is a graduate of Columbia University and the New York University Graduate School of Business Administration.
Mr. Kaufthal is well qualified to
serve as an independent director due to his background and his experience in public and private company governance and investment banking, as
well as his prior experience with Quinpario 1.
Roberto Mendoza has served as
a director since November 2014. Mr. Mendoza has served as a Senior Managing Director of Atlas Advisors LLC, an independent global investment
banking firm, since March 2010. Previously, Mr. Mendoza co-founded Deming Mendoza & Co., LLC, a corporate finance advisory firm, and served
as one of its partners from February 2009 to March 2010. Mr. Mendoza served as Non-Executive Chairman of Trinsum Group from February 2007 to
November 2008. In January 2007, Trinsum Group was formed as a result of a merger of Marakon Associates and Integrated Finance Limited, a
financial advisory company which Mr. Mendoza co-founded and of which he served as Chairman of the Board and Managing Director from 2002 to
February 2007. He also served as Managing Director of Goldman Sachs Services from September 2000 to February 2001. From 1967 to 2000, Mr.
Mendoza held positions at J.P. Morgan & Co. Inc., serving from 1990 to 2000 as director and Vice Chairman of the Board. Mr. Mendoza served
as Chairman of Egg plc from May 2000 to February 2006, and as a director of Prudential plc from May 2000 to May 2007, and of PARIS RE Holdings
Limited from January 2007 to September 2009. He currently serves as a director of Rocco Forte & Family Limited, PartnerRe Ltd., Manpower
Inc. and The Western Union Company. Mr. Mendoza is a member of the Council on Foreign Relations. Mr. Mendoza holds a B.A. from Yale and
an M.B.A. (Baker Scholar) from the Harvard Business School.
Mr. Mendoza is well qualified to
serve as an independent director due to his substantial experience in investment banking and financial services, as well as his international
business experience and service on other public company boards.
Dr. John Rutledge has served
as a director since November 2014. Dr. Rutledge is the founder of Rutledge Capital, a private equity investment firm that invests in U.S.
middle market manufacturing, distribution, and service companies, and has served as its Chairman since 1990. Dr. Rutledge is also Chief
Investment Strategist for Safanad SA Inc., an investment firm based in New York, since its inception in 2008. He also serves as Senior
Research Professor at Claremont Graduate University since 2010, where he teaches economics and finance. Dr. Rutledge also serves as a
CNBC Contributor since 2009. In addition, Dr. Rutledge is an Honorary Professor at the Chinese Academy of Sciences in Beijing and Chief Advisor
for Finance and Investment to the Governor of the Haidian District in Beijing and has served in those capacities since 2007 and 2008,
respectively. He is a senior fellow at the Pacific Research Institute and the Heartland Institute. In addition to his many advisory and board
roles, Dr. Rutledge wrote the Forbes’ Business Strategy column from 1992 to 2002 and has writes for Forbes.com and TheStreet.com. He
also founded Claremont Economics Institute, an economic advisory business, in 1978 and served as its Chairman from January 1979 to 1991. Dr.
Rutledge currently serves as a member of the Board of Directors of Jason Industries, Inc. (NASDAQ:JASN), a global industrial manufacturing
company operating in the agricultural,
77
construction and industrial manufacturing sectors, since August 2013. Dr. Rutledge has served as the director of a number of other companies, including: American Standard (formerly NYSE: ASD), a manufacturer of plumbing, air conditioning, and automotive products; Earle M. Jorgensen Company (formerly NYSE: JOR), the largest independent distributor of metal products in North America; Lazard Freres Funds, a mutual fund; CROM Corporation, a designer and manufacturer of pre-stressed concrete tanks; AdobeAir, a manufacturer of heating and cooling products; StairMaster, a manufacturer of fitness products; Fluidrive, a manufacturer of steerable, hydraulic axles for the agricultural and trucking industries; CST, a manufacturer of paper office products; Ellis Communications, an operator of television and radio companies; General Medical, a supplier of medical products; United Refrigeration, an operator of cold storage warehouses for the food industry; and Framed Picture Enterprise, a retailer in the framed art business. Dr. Rutledge was one of the principal architects of the Reagan economic plan in 1981 and was an adviser to the Bush White House on tax policy from 2001 to 2004. Dr. Rutledge began his career as a professor of economics at Tulane University and Claremont McKenna College. He holds a B.A. from Lake Forest College and a Ph.D. from the University of Virginia.
Dr. Rutledge is well qualified to
serve as an independent director due to his academic background as well as his experience in public and private company governance, as well
as his prior experience with Quinpario 1.
Shlomo Yanai has served as a
director since November 2014. Mr. Yanai has served as the Chairman of the Board of Directors of Protalix BioTherapeutics, Inc. since July 2014.
Mr. Yanai is currently the Chairman of the Board of Cambrex Corporation (NYSE:CBM) and a director of Lumenis Ltd. (NASDAQ:LMNS). Mr.
Yanai served as President and Chief Executive Officer of Teva Pharmaceuticals from March 2007 until May 2012 and, prior to joining Teva, Mr.
Yanai was President and Chief Executive Officer of Makhteshim-Agan Industries Ltd. from 2003 until 2006. Before that, he was a Major
General in the Israel Defense Forces, where he served for 32 years, in various positions, the last two positions being Commanding Officer of the
Southern Command and Head of the Division of Strategic Planning. Mr. Yanai was the head of the Israeli security delegation to the peace
talks at Camp David, Shepherdstown and Wye River. He currently serves as a member of the Board of Governors of the Technion — Israel
Institute of Technology of Haifa, Israel, and of the International Advisory Board, MBA Program of Ben-Gurion University of the Negev, Israel, as
well as an honorary member of the Board of the Institute for Policy and Strategy of the Interdisciplinary Center (IDC), Herzliya, Israel. Mr.
Yanai holds a bachelor’s degree in political science and economics from Tel Aviv University, a master’s degree in national
resources management from George Washington University, and is a graduate of the Advanced Management Program of Harvard Business School and
U.S. National War College (NDU). Mr. Yanai was the recipient of the Max Perlman Award for Excellence in Global Business Management from
Tel Aviv University, Israel in 2005 and was awarded an honorary doctorate by Bar-Ilan University, Israel in 2012.
Mr. Yanai is well qualified to serve
as an independent director due to his global operating experience in the life-science and pharmaceutical and agro-chemicals industry. He also
brings a global perspective to the Board, incorporating his industry and Board leadership experience and his distinguished military
service.
Our board of directors is divided into
three classes with only one class of directors being elected in each year and each class serving a three-year term. The term of office of the first
class of directors, consisting of Dr. John Rutledge and Shlomo Yanai, will expire at our first annual meeting of stockholders. The term
of office of the second class of directors, consisting of W. Thomas Jagodinski and Ilan Kaufthal, will expire at the second annual
meeting. The term of office of the third class of directors, consisting of Jeffry N. Quinn, Edgar G. Hotard and Roberto Mendoza will expire at
our third annual meeting of stockholders.
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Executive Compensation
No executive officer has received any
cash compensation for services rendered to us. Commencing on the date of this prospectus through the acquisition of a target business, we will pay
Quinpario Partners LLC, an affiliate of our sponsor, a fee of $10,000 per month for providing us with office space and certain office and secretarial
services. However, this arrangement is solely for our benefit and is not intended to provide our officers or directors with compensation in lieu of a
salary. Such individuals will also receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf,
such as identifying potential target businesses, performing business due diligence on suitable target businesses and business combinations as well as
traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations.
After our initial business combination,
members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts
being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to our stockholders. It is unlikely the
amount of such compensation will be known at the time of a stockholder meeting held to consider our initial business combination, as it will be up to
the directors of the post-combination business to determine executive and director compensation. In this event, such compensation will be publicly
disclosed at the time of its determination in a Current Report on Form 8-K, as required by the SEC.
Director Independence
Currently Messrs. Hotard, Jagodinski,
Kaufthal, Mendoza and Yanai and Dr. Rutledge would each be considered an “independent director” under the Nasdaq listing rules, which is
defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship,
which, in the opinion of the company’s board of directors would interfere with the director’s exercise of independent judgment in carrying
out the responsibilities of a director. Our independent directors will have regularly scheduled meetings at which only independent directors are
present.
We will only enter into a business
combination if it is approved by a majority of our independent directors. Additionally, we will only enter into transactions with our officers and
directors and their respective affiliates that are on terms no less favorable to us than could be obtained from independent parties. Any related-party
transactions must be approved by our audit committee and a majority of disinterested directors.
Audit
Committee
Effective upon the date of this
prospectus, we will establish an audit committee of the board of directors, which will consist of W. Thomas Jagodinski, ________ and ________,
each of whom is an independent director. The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not
limited to:
• |
reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our Form 10-K; |
• |
reviewing and discussing with management and our independent auditor our quarterly financial statements prior to the filing of our Form 10-Qs, including the results of the independent auditor’s review of the quarterly financial statements |
• |
discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; |
79
• |
discussing with management major risk assessment and risk management policies; |
• |
monitoring the independence of the independent auditor; |
• |
verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; |
• |
reviewing and approving all related-party transactions; |
• |
inquiring and discussing with management our compliance with applicable laws and regulations; |
• |
pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; |
• |
appointing or replacing the independent auditor; |
• |
determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; |
• |
establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and |
• |
approving reimbursement of expenses incurred by our management team in identifying potential target businesses. |
Financial Experts
on Audit Committee
The audit committee will be composed of
“independent directors” who are “financially literate” as defined under the Nasdaq listing standards. The Nasdaq listing standards
define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance
sheet, income statement and cash flow statement.
In addition, we must certify to Nasdaq
that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite
professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication.
The board of directors has determined that W. Thomas Jagodinski qualifies as an “audit committee financial expert,” as defined under
rules and regulations of the SEC.
Nominating
Committee
Effective upon the date of this
prospectus, we will establish a nominating committee of the board of directors, which will consist of ________, ________ and ________, each of whom is
an independent director. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of
directors. The nominating committee considers persons identified by its members, management, stockholders, investment bankers and
others.
Guidelines for
Selecting Director Nominees
The guidelines for selecting nominees,
which are specified in our Nominating Committee Charter, generally provide that persons to be nominated:
• |
should have demonstrated notable or significant achievements in business, education or public service; |
80
• |
should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and |
• |
should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of our stockholders. |
The Nominating Committee will consider a
number of qualifications relating to management and leadership experience, background, integrity and professionalism in evaluating a person’s
candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting
experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain
a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by stockholders and other
persons.
Compensation Committee
Effective upon the date of this
prospectus, we will establish a compensation committee of the board of directors, which will consist of ________, ________ and ________, each of whom
is an independent director under Nasdaq’s listing standards. The compensation committee’s duties, which are specified in our Compensation
Committee Charter, include, but are not limited to:
• |
reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer’s based on such evaluation; |
• |
reviewing and approving the compensation of all of our other executive officers; |
• |
reviewing our executive compensation policies and plans; |
• |
implementing and administering our incentive compensation equity-based remuneration plans; |
• |
assisting management in complying with our proxy statement and annual report disclosure requirements; |
• |
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees; |
• |
if required, producing a report on executive compensation to be included in our annual proxy statement; and |
• |
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
Notwithstanding the foregoing, as
indicated above, no compensation of any kind will be paid to our sponsor or officers or directors, or any of their respective affiliates, prior to or
in connection with the consummation of an initial business combination. Accordingly, it is likely that prior to the consummation of an initial business
combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into
in connection with such initial business combination.
Code of Ethics
Effective upon consummation of this
offering, we will adopt a code of ethics that applies to all of our executive officers, directors and employees. The code of ethics codifies the
business and ethical principles that govern all aspects of our business.
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Conflicts of Interest
Investors should be aware of the
following potential conflicts of interest:
• |
None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities. |
• |
As described below, in the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our officers and directors may have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
• |
Certain of our officers and directors are now, and all may in the future become, affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by our company. |
• |
Unless we consummate our initial business combination, our officers, directors and sponsor will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount of available proceeds not deposited in the trust account and the amount of interest income from the trust account that may be released to us as working capital. |
• |
The insider shares and private warrants beneficially owned by our officers and directors will be subject to restrictions on transfer that will not lapse unless our initial business combination is successfully completed. Additionally, our sponsor will not receive liquidation distributions with respect to any of the insider shares. For the foregoing reasons, our board may have a conflict of interest in determining whether a particular target business is appropriate to effect our initial business combination with. |
In general, officers and directors of a
corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:
• |
the corporation could financially undertake the opportunity; |
• |
the opportunity is within the corporation’s line of business; and |
• |
it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation. |
Accordingly, as a result of multiple
business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the
above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board evaluates a particular business opportunity
with respect to the above-listed criteria. The above mentioned conflicts may not be resolved in our favor.
Below is a table summarizing the
companies to which our officers and directors owe fiduciary obligations that could conflict with their fiduciary obligations to us, all of which may
have to (i) be presented appropriate potential target businesses by our officers or directors,
82
and (ii) reject the opportunity to acquire such potential target business, prior to their presentation of such target business to us:
| Name of Individual |
Name Affiliated Company |
Affiliation |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Jeffry N.
Quinn |
Jason Industries Inc. |
Chairman of the Board of Directors |
||||||||
Tronox Limited |
Director |
|||||||||
Ferro Corporation |
Director |
|||||||||
W.R. Grace & Co. |
Director |
|||||||||
Edgar G.
Hotard |
HAO Capital |
Operating Partner |
||||||||
ARCH Venture Partners |
Venture Partner |
|||||||||
SIAD Engineering (Hangzhou) Co. Ltd. |
Executive Chairman |
|||||||||
Baosteel Metals |
Director |
|||||||||
SIAD Macchine Impianti S.p.A. |
Director |
|||||||||
W.
Thomas Jagodisnki |
Lindsay Corporation |
Director |
||||||||
Centrus Energy Corp. |
Director |
|||||||||
Ilan
Kaufthal |
East Wind Advisors |
Chairman |
||||||||
Cambrex Corporation |
Director |
|||||||||
Blyth, Inc. |
Director |
|||||||||
Tronox Limited |
Director |
|||||||||
Roberto
Mendoza |
Atlas Advisors LLC |
Senior Managing Director |
||||||||
Rocco Forte & Family Limited |
Director |
|||||||||
Manpower Inc. |
Director |
|||||||||
The Western Union Company |
Director |
|||||||||
Dr. John
Rutledge |
Rutledge Capital |
Chairman |
||||||||
Safanad SA Inc. |
Chief Investment Strategist |
|||||||||
Shlomo
Yanai |
Protalix BioTherapeutics, Inc. |
Chairman |
||||||||
Cambrex Corporation |
Chairman |
|||||||||
Additionally, all of our executive
officers are also partners in Quinpario Partners LLC, the managing member of our sponsor. As a result, they have fiduciary duties to Quinpario Partners
that will take priority over us.
Quinpario Partners LLC also owns Mason
Forty Partners, LLC, an investor in Collabrium Japan Acquisition Corporation, a blank check company with approximately $15 million in trust seeking to
consummate a business combination. Quinpario Partners and its partners intend to assist Collabrium Japan Acquisition Corporation in consummating its
initial business combination. Notwithstanding the foregoing, the size of the target business with which we must consummate our initial business
combination is substantially greater than the size of the target business with which Collabrium Japan Acquisition Corporation intends to focus on. As a
result, we do not believe our executive officers will have any conflict of interest in determining which entity to present a potential target business
to.
Our sponsor, as well as all of our
officers and directors, have agreed to vote any shares of common stock held by them in favor of our initial business combination. In addition, they
have agreed to waive their respective rights to participate in any liquidation distribution with respect to their insider shares. If they purchase
shares of common stock in this offering or in the open market, however, they would be entitled to participate in any liquidation distribution in
respect of such shares but have agreed not to convert such shares in connection with the consummation of our initial business
combination.
All ongoing and future transactions
between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are
available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested
“independent” directors, or the members
83
of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our disinterested “independent” directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties.
To further minimize conflicts of
interest, we have agreed not to consummate our initial business combination with an entity that is affiliated with any of our officers, directors or
sponsor, unless we have obtained (i) an opinion from an independent investment banking firm that the business combination is fair to our unaffiliated
stockholders from a financial point of view and (ii) the approval of a majority of our disinterested and independent directors (if we have any at that
time). Furthermore, in no event will any of our sponsor, members of our management team or their respective affiliates be paid any finder’s fee,
consulting fee or other similar compensation prior to, or for any services they render in order to effectuate, the consummation of our initial business
combination (regardless of the type of transaction that it is).
Limitation on Liability and Indemnification of Directors and
Officers
Our amended and restated certificate of
incorporation provides that our directors and officers will be indemnified by us to the fullest extent authorized by Delaware law as it now exists or
may in the future be amended. In addition, our amended and restated certificate of incorporation provides that our directors will not be personally
liable for monetary damages to us for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our
stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or
unlawful redemptions, or derived an improper personal benefit from their actions as directors. Notwithstanding the foregoing, such indemnification will
not extend to any claims our executive officers may make to us to cover any loss that they may sustain as a result of their agreement to pay debts and
obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us
as described elsewhere in this prospectus.
Our bylaws also will permit us to secure
insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would
permit indemnification. We will purchase a policy of directors’ and officers’ liability insurance that insures our directors and officers
against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify the
directors and officers.
These provisions may discourage
stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing
the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our
stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards
against directors and officers pursuant to these indemnification provisions. We believe that these provisions, the insurance and the indemnity
agreements are necessary to attract and retain talented and experienced directors and officers.
Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions,
or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
84
The following table sets forth
information regarding the beneficial ownership of our shares of common stock as of the date of this prospectus and as adjusted to reflect the sale of
our shares of common stock included in the units offered by this prospectus (assuming none of the individuals listed purchase units in this offering),
by:
• |
each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; |
• |
each of our officers and directors; and |
• |
all of our officers and directors as a group. |
Unless otherwise indicated, we believe
that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The
following table does not reflect record of beneficial ownership of any shares of common stock issuable upon exercise of outstanding warrants as such
warrants are not exercisable within 60 days of the date of this prospectus.
| Prior to Offering |
After Offering(2) |
||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name and Address of Beneficial Owner(1) |
Amount and Nature of Beneficial Ownership |
Approximate Percentage of Outstanding Shares of common stock |
Amount and Nature of Beneficial Ownership |
Approximate Percentage of Outstanding Shares of common stock |
|||||||||||||||
Jeffry N.
Quinn |
9,762,500 | (3) | 97.5 | % | 8,450,000 | (3) | 19.4 | % | |||||||||||
D. John
Srivisal |
0 | (4) | 0 | % | 0 | (4) | 0 | % | |||||||||||
A. Craig Ivey
|
0 | (4) | 0 | % | 0 | (4) | 0 | % | |||||||||||
Sara F.
Melly |
0 | 0 | % | 0 | 0 | % | |||||||||||||
Egdar G.
Hotard |
50,000 | * | 50,000 | * | |||||||||||||||
W. Thomas
Jagodisnki |
50,000 | * | 50,000 | * | |||||||||||||||
Ilan
Kaufthal |
50,000 | * | 50,000 | * | |||||||||||||||
Roberto
Mendoza |
50,000 | * | 50,000 | * | |||||||||||||||
Dr. John
Rutledge |
50,000 | * | 50,000 | * | |||||||||||||||
Shlomo
Yanai |
50,000 | * | 50,000 | * | |||||||||||||||
Quinpario
Partners 2, LLC |
9,762,500 | 97.5 | % | 8,450,000 | 19.4 | % | |||||||||||||
All directors
and executive officers as a group (10 individuals) |
10,062,500 | 100.0 | % | 8,750,000 | 20.0 | % | |||||||||||||
* |
Less than 1% |
(1) |
Unless otherwise indicated, the business address of each of the individuals is 12935 N. Forty Drive, Suite 201, St. Louis, Missouri 63141. |
(2) |
Assumes no exercise of the over-allotment option and, therefore, the forfeiture of an aggregate of 1,312,500 shares of common stock held by our sponsor. |
(3) |
Represents shares held by Quinpario Partners 2, LLC, our sponsor. Quinpario Partners LLC is the managing member of Quinpario Partners 2, LLC. Jeffry N. Quinn, our Chairman of the Board, is the sole managing member of Quinpario Partners LLC. Consequently, Mr. Quinn may be deemed the beneficial owner of the securities held by our sponsor and has sole voting and dispositive control over such securities. Mr. Quinn disclaims beneficial ownership over any securities owned by our sponsor in which he does not have any pecuniary interest. |
(4) |
Does not include any shares indirectly owned by this individual as a result of his membership interest in our sponsor. |
Immediately after this offering, our
initial stockholders will beneficially own approximately 20% of the then issued and outstanding shares of common stock (assuming they do not purchase
any units offered by this prospectus). None of our sponsor, officers and directors has indicated to us that it or he intends to purchase our units in
the offering. Because of the ownership block held by our sponsor, such individuals may be able to effectively exercise
85
influence over all matters requiring approval by our stockholders, including the election of directors and approval of significant corporate transactions other than approval of our initial business combination.
If the underwriters do not exercise all
or a portion of the over-allotment option, an aggregate of up to 1,312,500 insider shares will be forfeited. Only a number of shares necessary to
maintain our sponsor’s 20% ownership interest in our shares of common stock after giving effect to the offering and the exercise, if any, of the
underwriters’ over-allotment option will be forfeited.
Subject to certain limited exceptions,
the insider shares will not be transferred, assigned or sold until (1) with respect to 20% of the insider shares, the consummation of our initial
business combination and (2) with respect to the remaining 80% of the insider shares, the earlier of one year after the date of the consummation of our
initial business combination and the date on which the closing price of our common stock equals or exceeds $12.00 per share (as adjusted for stock
splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30 trading day period commencing 150 days after our
initial business combination. Notwithstanding the foregoing, these transfer restrictions will be removed earlier if, after our initial business
combination, we consummate a (i) liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the
right to exchange their shares of common stock for cash, securities or other property or (ii) consolidation, merger or other change in the majority of
our management team.
During the above-referenced lock-up
period, the holders of these shares will not be able to sell or transfer their securities except (1) amongst themselves, to our officers, directors and
employees or to a holder’s officers, directors, members, employees and affiliates, (2) to relatives and trusts for estate planning purposes, (3)
by virtue of the laws of descent and distribution upon death, (4) pursuant to a qualified domestic relations order, (5) by certain pledges to secure
obligations incurred in connection with purchases of our securities, (6) by private sales made at or prior to the consummation of our initial business
combination at prices no greater than the price at which the shares were originally purchased or (7) to us for no value for cancellation in connection
with the consummation of our initial business combination, in each case (except for clause 7) where the transferee agrees to the terms of the lock-up
provisions, but will retain all other rights as our stockholders, including, without limitation, the right to vote their shares of common stock and the
right to receive cash dividends, if declared. If dividends are declared and payable in shares of common stock, such dividends will also be subject to
the above-referenced lock-up provisions. If we are unable to effect a business combination and liquidate, there will be no liquidation distribution
with respect to the insider shares.
Our sponsor has committed that it and
its designees will purchase the private warrants (for an aggregate purchase price of $9,000,000) from us. These purchases will take place on a private
placement basis simultaneously with the consummation of this offering. Our sponsor and its designees have also agreed that if the over-allotment option
is exercised by the underwriters, they will purchase from us at a price of $0.50 per warrant an additional number of private warrants (up to a maximum
of 2,100,000 private warrants) pro rata with the amount of the over-allotment option exercised so that at least $10.00 per share sold to the public in
this offering is held in trust regardless of whether the over-allotment option is exercised in full or part. These additional private warrants will be
purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option.
The private warrants are identical to the warrants included in the units sold in this offering except the private warrants will be non-redeemable and
may be exercised on a cashless basis so long as they continue to be held by the initial purchasers or their permitted transferees. Additionally, the
holders have agreed not to transfer, assign or sell any of the private warrants or underlying securities (except to the same permitted transferees as
the
86
insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until 30 days after the completion of our initial business combination.
In order to meet our working capital
needs following the consummation of this offering, our sponsor, officers and directors or their affiliates may, but are not obligated to, loan us
funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a
non-interest bearing promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at
the lender’s discretion, up to $1,500,000 of the notes may be converted upon consummation of our business combination into additional private
warrants at a price of $0.50 per warrant. Our stockholders have approved the issuance of the warrants and underlying securities upon conversion of such
notes, to the extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete a
business combination, the loans will not be repaid.
Quinpario Partners 2, LLC and Jeffry N.
Quinn are our “promoters,” as that term is defined under the Federal securities laws.
87
In September 2014, we issued 10,062,500
shares of common stock to our sponsor for $25,000 in cash, at a purchase price of approximately $0.002 share, in connection with our organization. Our
sponsor subsequently transferred a portion of its insider shares to members of our management team.
If the underwriters do not exercise all
or a portion of their over-allotment option, our sponsor will forfeit up to an aggregate of 1,312,500 insider shares in proportion to the portion of
the over-allotment option that was not exercised. If such shares are forfeited, we will record the forfeited shares as treasury stock and
simultaneously retire the shares. Upon receipt, such forfeited shares would then be immediately cancelled which would result in the retirement of the
treasury shares and a corresponding charge to additional paid-in capital.
If the underwriters determine the size
of the offering should be increased (including pursuant to Rule 462(b) under the Securities Act) or decreased, a share dividend or a contribution back
to capital, as applicable, would be effectuated in order to maintain our sponsor’s ownership at a percentage of the number of shares of common
stock to be sold in this offering. An increase in offering size of up to 20% could result in the per-share conversion or liquidation price decreasing
by as much as $0.03. Alternatively, our sponsor may purchase from us an additional number of private warrants at a price of $0.50 per warrant, or the
underwriters could defer a greater amount of underwriting commissions, so that at least $10.00 per share sold to the public in this offering is held in
trust.
Our sponsor has committed that it and/or
its designees will purchase the 18,000,000 private warrants for a total purchase price of $9,000,000 from us. Each private warrant entitles the holder
to purchase one-half of one share of our common stock at $5.75 per half share. These purchases will take place on a private placement basis
simultaneously with the consummation of this offering. Our sponsor and its designees have also agreed that if the over-allotment option is exercised by
the underwriters, they will purchase from us at a price of $0.50 per warrant an additional number of private warrants (up to a maximum of 2,100,000
private warrants) pro rata with the amount of the over-allotment option exercised so that at least $10.00 per share sold to the public in this offering
is held in trust regardless of whether the over-allotment option is exercised in full or part. These additional private warrants will be purchased in a
private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The purchase
price for the private warrants has been delivered to Continental Stock Transfer & Trust Company, our transfer agent in connection with this
offering, who is also acting as escrow agent in connection with the private sale of private warrants, to hold in a non-interest bearing account until
we consummate this offering. Continental Stock Transfer & Trust Company will deposit the purchase price into the trust account simultaneously with
the consummation of the offering and the over-allotment option, if any. The private warrants are identical to the warrants included in the units sold
in this offering except the private warrants will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to
be held by the initial purchasers or their permitted transferees. Additionally, the holders have agreed not to transfer, assign or sell any of the
private warrants or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the
same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until 30 days after the
completion of our initial business combination.
In order to meet our working capital
needs following the consummation of this offering, our sponsor, officers and directors and their respective affiliates may, but are not obligated to,
loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a
non-interest bearing promissory note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at
the lender’s discretion, up to $1,500,000 of the notes may be converted
88
upon consummation of our business combination into additional private warrants at a price of $0.50 per warrant. Our stockholders have approved the issuance of the warrants and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of our initial business combination. If we do not complete a business combination, the loans will not be repaid.
The holder of our insider shares issued
and outstanding on the date of this prospectus, as well as the holder of the private warrants (and underlying securities) and any securities our
sponsor, officers, directors, special advisors or their respective affiliates may be issued in payment of working capital loans made to us, will be
entitled to registration rights pursuant to an agreement to be signed prior to or on the effective date of this offering. The holders of a majority of
these securities are entitled to make up to three demands that we register such securities. In addition, the holders have certain
“piggy-back” registration rights with respect to registration statements filed subsequent to our consummation of our initial business
combination. The registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become
effective until termination of the applicable lock-up period described above. We will bear the expenses incurred in connection with the filing of any
such registration statements.
As of September 12, 2014, our sponsor
loaned to us an aggregate of $46,663 to cover expenses related to this offering. The loan is payable without interest on the earlier of (i) January 31,
2015, (ii) the date on which we consummate our initial public offering or (iii) the date on which we determine to not proceed with our initial public
offering. We intend to repay this loan from the proceeds of this offering not being placed in the trust account.
Quinpario Partners LLC has agreed that,
commencing on the date of this prospectus through the earlier of our consummation of our initial business combination or our liquidation, it will make
available to us certain general and administrative services, including office space, utilities and administrative support, as we may require from time
to time. We have agreed to pay Quinpario Partners LLC $10,000 per month for these services. Our Chairman of the Board, Jeffry N. Quinn, is the managing
member of Quinpario Partners LLC, and all of our executive officers are partners of Quinpario Partners LLC. Accordingly, our officers and directors
will benefit from the transaction to the extent of their interest in Quinpario Partners LLC. However, this arrangement is solely for our benefit and is
not intended to provide our officers or directors with compensation in lieu of a salary. We believe, based on rents and fees for similar services in
St. Louis Missouri, that the fee charged by Quinpario Partners LLC is at least as favorable as we could have obtained from an unaffiliated
person.
Other than the fees described above, no
compensation or fees of any kind will be paid to any of our sponsor, officers, directors, special advisors or their respective affiliates, for services
rendered to us prior to or in connection with the consummation of our initial business combination (regardless of the type of transaction that it is).
However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such
as identifying potential target businesses, performing business due diligence on suitable target businesses and business combinations as well as
traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations. There is no limit on the
amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in
the trust account and the interest income earned on the amounts held in the trust account, such expenses would not be reimbursed by us unless we
consummate an initial business combination.
After our initial business combination,
members of our management team who remain with us may be paid consulting, board, management or other fees from the combined company with any and all
amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to our stockholders. It is
unlikely the
89
amount of such compensation will be known at the time of a stockholder meeting held to consider our initial business combination, as it will be up to the directors of the post-combination business to determine executive and director compensation. In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K, as required by the SEC.
All ongoing and future transactions
between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are
available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested
independent directors, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such
transaction unless our audit committee and a majority of our disinterested independent directors determine that the terms of such transaction are no
less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties.
Related Party Policy
Our Code of Ethics requires us to avoid,
wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by
the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount involved will
or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer,
director or nominee for election as a director, (b) greater than 5% beneficial owner of our shares of common stock, or (c) immediate family member, of
the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a
director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has
interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a
member of his or her family, receives improper personal benefits as a result of his or her position.
We also require each of our directors
and executive officers to annually complete a directors’ and officers’ questionnaire that elicits information about related party
transactions.
These procedures are intended to
determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a
director, employee or officer.
To further minimize conflicts of
interest, we have agreed not to consummate our initial business combination with an entity that is affiliated with any of our sponsor, officers or
directors unless we have obtained an opinion from an independent investment banking firm and the approval of a majority of our disinterested and
independent directors (if we have any at that time) that the business combination is fair to our unaffiliated stockholders from a financial point of
view.
90
General
Our certificate of incorporation
currently authorizes the issuance of 135,000,000 shares of common stock, par value $0.0001, and 1,000,000 shares of preferred stock, par value $0.0001.
As of the date of this prospectus, 10,062,500 shares of common stock are outstanding, held by our initial stockholders. No shares of preferred stock
are currently outstanding. The following description summarizes all of the material terms of our securities. Because it is only a summary, it may not
contain all the information that is important to you. For a complete description you should refer to our amended and restated certificate of
incorporation and bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part.
Units
Each unit has an offering price of
$10.00 and consists of one share of common stock and one warrant. Each warrant entitles the holder thereof to purchase one-half of one share of our
common stock at a price of $5.75 per half share, subject to adjustment as described in this prospectus. For example, if a warrant holder holds two
warrants, such warrants will be exercisable for one share of the company’s common stock at a price of $11.50 per share. Warrants must be exercised
for one whole share of common stock. The common stock and warrants comprising the units will begin separate trading on the 52nd day
following the closing of this offering unless Deutsche Bank Securities Inc. and Cantor Fitzgerald & Co. informs us of their decision to allow
earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when
such separate trading will begin. Once the shares of common stock and warrants commence separate trading, holders will have the option to continue to
hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to
separate the units into shares of common stock and warrants.
In no event will the common stock and
warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet reflecting our
receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering
which will include this audited balance sheet, which is anticipated to take place three business days after the date of this prospectus. If the
underwriters’ over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current
Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters’ over-allotment
option.
Common stock
Our holders of record of our common
stock are entitled to one vote for each share held on all matters to be voted on by stockholders. In connection with any vote held to approve our
initial business combination, our sponsor, as well as all of our officers and directors, have agreed to vote their respective shares of common stock
owned by them immediately prior to this offering and any shares acquired in this offering or following this offering in the open market in favor of the
proposed business combination.
We will consummate our initial business
combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority
of the outstanding shares of common stock voted are voted in favor of the business combination.
Our board of directors is divided into
three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. There is
no
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cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares eligible to vote for the election of directors can elect all of the directors.
Pursuant to our amended and restated
certificate of incorporation, if we do not consummate our initial business combination within 24 months from the closing of this offering, we will (i)
cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem 100% of the outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and
(iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Our initial
stockholders have agreed to waive their rights to share in any distribution with respect to their insider shares.
Our stockholders have no conversion,
preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the shares of common stock, except that
public stockholders have the right to sell their shares to us in any tender offer or have their shares of common stock converted to cash equal to their
pro rata share of the trust account if they vote on the proposed business combination and the business combination is completed.
Preferred Stock
There are no shares of preferred stock
outstanding. Our amended and restated certificate of incorporation authorizes the issuance of 1,000,000 shares of preferred stock with such
designation, rights and preferences as may be determined from time to time by our board of directors. No shares of preferred stock are being issued or
registered in this offering. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of common stock. However,
the underwriting agreement prohibits us, prior to a business combination, from issuing preferred stock which participates in any manner in the proceeds
of the trust account, or which votes as a class with the common stock on our initial business combination. We may issue some or all of the preferred
stock to effect our initial business combination. In addition, the preferred stock could be utilized as a method of discouraging, delaying or
preventing a change in control of us. Although we do not currently intend to issue any shares of preferred stock, we reserve the right to do so in the
future.
Warrants
No warrants are currently outstanding.
Each warrant entitles the registered holder to purchase one-half of one share of our common stock at a price of $5.75 per half share, subject to
adjustment as discussed below, at any time commencing on the later of 12 months from the closing of this offering or 30 days after the completion of
our initial business combination. For example, if a warrant holder holds two warrants, such warrants will be exercisable for one share of our common
stock at a price of $11.50 per share. Warrants must be exercised for a whole share as we will not issue fractional shares upon exercise of warrants.
The warrants will expire five years after the completion of an initial business combination, or earlier upon redemption, as described
below.
Notwithstanding the foregoing, no public
warrants will be exercisable for cash unless we have an effective and current registration statement covering the shares of common
stock
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issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the public warrants is not effective within a specified period following the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis in the same manner as if we called the warrants for redemption and required all holders to exercise their warrants on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose will mean the average reported last sale price of the shares of common stock for the 10 trading days ending on the trading day prior to the date of exercise. There will be no net cash settlement of the warrants under any circumstances.
The private warrants will be identical
to the public warrants underlying the units being offered by this prospectus except that such warrants will be exercisable for cash (even if a
registration statement covering the shares of common stock issuable upon exercise of such warrants is not effective) or on a cashless basis, at the
holder’s option, and will not be redeemable by us, in each case so long as they are still held by the initial purchasers or their
affiliates.
We may call the warrants for redemption
(excluding the private warrants), in whole and not in part, at a price of $0.01 per warrant,
• |
at any time while the warrants are exercisable, |
• |
upon not less than 30 days’ prior written notice of redemption to each warrant holder, |
• |
if, and only if, the reported last sale price of the shares of common stock equals or exceeds $24.00 per share, for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of redemption to warrant holders, and |
• |
if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of redemption. |
The right to exercise will be forfeited
unless the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a
warrant will have no further rights except to receive the redemption price for such holder’s warrant upon surrender of such
warrant.
The redemption criteria for our warrants
have been established at a price which is intended to provide warrant holders a substantial premium to the initial exercise price and provide a
sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as a result of our
redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants.
If we call the warrants for redemption
as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.”
In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient
obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise
price of the warrants and the “fair market value” (defined
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below) by (y) the fair market value. In this case, the “fair market value” shall mean the average reported last sale price of the shares of common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether we will exercise our option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including the price of our shares of common stock at the time the warrants are called for redemption, our cash needs at such time and concerns regarding dilutive stock issuances.
The warrants will be issued in
registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but
requires the approval, by written consent or vote, of the holders of a majority of the then outstanding warrants in order to make any change that
adversely affects the interests of the registered holders.
The exercise price and number of shares
of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary
dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of shares of common
stock at a price below their respective exercise prices.
The warrants may be exercised upon
surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side
of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check
payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of shares of common
stock and any voting rights until they exercise their warrants and receive shares of common stock. After the issuance of shares of common stock upon
exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by
stockholders.
Except as described above, no public
warrants will be exercisable and we will not be obligated to issue shares of common stock unless at the time a holder seeks to exercise such warrant, a
prospectus relating to the shares of common stock issuable upon exercise of the warrants is current and the shares of common stock have been registered
or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of the warrant
agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current prospectus relating to the shares of common stock
issuable upon exercise of the warrants until the expiration of the warrants.
Warrant holders may elect to be subject
to a restriction on the exercise of their warrants such that an electing warrant holder would not be able to exercise their warrants to the extent
that, after giving effect to such exercise, such holder would beneficially own in excess of 9.8% of the shares of common stock
outstanding.
Dividends
We have not paid any cash dividends on
our shares of common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of
cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent
to completion of our initial business combination. The payment of any dividends subsequent to our initial business combination will be within the
discretion of our then board of directors. It is the present intention of our board of directors to retain all earnings, if any, for use in our
business operations and, accordingly, our board does not anticipate declaring any dividends in the foreseeable future.
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Our Transfer Agent and Warrant Agent
The transfer agent for our securities
and warrant agent for our warrants is Continental Stock Transfer & Trust Company, 17 Battery Place, New York, New York 10004.
Certain Anti-Takeover Provisions of Delaware Law and our
Amended and Restated Certificate of Incorporation and By-Laws
Staggered board of
directors
Our amended and restated certificate of
incorporation provides that our board of directors will be classified into three classes of directors of approximately equal size. As a result, in most
circumstances, a person can gain control of our board only by successfully engaging in a proxy contest at two or more annual meetings.
Special meeting of
stockholders
Our bylaws provide that special meetings
of our stockholders may be called only by a majority vote of our board of directors, by our president or by our chairman or by our secretary at the
request in writing of stockholders owning a majority of our issued and outstanding capital stock entitled to vote.
Advance notice
requirements for stockholder proposals and director nominations
Our bylaws provide that stockholders
seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of
stockholders must provide timely notice of their intent in writing. To be timely, a stockholder’s notice will need to be delivered to our
principal executive offices not later than the close of business on the 60th day nor earlier than the close of business on the
90th day prior to the scheduled date of the annual meeting of stockholders. In the event that less than 70 days’ notice or prior public
disclosure of the date of the annual meeting of stockholders is given, a stockholder’s notice shall be timely if delivered to our principal
executive offices not later than the 10th day following the day on which public announcement of the date of our annual meeting of
stockholders is first made or sent by us. Our bylaws also specify certain requirements as to the form and content of a stockholders’ meeting.
These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors
at our annual meeting of stockholders.
Authorized but
unissued shares
Our authorized but unissued shares of
common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate
purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and
unreserved shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy
contest, tender offer, merger or otherwise.
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Immediately after this offering, we will
have 43,750,000 shares of common stock outstanding, or 50,312,500 shares of common stock if the over-allotment option is exercised in full. Of these
shares, the 35,000,000 shares of common stock sold in this offering, or 40,250,000 shares of common stock if the over-allotment option is exercised in
full, will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by one of our
affiliates within the meaning of Rule 144 under the Securities Act. All of the remaining shares are restricted securities under Rule 144, in that they
were issued in private transactions not involving a public offering.
Rule
144
A person who has beneficially owned
restricted shares of common stock for at least six months would be entitled to sell their shares provided that (1) such person is not deemed to have
been one of our affiliates at the time of, or at any time during the three months preceding, a sale and (2) we are subject to the Exchange Act periodic
reporting requirements for at least three months before the sale. Persons who have beneficially owned restricted shares of common stock for at least
six months but who are our affiliates at the time of, or any time during the three months preceding, a sale, would be subject to additional
restrictions, by which such person would be entitled to sell within any three-month period a number of shares that does not exceed the greater of
either of the following:
• |
1% of the number of shares then outstanding, which will equal 437,500 shares of common stock immediately after this offering (or 503,125 shares of common stock if the over-allotment option is exercised in full); and |
• |
the average weekly trading volume of the shares of common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
Sales under Rule 144 are also limited by
manner of sale provisions and notice requirements and to the availability of current public information about us.
Restrictions on the Use of Rule 144 by Shell Companies or
Former Shell Companies
Historically, the SEC staff had taken
the position that Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were, blank check
companies, like us. The SEC has codified and expanded this position in the amendments discussed above by prohibiting the use of Rule 144 for resale of
securities issued by any shell companies (other than business combination related shell companies) or any issuer that has been at any time previously a
shell company. The SEC has provided an important exception to this prohibition, however, if the following conditions are met:
• |
the issuer of the securities that was formerly a shell company has ceased to be a shell company; |
• |
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
• |
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and |
• |
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. |
As a result, it is likely that pursuant
to Rule 144, our initial stockholders will be able to sell their insider shares and private warrants freely without registration one year after we
have
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completed our initial business combination assuming they are not an affiliate of ours at that time.
Registration
Rights
The holders of our insider shares issued
and outstanding on the date of this prospectus, as well as the holders of the private warrants and any securities our sponsor, officers, directors or
their respective affiliates may be issued in payment of working capital loans made to us, will be entitled to registration rights pursuant to an
agreement to be signed prior to or on the effective date of this offering. The holders of a majority of these securities are entitled to make up to
three demands that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to
registration statements filed subsequent to our consummation of our initial business combination. We will bear the expenses incurred in connection with
the filing of any such registration statements.
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The following are the material U.S.
federal income and estate tax considerations with respect to your ownership and disposition of our units or components thereof, which we refer to
collectively as our securities, assuming you purchase the securities in this offering and will hold them as capital assets within the meaning of the
Internal Revenue Code of 1986, as amended (the “Code”).
This discussion does not address all of
the U.S. federal income and estate tax considerations that may be relevant to you in light of your particular circumstances, and it does not describe
all of the tax consequences that may be relevant to holders subject to special rules, such as:
• |
certain financial institutions; |
• |
insurance companies; |
• |
dealers and traders in securities or foreign currencies; |
• |
persons holding our securities as part of a hedge, straddle, conversion transaction or other integrated transaction; |
• |
U.S. persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; |
• |
partnerships or other entities classified as partnerships for U.S. federal income tax purposes; |
• |
persons liable for the alternative minimum tax; and |
• |
tax-exempt organizations. |
The following does not discuss any
aspect of state, local or non-U.S. taxation. This discussion is based on current provisions of the Code, Treasury regulations, judicial opinions,
published positions of the U.S. Internal Revenue Service (“IRS”) and all other applicable authorities, all of which are subject to change,
possibly with retroactive effect. This discussion is not intended as tax advice.
If an entity that is treated as a
partnership for U.S. federal income tax purposes holds our securities, the tax treatment of a partner will generally depend on the status of the
partner and the activities of the entity. If you are a partner in such an entity, you should consult your tax advisor.
WE URGE PROSPECTIVE HOLDERS TO
CONSULT THEIR TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSIDERATIONS WITH RESPECT TO ACQUIRING,
HOLDING AND DISPOSING OF OUR SECURITIES.
Company
Personal Holding
Company Status
We could be subject to an additional
level of U.S. federal income tax on a portion of our income if we are determined to be a personal holding company (“PHC”) for U.S. federal
income tax purposes. A U.S. corporation generally will be classified as a PHC for U.S. federal income tax purposes in a given taxable year
if:
• |
at any time during the last half of such taxable year, five or fewer individuals (without regard to their citizenship or residency and including as individuals for this purpose certain entities such as certain tax-exempt organizations, pension funds, and charitable trusts) own or are deemed to own (pursuant to certain constructive ownership rules) more than 50% of the stock of the corporation by value; and |
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• |
at least 60% of the corporation’s adjusted ordinary gross income, as determined for U.S. federal income tax purposes, for such taxable year consists of PHC income (which includes, among other things, dividends, interest, certain royalties, annuities and, under certain circumstances, rents). |
Depending on the date and size of our
initial business combination, it is possible that at least 60% of our adjusted ordinary gross income may consist of PHC income as discussed above. In
addition, depending on the concentration of our stock in the hands of individuals, including our founders and certain tax-exempt organizations, pension
funds, and charitable trusts, it is possible that more than 50% of our stock will be owned or deemed owned (pursuant to the constructive ownership
rules) by such persons during the last half of a taxable year. Thus, no assurance can be given that we will not become a PHC following this offering or
in the future. If we are or were to become a PHC in a given taxable year, we would be subject to an additional PHC tax, currently 20%, on our
undistributed PHC income, which generally includes our taxable income, subject to certain adjustments.
Public Stockholders
General Treatment of
Units
There is no authority addressing the
treatment, for U.S. federal income tax purposes, of securities with terms substantially the same as the units, and, therefore, that treatment is not
entirely clear. Each unit should be treated for U.S. federal income tax purposes as an investment unit consisting of one share of our common stock and
one warrant to acquire one half of one share of our common stock, subject to adjustment. In determining your basis for the common stock and warrant
composing a unit, you should allocate your purchase price for the unit between the components on the basis of their relative fair market values at the
time of issuance. You are urged to consult your own tax advisors regarding the U.S. federal, state, local and any foreign tax consequences of an
investment in a unit (including alternative characterizations of a unit). Unless otherwise stated, the following discussions are based on the
assumption that the characterization of the common stock and warrants and the allocation described above are accepted for U.S. federal income tax
purposes.
U.S. Holders
This section is addressed to U.S.
holders of our securities. For purposes of this discussion, you are a “U.S. holder” if you are a beneficial owner that is:
• |
a citizen or resident of the United States for U.S. federal income tax purposes; |
• |
a corporation, or other entity taxable as a corporation, created or organized in, or under the laws of, the United States or any political subdivision of the United States; |
• |
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
• |
a trust if a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or it has in effect a valid election to be treated as a U.S. person. |
The term “U.S. Holder” also
includes certain former citizens and residents of the United States.
Dividends and
Distributions
As discussed under “Dividend
Policy” above, we do not anticipate that any dividends will be paid in the foreseeable future. In the event that we do make distributions on our
common
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stock, such distributions will be treated as dividends for U.S. federal income tax purposes to the extent of our current or accumulated earnings and profits. Distributions in excess of our current or accumulated earnings and profits will reduce your basis in the common stock (but not below zero). Any excess over your basis will be treated as gain realized on the sale or other disposition of the common stock and will be treated as described in the first paragraph under “— Sale or Other Disposition or Conversion of Common Stock” below.
The conversion feature of the common
stock described under “Proposed Business — Effecting a Business Combination — Conversion Rights” may be viewed as a position with
respect to substantially similar or related property which diminishes your risk of loss and thereby affects your ability to satisfy the holding period
requirements for the dividends received deduction or the preferential tax rate on qualified dividend income with respect to the time period prior to
the approval of an initial business combination.
Sale or Other
Disposition or Conversion of Common Stock
Gain or loss you realize on the sale or
other disposition of our common stock (other than conversion into cash but including a liquidation in the event we do not consummate a business
combination within the required time) will be capital gain or loss. The amount of your gain or loss will be equal to the difference between your tax
basis in the common stock disposed of and the amount realized on the disposition. The deductibility of capital losses is subject to limitations. Any
capital gain or loss you realize on a sale or other disposition of our common stock will generally be long-term capital gain or loss if your holding
period for the common stock is more than one year. However, the conversion feature of the common stock described under “Proposed Business —
Effecting a Business Combination — Conversion Rights” conceivably could affect your ability to satisfy the holding period requirements for
the long-term capital gain tax rate with respect to the time period prior to the approval of an initial business combination.
If you convert your common stock into a
right to receive cash as described in “Proposed Business — Effecting a Business Combination — Conversion Rights,” the conversion
generally will be treated as a sale of common stock described in the preceding paragraph (rather than as a dividend or distribution). The conversion
will, however, be treated as a dividend or distribution and taxed as described in “— Dividends and Distributions” above if your
percentage ownership in us (including shares that you are deemed to own under certain attribution rules, such as the shares into which the warrants are
exercisable) after the conversion is not meaningfully reduced from what your percentage ownership was prior to the conversion. If you have a relatively
minimal stock interest and, taking into account the effect of conversion by other stockholders, your percentage ownership in us is reduced as a result
of the conversion, you should generally be regarded as having suffered a meaningful reduction in interest. For example, the IRS has ruled that any
reduction in the stockholder’s proportionate interest will constitute a “meaningful reduction” in a transaction in which a holder held
less than 1% of the shares of a corporation and did not have management control over the corporation. You should consult your own tax advisor as to
whether conversion of your common stock will be treated as a sale or as a dividend under the Code and, if you actually or constructively own 5% (or, if
our stock is not then publicly traded, 1%) or more of our common stock before conversion, whether you are subject to special reporting requirements
with respect to such conversion.
Sale or Other
Disposition, Exercise or Expiration of Warrants
Upon the sale or other disposition of a
warrant (other than by exercise), you will generally recognize capital gain or loss equal to the difference between the amount realized on the sale or
other disposition and your tax basis in the warrant. This capital gain or loss will be long-term capital gain or loss if, at the time of the sale or
other disposition, the warrant has been held by you for more than one year. The deductibility of capital losses is subject to
limitations.
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In general, you will not be required to
recognize income, gain or loss upon exercise of a warrant for its exercise price. Your basis in a share of common stock received upon exercise will be
equal to the sum of (1) your basis in the warrant and (2) the exercise price of the warrant. Your holding period in the shares received upon exercise
will commence on the day after you exercise the warrants. Although there is no direct legal authority as to the U.S. federal income tax treatment of an
exercise of a warrant on a cashless basis, we intend to take the position that such exercise will not be taxable, either because the exercise is not a
gain realization event or because it qualifies as a tax-free recapitalization. In the former case, the holding period of the common stock should
commence on the day after the warrant is exercised. In the latter case, the holding period of the common stock would include the holding period of the
exercised warrants. However, our position is not binding on the IRS and the IRS may treat a cashless exercise of a warrant as a taxable exchange. You
are urged to consult your own tax advisor as to the consequences of an exercise of a warrant on a cashless basis.
If a warrant expires without being
exercised, you will recognize a capital loss in an amount equal to your basis in the warrant. Such loss will be long-term capital loss if, at the time
of the expiration, the warrant has been held by you for more than one year. The deductibility of capital losses is subject to
limitations.
Constructive
Dividends on Warrants
As discussed under “Dividend
Policy” above, we do not anticipate that any dividends will be paid in the foreseeable future. If at any time during the period you hold warrants,
however, we were to pay a taxable dividend to our stockholders and, in accordance with the anti-dilution provisions of the warrants, the conversion
rate of the warrants were increased, that increase would be deemed to be the payment of a taxable dividend to you to the extent of our earnings and
profits, notwithstanding the fact that you will not receive a cash payment. If the conversion rate is adjusted in certain other circumstances (or in
certain circumstances, there is a failure to make adjustments), such adjustments may also result in the deemed payment of a taxable dividend to you.
You should consult your tax advisor regarding the proper treatment of any adjustments to the warrants.
Unearned Income
Medicare Tax
A 3.8% Medicare contribution tax will
generally apply to all or some portion of the net investment income of a U.S. holder that is an individual with adjusted gross income that exceeds a
threshold amount ($250,000 if married filing jointly or if considered a “surviving spouse” for federal income tax purposes, $125,000 if
married filing separately, and $200,000 in other cases). This 3.8% tax will also apply to all or some portion of the undistributed net investment
income of certain U.S. holders that are estates and trusts. For these purposes, dividends and gains from the taxable dispositions of the common stock
and warrants will generally be taken into account in computing such a U.S. holder’s net investment income.
Information
Reporting and Backup Withholding
Information returns may be filed with
the IRS with respect to dividends or other distributions we may pay to you and proceeds from the sale of your shares of common stock or warrants. You
will be subject to backup withholding on these payments if you fail to provide your taxpayer identification number to the paying agent and comply with
certain certification procedures (usually by providing a duly executed IRS Form W-9) or otherwise establish an exemption from backup withholding.
Backup withholding is not an additional tax. Any amounts withheld with respect to your shares of common stock or warrants under the backup withholding
rules will be refunded to you or credited against your United States federal income tax liability, if any, by the IRS provided that certain required
information is furnished to the IRS in a timely manner.
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Non-U.S. Holders
This section is addressed to non-U.S.
holders of the securities. For purposes of this discussion, a “non-U.S. holder” is a beneficial owner of a security (other than an entity
treated as a partnership for U.S. federal income tax purposes) that is not a U.S. holder.
Dividends and
Distributions
As discussed under “Dividend
Policy” above, we do not anticipate that any dividends will be paid in the foreseeable future. If, however, we were to pay taxable dividends to
you with respect to your shares of common stock (including any deemed distributions treated as a dividend on the warrants, as described in “—
Constructive Dividends on Warrants” below), those dividends would generally be subject to United States withholding tax at a rate of 30% of the
gross amount, unless you are eligible for a reduced rate of withholding tax under an applicable income tax treaty and you provide proper certification
of your eligibility for such reduced rate (usually on an IRS Form W-8BEN). A distribution will constitute a dividend for U.S. federal income tax
purposes to the extent of our current or accumulated earnings and profits as determined under the Code. Any distribution not constituting a dividend
will be treated first as reducing your basis in your shares of common stock and, to the extent it exceeds your basis, as gain from the disposition of
your shares of common stock treated as described under “Sale or Other Disposition of Common Stock or Warrants” below. The full amount of any
distributions to you may, however, be subject to United States withholding tax unless the applicable withholding agent elects to withhold a lesser
amount based on a reasonable estimate of the amount of the distribution that would be treated as a dividend. In addition, if we determine that we are
likely to be classified as a “United States real property holding corporation” (see “Sale or Other Disposition of Common Stock or
Warrants” below), we will withhold at least 10% of any distribution that exceeds our current and accumulated earnings and profits as provided by
the Code.
Dividends we pay to you that are
effectively connected with your conduct of a trade or business within the United States (and, if certain income tax treaties apply, are attributable to
a United States permanent establishment maintained by you) generally will not be subject to United States withholding tax if you comply with applicable
certification and disclosure requirements (usually by providing an IRS Form W-8ECI). Instead, such dividends generally will be subject to United States
federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to United States persons. If you are a
corporation, effectively connected income may also be subject to a “branch profits tax” at a rate of 30% (or such lower rate as may be
specified by an applicable income tax treaty).
Exercise of
Warrants
You generally will not be subject to
U.S. federal income tax on the exercise of the warrants into shares of common stock. However, if a cashless exercise of warrants results in a taxable
exchange, as described in “— U.S. Holders — Sale or Other Disposition, Exercise or Expiration of Warrants,” the rules described
below under “Sale or Other Disposition of Common Stock or Warrants” would apply.
Sale or Other
Disposition of Common Stock or Warrants
You generally will not be subject to
United States federal income tax on any gain realized upon the sale, exchange or other disposition of our common stock (which would include a
dissolution and liquidation in the event we do not consummate an initial business combination within the required timeframe) or warrants (including an
expiration or redemption of our warrants), unless:
• |
the gain is effectively connected with your conduct of a trade or business within the United States (and, under certain income tax treaties, is attributable to a United States permanent establishment you maintain); |
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• |
you are an individual, you hold your shares of common stock or warrants as capital assets, you are present in the United States for 183 days or more in the taxable year of disposition and you meet other conditions, and you are not eligible for relief under an applicable income tax treaty; or |
• |
we are or have been a “United States real property holding corporation” for United States federal income tax purposes and, in the case where the shares of our common stock are regularly traded on an established securities market, you hold or have held, directly or indirectly, at any time within the shorter of the five-year period preceding disposition or your holding period for your shares of common stock or warrants, more than 5% of our common stock. Special rules may apply to the determination of the 5% threshold in the case of a holder of a warrant. You are urged to consult your own tax advisors regarding the effect of holding the warrants on the calculation of such 5% threshold. We will be classified as a United States real property holding corporation if the fair market value of our “United States real property interests” equals or exceeds 50% of the sum of (1) the fair market value of our United States real property interests, (2) the fair market value of our non-United States real property interests and (3) the fair market value of any other of our assets which are used or held for use in our trade or business. Although we currently are not a United States real property holding corporation, we cannot determine whether we will be a United States real property holding corporation in the future until we consummate an initial business combination. |
Gain that is effectively connected with
your conduct of a trade or business within the United States generally will be subject to United States federal income tax, net of certain deductions,
at the same rates applicable to United States persons. If you are a corporation, the branch profits tax also may apply to such effectively connected
gain. If the gain from the sale or disposition of your shares of common stock or warrants is effectively connected with your conduct of a trade or
business in the United States but under an applicable income tax treaty is not attributable to a permanent establishment you maintain in the United
States, your gain may be exempt from United States tax under the treaty. If you are described in the second bullet point above, you generally will be
subject to United States federal income tax at a rate of 30% on the gain realized, although the gain may be offset by some United States source capital
losses realized during the same taxable year. If you are described in the third bullet point above, gain recognized by you on the sale, exchange or
other disposition of shares of common stock or warrants will be subject to U.S. federal income tax on a net income basis at normal graduated U.S.
federal income tax rates. In addition, a buyer of your shares of common stock or warrants may be required to withhold United States income tax at a
rate of 10% of the amount realized upon such disposition.
If you convert your common stock into a
right to receive cash as described in “Proposed Business — Effecting a Business Combination — Conversion Rights,” the conversion
generally will be treated as a sale of common stock rather than as a dividend or distribution. The conversion will, however, be treated as a dividend
or distribution and taxed as described in “Dividends and Distributions” if your percentage ownership in us (including shares that you are
deemed to own under certain attribution rules, such as the shares into which the warrants are exercisable) after the conversion is not meaningfully
reduced from what your percentage ownership was prior to the conversion. See the discussion in “— U.S. Holders — Sale or Other
Disposition or Conversion of Common Stock.” You should consult your own tax advisor as to whether conversion of your common stock will be treated
as a sale or as a dividend under the Code.
Constructive
Dividends on Warrants
As discussed under “Dividend
Policy” above, we do not anticipate that any dividends will be paid in the foreseeable future. If at any time during the period you hold warrants,
however, we were to pay a taxable dividend to our stockholders and, in accordance with the
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anti-dilution provisions of the warrants, the conversion rate of the warrants were increased, that increase would be deemed to be the payment of a taxable dividend to you to the extent of our earnings and profits, notwithstanding the fact that you will not receive a cash payment. If the conversion rate is adjusted in certain other circumstances (or in certain circumstances, there is a failure to make adjustments), such adjustments may also result in the deemed payment of a taxable dividend to you. Any resulting withholding tax attributable to deemed dividends would be collected from other amounts payable or distributable to you. You should consult your tax advisor regarding the proper treatment of any adjustments to the warrants.
Information
Reporting and Backup Withholding
We must report annually to the IRS the
amount of dividends or other distributions we may pay to you on your shares of common stock and the amount of tax we withhold on any such distributions
regardless of whether withholding is required. The IRS may make copies of the information returns reporting those dividends and amounts withheld
available to the tax authorities in the country in which you reside pursuant to the provisions of an applicable income tax treaty or exchange of
information treaty.
The United States imposes backup
withholding on dividends and certain other types of payments to United States persons. You will not be subject to backup withholding on dividends you
receive on your shares of common stock if you provide proper certification (usually on an IRS Form W-8BEN) of your status as a non-United States person
or you are a corporation or one of several types of entities and organizations that qualify for exemption (an “exempt
recipient”).
Information reporting and backup
withholding generally are not required with respect to the amount of any proceeds from the sale of your shares of common stock or warrants outside the
United States through a foreign office of a foreign broker that does not have certain specified connections to the United States. However, if you sell
your shares of common stock or warrants through a United States broker or the United States office of a foreign broker, the broker will be required to
report to the IRS the amount of proceeds paid to you unless you provide appropriate certification (usually on an IRS Form W-8BEN) to the broker of your
status as a non-United States person or you are an exempt recipient. Information reporting also would apply if you sell your shares of common stock or
warrants through a foreign broker deriving more than a specified percentage of its income from United States sources or having certain other
connections to the United States.
Backup withholding is not an additional
tax. Any amounts withheld with respect to your shares of common stock or warrants under the backup withholding rules will be refunded to you or
credited against your United States federal income tax liability, if any, by the IRS provided that certain required information is furnished to the IRS
in a timely manner.
Foreign Account Tax
Compliance Act
A 30% withholding tax will be imposed on
payments to certain foreign entities of U.S.-source dividends and the gross proceeds of dispositions of stock that can produce U.S.-source dividends,
unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts
with those entities) have been satisfied. This withholding tax will not apply, however, to payments of gross proceeds from dispositions of stock before
January 1, 2017. Non-U.S. holders should consult their tax advisors regarding the possible implications of this withholding tax on their investment in
the units.
Estate
Tax
Common stock owned or treated as owned
by an individual who is not a citizen or resident (as defined for United States federal estate tax purposes) of the United States at
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the time of his or her death, or by an entity the property of which is potentially includible in such an individual’s gross estate, will be included in the individual’s gross estate for United States federal estate tax purposes and therefore may be subject to United States federal estate tax unless an applicable estate tax treaty provides otherwise. The foregoing may also apply to warrants.
Unearned Income
Medicare Tax
If you are a foreign estate or trust,
you may be subject to the Medicare contribution tax described under “U.S. Holders — Unearned Income Medicare Tax” above. Non-U.S.
holders should consult their tax advisors regarding the possible implications of the Medicare contribution tax on their investments in the
units.
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Subject to the terms and conditions of
the underwriting agreement, the underwriters named below, through their representatives, Deutsche Bank Securities Inc. and Cantor Fitzgerald & Co.,
have severally agreed to purchase from us on a firm commitment basis the following respective number of units at a public offering price less the
underwriting discounts and commissions set forth on the cover page of this prospectus:
| Underwriter |
Number of Units |
|||||
|---|---|---|---|---|---|---|
Deutsche Bank
Securities Inc. |
||||||
Cantor
Fitzgerald & Co. |
||||||
Total
|
35,000,000 | |||||
The underwriting agreement provides that
the obligations of the underwriters to purchase the units included in this offering are subject to approval of legal matters by counsel and to other
conditions. The underwriters are obligated to purchase all of the units (other than those covered by the over-allotment option described below) if they
purchase any of the units.
Units sold by the underwriters to the
public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any units sold by the underwriters to
securities dealers may be sold at a discount from the initial public offering price not to exceed $____ per unit. If all of the units are not sold at
the initial offering price, the underwriters may change the offering price and the other selling terms. Deutsche Bank Securities Inc. and Cantor
Fitzgerald & Co. have advised us that the underwriters do not intend to make sales to discretionary accounts.
If the underwriters sell more units than
the total number set forth in the table above, we have granted to the underwriters an option, exercisable for 45 days from the date of this prospectus,
to purchase up to 5,250,000 additional units at the public offering price less the underwriting discount. The underwriters may exercise this option
solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter
must purchase a number of additional units approximately proportionate to that underwriter’s initial purchase commitment. Any units issued or sold
under the option will be issued and sold on the same terms and conditions as the other units that are the subject of this offering.
We, our sponsor and our officers and
directors have agreed that, except with respect to permitted transferees as described above, for a period of 180 days from the date of this prospectus,
we and they will not, without the prior written consent of Deutsche Bank Securities Inc. and Cantor Fitzgerald & Co. offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any units, warrants, shares of common stock or any other securities convertible into, or
exercisable, or exchangeable for, shares of common stock; provided, however, that we may (1) issue and sell the private warrants, (2) issue and sell
the additional units to cover our underwriters’ over-allotment option (if any), (3) register with the SEC pursuant to an agreement to be entered
into concurrently with the issuance and sale of the securities in this offering, the resale of the insider shares and the private warrants or the
warrants and shares of common stock issuable upon exercise of the warrants and (4) issue securities in connection with a business combination. Deutsche
Bank Securities Inc. and Cantor Fitzgerald & Co. in their sole discretion may release any of the securities subject to these lock-up agreements at
any time without notice.
Our initial stockholders have agreed not
to transfer, assign or sell any of its insider shares (except with respect to permitted transferees as described above) until (1) with respect to 20%
of the insider shares, the consummation of our initial business combination and (2) with respect to the remaining 80% of the insider shares, the
earlier of one year after the date of the consummation of our initial business combination and the date on which the closing price of
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our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30 trading day period commencing 150 days after our initial business combination. Notwithstanding the foregoing, these transfer restrictions will be removed earlier if, after our initial business combination, we consummate a subsequent (i) liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property or (ii) consolidation, merger or other change in the majority of our management team.
The private warrants (including the
common stock issuable upon exercise of the private warrants) will not be transferable, assignable or salable until 30 days after the completion of our
initial business combination (except with respect to permitted transferees as described above).
Prior to this offering, there has been
no public market for our securities. Consequently, the initial public offering price for the units was determined by negotiations between us and the
representative.
The determination of our per unit
offering price was more arbitrary than would typically be the case if we were an operating company. Among the factors considered in determining initial
public offering price were the history and prospects of companies whose principal business is the acquisition of other companies, prior offerings of
those companies, our management, our capital structure, and currently prevailing general conditions in equity securities markets, including current
market valuations of publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the units,
common stock or warrants will sell in the public market after this offering will not be lower than the initial public offering price or that an active
trading market in our units, common stock or warrants will develop and continue after this offering.
We have applied to have our units listed
on NASDAQ under the symbol “QPACU” and anticipate that, once the common stock and warrants begin separate trading, they will be listed
on NASDAQ under the symbols “QPAC” and “QPACW”, respectively.
The following table shows the
underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both
no exercise and full exercise of the underwriters’ over-allotment option.
| Paid by Quinpario Acquisition Corp. 2 |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| No Exercise |
Full Exercise |
||||||||||
Per
Unit(1) |
$ | 0.55 | $ | 0.55 | |||||||
Total(1) |
$ | 19,250,000 | $ | 22,137,500 | |||||||
(1) |
Includes $0.35 per unit, or approximately $12.25 million (or approximately $14.10 million if the over-allotment option is exercised in full) in the aggregate payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriters only on completion of an initial business combination. |
In addition, we have agreed to pay for
the FINRA-related fees and expenses of the underwriters’ legal counsel, not to exceed $15,000.
If we do not complete our initial
business combination within 24 months from the closing of this offering, the trustee and the underwriters have agreed that (i) they will forfeit any
rights or claims to their deferred underwriting discounts and commissions, including any accrued interest thereon, then in the trust account, and (ii)
that the deferred underwriters’ discounts and commissions will be distributed on a pro rata basis, together with any accrued interest thereon
(which interest shall be net of taxes payable) to the public stockholders.
In connection with the offering, the
underwriters may purchase and sell units in the open market. Purchases and sales in the open market may include short sales, purchases to
cover
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short positions, which may include purchases pursuant to the over-allotment option, and stabilizing purchases.
• |
Short sales involve secondary market sales by the underwriters of a greater number of shares than they are required to purchase in the offering. |
• |
“Covered” short sales are sales of units in an amount up to the number of units represented by the underwriters’ over-allotment option. |
• |
“Naked” short sales are sales of units in an amount in excess of the number of units represented by the underwriters’ over-allotment option. |
• |
Covering transactions involve purchases of units either pursuant to the over-allotment option or in the open market after the distribution has been completed in order to cover short positions. |
• |
To close a naked short position, the underwriters must purchase shares in the open market after the distribution has been completed. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the units in the open market after pricing that could adversely affect investors who purchase in the offering. |
• |
To close a covered short position, the underwriters must purchase units in the open market after the distribution has been completed or must exercise the over-allotment option. In determining the source of shares to close the covered short position, the underwriters will consider, among other things, the price of units available for purchase in the open market as compared to the price at which they may purchase units through the over-allotment option. |
• |
Stabilizing transactions involve bids to purchase units so long as the stabilizing bids do not exceed a specified maximum. |
Purchases to cover short positions and
stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline
in the market price of the units. They may also cause the price of the units to be higher than the price that would otherwise exist in the open market
in the absence of these transactions. The underwriters may conduct these transactions in the over-the-counter market or otherwise. If the underwriters
commence any of these transactions, they may discontinue them at any time.
We estimate that our portion of the
total expenses of this offering payable by us will be $700,000, excluding underwriting discounts and commissions.
We have agreed to indemnify the
underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required
to make because of any of those liabilities.
We are not under any contractual
obligation to engage any of the underwriters to provide any services for us after this offering, and have no present intent to do so. However, any of
the underwriters may introduce us to potential target businesses or assist us in raising additional capital in the future. If any of the underwriters
provide services to us after this offering, we may pay such underwriter fair and reasonable fees that would be determined at that time in an arm’s
length negotiation; provided that no agreement will be entered into with any of the underwriters and no fees for such services will be paid to any of
the underwriters prior to the date that is 90 days from the date of this prospectus, unless FINRA determines that such payment would not be deemed
underwriters’ compensation in connection with this offering and we may pay the underwriters of this offering or any entity with which they are
affiliated a finder’s fee or other compensation for services rendered to us in connection with the completion of a business
combination.
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Some of the underwriters and their
affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with
us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
In addition, in the ordinary course of
their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their
customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their
affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial
instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Notice to Prospective Investors in
Australia
No placement document, prospectus,
product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission (“ASIC”),
in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the
Corporations Act 2001 (the “Corporations Act”), and does not purport to include the information required for a prospectus, product disclosure
statement or other disclosure document under the Corporations Act.
Any offer in Australia of the shares may
only be made to persons (the “Exempt Investors”) who are “sophisticated investors” (within the meaning of section 708(8) of the
Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or
more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter
6D of the Corporations Act.
The shares applied for by Exempt
Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in
circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708
of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act.
Any person acquiring shares must observe such Australian on-sale restrictions.
This prospectus contains general
information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not
contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the
information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those
matters.
Notice to Prospective Investors in the Dubai International
Financial Centre
This prospectus relates to an Exempt
Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for
distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other
person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this
prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus
relates may be illiquid
109
and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.
Notice to Prospective Investors in the European Economic
Area
In relation to each member state of the
European Economic Area that has implemented the Prospectus Directive (each, a “relevant member state”), with effect from and including the
date on which the Prospectus Directive is implemented in that relevant member state (the “relevant implementation date”), an offer of units
described in this prospectus may not be made to the public in that relevant member state prior to the publication of a prospectus in relation to the
units that has been approved by the competent authority in that relevant member state or, where appropriate, approved in another relevant member state
and notified to the competent authority in that relevant member state, all in accordance with the Prospectus Directive, except that, with effect from
and including the relevant implementation date, an offer of our units may be made to the public in that relevant member state at any
time:
• |
to any legal entity which is a qualified investor as defined in the Prospectus Directive; |
• |
to fewer than 100, or, if the relevant member state has implemented the relevant provisions of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the issuer for any such offer; or natural or legal persons (other than qualified investors as defined below) subject to obtaining the prior consent of the underwriter for any such offer; or |
• |
in any other circumstances that do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive. |
Each purchaser of units described in
this prospectus located within a relevant member state will be deemed to have represented, acknowledged and agreed that it is a “qualified
investor” within the meaning of Article 2(1)(e) of the Prospectus Directive.
For the purpose of this provision, the
expression an “offer to the public” in any relevant member state means the communication in any form and by any means of sufficient
information on the terms of the offer and the units to be offered so as to enable an investor to decide to purchase or subscribe for the units, as the
expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression
“Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the PD 2010 Amending Directive to the extent implemented
by the relevant member state) and includes any relevant implementing measure in each relevant member state, and the expression 2010 PD Amending
Directive means Directive 2010/73/EU.
We have not authorized and do not
authorize the making of any offer of units through any financial intermediary on their behalf, other than offers made by the underwriters with a view
to the final placement of the units as contemplated in this prospectus. Accordingly, no purchaser of the units, other than the underwriters, is
authorized to make any further offer of the units on behalf of us or the underwriters.
Notice to Prospective Investors in
Switzerland
The shares may not be publicly offered
in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in
Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the
Swiss Code of Obligations or the
110
disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other
offering or marketing material relating to the offering, the Company, the shares have been or will be filed with or approved by any Swiss regulatory
authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market
Supervisory Authority FINMA (FINMA), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective
Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does
not extend to acquirers of shares.
Notice to Prospective Investors in the United
Kingdom
This prospectus is only being
distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the
Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling
within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as a “relevant person”). The units are only
available to, and any invitation, offer or agreement to purchase or otherwise acquire such units will be engaged in only with, relevant persons. This
prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to
any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any
of its contents.
Notice to Prospective Investors in France
Neither this prospectus nor any other
offering material relating to the units described in this prospectus has been submitted to the clearance procedures of the Autorité des
Marchés Financiers or by the competent authority of another member state of the European Economic Area and notified to the Autorité des
Marchés Financiers. The units have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.
Neither this prospectus nor any other offering material relating to the units has been or will be:
• |
released, issued, distributed or caused to be released, issued or distributed to the public in France; or |
• |
used in connection with any offer for subscription or sale of the units to the public in France. |
Such offers, sales and distributions
will be made in France only:
• |
to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case investing for their own account, all as defined in, and in accordance with, Article L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier; |
• |
to investment services providers authorized to engage in portfolio management on behalf of third parties; or |
• |
in a transaction that, in accordance with article L.411-2-II-1¦Mbb[-or-2¦Mbb[-or 3¦Mbb[ of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public à l’épargne). |
111
The units may be resold directly or
indirectly, only in compliance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et
financier.
Notice to Prospective Investors in Hong
Kong
The units may not be offered or sold in
Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies
Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.
571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a
“prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating
to the units may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which
is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of
Hong Kong) other than with respect to units which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional
investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made
thereunder.
Notice to Prospective Investors in Japan
The units have not been and will not be
registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) and, accordingly, will not be offered or sold,
directly or indirectly, in Japan, or for the benefit of any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or
to any Japanese Person, except in compliance with all applicable laws, regulations and ministerial guidelines promulgated by relevant Japanese
governmental or regulatory authorities in effect at the relevant time. For the purposes of this paragraph, “Japanese Person” shall mean any
person resident in Japan, including any corporation or other entity organized under the laws of Japan.
Notice to Prospective Investors in
Singapore
This prospectus has not been registered
as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer
or sale, or invitation for subscription or purchase, of the units may not be circulated or distributed, nor may the units be offered or sold, or be
made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an
institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person
pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or
(iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance
with conditions set forth in the SFA.
Where the units are subscribed or
purchased under Section 275 of the SFA by a relevant person which is:
• |
shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except: |
112
• |
to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA; |
• |
where no consideration is or will be given for the transfer; or |
• |
where the transfer is by operation of law. |
LEGAL MATTERS
Graubard Miller, New York, New York, is
acting as our counsel in connection with the registration of our securities under the Securities Act of 1933, and as such, will pass upon the validity
of the securities offered in this offering Kirkland & Ellis LLP, New York, New York, advised the underwriters in connection with the offering of
the securities.
EXPERTS
The financial statements of Quinpario
Acquisition Corp. 2 as of September 12, 2014 and for the period from July 15, 2014 (inception) through September 12, 2014 appearing in this prospectus
have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their report, thereon (which contains an explanatory
paragraph relating to substantial doubt about the ability of Quinpario Acquisition Corp. 2 to continue as a going concern as described in Note 1 to the
financial statements), appearing elsewhere in this prospectus, and are included in reliance on such report given on the authority of such firm as an
experts in auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL
INFORMATION
We have filed with the SEC a
registration statement on Form S-1 under the Securities Act with respect to the units we are offering by this prospectus. This prospectus does not
contain all of the information included in the registration statement. For further information about us and our shares, you should refer to the
registration statement and the exhibits and schedules filed with the registration statement. Whenever we make reference in this prospectus to any of
our contracts, agreements or other documents, the references are materially complete but may not include a description of all aspects of such
contracts, agreements or other documents, and you should refer to the exhibits attached to the registration statement for copies of the actual
contract, agreement or other document.
Upon completion of this offering, we
will be subject to the information requirements of the Exchange Act and will file annual, quarterly and current event reports, proxy statements and
other information with the SEC. You can read our SEC filings, including the registration statement, over the Internet at the SEC’s website at
www.sec.gov . You may also read and copy any document we file with the SEC at its public reference facility at 100 F Street, N.E., Washington,
D.C. 20549.
You may also obtain copies of the
documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for further information on the operation of the public reference facilities.
113
Quinpario Acquisition Corp. 2
| Page |
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F-2 |
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Financial
Statements |
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F-3 |
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F-4 |
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F-5 |
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F-6 |
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F-7
– F-12 |
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Report of Independent Registered Public Accounting
Firm
To the Board of Directors and Shareholders
of Quinpario Acquisition Corp. 2
of Quinpario Acquisition Corp. 2
We have audited the accompanying balance sheet of Quinpario
Acquisition Corp. 2 (the “Company”) as of September 12, 2014, and the related statements of operations, changes in stockholder’s equity
and cash flows for the period from July 15, 2014 (inception) through September 12, 2014. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Quinpario Acquisition Corp. 2 as of September 12, 2014, and the results of its operations
and its cash flows for the period from July 15, 2014 (inception) through September 12, 2014 in conformity with accounting principles generally accepted
in the United States of America.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has no present revenue, its business plan
is dependent on the completion of a financing and the Company’s cash and working capital as of September 12, 2014 are not sufficient to complete
its planned activities for the upcoming year. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans regarding these matters are also described in Notes 1 and 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Marcum LLP
Marcum LLP
New York, NY
September 26, 2014
New York, NY
September 26, 2014
F-2
BALANCE SHEET
September 12, 2014
September 12, 2014
ASSETS |
|||||||
Current
Assets: Cash and cash equivalents |
$ | 24,385 | |||||
Deferred
offering costs |
60,000 | ||||||
Total
assets |
$ | 84,385 | |||||
LIABILITIES AND STOCKHOLDER’S EQUITY |
|||||||
Current
liabilities: |
|||||||
Accrued
offering costs |
$ | 25,000 | |||||
Note payable
to sponsor |
46,663 | ||||||
Total
liabilities |
71,663 | ||||||
Stockholder’s equity |
|||||||
Preferred
stock, $.0001 par value, 1,000,000 shares authorized: none issued and outstanding |
— | ||||||
Common stock,
$.0001 par value, 135,000,000 shares authorized; 10,062,500 shares issued and outstanding(1) |
1,006 | ||||||
Additional
paid-in capital |
23,994 | ||||||
Accumulated
Deficit |
(12,278 | ) | |||||
Total
stockholder’s equity |
12,722 | ||||||
Total
liabilities and stockholder’s equity |
$ | 84,385 | |||||
(1) |
Includes an aggregate of 1,312,500 shares subject to forfeiture by the initial stockholder to the extent that the underwriters’ over-allotment option is not exercised in full (see note 4) |
The accompanying notes are an integral part of these financial
statements.
F-3
STATEMENT OF OPERATIONS
For the period from July 15, 2014 (inception) to September 12, 2014
For the period from July 15, 2014 (inception) to September 12, 2014
Formation,
general & administrative costs |
$ | 12,278 | ||||
Net loss
|
$ | (12,278 | ) | |||
Weighted
average number of common shares outstanding — basic and diluted(1) |
8,750,000 | |||||
Net loss per
common share — basic and diluted |
$ | (0.00 | ) |
(1) |
Excludes an aggregate of 1,312,500 shares subject to forfeiture by the initial stockholder to the extent that the underwriters’ over-allotment option is not exercised in full (see note 4) |
The accompanying notes are an integral part of these financial
statements.
F-4
STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY
For the period from July 15, 2014 (inception) to September 12, 2014
For the period from July 15, 2014 (inception) to September 12, 2014
| Common Stock |
||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares(1) |
Amount |
Additional Paid-in Capital |
Accumulated Deficit |
Total Stockholder’s Equity |
||||||||||||||||||
Sale of common
stock issued to initial stockholder |
10,062,500 | $ | 1,006 | $ | 23,994 | $ | — | $ | 25,000 | |||||||||||||
Net loss
|
(12,278 | ) | (12,278 | ) | ||||||||||||||||||
Balance at
September 12, 2014 |
10,062,500 | $ | 1,006 | $ | 23,994 | $ | (12,278 | ) | $ | 12,722 | ||||||||||||
(1) |
Includes an aggregate of 1,312,500 shares subject to forfeiture by the initial stockholder to the extent that the underwriters’ over-allotment option is not exercised in full (see note 4) |
The accompanying notes are an integral part of these financial
statements.
F-5
STATEMENT OF CASH FLOWS
For the period from July 15, 2014 (inception) to September 12, 2014
For the period from July 15, 2014 (inception) to September 12, 2014
Cash flows
from operating activities: |
||||||
Net loss
|
$ | (12,278 | ) | |||
Adjustments to
reconcile net loss to net cash used to operating activities |
||||||
Payment of
expenses pursuant to note payable to sponsor |
11,663 | |||||
Changes in
operating assets and liabilities |
||||||
Accrued
expenses |
— | |||||
Net cash
used in operating activities |
(615 | ) | ||||
Cash flows
from financing activities: |
||||||
Proceeds from
sale of common stock to initial stockholder |
25,000 | |||||
Net cash
provided by financing activities |
25,000 | |||||
Net
increase in cash |
24,385 | |||||
Cash at
beginning of the period |
— | |||||
Cash at end
of the period |
$ | 24,385 | ||||
Non-cash
financing activities: |
||||||
Accrual of
deferred offering costs |
$ | 25,000 | ||||
Payment of
deferred operating costs pursuant to note payable to sponsor |
35,000 |
The accompanying notes are an integral part of these financial
statements.
F-6
QUINPARIO ACQUISITION CORP. 2
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
Quinpario Acquisition Corp. 2
(“us”, “we”, “Company”, “our”), is a newly organized blank check company incorporated in Delaware on July 15,
2014. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or
similar business combination (“Business Combination”). The Company has neither engaged in any operations nor generated significant revenue to
date. At September 12, 2014 the Company has not yet commenced any operations. All activity through September 12, 2014 relates to the Company’s
formation and proposed public offering described below. The Company has selected December 31 as its fiscal year end.
The Company’s management has broad
discretion with respect to the specific application of the net proceeds of its proposed initial public offering of Units (as defined in Note 3 below)
(the “Proposed Offering”), although substantially all of the net proceeds of the Proposed Offering are intended to be generally applied
toward consummating a Business Combination. Furthermore, there is no assurance that the Company will be able to successfully affect a Business
Combination. An amount equal to 100% of the gross proceeds of the Proposed Offering will be held in a trust account (“Trust Account”) and
invested in U.S. “government securities,” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 (the “1940
Act”) with a maturity of 180 days or less or in any open ended investment company that holds itself out as a money market fund selected by the
Company meeting the conditions of paragraphs (c)(2), (c)(3) and (c)(4) of Rule 2a-7 of the 1940 Act, as determined by the Company, until the earlier
of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account as described below.
We will either (1) seek stockholder
approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of
whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust
account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby
avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of
taxes payable), in each case subject to the limitations described herein. The decision as to whether we will seek stockholder approval of our proposed
business combination or allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our 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 us to seek stockholder
approval. Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial business
combinations and related conversions of public shares for cash upon consummation of such initial business combinations even when a vote is not required
by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders to sell their shares pursuant to the tender offer rules
of the Securities and Exchange Commission (“SEC”). In that case, we will file tender offer documents with the SEC which will contain
substantially the same financial and other information about the initial business combination as is required under the SEC’s proxy rules. We will
consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek
stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination. Notwithstanding the
foregoing, the Amended and Restated Certificate of Incorporation of the Company will provide that a public stockholder, together with any affiliate or
other person with
F-7
QUINPARIO ACQUISITION CORP. 2
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS — (continued)
whom such public stockholder is acting in concert or as a “group” (within the meaning of Section 13 of the Securities Act of 1934, as amended), will be restricted from seeking conversion rights with respect to an aggregate of more than 15% of the public shares (but only with respect to the amount over 15% of the public shares). A “group” will be deemed to exist if public stockholders (i) file a Schedule 13D or 13G indicated the presence of a group or (ii) acknowledge to the Company that they are acting, or intend to act, as a group.
The Company will have until 24 months
from the closing of the Proposed Offering to consummate its initial Business Combination. If the Company is unable to consummate an initial Business
Combination within such time period, it will, as promptly as possible but not more than ten business days thereafter, redeem 100% of the outstanding
public shares for a pro rata portion of the funds held in the Trust Account and then seek to dissolve and liquidate. In such event, the warrants will
expire worthless. The Company expects the per share redemption price to be $10.00 per share of common stock (regardless of whether the underwriters
exercise their over-allotment option in full or in part), without taking into account any interest earned on such funds. However, the Company may not
be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of public stockholders.
Going Concern Consideration
At September 12, 2014, the Company had
$24,385 in cash and working capital deficit of $47,278. Further, the Company has incurred and expects to continue to incur significant costs in pursuit
of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
Management plans to address this uncertainty through the Proposed Public Offering are discussed in Note 3. There is no assurance that the
Company’s plans to raise capital or to consummate a Business Combination will be successful. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of presentation
The accompanying 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 rules and regulations of the Securities and Exchange Commission (“SEC”).
Cash and Cash Equivalents
The Company considers all short-term
investments with a maturity of three months or less when purchased to be cash equivalents.
Net loss per common share
The Company complies with accounting and
disclosure requirements of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 260,
“Earnings Per Share.” Net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average
number of common shares outstanding for
F-8
QUINPARIO ACQUISITION CORP. 2
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —
(continued)
the period, which excludes an aggregate of 1,312,500 shares subject to forfeiture by the initial shareholder to the extent that the unerwriters over-allotment option is not exercised in full (see note 4). At September 12, 2014, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted loss per common share is the same as basic loss per common share for the period.
Concentration of credit risk
Financial instruments that potentially
subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times may exceed the Federal
depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed
to significant risks on such accounts.
Fair value of financial instruments
The fair value of the Company’s
assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
Use of estimates
The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Deferred offering costs
Deferred offering costs consist of legal
and underwriting fees incurred through the balance sheet date that are directly related to the Proposed Offering and that will be charged to
stockholders’ equity upon the completion of the Proposed Offering. Should the Proposed Offering prove to be unsuccessful, these deferred costs as
well as additional expenses to be incurred will be charged to operations.
Income taxes
The Company complies with the accounting
and reporting requirements of FASB ASC, 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of
assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income. 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 September 12, 2014. FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement
F-9
QUINPARIO ACQUISITION CORP. 2
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —
(continued)
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 as income tax expense. No amounts were accrued for the payment of interest and penalties at September 12, 2014. 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 is subject to income tax examinations by major taxing authorities since inception. The Companys initial tax returns will include the period ended September 12, 2014 and will be subject to examination by federal and state tax authorities for three years from the date they are filed.
The Company may be subject to potential
examination by U.S. federal and state authorities in the areas of income taxes. These potential examinations may include questioning the timing and
amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal and state tax laws. The Company’s
management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recently issued accounting standards
Management does not believe that any
recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial
statements.
3. PROPOSED OFFERING
Pursuant to the Proposed Offering, the
Company will offer for sale up to 35,000,000 units at $10.00 per unit (“Units”). Each Unit will consist of one share of our common stock and
one warrant. Each warrant entitles the holder thereof to purchase one-half of one share of our common stock at a price of $5.75 per half share, subject
to adjustment as described in the Company’s prospectus. Warrants may be exercised only for a whole number of shares of common stock. No fractional
shares will be issued upon exercise of the warrants. Each warrant will become exercisable on the later of 30 days after the completion of an initial
business combination or 12 months from the date of this prospectus, and will expire five years after the completion of an initial business combination,
or earlier upon redemption.
In connection with the Proposed
Offering, the Company’s sponsor (the “Sponsor”) and its designees have committed to purchase an aggregate of 18,000,000 warrants, or
“private warrants” at a price of $0.50 per warrant ($9,000,000 in the aggregate) in a private placement that will occur simultaneously with
the closing of the Proposed Offering. The Sponsor and its designees have also agreed that if the over-allotment option is exercised by the
underwriters, they will purchase from the Company at a price of $0.50 per warrant an additional number of private warrants (up to a maximum of
2,100,000 private warrants) pro rata with the amount of the over-allotment option exercised so that at least $10.00 per share sold to the public in the
Proposed Offering is held in the Trust Account regardless of whether the over-allotment option is exercised in full or part. These additional private
warrants will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the
over-allotment option. The proceeds from the private placement of the private warrants will be added to the proceeds of the Proposed Offering and
placed in an account in
F-10
QUINPARIO ACQUISITION CORP. 2
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
3. PROPOSED OFFERING —
(continued)
the United States maintained by Continental Stock Transfer & Trust Company, as trustee.
The private warrants are identical to
the warrants included in the units to be sold in the Proposed Offering except the private warrants will be non-redeemable and may be exercised on a
cashless basis, at the holder’s option, in each case so long as they continue to be held by the initial purchasers or their permitted transferees.
The purchasers have also agreed not to transfer, assign or sell any of the private warrants or underlying securities (except to the same permitted
transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the private
warrants must agree to, each as described above) until 30 days after the completion of an initial Business Combination.
4. RELATED PARTY TRANSACTIONS
If the underwriters do not exercise all
or a portion of their over-allotment option, the Sponsor will forfeit up to an aggregate of 1,312,500 insider shares in proportion to the portion of
the over-allotment option that was not exercised. If such shares are forfeited, the Company will record the forfeited shares as treasury stock and
simultaneously retire the shares. Upon receipt, such forfeited shares would then be immediately cancelled which would result in the retirement of the
treasury shares and a corresponding charge to additional paid-in capital.
The initial stockholders have agreed not
to transfer, assign or sell any of the insider shares (except to certain permitted transferees) until (1) with respect to 20% of the insider shares,
the consummation of an initial Business Combination and (2) with respect to the remaining 80% of the insider shares, the earlier of one year after the
date of the consummation of an initial Business Combination or if after 150 days after an initial Business Combination, the closing price of the
Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations)
for any 20 trading days within any 30 trading day period. Notwithstanding the foregoing, the foregoing transfer restrictions will be removed earlier
if, after an initial Business Combination, the Company consummates a subsequent (i) liquidation, merger, stock exchange or other similar transaction
which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other
property or (ii) consolidation, merger or other change in the majority of the Company’s management team.
The holder of the insider shares, as
well as the holder of the private warrants (and underlying securities) and any securities the Sponsor, officers, directors, special advisors or their
respective affiliates may be issued in payment of working capital loans made to the Company, will be entitled to registration rights pursuant to an
agreement to be signed prior to or on the effective date of the Proposed Offering. The holders of a majority of these securities are entitled to make
up to three demands that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to
registration statements filed subsequent to our consummation of an initial Business Combination. The registration rights agreement provides that we
will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period
described above. the Company will bear the expenses incurred in connection with the filing of any such registration statements.
As of September 12, 2014, the Sponsor
loaned to the Company an aggregate of $46,663 to cover expenses related to this offering. The loan is payable without interest on the
earlier
F-11
QUINPARIO ACQUISITION CORP. 2
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
4. RELATED PARTY TRANSACTIONS —
(continued)
of (i) December 31, 2014, (ii) the date on which we consummate our initial public offering or (iii) the date on which we determine to not proceed with our initial public offering. We may draw down up to $300,000 from the Sponsor. The Company intends to repay this loan from the proceeds of the Proposed Offering not being placed in the Trust Account.
Quinpario Partners LLC has agreed that,
commencing on the effective date of Proposed Offering through the earlier of our consummation of an initial Business Combination or our liquidation, it
will make available to us certain general and administrative services, including office space, utilities and administrative support, as we may require
from time to time. We have agreed to pay Quinpario Partners LLC $10,000 per month for these services.
In order to meet the Company’s
working capital needs following the consummation of the Proposed Offering, the Sponsor, officers and directors and their respective affiliates may, but
are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan
would be evidenced by a non-interest bearing promissory note. The notes would either be paid upon consummation of an initial Business Combination,
without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon consummation of the Business Combination
into additional private warrants at a price of $0.50 per warrant.
5. COMMITMENTS & CONTINGENCIES
The Company has granted the underwriters
a 45-day option to purchase up to 5,250,000 units (over and above the 35,000,000 units referred to above) solely to cover over-allotments, if
any.
The underwriters will be entitled to an
underwriting discount of two percent (2.0%) which shall be paid in cash at the closing of the Proposed Offering, including any amounts raised pursuant
to the overallotment option. In addition, the underwriters will be entitled to a deferred fee of three and one-half percent (3.5%) of the Proposed
Offering, including any amounts raised pursuant to the overallotment option, payable in cash upon the closing of a Business
Combination.
6. STOCKHOLDER’S EQUITY
Common Stock — The
Company is authorized to issue 135,000,000 shares of common stock with a par value of $0.0001 per share. At September 12, 2014, there were 10,062,500
common shares outstanding, which shares were issued to the Sponsor for $25,000.
Preferred Stock — The
Company is authorized to issue 1,000,000 shares of preferred stock in one or more series with such designations, voting and other rights and
preferences as may be determined from time to time by the Board of Directors. At September 12, 2014, the Company has not issued any preferred
shares.
7. SUBSEQUENT EVENTS
Management has approved the financial
statements and performed an evaluation of subsequent events through September 26, 2014, the date the financial statements were available for issuance,
noting no additional items which require adjustment or disclosure.
F-12
Until __________, 2014, all dealers that effect transactions in
these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’
obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
No dealer, salesperson or any other person is authorized to
give any information or make any representations in connection with this offering other than those contained in this prospectus and, if given or made,
the information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the securities offered by this prospectus, or an offer to sell or a solicitation of an offer to
buy any securities by anyone in any jurisdiction in which the offer or solicitation is not authorized or is unlawful.
TABLE OF CONTENTS
| Page |
||||||
|---|---|---|---|---|---|---|
SUMMARY
|
1 | |||||
SUMMARY
FINANCIAL DATA |
18 | |||||
RISK FACTORS
|
19 | |||||
CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS |
42 | |||||
USE OF
PROCEEDS |
43 | |||||
DIVIDEND
POLICY |
47 | |||||
DILUTION
|
48 | |||||
CAPITALIZATION
|
50 | |||||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
51 | |||||
PROPOSED
BUSINESS |
56 | |||||
MANAGEMENT
|
73 | |||||
PRINCIPAL
STOCKHOLDERS |
85 | |||||
CERTAIN
TRANSACTIONS |
88 | |||||
DESCRIPTION OF
SECURITIES |
91 | |||||
SHARES
ELIGIBLE FOR FUTURE SALE |
96 | |||||
MATERIAL U.S.
FEDERAL INCOME TAX CONSIDERATIONS |
98 | |||||
UNDERWRITING
|
106 | |||||
LEGAL MATTERS
|
113 | |||||
EXPERTS
|
113 | |||||
WHERE YOU CAN
FIND ADDITIONAL INFORMATION |
113 | |||||
INDEX TO
FINANCIAL STATEMENTS |
F-1 | |||||
| Quinpario Acquisition Corp. 2 $350,000,000 35,000,000 Units Deutsche Bank Securities Cantor Fitzgerald & Co. Prospectus __________________, 2014 |
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and
Distribution.
The estimated expenses payable by us in
connection with the offering described in this registration statement (other than the underwriting discount and commissions) will be as
follows:
Initial
Trustees’ fee |
$ | 1,000 | (1) | |||
SEC
Registration Fee |
52,000 | |||||
FINRA filing
fee |
61,000 | |||||
Accounting
fees and expenses |
30,000 | |||||
Nasdaq listing
fees |
75,000 | |||||
Printing and
engraving expenses |
55,000 | |||||
Directors
& Officers liability insurance premiums |
125,000 | (2) | ||||
Legal fees and
expenses |
250,000 | |||||
Miscellaneous |
51,000 | (3) | ||||
Total |
$ | 700,000 |
(1) |
In addition to the initial acceptance fee that is charged by Continental Stock Transfer & Trust Company, as trustee, the registrant will be required to pay to Continental Stock Transfer & Trust Company fees for acting as trustee, as transfer agent of the registrant’s shares of common stock, as warrant agent for the registrant’s warrants. |
(2) |
This amount represents the approximate amount of director and officer liability insurance premiums the registrant anticipates paying following the consummation of its initial public offering and until it consummates a business combination. |
(3) |
This amount represents additional expenses that may be incurred by the Company in connection with the offering over and above those specifically listed above, including distribution and mailing costs. |
Item 14. Indemnification of Directors and
Officers.
Our amended and restated certificate of
incorporation provides that all directors, officers, employees and agents of the registrant shall be entitled to be indemnified by us to the fullest
extent permitted by Section 145 of the Delaware General Corporation Law.
Section 145 of the Delaware General
Corporation Law concerning indemnification of officers, directors, employees and agents is set forth below.
“Section 145. Indemnification of
officers, directors, employees and agents; insurance.
(a) A corporation shall have
power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact
that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action,
suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the person did not act in good faith
II-1
and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.
(b) A corporation shall have
power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person
in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court
in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a
present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding
referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
(d) Any indemnification under
subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has
met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person
who is a director or officer of the corporation at the time of such determination, (1) by a majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or
(4) by the stockholders.
(e) Expenses (including
attorneys’ fees) incurred by an officer or director of the corporation in defending any civil, criminal, administrative or investigative action,
suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses (including attorneys’ fees) incurred by former directors and officers
or other employees and agents of the corporation or by persons serving at the request of the corporation as directors, officers, employees or agents of
another corporation, partnership, joint venture, trust or other enterprise may be so paid upon such terms and conditions, if any, as the corporation
deems appropriate.
(f) The indemnification and
advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. A
right to indemnification or to advancement of expenses arising under a
II-2
provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
(g) A corporation shall have
power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s
status as such, whether or not the corporation would have the power to indemnify such person against such liability under this
section.
(h) For purposes of this
section, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority
to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting
or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had
continued.
(i) For purposes of this
section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the corporation” shall
include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have
acted in a manner “not opposed to the best interests of the corporation” as referred to in this section.
(j) The indemnification and
advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such
a person.
(k) The Court of Chancery is
hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section
or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a
corporation’s obligation to advance expenses (including attorneys’ fees).”
Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions,
or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred
or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel
II-3
the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Paragraph B of Article Eighth of our
amended and restated certificate of incorporation provides:
“The Corporation, to the full
extent permitted by Section 145 of the GCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses
(including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or
proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized hereby.”
Pursuant to the Underwriting Agreement
filed as Exhibit 1.1 to this Registration Statement, we have agreed to indemnify the Underwriters and the Underwriters have agreed to indemnify us
against certain civil liabilities that may be incurred in connection with this offering, including certain liabilities under the Securities
Act.
Item 15. Recent Sales of Unregistered
Securities.
(a) During the past three
years, we sold the following shares of common stock without registration under the Securities Act:
| Name |
Number of Shares |
|||||
|---|---|---|---|---|---|---|
Quinpario
Partners 2, LLC |
10,062,500 | |||||
All such shares were issued in September
2014 in connection with our organization pursuant to the exemption from registration contained in Section 4(2) of the Securities Act as they were sold
to an accredited investor. The shares issued to the entity above were sold for an aggregate offering price of $25,000 at a purchase price of
approximately $0.002 per share.
In addition, the Company’s sponsor
has committed that it or its designees will purchase an aggregate of 18,000,000 private warrants from the Company on a private placement basis
simultaneously with the consummation of this offering, for an aggregate purchase price of $9,000,000. These purchases will take place on a private
placement basis simultaneously with the consummation of our initial public offering. The Company’s sponsor and its designees have also agreed that
if the over-allotment option is exercised by the underwriters, they will purchase from the Company at a price of $0.50 per warrant an additional number
of private warrants (up to a maximum of 2,100,000 private warrants) pro rata with the amount of the over-allotment option exercised so that at least
$10.00 per share sold to the public in this offering is held in trust regardless of whether the over-allotment option is exercised in full or part.
These additional private warrants will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the
exercise of the over-allotment option. These issuances will be made pursuant to the exemption from registration contained in Section 4(2) of the
Securities Act.
No underwriting discounts or commissions
were paid with respect to such sales.
II-4
Item 16. Exhibits and Financial Statement
Schedules.
(a) The following exhibits
are filed as part of this Registration Statement:
| Exhibit No. |
Description |
|||||
|---|---|---|---|---|---|---|
| 1.1 | Form
of Underwriting Agreement.* |
|||||
| 3.1 | Certificate of Incorporation.** |
|||||
| 3.2 | Amended and Restated Certificate of Incorporation.* |
|||||
| 3.3 | Bylaws.** |
|||||
| 4.1 | Specimen Unit Certificate.* |
|||||
| 4.2 | Specimen common stock Certificate.* |
|||||
| 4.3 | Specimen Warrant Certificate.* |
|||||
| 4.4 | Form
of Warrant Agreement among the Registrant and Continental Stock Transfer & Trust Company.* |
|||||
| 5.1 | Opinion of Graubard Miller.* |
|||||
| 10.1 | Form
of Letter Agreement among the Registrant, Deutsche Bank Securities, Inc., Cantor Fitzgerald & Co. and each of the Registrant’s Officers,
Directors and Sponsor.* |
|||||
| 10.2 | Form
of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant.* |
|||||
| 10.3 | Form
of Letter Agreement between Quinpario Partners LLC and Registrant regarding administrative support.* |
|||||
| 10.4 | Promissory Note issued to Quinpario Partners LLC.** |
|||||
| 10.5 | Form
of Registration Rights Agreement among the Registrant and the Sponsor.* |
|||||
| 10.6 | Form
of Subscription Agreements among the Registrant, Graubard Miller and the Sponsor.* |
|||||
| 14 | Code
of Ethics.* |
|||||
| 23.1 | Consent of Marcum LLP. |
|||||
| 23.2 | Consent of Graubard Miller (included in Exhibit 5.1).* |
|||||
| 24 | Power
of Attorney (included on signature page of this Registration Statement). |
|||||
* |
To be filed by amendment. |
** |
Previously Filed. |
II-5
Item 17. Undertakings.
(a) The undersigned
registrant hereby undertakes:
1. To file, during any period
in which offers or sales are being made, a post-effective amendment to this registration statement:
i. To include any prospectus
required by Section 10(a)(3) of the Securities Act of 1933;
ii. To reflect in the
prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
iii. To include any material
information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information
in the registration statement.
(2) That, for the purpose of
determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from
registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the
offering.
(4) That for the purpose of
determining any liability under the Securities Act of 1933 in a primary offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to
offer or sell such securities to such purchaser:
(i) Any preliminary
prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing
prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The portion of any
other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by
or on behalf of the undersigned registrant; and
(iv) Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.
(5) That for the purpose of
determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used
after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or
made in a document
II-6
incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(b) The undersigned hereby
undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in
such names as required by the underwriter to permit prompt delivery to each purchaser.
(c) Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(d) The undersigned
registrant hereby undertakes that:
(1) For purposes of
determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of
determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-7
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in St. Louis, Missouri, on the 5 th day of November, 2014.
QUINPARIO ACQUISITION CORP. 2 |
||||||||||
By: |
/s/ D. John Srivisal |
|||||||||
Name:
D. John Srivisal Title: Chief Executive Officer |
||||||||||
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that
each person whose signature appears below constitutes and appoints Jeffry N. Quinn and Sara F. Melly his true and lawful attorney-in-fact, with
full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments
including post-effective amendments to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute, each acting
alone, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the
Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates
indicated.
| Name |
Position |
Date |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
/s/ Jeffry N. Quinn |
Chairman of
the Board |
November 5, 2014 |
||||||||
Jeffry N.
Quinn |
||||||||||
/s/ D. John Srivisal |
President
and Chief Executive Officer |
November 5, 2014 |
||||||||
D. John
Srivisal |
(Principal executive officer and principal financial and accounting) |
|||||||||
/s/ Edgar
G. Hotard |
Director |
November 5, 2014 |
||||||||
Edgar G.
Hotard |
||||||||||
/s/ W.
Thomas Jagodisnki |
Director |
November 5, 2014 |
||||||||
W. Thomas
Jagodisnki |
||||||||||
/s/ Ilan
Kaufthal |
Director |
November 5, 2014 |
||||||||
Ilan
Kaufthal |
||||||||||
/s/
Roberto Mendoza |
Director |
November 5, 2014 |
||||||||
Roberto
Mendoza |
||||||||||
/s/ Dr.
John Rutledge |
Director |
November 5, 2014 |
||||||||
Dr. John
Rutledge |
||||||||||
/s/ Shlomo
Yanai |
Director |
November 5, 2014 |
||||||||
Shlomo
Yanai |
||||||||||
II-8
Exhibit 23.1
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S CONSENT
We consent to the inclusion in this Registration Statement of Quinpario Acquisition Corp. 2 (the "Company") on Amendment No. 1 to Form S-1, File No. 333-198988, of our report dated September 26, 2014, which includes an explanatory paragraph as to the Company's ability to continue as a going concern, with respect to our audit of the financial statements of Quinpario Acquisition Corp. 2 as of September 12, 2014 and for the period from July 15, 2014 (inception) through September 12, 2014, which report appears in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our Firm under the heading "Experts" in such Prospectus.
/s/ Marcum LLP
Marcum LLP
New York, NY
November 5, 2014