Business Context and Reporting Period
This Form 8-K, dated July 8, 2015, reports the completion of a series of mergers (the "Lindblad Mergers") by Capitol Acquisition Corp. II (now Lindblad Expeditions Holdings, Inc.). Upon closing, Lindblad Expeditions, Inc. became a direct wholly-owned subsidiary, and the combined entity changed its name to Lindblad Expeditions Holdings, Inc. The company provides expedition cruising and adventure travel experiences featuring wildlife encounters and nature-based itineraries.
Key Financial Metrics and Transaction Details
Transaction Consideration: Former Lindblad stockholders received an aggregate of $90,000,000 in cash and 20,017,787 shares of common stock. Outstanding Lindblad stock options were converted into options to purchase 3,821,696 shares of the new company's common stock at an exercise price of $1.76 per share.
Debt and Liquidity: The company entered into an Amended Credit Agreement for a total facility of $175.0 million, consisting of a $155.0 million U.S. term loan and a $20.0 million Cayman term loan. Net proceeds were approximately $165.2 million. The loans bear interest at an adjusted LIBOR rate (floor 1.00%) plus a 4.50% spread and mature on May 8, 2021.
Financial Covenants: The credit agreement requires a total net leverage ratio of 4.75 to 1.00 initially, stepping down annually to 3.50 to 1.00 by March 31, 2020.
Historical Financial Data: The filing does not provide specific revenue, profit, or cash flow numbers within the text. Selected historical financial data for Lindblad for the three months ended March 31, 2015, and the years ended December 31, 2014, 2013, 2012, 2011, and 2010, are incorporated by reference from the Definitive Proxy Statement.
Material Changes Versus Prior Period
- Corporate Structure: The registrant transitioned from a shell company (Capitol Acquisition Corp. II) with no operations to an operating company following the merger with Lindblad.
- Capital Structure: The company now has 44,717,759 outstanding shares of common stock as of July 8, 2015.
- Debt Profile: The company assumed significant new debt obligations ($175.0 million facility) to fund the transaction and general corporate purposes, replacing prior debt structures.
- Management: Significant changes in executive leadership occurred, with Sven-Olof Lindblad appointed as CEO and President, and Ian Rogers appointed as COO and CFO.
Guidance, Outlook, and Risks
Management Commentary: The filing incorporates by reference the Management's Discussion and Analysis (MD&A) from the Definitive Proxy Statement for details on results of operations and financial condition. No specific forward-looking guidance or revenue projections are provided in this text.
Risks and Contingencies: Risk factors related to the business and operations following the merger are incorporated by reference from the Definitive Proxy Statement. The company is subject to financial covenants limiting indebtedness and investments.
Unusual Items: The transaction involved a complex merger structure with cash and stock consideration, warrant conversions, and a new credit facility secured by substantially all assets of the Company.
Important Facts for Investor Verification
- Ownership Concentration: Sven-Olof Lindblad beneficially owns approximately 31.6% of the outstanding common stock; all directors and executive officers as a group own 49.2%.
- National Geographic Relationship: The merger was contingent on an option agreement granting National Geographic the right to purchase 5% of the company's shares at $10.00 per share.
- Debt Servicing: Verify the company's ability to meet the initial 4.75x net leverage ratio covenant and service the $175.0 million debt load with a 4.50% spread over LIBOR.
- Historical Performance: Review the Definitive Proxy Statement (pages 25 and 134-147) for actual revenue, profit, and cash flow figures for Lindblad prior to the merger, as this 8-K does not contain the specific numbers.
- Executive Compensation: Review the Definitive Proxy Statement for details on the new employment agreements with Ian Rogers and Trey Byus and the non-competition agreement with Sven-Olof Lindblad.