Business Context and Reporting Period
This Form 8-K, dated June 13, 2019, reports a material definitive agreement entered into by TPG Pace Holdings Corp. (the "Company") to acquire Accel Entertainment, Inc. ("Accel"). The filing details a proposed business combination involving a stock purchase, a merger, and a domestication of the Company from the Cayman Islands to Delaware.
Key Financial Metrics and Transaction Terms
- Purchase Price: Accel shareholders may elect cash consideration of $177.00 per share.
- Share Consideration: Shares not elected for cash will be converted into New Parent Class A-1 Stock at an approximate value of $10.22 per share.
- Cash Cap: The aggregate cash consideration is subject to pro rata adjustment if shareholder elections exceed $350,000,000.
- Private Placement: The Company agreed to sell 4,403,132 shares of New Parent Class A-1 Stock to Private Placement Investors at $10.22 per share, raising approximately $45 million to fund the cash portion of the transaction.
- Ownership Structure (Pro Forma): Upon closing, public shareholders (including private placement investors) are expected to own approximately 56.63%, Accel shareholders approximately 34.11%, and the Pace Sponsor and independent directors approximately 8.68%.
- Incentives: Accel shareholders rolling over more than 30% of their shares will receive pro-rata shares of 2,444,444 New Accel Warrants and 3,000,000 shares of New Parent Class A-2 Stock (subject to vesting).
Material Changes and Transaction Mechanics
The filing announces a fundamental change in the Company's corporate structure and business operations. Key mechanics include:
- Domestication: The Company will transfer from the Cayman Islands to Delaware immediately prior to the stock purchase.
- Merger: Accel will merge with and into New Pace LLC, a wholly-owned subsidiary of the Company.
- Sponsor Adjustments: The Pace Sponsor agreed to cancel 1,250,000 shares of Class F Stock, surrender 2,444,444 founder warrants, and contribute 500,000 shares to a donor advised fund to limit its aggregate ownership to 10.25%.
- Board Composition: The post-closing board will consist of seven directors: one executive director, one designated by Accel, the CEO of Accel, and four independent directors.
Guidance, Risks, and Conditions
The transaction is subject to customary closing conditions, including approval by the Company's shareholders, expiration of the Hart-Scott-Rodino waiting period, and approval by the Pennsylvania Gaming Control Board. The transaction must be consummated by September 30, 2019, unless extended.
Risks and Contingencies:
- Failure to obtain necessary regulatory or shareholder approvals.
- Disruption of Accel's current operations due to the transaction announcement.
- Inability to meet NYSE listing standards post-combination.
- Forward-looking statements regarding future financial performance are subject to significant uncertainties and should not be relied upon as guarantees.
Investor Verification Checklist
- Verify the final cash election percentage by Accel shareholders to determine the actual cash outlay versus equity dilution.
- Confirm receipt of regulatory approvals, specifically from the Pennsylvania Gaming Control Board and antitrust authorities.
- Review the upcoming Form S-4 Registration Statement for detailed risk factors and pro forma financial data.
- Monitor the status of the $45 million private placement funding to ensure liquidity for the cash portion of the deal.
- Check for any amendments to the Transaction Agreement regarding the September 30, 2019 closing deadline.