Ranpak Holdings Corp. quarterly report, Q1 FY2019

Business context and reporting period

This is One Madison Corporation’s unaudited Form 10-Q for the three months ended March 31, 2019—not an operating-company 10-Q filed by Ranpak Holdings. One Madison was a shell company formed to complete a business combination; it reported no operating revenue, and the filing does not provide Ranpak’s standalone financial results.

One Madison had agreed to acquire all outstanding equity of Rack Holdings, Inc. (Ranpak) for stated cash consideration of $950 million, subject to adjustments and closing conditions. The transaction had not closed as of the reporting date.

Financial results and liquidity

At March 31, 2019, cash outside the Trust and Escrow accounts was $1.96 million; cash in escrow was $1.00 million and Trust Account cash and marketable securities were $306.89 million. The Trust funds were generally restricted pending a business combination or liquidation. Current liabilities were $11.93 million, including a $4.00 million non-interest-bearing working-capital note; total liabilities were $23.23 million. The filing reports no long-term debt outstanding at the reporting date.

Total assets were $309.94 million and shareholders’ equity was $5.00 million. Accounts payable and accrued expenses rose to $7.93 million from $2.74 million at year-end. Most of the increase in expenses versus Q1 2018 reflected transaction-related professional, consulting, travel, and other costs.

Material changes, transaction outlook, and risks

• One Madison expected to fund the acquisition with Trust Account proceeds net of redemptions, $150 million under forward-purchase agreements, $142 million under subscription agreements, and up to $650 million of committed senior secured facilities. Financing and closing remained subject to conditions; the credit commitment included term and revolving facilities and contingent tranches.
• The $950 million cash consideration was subject to working-capital adjustment against a normalized $22 million level, plus target cash and less target debt and unpaid transaction expenses, with a post-closing true-up. A January 2019 amendment specified a €140 million payment, credited at an agreed exchange rate.
• Closing conditions included shareholder approval for additional equity issuances, regulatory clearances, and customary representations, covenants, and no-material-adverse-effect conditions. The agreement could be terminated if closing did not occur by July 12, 2019, subject to stated terms.
• One Madison disclosed substantial doubt about its ability to continue as a going concern because it was required to liquidate if no business combination was completed by January 22, 2020. Management stated it did not expect to need additional funds before closing, but warned that transaction costs could exceed estimates and that additional financing might be needed.
• If the acquisition failed, One Madison expected further due-diligence and transaction costs in pursuing another target. Public shareholders had redemption rights, and a high level of redemptions or insufficient financing could prevent completion. Public warrants could expire worthless if no business combination closed.
• On March 27, 2019, One Madison agreed to exchange 7,429,256 private-placement warrants for about 742,926 Class A or Class C shares, subject to the business combination closing. The company also authorized up to $10 million to repurchase public warrants, without a minimum purchase or time limit.
• No operating guidance for Ranpak is provided. One Madison reported its disclosure controls were effective and no material change in internal control over financial reporting during the quarter.

Important facts for investors to verify

1. Confirm the transaction’s eventual closing status, shareholder approvals, regulatory clearances, and financing availability; the filing describes commitments and conditions, not completed funding.
2. Review Ranpak’s standalone financial statements and operating trends separately; they are not presented in this filing.
3. Check actual redemptions, final purchase-price adjustments, target debt and cash, transaction expenses, and resulting debt and liquidity after closing.
4. Assess dilution and ownership effects from forward-purchase and subscription shares, founder-share conversion, and the proposed warrant exchange.
5. Monitor One Madison’s limited unrestricted cash, rising accrued expenses, the $4 million note’s repayment terms, and the January 22, 2020 liquidation deadline if the combination did not close.