Business context and reporting period
Important issuer mismatch: Although the request identifies Ranpak Holdings Corp., the supplied filing is One Madison Corporation’s unaudited Form 10-Q for the quarter ended September 30, 2018. It reports on a blank-check company, not Ranpak, and contains no Ranpak operating or financial results.
One Madison was a shell company formed to pursue a business combination. It had not identified a target or generated operating revenue by the reporting date. Its stated focus was North American or Western European consumer products, food and beverage, and related manufacturing or industrial services businesses. The company completed its $300 million IPO on January 22, 2018.
Financial results and liquidity
- Revenue: $0 for the three and nine months ended September 30, 2018.
- Net income: $1.324 million for the quarter and $2.904 million for the nine months, primarily reflecting trust-account interest of $1.457 million and $3.457 million, respectively, offset by expenses of $132,326 and $553,661. These results do not reflect operating-business performance.
- Per-share results: Class A basic and diluted income was $0.05 for the quarter and $0.12 for the nine months; Class B basic and diluted loss was $0.01 and $0.06, respectively.
- Cash flow: Nine-month operating cash use was $617,462; $300 million was placed in the trust account as investing cash flow. Financing activities provided $301.154 million. Period-end cash outside the trust was $538,682.
- Assets and trust: Total assets were $304.123 million at September 30, including $303.457 million of cash and marketable securities in the trust account. The trust held U.S. Treasury securities and cash.
- Liabilities and equity: Total liabilities were $11.412 million, including $10.5 million of deferred underwriting compensation and $800,000 of deferred legal fees, both payable upon a business combination. Current liabilities were $111,644. The balance sheet classified $287.711 million of public shares as subject to possible redemption outside permanent equity. The sponsor note had been repaid; the filing reports no other funded debt.
- Margins: Not meaningful because the company had no revenue.
Changes versus prior period
The company moved from pre-IPO formation activity to a publicly funded acquisition-search phase: it raised $300 million in the January 2018 IPO and $8 million from private-placement warrants, and held approximately $303.5 million in its trust account at quarter-end. The comparable 2017 information is for the period from inception on July 13, 2017 through September 30, 2017, not a full comparable quarter; it reported an $8,463 net loss and is not directly comparable.
Outlook, risks, and unusual items
- Management expected expenses to rise as it conducted target searches and due diligence and met public-company reporting requirements. The filing gives no earnings or revenue guidance.
- The company had until January 22, 2020—24 months after the IPO closing—to complete a business combination; otherwise, it generally would redeem public shares and liquidate. Any target had to meet the stated minimum fair-value test of 80% of trust assets, subject to the filing’s exclusions.
- Management disclosed that projected liquidity outside the trust was insufficient to meet current obligations, but stated that sponsor funding was available and sufficient. Sponsor and affiliate loans were discretionary, not committed.
- Forward purchase agreements contemplated up to $150 million of share purchases and related warrants concurrent with a business combination; those proceeds were not cash on hand at September 30.
- Public shareholders could redeem shares in connection with a business combination, subject to a $5,000,001 net-tangible-assets floor. The trust could also be subject to creditor claims. Warrants could expire worthless if no business combination occurred.
- Deferred fees and a $262,000 officers’ insurance obligation were contingent on a business combination or, for the insurance fee, dissolution. The filing reported no legal proceedings and no material changes to previously disclosed risk factors.
- Management and the CFO concluded disclosure controls were effective; no material change in internal control over financial reporting was reported for the quarter.
Most important facts to verify
- Confirm the intended issuer: the supplied filing is One Madison Corporation’s, not Ranpak Holdings Corp.’s.
- Check subsequent filings for whether and when a business combination was announced or completed, and for any changes to the January 22, 2020 deadline.
- Verify the availability and terms of sponsor support, since management cited it to address projected liquidity shortfalls but it was not a committed facility.
- Review subsequent trust balances, redemption levels, deferred fees, and the status of the contemplated $150 million forward purchase financing.