PRM

Business Context and Reporting Period

Company: Perimeter Solutions, SA (Holdco)
Filing Type: Form 8-K (Current Report)
Reporting Date: November 9, 2021
Event: Consummation of a business combination between Holdco, EverArc Holdings Limited (SPAC), and Perimeter (SK Invictus Intermediate S.à r.l.). The combined entity began trading on the NYSE under the symbol "PRM" on the Closing Date.

Key Financial Metrics and Capital Structure

Equity Raised (PIPE): Approximately $116.3 million raised through private placements at $10.00 per share:

• EverArc Subscribers: 115,000,000 shares ($1.15 billion gross proceeds).
• Management Subscribers: 1,104,810 shares (~$11.0 million).
• Director Subscribers: 200,000 shares ($2.0 million).

Debt Financing:

• Senior Notes: $675.0 million principal amount of 5.000% senior secured notes due 2029. Interest payable semi-annually commencing April 30, 2022.
• Revolving Credit Facility: $100.0 million five-year senior secured revolving credit facility (matures November 9, 2026). Includes a $20.0 million swingline and $25.0 million letter of credit sub-facility. Interest rates are LIBOR + 3.25% or Base Rate + 2.25% (subject to step-downs).

Outstanding Shares: 157,137,410 Holdco Ordinary Shares outstanding immediately following the Closing (excluding warrants).

Historical Financials: The filing does not provide specific revenue, profit, or cash flow numbers for the combined entity within the text. Historical data for Perimeter and EverArc is incorporated by reference from the Prospectus.

Material Changes and Transaction Details

Corporate Structure:

• Merger Sub merged with EverArc; EverArc survived as a wholly-owned subsidiary of Holdco.
• SK Holdings contributed a portion of Perimeter shares for Holdco Preferred Shares and sold the remainder for cash.
• EverArc Warrants were converted to Holdco Warrants (exercise price $12.00).

Ownership Distribution (Post-Closing):

• PIPE Subscribers: 72.7% (Institutional: 72.7%, Management: 0.7%, Directors: 0.1%).
• EverArc Existing Shareholders: 26.0%.
• SK Subscribers: 0.3%.

Escrow: Approximately $7.6 million of cash consideration held in escrow pending purchase price adjustments.

Guidance, Risks, and Unusual Items

Founder Advisory Agreement:

• Holdco assumed obligations to pay the EverArc Founder Entity advisory fees through December 31, 2031.
• Variable Annual Advisory Amount: 18% of the increase in market value over $10.00 per share (based on a calculation number of ~157.1 million shares). Estimated at ~$42.4 million for Year 1 assuming a $11.50 stock price.
• Fixed Annual Advisory Amount: 1.5% of the calculation number in shares (approx. 2.36 million shares). Estimated at ~$27.1 million for Year 1 assuming a $11.50 stock price.
• Termination Payments: Significant cash payments due upon termination or sale of the company, calculated based on remaining years of the agreement.

Executive Compensation:

• New employment agreements for CEO (Edward Goldberg), CFO (Barry Lederman), and Business Director (Shannon Horn).
• Stock Options: ~8.61 million performance-based options granted pre-closing. Vesting tied to EBITDA targets (Bridge Option) and 15-25% compounded annual growth in Operating Performance per Diluted Share (5-Year Option).
• Retention Requirements: Named executives must hold significant aggregate value in company stock (e.g., $2.2 million for CEO).

Risks and Contingencies:

• Debt Covenants: Revolving Credit Facility requires compliance with a maximum secured net leverage ratio of 7.50:1.00 if utilization exceeds 40% of commitments.
• Forward-Looking Statements: Risks include failure to realize expected benefits, inability to maintain NYSE listing, and market demand for fire retardant products.
• Related Party Transactions: Significant ongoing advisory fees payable to EverArc Founders.

Investor Verification Checklist

• Debt Service Capacity: Verify the company's ability to service $675 million in senior notes (5% interest) and the revolving credit facility given the lack of immediate revenue data in this filing.
• Advisory Fee Impact: Assess the dilution and cash flow impact of the Founder Advisory Agreement, particularly the variable component tied to stock price appreciation.
• Pro Forma Financials: Review the "Unaudited Pro Forma Condensed Consolidated Combined Financial Information" in the referenced Prospectus (Page 65) for projected earnings and leverage ratios.
• Warrant Overhang: Confirm the number of outstanding warrants (converted from EverArc) and their exercise price ($12.00) relative to the current trading price.
• Equity Cure Rights: Understand the terms under which the company can issue equity to cure leverage ratio breaches under the credit facility.