Business Context and Reporting Period
On July 27, 2020, dMY Technology Group, Inc., a special purpose acquisition company, entered into a Business Combination Agreement with Rush Street Interactive, LP (“RSI”), its sellers, dMY Sponsor, LLC and related parties. Upon closing, dMY Technology Group is expected to change its name to Rush Street Interactive, Inc. and operate RSI through an “Up-C” structure.
This Form 8-K reports the transaction announcement and related agreements; it does not provide a quarterly or annual operating-period financial update for RSI.
Key Financial and Transaction Metrics
- Implied RSI enterprise value: $1.725 billion, subject to post-closing adjustments.
- Private investment proceeds: Investors subscribed for 16,043,002 shares of Class A common stock at $10.00 per share, for aggregate proceeds of $160,430,020, contingent on closing.
- Expected ownership: Assuming no redemptions, $160 million of equity financing and the maximum purchase of RSI Units, the combined company is expected to own approximately 22% of RSI Units and control RSI through its general partner. Depending on redemptions, ownership could be approximately 12%.
- Minimum closing cash: The sellers’ closing obligation is conditioned on at least $160 million of Available Closing Date Cash, subject to specified expense adjustments.
- Potential purchase consideration: Up to 12.5 million RSI Units may be purchased from the sellers for cash. Purchased RSI Units Cash Consideration and certain post-closing contribution amounts are capped at $125 million in aggregate.
- Tax receivable agreement: The company is expected to pay the sellers 85% of certain realized U.S. federal, state and local tax savings related to basis increases and other specified tax benefits.
- Operating metrics, revenue, profit, cash flow, margins, debt and liquidity: The filing text does not provide clear values for RSI’s historical or projected operating results, debt or standalone liquidity beyond the transaction funding terms.
Material Changes Versus the Prior Comparable Period
- The filing announces a proposed change in control and corporate structure rather than reporting period-over-period results.
- The post-closing company will hold RSI Units and the general partner entity directly, while the sellers will retain the remaining RSI Units and receive Class V voting stock with voting rights but no dividend or distribution rights.
- At closing, existing Class B common stock will convert into an aggregate of 5,750,000 shares of Class A common stock on a one-for-one basis.
- Up to 1,212,813 founder shares, 1,212,813 Issued RSI Units and 15 million Retained RSI Units, together with corresponding Class V voting stock, will be subject to potential forfeiture or earnout restrictions.
Guidance, Outlook, Risks and Unusual Items
- Closing timing: The agreement may be terminated if the transaction has not closed by April 27, 2021, subject to specified extensions, including extensions related to regulatory approvals and stockholder meeting procedures.
- Required conditions: Closing requires stockholder approval, applicable antitrust clearance if required, gaming regulatory approvals, the absence of a material adverse effect and substantial compliance with contractual obligations.
- Services and governance: Rush Street Gaming is expected to provide legal, compliance, human resources and information technology services to RSI for two years after closing, subject to specified terms. The sellers’ representative may nominate nine directors and the Sponsor may nominate two, subject to requirements.
- Exchange rights: Beginning six months after closing, sellers may exchange Retained RSI Units for Class A common stock or, at the general partner’s election, cash equal to the market value of the shares, subject to conditions.
- Risks: Key risks include failure to obtain stockholder or gaming regulatory approvals, termination of the agreement, litigation, COVID-19 effects, inability to maintain NYSE listing, transaction disruption and costs, competition, regulatory changes, difficulty achieving anticipated benefits and retaining key employees.
- Unregistered securities: Shares issued in the subscriptions and business combination are expected to rely on Securities Act Section 4(a)(2) and/or Regulation D exemptions.
- Forward-looking information: The filing contains transaction expectations and projections that are subject to substantial risks and uncertainties; no operating or financial guidance is clearly provided in the filing text.
Important Facts for Investors to Verify
- Whether dMY stockholders approve the business combination and whether required gaming and other regulatory approvals are obtained.
- Actual redemptions, equity financing proceeds, Available Closing Date Cash and resulting ownership percentage.
- Final enterprise value and any adjustments for transaction expenses or other closing items.
- Final terms of the Tax Receivable Agreement, including the potential obligation to remit 85% of specified tax savings to sellers.
- Final capitalization, earnout forfeitures, seller exchange activity and dilution from RSI Units, Class V voting stock and warrants.
- RSI’s historical revenue, profitability, cash flow, margins, debt, liquidity and operating metrics, which are not provided clearly in this Form 8-K.
- The definitive proxy statement, amended Form 8-K exhibits, subscription agreements, investor presentation and subsequent filings for complete transaction terms and risk disclosures.