Filing Overview
Registrant: Aurora Acquisition Corp., a Cayman Islands blank check company. Report date: May 13, 2021; earliest event May 10, 2021. The filing concerns Aurora’s proposed business combination with Better HoldCo, Inc., the predecessor to Better Home & Finance Holding Co.
Business Context and Transaction
On May 10, 2021, Aurora entered into a merger agreement with Aurora Merger Sub I, Inc. and Better HoldCo, Inc. The transaction provides for a two-step merger under which Better would become a wholly owned subsidiary of Aurora and then merge into Aurora, with Aurora surviving.
- Better equity holders would receive, in the aggregate, $950 million in cash and 595 million shares of Aurora common stock valued at $10.00 per share, subject to adjustments and specified exceptions.
- Before closing, Aurora is expected to redomesticate from the Cayman Islands to Delaware and change its name to include “Better” or another mutually agreed name.
- Aurora’s existing shares, warrants and units would be converted into corresponding securities of the domesticated company.
Capitalization, Liquidity and Other Financial Terms
| Item | Reported terms |
|---|---|
| SB Northstar subscription | Up to $1.5 billion of Class A and Class C common stock at $10.00 per share, subject to adjustment. |
| Sponsor subscription | $200 million of Class A common stock at $10.00 per share. |
| Redemption backstop | The sponsor would purchase shares at $10.00 per share equal to the shortfall resulting from public-shareholder redemptions, subject to closing-related conditions. |
| Minimum cash condition | At closing, Aurora must hold cash at least equal to the amount in its trust account on May 10, 2021 plus $1.5 billion. |
| Minimum net tangible assets | Aurora must have at least $5,000,001 of net tangible assets at closing. |
| Promissory note | Aurora amended and restated a note with a principal amount of up to $2 million payable to the sponsor, with an extended maturity date. |
The filing does not provide Better’s historical revenue, profit, cash flow, margins, debt balances, trust-account balance, or liquidity metrics. It is a transaction announcement rather than a periodic financial-results filing.
Material Changes and Transaction Governance
- The proposed combination would transform Aurora from a blank check company into the surviving public company associated with Better.
- Better stockholders, directors and officers subject to the holder support agreement agreed to vote in favor of the transaction and accepted post-closing transfer restrictions.
- Existing Aurora shareholders party to the support agreement agreed to approve the domestication, name change, business combination and related share issuances.
- The sponsor agreed to forfeit 50% of its private-placement warrants at closing; 20% of the sponsor’s Class A shares are subject to lock-up provisions.
- A registration rights agreement contemplated at closing would provide resale registration rights to specified Better stockholders and the sponsor.
Conditions, Outlook and Risks
Closing is subject to shareholder approvals, effectiveness of an SEC proxy statement/registration statement, applicable regulatory approvals and waiting periods, NASDAQ listing approval, completion of the domestication, required cash and tangible-asset thresholds, and customary accuracy-of-representations, covenant-performance and material-adverse-effect conditions.
The agreement may be terminated in specified circumstances, including failure to obtain required approvals, uncured breaches, certain governmental orders or if closing has not occurred by February 12, 2022, subject to the agreement’s extension provisions.
Management identifies risks related to Better’s rapid growth, demand and market share, mortgage and residential real-estate conditions, interest rates, COVID-19 effects, loan and asset valuation risk, liquidity and financing needs, existing and future indebtedness, regulatory compliance, technology and cybersecurity infrastructure, competition, personnel, government-sponsored housing entities, and the costs of operating as a public company. The filing provides no firm operating or financial guidance.
Important Facts for Investors to Verify
- Whether the SEC registration statement/proxy statement becomes effective and whether Aurora and Better shareholders approve the transaction.
- The final amount of Aurora’s trust account, shareholder redemptions, backstop purchases and total cash available at closing.
- Better’s audited and unaudited financial statements, including revenue, profitability, cash flow, debt, liquidity and operating margins, which were not included in this filing.
- The final number and classes of shares issued, including the effects of adjustments, redemptions, sponsor subscriptions and the $1.5 billion PIPE subscription.
- Receipt of HSR, state mortgage-licensing, other regulatory and NASDAQ approvals.
- Completion of the domestication, merger and name change, and the resulting ownership, voting-control and lock-up structure.
- The definitive merger agreement, subscription agreements, redemption backstop, sponsor arrangements and May 11, 2021 webcast transcript filed as exhibits.