Filing Summary
Business Context and Reporting Period
Social Capital Hedosophia Holdings Corp. III, a Cayman Islands special purpose acquisition company, filed this Form 8-K on January 6, 2021. The filing reports shareholder approval of the proposed domestication and business combination with Clover Health Investments, Corp., after which the combined company is expected to be named Clover Health Investments, Corp.
Key Financial and Capitalization Information
The filing does not provide revenue, profit, cash flow, margins, debt, liquidity, or other operating financial metrics for the reporting period.
| Item | Information |
|---|---|
| Shareholders represented | 67,292,577 shares, representing 65.02% of shares outstanding and entitled to vote as of November 17, 2020 |
| Authorized capital after domestication | 2.5 billion Class A common shares, 500 million Class B common shares, and 25 million preferred shares |
| Class B voting rights | 10 votes per share, compared with one vote per Class A share |
| Equity incentive plan reserve | Initial reserve equal to 5.5% of fully diluted and as-converted capital stock, with specified annual increases |
| Management incentive plan reserve | 6.0% of Clover’s common stock on a fully diluted and as-converted basis as of closing |
| Employee stock purchase plan reserve | Initial reserve equal to 0.5% of fully diluted and as-converted capital stock, subject to additional increases and a stated maximum |
Material Changes and Transaction Status
- Shareholders approved the merger agreement, including the merger of Clover into subsidiaries of SCH and the subsequent merger that would leave SCH as the surviving company.
- Shareholders approved the domestication of SCH from the Cayman Islands to Delaware and the change of name to Clover Health Investments, Corp.
- Shareholders approved the issuance of shares to PIPE investors and Clover stockholders in connection with the business combination.
- Shareholders approved the 2020 Equity Incentive Plan, the 2020 Management Incentive Plan, and the 2020 Employee Stock Purchase Plan.
- Shareholders approved the election of Vivek Garipalli, Andrew Toy, Chelsea Clinton, Lee A. Shapiro, and Nathaniel S. Turner as directors upon consummation of the transaction.
- The board will be divided into three classes, and the approved documents provide for enhanced voting rights for Class B common stock.
Guidance, Outlook, Risks, and Unusual Items
SCH stated that, although not guaranteed, it expected to close the business combination on January 7, 2021, subject to customary closing conditions. It also expected Clover Class A common stock and warrants to begin trading on Nasdaq under the symbols “CLOV” and “CLOW” on January 8, 2021.
The transaction remained subject to closing conditions, and the expected closing and trading dates were not assured. The approved equity plans and Class B super-voting structure may result in material future equity issuance, dilution, and concentration of voting power. The management incentive plan contemplated awards covering two-thirds of its reserve for the chief executive officer and the balance for the president and chief technology officer.
Investor Verification Checklist
- Verify that the business combination and Delaware domestication actually closed and identify the effective closing date.
- Confirm the final number and type of shares issued to Clover stockholders and PIPE investors.
- Review the post-closing fully diluted capitalization, including warrants, incentive-plan reserves, and ESPP shares.
- Assess the effect of the 10-to-one Class B voting structure and the resulting concentration of control.
- Confirm the final Nasdaq listing symbols and trading commencement dates.
- Review the full merger agreement, equity plans, and closing filings for conditions, transaction adjustments, and dilution provisions.