Business Context and Reporting Period
This Form 8-K, dated February 10, 2023, reports two material events for Ouster, Inc. (OUST): the completion of its merger with Velodyne Lidar, Inc. (Velodyne) and the entry into a Third Amendment to its Loan and Security Agreement with Hercules Capital, Inc.
Key Financial Metrics and Transaction Details
- Merger Consideration: Velodyne common stockholders received 0.8204 shares of Ouster common stock for each share of Velodyne common stock held (Exchange Ratio).
- Ownership Structure: The Exchange Ratio resulted in Velodyne equityholders and Ouster equityholders each owning approximately 50% of the fully diluted shares of Ouster common stock as of the effective date.
- Debt Facility Amendment: Ouster increased debt baskets for purchase money debt, capital leases, and letter of credit obligations. The amendment also provided flexibility for maintaining cash in non-US accounts and relocating equipment.
- Financial Statements: The filing incorporates Velodyne's audited financial statements for 2021 and 2020, and unaudited statements for the nine months ended September 30, 2022. Pro forma combined financial information for the nine months ended September 30, 2022, and the year ended December 31, 2021, is included in Exhibit 99.3.
Material Changes Versus Prior Period
- Corporate Structure: Velodyne ceased to exist as a separate legal entity and became a wholly-owned subsidiary of Ouster. Velodyne's Nasdaq listing was suspended and delisted effective February 13, 2023.
- Equity Instruments: Outstanding Velodyne warrants, options, and restricted stock units held by continuing service providers were converted into Ouster instruments adjusted by the Exchange Ratio. Non-employee director awards vested in full.
- Debt Covenants: The credit agreement was amended to increase borrowing capacity for specific asset classes and operational flexibility compared to the prior agreement terms.
Guidance, Outlook, and Risks
- Delisting: Velodyne will cease filing periodic reports with the SEC as it is no longer a public company.
- Future Filings: Audited consolidated financial statements of Velodyne for the year ended December 31, 2022, and pro forma financial statements for the year ended December 31, 2022, will be filed in an amendment to this report within 71 days.
- Risk Allocation: The Merger Agreement contains representations and warranties made solely for the purpose of the agreement and should not be relied upon as establishing factual matters outside that context.
Investor Verification Checklist
- Verify the final ownership percentage split between legacy Ouster and Velodyne shareholders post-merger.
- Review the specific terms of the Third Amendment to the Loan and Security Agreement (Exhibit 10.1) regarding increased debt baskets.
- Examine the unaudited pro forma condensed combined financial information (Exhibit 99.3) to understand the combined entity's financial position.
- Confirm the status of Velodyne's delisting from Nasdaq and the cessation of its SEC reporting obligations.
- Check for the upcoming filing of the 2022 audited financial statements and full-year 2022 pro forma data within the 71-day window.