ALTA EQUIPMENT GROUP INC. current report, 12 December 2019

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Filing Overview

Registrant: B. Riley Principal Merger Corp. (BRPM), a special purpose acquisition company. Report date: December 12, 2019; filed December 13, 2019. The filing announces a definitive merger agreement with Alta Equipment Holdings, Inc. Upon closing, BRPM intends to change its name to Alta Equipment Group Inc.

Transaction and Key Financial Terms

  • BR Canyon Merger Sub Corp., a wholly owned BRPM subsidiary, will merge with Alta, with Alta becoming a wholly owned subsidiary of BRPM.
  • BRPM expects to repay Alta’s existing gross debt of approximately $295 million.
  • Alta equityholders are expected to receive approximately $119 million of consideration: $43 million in cash and $76 million in BRPM common stock, consisting of 7.6 million shares valued at $10.00 per share.
  • Alta intends, subject to closing and definitive agreements, to acquire two additional entities for an aggregate purchase price of approximately $95 million, funded with equity and debt proceeds raised in connection with the merger.
  • The transaction requires debt commitment letters supporting aggregate credit facilities of at least $310 million, at least $143 million of cash from BRPM’s trust account and equity financing sources, and Alta EBITDA of at least $72.5 million as measured under the merger agreement.

Equity Financing and Registration Rights

  • PIPE investors, including affiliates of B. Riley Financial, agreed to purchase $35 million of BRPM Class A common stock at $10.00 per share, or 3.5 million shares, immediately before closing, subject to conditions.
  • Non-affiliated PIPE investors will receive an aggregate of 142,895 incentive shares and 1,018,125 warrants. The Sponsor will forfeit an equal number of founder shares, and B. Riley Principal Investments or its designees will transfer an equal number of warrants to BRPM.
  • Following closing, BRPM will be required to file a resale registration statement for the sellers’ shares within 45 days. Greenawalt will have unlimited demand registration rights, subject to the agreement.
  • The shares issued in connection with the transaction are expected to be issued pursuant to exemptions from registration under Section 4(a)(2) and/or Regulation D.

Material Changes Versus Prior Period

This is a transaction announcement rather than an earnings or periodic financial report. The filing does not provide comparable-period revenue, net income, cash flow, margins, balance-sheet liquidity, or detailed operating results for BRPM or Alta. Accordingly, no prior-period financial comparison is available from the filing text.

Conditions, Outlook, and Risks

  • Closing is subject to BRPM stockholder approval, satisfaction of Hart-Scott-Rodino requirements and other regulatory approvals, required debt financing, minimum cash availability, and the specified EBITDA threshold.
  • The merger agreement may be terminated in specified circumstances, including if the transaction has not closed by June 11, 2020, unless the delay results from a material breach by the terminating party.
  • Alta’s two proposed acquisitions remain subject to definitive agreements and closing conditions; completion is not assured.
  • Management’s transaction-related expectations are forward-looking and depend on financing, regulatory and stockholder approvals, continued operations, customer and supplier relationships, employee retention, competition, growth execution, listing approval, transaction costs, legal proceedings, and broader economic and regulatory conditions.
  • The filing does not provide formal revenue, earnings, margin, cash flow, leverage, or post-closing guidance.

Investor Verification Checklist

  1. Confirm completion of the merger, the final consideration mix, and the post-closing ownership structure.
  2. Verify the amount and terms of debt financing, repayment of Alta’s existing debt, and resulting leverage and liquidity.
  3. Assess whether Alta met the contractual minimum EBITDA requirement of $72.5 million.
  4. Review the definitive proxy statement, audited financial statements, pro forma financial information, and risk factors when filed.
  5. Determine whether the two proposed acquisitions were completed and their purchase-price funding and financial impact.
  6. Review PIPE closing proceeds, dilution from incentive shares and warrants, and registration rights.