Business Context and Reporting Period
This Form 8-K Current Report, dated November 24, 2020, details a material definitive agreement entered into by Cohen & Company Inc. (the "Company"). The Company, through its subsidiaries acting as the Sponsor, is involved in a proposed merger between INSU Acquisition Corp. II ("IAC II"), a special purpose acquisition company (SPAC), and MetroMile, Inc. ("MetroMile").
Key Financial Metrics and Transaction Terms
The filing outlines specific financial thresholds and investment commitments required for the transaction to close:
- PIPE Investment: Institutional investors, including a subsidiary of the Company, committed to purchase up to 16,000,000 shares of IAC II Class A Common Stock at $10.00 per share.
- Company Commitment: The Company's subsidiary committed to purchase 1,500,000 shares, with an option to increase this to 5,000,000 shares total.
- Cash Requirement: IAC II must have at least $199 million in cash at closing, accounting for the PIPE investment, redemptions, transaction expenses, and debt repayment.
- Net Tangible Assets: IAC II must maintain at least $5,000,001 in net tangible assets immediately following the closing.
- Founder Shares: The Sponsor agreed to forfeit 1,177,000 founder shares. Remaining shares are subject to vesting based on share price milestones ($15.00 and $17.00).
The filing does not provide historical revenue, profit, cash flow, or margin data for Cohen & Company Inc. or MetroMile.
Material Changes and Conditions
The transaction is subject to several material conditions, including:
- Approval by stockholders of both IAC II and MetroMile.
- Effectiveness of the Form S-4 registration statement.
- Expiration of applicable Hart-Scott-Rodino antitrust waiting periods.
- Absence of a material adverse effect on either party since the agreement date.
- Receipt of necessary consents and authorizations.
Outlook, Risks, and Contingencies
Management commentary is limited to the terms of the agreement and standard forward-looking statements. Key risks and contingencies identified include:
- Termination Risk: The Merger Agreement may be terminated due to specific events or changes in circumstances.
- Approval Risk: Failure to obtain stockholder approval or satisfy closing conditions could prevent the transaction.
- Private Placement Risk: Inability to complete the PIPE investment could impact the cash requirements for closing.
- Legal Proceedings: Potential litigation following the announcement of the transaction.
- Share Price Volatility: Vesting of Sponsor founder shares is contingent on the post-merger share price reaching specific thresholds ($15.00 and $17.00).
Investor Verification Checklist
- Verify the final number of founder shares allocated to the Operating LLC versus non-controlling interests, as this is not yet determined.
- Confirm the status of the Form S-4 registration statement and the timing of the special stockholder meeting.
- Monitor the actual cash balance of IAC II at closing to ensure the $199 million threshold is met after redemptions.
- Review the full text of the Sponsor Share Cancellation and Vesting Agreement (Exhibit 10.2) for detailed vesting mechanics.
- Assess the likelihood of the Company's subsidiary exercising its option to increase its PIPE investment from 1.5 million to 5 million shares.