Indie Semiconductor, Inc. current report, 10 June 2021

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Indie Semiconductor, Inc. — Form 8-K Summary

Reporting date: June 10, 2021. The filing reports completion of Thunder Bridge Acquisition II’s domestication and business combination with Ay Dee Kay, LLC, doing business as indie Semiconductor. The combined company changed its name to Indie Semiconductor, Inc. and began trading on Nasdaq under INDI; its warrants trade under INDIW.

Business Context and Transaction

  • Thunder Bridge II domesticated from the Cayman Islands into Delaware and became the public-company successor.
  • Merger subsidiaries combined with indie LLC, certain blocker entities and ADK Service Provider Holdco.
  • Indie LLC continues as the operating subsidiary.
  • The transaction was approved at the June 9, 2021 special shareholder meeting and closed June 10, 2021.
  • The company remains an emerging growth company.

Financial Position and Key Metrics

  • PIPE financing: 15.0 million Class A shares issued at $10.00 per share for gross proceeds of $150.0 million.
  • Approximately 9.9 million public shares were redeemed at approximately $10.13 per share, for aggregate redemptions of approximately $100.1 million.
  • Thunder Bridge II’s trust account held approximately $350 million before redemptions. After redemptions and the PIPE financing, approximately $400 million was available for transaction-related disbursements.
  • Approximately $65 million was used for transaction expenses, repayment of indie’s long-term debt and related fees; approximately $48 million represented total transaction costs.
  • Approximately $335 million became available to indie at closing.
  • Placement-agent fees for the PIPE financing were approximately $4.5 million to Morgan Stanley and $3.0 million to Deutsche Bank.
  • The filing does not provide a clear consolidated revenue, net income, cash-flow, gross-margin, operating-margin or post-closing debt balance in the text provided. Historical and March 31, 2021 financial statements and MD&A are incorporated by reference or filed as exhibits.

Capitalization and Ownership

  • Immediately after closing, 101,482,466 Class A shares, 33,827,371 Class V shares and 27,400,000 warrants were outstanding.
  • Class V common stock has voting rights but no economic rights and generally corresponds to post-merger indie units exchangeable for Class A shares.
  • Indie Equity Holders received 53,234,572 Class A shares, including 1,791,147 subject to vesting, and retained 34,476,883 post-merger indie units, including 270,907 subject to vesting.
  • Up to 10 million earn-out shares may be issued upon satisfaction of specified stock-price performance thresholds, subject to reductions for certain phantom equity awards.
  • Immediately following the transaction, total Common Stock outstanding was 135,309,840 shares. Public stockholders held approximately 18.2%, the Sponsor approximately 6.4%, former indie securityholders approximately 64.3% on an as-exchanged basis, and PIPE investors approximately 11.1%.
  • The 2021 Equity Incentive Plan became effective and reserves 10,368,750 shares for issuance.

Material Changes Versus the Prior Period

  • The company transitioned from a special purpose acquisition company to an operating semiconductor company and ceased to be a shell company.
  • Thunder Bridge II’s ordinary shares and public warrants ceased trading; Indie’s Class A stock and warrants began trading June 11, 2021.
  • The transaction materially increased available cash, issued new equity, converted founder shares and warrants, and eliminated or repaid indie long-term debt and related fees using transaction proceeds.
  • The company entered into an exchange agreement, amended operating agreement, tax receivable agreement, registration rights agreements, lock-up agreements and indemnification agreements.
  • Certain legacy lawsuits were voluntarily dismissed or discontinued without prejudice, including Householder v. Thunder Bridge Acquisition II and Tomczak v. Thunder Bridge Acquisition II.

Guidance, Outlook, Risks and Unusual Items

  • No specific revenue, earnings or operating guidance is provided in the filing text.
  • Management’s discussion and analysis for the period ended March 31, 2021 is incorporated by reference rather than reproduced in the filing.
  • Forward-looking statements address expected transaction benefits, financial condition, results of operations, earnings outlook and growth prospects, but are subject to substantial uncertainty.
  • Key risks include semiconductor-industry cyclicality, product and technology execution, demand for products incorporating indie’s components, supply availability, demand forecasting, competitive bid processes, capital requirements, funding access, transaction disruption, growth management, Nasdaq listing and potential litigation.
  • Earn-out shares and escrowed founder shares are subject to stock-price performance thresholds and may be forfeited if those thresholds are not met.
  • Indie has not paid cash dividends and does not expect to pay dividends for the foreseeable future.

Investor Verification Items

  • Review Exhibit 99.2 and the incorporated historical financial statements for revenue, profitability, cash flows, margins, working capital and debt balances.
  • Reconcile the approximately $335 million of cash made available at closing with transaction expenses, debt repayment and ongoing liquidity needs.
  • Assess dilution from 27.4 million warrants, earn-out shares, phantom equity, the 2021 Equity Incentive Plan and exchangeable post-merger indie units.
  • Review the tax receivable agreement for potential future cash-payment obligations.
  • Confirm the terms and expiration of six-month lock-up restrictions and the timing of resale registration statements for PIPE and other shares.
  • Evaluate whether the company maintains Nasdaq listing compliance and achieves the operating growth assumptions underlying the transaction.