Business Context and Reporting Period
Company: Experience Investment Corp. (EXPC)
Reporting Date: December 14, 2020
Event: Entry into a Material Definitive Agreement (Merger Agreement) with BLADE Urban Air Mobility, Inc. ("Blade").
Transaction Overview: The Company agreed to merge with Blade via a wholly-owned subsidiary. Blade will continue as the surviving entity. The transaction is subject to stockholder approval from both companies and other customary closing conditions.
Key Financial Metrics and Transaction Terms
- Merger Consideration: Based on a reference price of $10.00 per share, the total merger consideration is valued at $356,250,000 (35,625,000 shares of Company Common Stock).
- PIPE Investment: Accredited investors have committed to purchase 12,500,000 shares of Company Common Stock at $10.00 per share, totaling $125,000,000.
- Liquidity Condition: The Company must have at least $100,000,000 in cash and cash equivalents immediately prior to Closing (after accounting for the PIPE Investment and redemptions).
- Net Tangible Assets Condition: The Company must have at least $5,000,001 of net tangible assets immediately following Closing.
- Redemption Rights: Public stockholders may redeem shares for cash equal to their pro rata share of the trust account (including interest) prior to the Merger consummation.
Material Changes and Structural Details
This filing represents a material change in the Company's corporate structure and business strategy, transitioning from a Special Purpose Acquisition Company (SPAC) to a combined entity with Blade.
- Exchange Ratio: Blade common stock, preferred stock, and options will be converted into Company Common Stock based on a "Closing Per Share Stock Consideration" formula involving the $356.25M valuation and fully-diluted Blade share count.
- Board Composition: The Company's board will expand to seven directors effective at the Merger, including designees from Blade and the Sponsor.
- Support Agreements: Blade stockholders holding approximately 58% of Blade Stock have agreed to support the Merger.
- Sponsor Commitments: The Sponsor agreed to vote in favor of the Merger and is subject to lock-up restrictions on Founder Shares and Private Placement Warrants for 180 days post-Merger.
Guidance, Outlook, Risks, and Contingencies
Outlook and Conditions: The Merger is expected to close after stockholder approval and satisfaction of conditions, including regulatory approvals (Hart-Scott-Rodino), effectiveness of the Registration Statement, and listing approval on Nasdaq or NYSE.
Termination Rights: The agreement may be terminated if the Closing does not occur by July 31, 2021, or if stockholder approval is not obtained by that date. Either party may terminate upon a Material Adverse Effect or uncured breaches.
Risks and Contingencies:
- Failure to obtain required stockholder or regulatory approvals.
- Inability to meet the $100 million cash condition due to high redemption rates by public stockholders.
- Disruption to Blade's operations due to the transaction announcement.
- Impact of the COVID-19 pandemic on business operations and transaction completion.
- Failure to realize anticipated pro forma results.
Investor Verification Checklist
- Verify the final redemption rate of public shares to ensure the $100 million cash condition is met.
- Confirm the fully-diluted share count of Blade to calculate the precise exchange ratio for Blade shareholders.
- Monitor the status of the Form S-4 Registration Statement and proxy statement for detailed financial data on Blade.
- Check for any Material Adverse Effect (MAE) events affecting Blade or the Company prior to Closing.
- Review the definitive proxy statement for the final composition of the post-merger board and management team.