Filing identity and business context
The supplied filing is Platinum Eagle Acquisition Corp.’s Form 10-Q for the quarter ended September 30, 2018—not a Target Hospitality Corp. filing. It describes a blank-check company seeking a business combination, with no operating business or revenue. The filing does not identify Target Hospitality as a target or report its financial results.
Financial results and position
- Revenue: $0 for the three and nine months ended September 30, 2018.
- Profit: Net income was $2.21 million for the quarter and $3.37 million for the nine months, driven by trust-account interest of $2.50 million and $3.85 million, respectively, offset by general and administrative expense of $299,175 and $475,643. Operating losses were $299,175 and $475,643. Profit margins are not meaningful for this pre-combination company.
- Cash flow: Nine-month operating cash outflow was $409,654; investing outflow was $325.0 million, primarily the trust-account deposit; financing inflow was $325.89 million. Cash outside the trust account ended at $476,554.
- Assets and liquidity: Total assets were $329.43 million, including $328.85 million in the trust account. Current liabilities were $167,768. Management stated that the company lacked sufficient liquidity to meet current obligations but expected Sponsor funding to cover them.
- Debt and commitments: No long-term debt was reported. Deferred underwriting compensation of $11.375 million is payable only if a business combination is completed. Sponsor loans for working capital were possible but not committed.
- Equity: $312.88 million of Class A shares were classified outside permanent equity as redeemable shares. Permanent shareholders’ equity was $5.00 million.
Changes versus prior periods
The company completed its $325 million public offering in January 2018 and raised approximately $8 million through private-placement warrants; $325 million was deposited in the trust account. At December 31, 2017, assets were $242,088, liabilities were $225,894, and there was no public-offering trust balance. The prior-year operations comparison covers only July 12, 2017 (inception) through September 30, 2017, when the company recorded a $5,000 loss; it is not a comparable third quarter.
Outlook, risks, and unusual items
- The company had until January 17, 2020 to complete a business combination; otherwise, it was required to wind up and redeem public shares, subject to the stated terms.
- Management expected further target-search and transaction costs. It noted that additional financing might be needed, and Sponsor or affiliate funding was not assured.
- Public shareholders could redeem shares in connection with a business combination or liquidation. A minimum net tangible asset threshold of $5,000,001 applied.
- Interest-rate exposure was described as limited because trust investments were short-term U.S. Treasury securities. No hedging activities were reported.
- No material changes to previously disclosed risk factors, legal proceedings, or defaults were reported. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Confirm the intended issuer: this filing is for Platinum Eagle Acquisition Corp., not Target Hospitality Corp.
- Verify any subsequent business combination, target identity, and transaction terms using later filings; this report provides no such details.
- Assess the business-combination deadline, redemption rights, and trust-account availability, including the contingent $11.375 million underwriting fee.
- Review the company’s ability to fund ongoing costs, given limited outside-trust cash and management’s liquidity warning.