Business context and reporting period
The supplied filing is Platinum Eagle Acquisition Corp.’s unaudited Form 10-Q for the quarter ended March 31, 2018. It does not identify Target Hospitality Corp. as the registrant; verify that this is the intended filing before relying on this summary.
Platinum Eagle was a blank-check company formed to pursue a business combination. It had not begun operating or generated significant revenue. It completed an IPO on January 17, 2018, raising $325.0 million, and concurrently raised approximately $8.0 million from a private warrant placement.
Financial results and position
- Revenue: $0 for the quarter.
- Net income: $749,862, primarily reflecting $900,125 of interest earned in the trust account, less $150,263 of general and administrative expenses. Operating loss was $150,263.
- Cash flow: Operating activities used $189,425. Investing activities used $325.0 million, deposited in the trust account. Financing activities provided $325.9 million; cash outside the trust account ended the quarter at $696,783.
- Liquidity and assets: Total assets were $326.7 million, including $325.9 million in the trust account and $696,783 of cash outside it. The trust funds were subject to restrictions and generally unavailable before a business combination or specified redemption event.
- Liabilities and equity: Current liabilities were $111,537. Total liabilities were $11.5 million, including $11.375 million of deferred underwriting compensation payable only if a business combination is completed. Shareholders’ equity was $5.0 million; $310.3 million of redeemable Class A shares was classified outside permanent equity.
- Debt and margins: The filing reports no long-term debt. Operating margins are not meaningful given the absence of revenue.
Changes versus prior period
The filing does not provide a comparable prior-year quarterly income or cash-flow period. Compared with December 31, 2017, the company’s balance sheet reflects the January IPO and private placement, the deposit of IPO proceeds into the trust account, and the resulting cash, trust assets, and redeemable shares. Cash increased from zero to $696,783; total assets increased from $242,088 to $326.7 million.
Outlook, risks, and unusual items
- The company had until January 17, 2020—24 months after the IPO closing—to complete a business combination. If it did not, it generally had to redeem public shares and liquidate.
- Management said it expected to incur additional costs while identifying and evaluating acquisition targets. It noted possible reliance on sponsor or affiliate loans or other financing; such funding was not assured.
- Public shareholders could redeem shares in connection with a business combination, subject to a $5,000,001 minimum net tangible asset threshold. Significant redemptions or inadequate financing could affect the company’s ability to complete a transaction.
- The $11.375 million deferred underwriting fee was contingent on completing a business combination. The trust account was invested in short-term U.S. Treasury securities; management considered interest-rate exposure immaterial due to their short maturities.
- Management reported effective disclosure controls as of March 31, 2018, no material change in internal control over financial reporting, no legal proceedings, and no material changes to previously disclosed risk factors.
Important facts to verify
- Confirm the registrant and filing: the supplied 10-Q is for Platinum Eagle Acquisition Corp., not Target Hospitality Corp.
- Confirm the restricted status and permitted uses of the $325.9 million trust balance, and the redemption terms and deadline.
- Verify the contingent nature of the $11.375 million deferred underwriting fee and the company’s available funding for ongoing costs.
- Do not interpret the reported net income as operating earnings: the company reported no revenue, and income was driven by trust-account interest.