Business Context and Reporting Period
This Form 8-K, filed on September 9, 2021, reports the consummation of a business combination between Sustainable Opportunities Acquisition Corp. (SOAC) and DeepGreen Metals Inc. (DeepGreen). Following the transaction, SOAC was continued from the Cayman Islands to British Columbia, Canada, and renamed TMC the metals company Inc. (TMC). The company ceased to be a shell company and became a holding company with equity interests in DeepGreen, focusing on deep seabed mining of polymetallic nodules.
Key Financial Metrics and Capital Structure
As this is a transaction report rather than a periodic financial statement, specific revenue, profit, and cash flow figures for the combined entity are not provided in this text. However, the following capitalization and transaction metrics are disclosed:
- PIPE Financing: The Company raised $110,300,000 in gross proceeds from the sale of 11,030,000 TMC Common Shares at $10.00 per share to PIPE Investors.
- Defaulted Financing: Two investors defaulted on subscription agreements for 22,000,000 shares, representing a potential loss of $220,000,000 in expected proceeds. The Company intends to pursue remedies.
- Outstanding Equity: Approximately 224,385,324 TMC Common Shares were outstanding immediately following the closing.
- Warrants: Approximately 24,500,000 warrants are outstanding, exercisable at $11.50 per share.
- Options: Options to purchase approximately 25,287,670 shares exist with a weighted average exercise price of $1.11 per share.
- Earnout Shares: Approximately 121,343,181 TMC Special Shares (DeepGreen Earnout Shares) are outstanding, convertible into common shares if specific price thresholds are met.
Material Changes and Transaction Details
The primary material change is the completion of the Business Combination and the resulting corporate restructuring:
- Shareholder Consideration: DeepGreen shareholders received 203,874,981 TMC Common Shares and various classes of Special Shares (Earnout Shares) based on an Adjusted Equity Value of approximately $2.29 billion.
- Redemptions: Public shareholders redeemed 27,278,657 Class A ordinary shares prior to the closing.
- Trading Status: SOAC securities ceased trading on the NYSE. TMC Common Shares and Public Warrants commenced trading on the Nasdaq Global Select Market under symbols TMC and TMCWW on September 10, 2021.
- Accounting Firm Change: The Company dismissed Marcum LLP and appointed Ernst & Young LLP as its independent registered public accounting firm.
Guidance, Risks, and Management Commentary
The filing contains extensive forward-looking statements and risk factors rather than specific financial guidance. Key areas of focus include:
- Operational Risks: Significant uncertainty exists regarding the commercial and technical feasibility of seafloor polymetallic nodule collection and processing.
- Regulatory Risks: The business depends on the timing and content of exploitation regulations from the International Seabed Authority (ISA) and government regulations regarding deep seabed mining.
- Financial Risks: The Company disclosed a material weakness in internal controls over financial reporting related to the restatement of SOAC's financial statements (warrant liability classification) which had not been remediated as of June 30, 2021.
- Legal Action: The Company plans to aggressively pursue remedies against the two investors who defaulted on the $220 million PIPE financing.
- Dividends: The Company has no current plans to pay cash dividends and intends to retain earnings for operations and expansion.
Investor Verification Checklist
- Verify the status of legal remedies being pursued against the two investors who defaulted on the $220 million PIPE financing.
- Review the "Risk Factors" section of the Proxy Statement (referenced in this filing) regarding the regulatory framework for deep seabed mining and the International Seabed Authority.
- Confirm the remediation status of the material weakness in internal controls over financial reporting previously identified by SOAC.
- Monitor the trading volume and price of TMC Common Shares to assess the likelihood of the Earnout Shares (121+ million shares) becoming convertible.
- Review the Unaudited Pro Forma Condensed Combined Financial Information (Exhibit 99.1) for projected capital requirements and cash burn rates.