Business Context and Reporting Period
This Form 8-K, filed on January 25, 2021, by Foley Trasimene Acquisition Corp. ("FTAC"), announces the entry into a Business Combination Agreement with Tempo Holding Company, LLC ("Alight"). The transaction involves a merger between FTAC and Alight, resulting in an "Up-C" structure where the combined company will operate through Alight's subsidiaries. The combined entity will be known as Alight Pubco.
Key Financial Metrics and Transaction Structure
The filing details the consideration and capital structure for the proposed business combination rather than historical operating results.
- PIPE Investment: FTAC and Alight Pubco have entered into subscription agreements to sell $1,550,000,000 of Class A Common Stock to PIPE Investors at $10.00 per share.
- Cash Consideration: The aggregate cash consideration to pre-Closing equityholders is approximately $1,000,000,000, subject to adjustments based on Alight's net debt (targeted at $3,692,000,000) and the amount remaining in FTAC's trust account (targeted at $835,000,000).
- Equity Consideration: Pre-Closing equityholders will receive approximately 226,663,750 shares of Class A Common Stock (plus adjustments for redemptions), 7,500,000 shares of Class B-1 Common Stock, and 7,500,000 shares of Class B-2 Common Stock.
- FTAC Stockholder Conversion: FTAC Class A shares convert 1-for-1 into Alight Pubco Class A shares. FTAC Class B shares convert into 23,287,500 shares of Alight Pubco Class A, subject to potential conversion into Class B-3 earnout shares if trust proceeds fall below $892,200,000.
- Debt and Liquidity Conditions: Closing is conditioned on an "Available Cash Amount" of at least $2,600,000,000 and FTAC maintaining net tangible assets of at least $5,000,001.
Material Changes and Earnout Provisions
The transaction introduces a complex equity structure with significant earnout components tied to future stock performance:
- Class B-1 Earnout: Converts to Class A if the volume-weighted average price (VWAP) exceeds $12.50 for 20 of 30 consecutive trading days. Forfeited if not achieved within seven years.
- Class B-2 Earnout: Converts to Class A if the VWAP exceeds $15.00 for 20 of 30 consecutive trading days. Forfeited if not achieved within seven years.
- Class B-3 Earnout: Issued to FTAC Sponsors/Insiders; converts to Class A if the VWAP exceeds $13.75 for 20 of 30 consecutive trading days. Forfeited if not achieved within seven years.
- Tax Receivable Agreement: Alight Pubco will pay 85% of actual tax savings realized from pre-existing tax attributes to certain equityholders.
Guidance, Risks, and Conditions to Closing
The filing outlines specific conditions that must be met for the transaction to close:
- Approvals: Requires FTAC stockholder approval, regulatory approvals (including HSR Act), and NYSE listing approval.
- Deadlines: The agreement may be terminated if the closing does not occur by July 25, 2021, unless extended by up to two 90-day periods.
- Lock-Up: FTAC Sponsors and Insiders agreed not to redeem or transfer securities for 270 days post-closing (or 150 days if the stock price exceeds $12.00).
- Risks: Key risks include failure to obtain stockholder or regulatory approval, inability to meet the $2.6 billion cash condition, disruption of operations, and the impact of the COVID-19 pandemic.
Investor Verification Checklist
- Verify the final amount of cash in FTAC's trust account after redemptions to determine the final cash consideration and potential conversion of Class B shares to earnout shares.
- Confirm the final net debt of Alight at closing to calculate the precise cash payout adjustment.
- Review the upcoming Form S-4 for detailed financial statements of Alight and the pro forma combined company.
- Monitor the status of regulatory approvals and the July 25, 2021, closing deadline.
- Assess the dilution impact of the $1.55 billion PIPE investment and the potential issuance of earnout shares.