Business Context and Reporting Period
On June 18, 2020, Tortoise Acquisition Corp. filed a Form 8-K announcing a definitive business combination agreement with Hyliion Inc. TortoiseCorp’s wholly owned subsidiary, SHLL Merger Sub Inc., will merge with Hyliion, with Hyliion surviving as a wholly owned subsidiary. The transaction is intended to create the public company that would become Hyliion Holdings Corp.
The filing is a transaction announcement rather than an operating or periodic financial report. It does not provide a clear historical reporting-period revenue, earnings, cash-flow, margin, debt, or liquidity schedule for Hyliion.
Key Transaction and Financial Terms
- Each share of Hyliion common stock will be exchanged for shares of TortoiseCorp Class A common stock based on an exchange ratio designed to deliver an aggregate of 100,000,000 TortoiseCorp shares, calculated on a fully diluted and as-converted basis.
- Hyliion preferred stock and outstanding convertible notes, including accrued unpaid interest, are to convert into Hyliion common stock immediately before the merger.
- Investors committed to purchase 30,750,000 Class A shares in a private placement at $10.00 per share, generating aggregate gross proceeds of $307.5 million, subject to closing conditions.
- Atlas Point agreed to purchase $17.5 million of forward purchase units at $10.00 per unit. Each unit consists of one Class A share and one-half warrant.
- A closing condition requires TortoiseCorp to have at least $235 million of cash after the transaction financing and distribution of trust-account funds, excluding transaction fees and expenses.
- Another closing condition requires TortoiseCorp to maintain at least $5,000,001 of net tangible assets after any shareholder redemptions.
- The filing does not state the amount of Hyliion’s revenue, net income or loss, operating cash flow, cash balance, debt balance, or operating margins.
Material Changes Versus the Prior Comparable Period
The filing does not present comparable-period financial statements or quantify changes in operating performance. The material development is the execution of the proposed business combination and related financing arrangements, rather than a change in reported historical results.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Closing is expected as promptly as practicable after satisfaction or waiver of closing conditions, but the agreement generally permits termination if the transaction has not closed within 180 days after June 18, 2020, subject to specified extensions and exceptions.
- Completion depends on Hyliion stockholder consent, TortoiseCorp stockholder approval, regulatory clearances including applicable Hart-Scott-Rodino requirements, exchange listing, delivery of audited Hyliion financial statements, financing, minimum cash and net tangible asset conditions, and the absence of a material adverse effect.
- Certain Hyliion stockholders agreed to support and vote for the transaction and to observe transfer restrictions.
- Certain investors are subject to a 180-day lock-up after closing. Thomas Healy would also be restricted from transferring more than 10% of specified holdings until two years after closing.
- Registration rights require resale registration statements to be filed generally within 30 days after closing. Failure to meet specified registration obligations may result in payments accruing at 0.5% per month, subject to a 5.0% cap, for qualifying PIPE shares.
- The parties identified risks involving shareholder redemptions, financing availability, regulatory approval, failure to satisfy closing conditions, termination rights, integration, competition, business rollout, milestone timing, and the ability to realize projected benefits.
- Forward-looking statements and any revenue, performance, market opportunity, or timing projections referenced in transaction materials are expressly described as illustrative and not guarantees of future results.
Most Important Facts for Investors to Verify
- Review the subsequent proxy statement and audited Hyliion financial statements for actual revenue, losses, cash burn, debt, liquidity, margins, and historical trends.
- Confirm the final fully diluted share count, exchange ratio, PIPE shares, forward purchase securities, warrants, options, and resulting ownership dilution.
- Verify the amount ultimately available from the trust account, PIPE financing, forward purchase financing, transaction expenses, and shareholder redemptions.
- Check whether all stockholder, regulatory, listing, minimum-cash, net-tangible-asset, and audited-financial-statement closing conditions were satisfied.
- Review the definitive registration rights, lock-up, support, and stockholders rights agreements, including resale timing and potential registration-failure payments.
- Assess whether management’s projected milestones and market opportunity are supported by verified customer demand, production capability, financing needs, and competitive conditions.