Business Context and Reporting Period
This Form 8-K reports the consummation of the business combination between Isos Acquisition Corporation and Old Bowlero Corp. on December 15, 2021. Following the merger, Isos was redomiciled as a Delaware corporation and renamed "Bowlero Corp." The company ceased to be a shell company and commenced trading on the NYSE under the symbols "BOWL" (Class A common stock) and "BOWL.WS" (warrants) on December 16, 2021. The filing also details the appointment of a new Board of Directors and executive officers, and a change in the company's fiscal year end to July 3, 2022.
Key Financial Metrics and Capital Structure
Capital Raised and Equity Issuance:
- PIPE Offerings: Raised approximately $245.6 million total, consisting of $150.6 million from the Common PIPE Offering (15.06 million shares at $10.00/share) and $95.0 million from the Preferred PIPE Offering (95,000 shares of preferred stock at $1,000/share).
- Forward Purchase Contract: Subscribers agreed to purchase 10 million shares of Class A common stock and warrants for 3,333,333 shares for an aggregate price of $100.0 million.
- Redemptions: Approximately 13.66 million Isos ordinary shares were redeemed for approximately $136.6 million.
- Outstanding Shares: As of the closing date, 165,378,145 shares of Common Stock were outstanding (107,066,942 Class A and 58,311,203 Class B). There were 17,225,692 warrants outstanding.
Debt and Liquidity:
- Revolving Credit Facility: The existing facility was refinanced into a new senior secured revolving credit facility ("New Revolver") initially sized at $140 million, subsequently increased to $165 million via a Seventh Amendment on December 17, 2021. Maturity is December 15, 2026.
- Term Loans: Existing term loans totaling over $175 million remain outstanding with no changes to terms.
- Debt Repayment: The Incremental Liquidity Facility Credit Agreement was repaid in full and terminated.
- Covenants: The New Revolver includes a financial covenant requiring a First Lien Leverage Ratio not to exceed 6.00:1.00 if utilization is at least 35%. This covenant is waived until the quarter ending March 31, 2022, provided Core Liquidity remains above $20 million.
Financial Statements: The filing incorporates by reference the audited financial statements of Old Bowlero for fiscal years ended June 27, 2021, and June 28, 2020, and unaudited pro forma combined financial information as of September 30, 2021. Specific revenue, profit, or cash flow figures for the reporting period are not contained within the text of this 8-K.
Material Changes Versus Prior Period
- Corporate Structure: Transition from a SPAC (Isos) to an operating entertainment company (Bowlero Corp.) via merger.
- Ownership: Former Old Bowlero stockholders own approximately 75.1% of the combined company. CEO Thomas F. Shannon holds 58,311,203 shares of Class B common stock (super-voting rights: 10 votes per share).
- Debt Restructuring: Replacement of the revolving credit facility and termination of the Incremental Liquidity Facility.
- Accounting Firm: Marcum LLP was dismissed as the independent auditor; KPMG LLP was engaged to audit the fiscal year ending July 3, 2022.
- Fiscal Year: Changed from a calendar year-end (December 31) to a 52/53-week fiscal year ending in early July.
Guidance, Outlook, Risks, and Unusual Items
Management Commentary and Outlook: The filing contains forward-looking statements regarding business strategy and growth but does not provide specific numerical guidance for revenue or earnings. Management expects to retain future earnings to finance operations and does not expect to declare cash dividends in the foreseeable future.
Risks and Contingencies:
- Operational Risks: Significant uncertainty related to the COVID-19 pandemic, competition in the out-of-home entertainment market, and the ability to retain key employees.
- Legal Proceedings: The company is not subject to any material pending legal proceedings as of the filing date.
- Earnout Shares: Up to 20,750,000 Earnout Shares may be issued to former Old Bowlero stockholders if the Class A stock price reaches $15.00 and $17.50 thresholds over specific trading periods within five years of closing.
- Related Party Transactions: A Stockholders Agreement grants Atairos and TS (affiliated with the CEO) special governance rights and board nomination rights based on ownership thresholds.
Investor Verification Checklist
- Debt Covenants: Verify the company's ability to maintain the $20 million Core Liquidity threshold to keep the leverage ratio covenant waived through March 31, 2022.
- Ownership Concentration: Confirm the voting power distribution, noting that Class B shares (held primarily by the CEO) carry 10 votes per share, giving management significant control.
- Earnout Triggers: Monitor the stock price performance against the $15.00 and $17.50 thresholds to assess potential dilution from Earnout Shares.
- Pro Forma Financials: Review the unaudited pro forma condensed combined financial information referenced in the Proxy Statement (incorporated by reference) for a clearer picture of post-merger financial health.
- Executive Compensation: Review the new employment agreements for the CEO and CFO, specifically the severance provisions and equity vesting schedules tied to performance and change of control.