Business Context and Reporting Period
This Form 8-K, dated February 9, 2021, reports that FG New America Acquisition Corp. (FGNA) entered into a Business Combination Agreement with Opportunity Financial, LLC (OppFi). Upon consummation, FGNA will change its name to OppFi Inc. The transaction involves an "Up-C" structure where the combined company will hold assets through OppFi, with FGNA acting as the sole manager. The filing does not contain historical financial statements for OppFi or FGNA, as it is a current report announcing the agreement rather than a periodic financial report.
Key Financial Metrics and Transaction Structure
- Equity Valuation: OppFi's equity value is set at $743,000,000 for the purpose of calculating retained units.
- Ownership Structure: Assuming no redemptions by current FGNA stockholders, the Company is expected to own approximately 38% of the OppFi Units post-closing. The remaining units will be owned by OppFi Members.
- Cash Consideration: Defined as the cash remaining in FGNA's trust account (post-redemptions) less the excess of transaction expenses (plus $15,000,000) over OppFi's available cash on the Closing Date.
- Minimum Cash Condition: The transaction is conditioned on FGNA having at least $200,000,000 of "Available Closing Date Cash."
- Earnout Units: 25,500,000 Retained OppFi Units are subject to forfeiture or exchange based on the achievement of certain earnout targets.
- Tax Receivable Agreement: The Company will pay OppFi Members 90% of the U.S. federal, state, and local income tax savings realized from the transaction.
Material Changes and Transaction Mechanics
The primary material change is the entry into a definitive agreement to merge a SPAC (FGNA) with a private operating company (OppFi). Key structural changes include:
- Stock Conversion: All outstanding Class B common stock of FGNA will convert to Class A common stock on a one-for-one basis, resulting in 5,943,750 shares.
- Voting Rights: FGNA will issue Class V Voting Stock to OppFi Members, granting one vote per share but no dividend rights. This stock will be canceled as Members exchange their OppFi Units for Class A Common Stock.
- Exchange Rights: Beginning six months after closing, Members may exchange Retained OppFi Units for Class A Common Stock or cash equivalents.
Guidance, Risks, and Contingencies
Conditions to Closing: The transaction is subject to stockholder approval, regulatory clearance (including HSR Act waiting periods), the absence of a Material Adverse Effect, and the satisfaction of the $200 million minimum cash requirement.
Termination Rights: The agreement may be terminated by mutual consent, if the transaction becomes illegal, if the closing does not occur by the "Outside Date," or due to uncured breaches by either party.
Risks and Uncertainties: Management highlights significant risks including the potential failure to obtain stockholder approval, high levels of stockholder redemptions reducing cash below the $200 million threshold, regulatory delays, the impact of COVID-19, and the inability to achieve anticipated synergies. The filing explicitly states that forward-looking statements involve significant risks and should not be relied upon as predictions.
Investor Verification Checklist
- Verify the final amount of cash in the trust account after stockholder redemptions to ensure the $200,000,000 minimum closing condition is met.
- Review the definitive proxy statement for detailed financial data on OppFi, which is not included in this 8-K.
- Confirm the specific earnout targets and the timeline for the 25,500,000 Earnout Units.
- Assess the impact of the Tax Receivable Agreement on future cash flows, as 90% of tax savings will be paid to OppFi Members.
- Monitor the status of regulatory approvals and the "Outside Date" for potential termination of the agreement.