Filing identity and business context
Important: The supplied filing is TPG Pace Holdings Corp.’s Form 10-Q, not an Accel Entertainment, Inc. filing. TPG Pace was a blank-check company seeking a business combination; this report does not identify Accel Entertainment as its target. The reporting period ended September 30, 2018. Accordingly, these figures do not describe Accel’s operating results.
Financial results and position
| Metric | Three months ended September 30, 2018 | Nine months ended September 30, 2018 |
|---|---|---|
| Revenue | $0 | $0 |
| Professional fees and other expenses | $137,687 | $592,575 |
| Interest income | $2,069,168 | $5,285,412 |
| Net income | $1,931,481 | $4,692,837 |
| Basic and diluted earnings per share | $0.03 | $0.08 |
Net income came from interest on trust investments, not business operations. The comparable 2017 periods reported losses of $94,400 for the quarter and $218,915 from inception through September 30, 2017; the nine-month comparison is therefore not a like-for-like full-year period.
At September 30, 2018, cash outside the trust was $512,827, current liabilities were $78,742, and trust investments totaled $454.5 million. Total assets were $455.1 million. Liabilities included $15.75 million of deferred underwriting compensation, payable only if a business combination closes. Public shares classified outside permanent equity were recorded at a $434.3 million redemption value. The company reported no long-term debt.
For the nine months, operating cash flow was $230,501; financing cash flow was negative $89,747, principally from payment of accrued offering costs; investing cash flow was zero. The company withdrew $750,000 of trust interest for operating expenses in August.
Changes, outlook, and risks
- Compared with the 2017 periods, 2018 results shifted to net income because the trust generated interest; the company still had no operating revenue.
- Management was evaluating acquisition opportunities but said it could not assure completion of a business combination. No transaction-specific guidance or operating forecast was provided.
- The company had until June 30, 2019 to complete a combination, or until September 30, 2019 if it had entered a qualifying agreement within the initial 24 months. Failure to close would require winding up and redeeming public shares; warrants could expire worthless. The filing states this deadline-related liquidation risk raises substantial doubt about the company’s ability to continue as a going concern.
- Management warned that available cash could be insufficient for pre-transaction expenses and that additional funding might be needed; it gave no assurance such funding would be available.
- On October 3, 2018, the NYSE notified the company it had fewer than 300 public holders. It had 45 days to submit a compliance plan, with a potential 18-month cure period if accepted; rejection could lead to suspension and delisting.
- The company reported no material change to previously disclosed risk factors, no legal proceedings, and effective disclosure controls. It paid an affiliate $20,000 monthly for administrative services.
Investor facts to verify
- Confirm the issuer and filing: this is TPG Pace Holdings Corp., not Accel Entertainment, Inc.
- Check whether a business combination was subsequently announced or completed, and whether the stated deadline or redemption terms changed.
- Verify the NYSE public-holder compliance plan and its outcome.
- Assess the limited $512,827 of cash outside the trust against expected transaction-search and administrative expenses.
- Review the trust balance, redemption levels, deferred underwriting fee, and any financing or dilution associated with a later transaction.