GPGI, Inc. current report, 19 April 2021

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Filing Overview

Registrant: Roman DBDR Tech Acquisition Corp. (the filing metadata identifies GPGI, Inc., but the filing names Roman DBDR Tech Acquisition Corp. as the registrant). Form 8-K date: April 19, 2021. This report announces a proposed business combination with CompoSecure Holdings, L.L.C.

Business Context and Transaction

The Company entered into a merger agreement with CompoSecure, Roman Parent Merger Sub, LLC, and LLR Equity Partners IV, L.P. Merger Sub will merge with CompoSecure, with CompoSecure surviving as a wholly owned subsidiary. The combined company is expected to operate under an Up-C structure and change its name to CompoSecure, Inc.

  • Implied CompoSecure equity value: approximately $853 million.
  • Pro forma combined enterprise value: approximately $1.2 billion.
  • Current trust account balance referenced in the filing: approximately $236.2 million, before shareholder redemptions.
  • Proposed PIPE financing includes $45 million from the sale of 4.5 million Class A common shares at $10.00 per share.
  • CompoSecure is expected to issue $130 million of senior exchangeable notes bearing 7.00% annual interest, payable semiannually, exchangeable into Class A common stock at $11.50 per share.
  • CompoSecure equity holders may receive up to 7.5 million additional shares or equivalent units under earn-out arrangements tied to specified stock-price thresholds.

Financial Metrics, Liquidity, and Capital Structure

This 8-K does not provide historical revenue, net income, operating cash flow, margins, or comparable-period financial statements. It is principally a transaction announcement rather than a periodic financial report.

  • Closing consideration is expected to include remaining trust cash, PIPE proceeds, equity consideration, and potential earn-out consideration, net of transaction expenses.
  • A closing condition requires CompoSecure net indebtedness to be no greater than $250 million and cash on hand of at least $5 million.
  • Another condition requires remaining trust cash plus PIPE proceeds, less $50 million of transaction expenses, to be at least $210 million.
  • The Company must have at least $5,000,001 of net tangible assets after giving effect to the transaction.
  • Under the proposed tax receivable agreement, the Company would pay participating CompoSecure interest holders 90% of realized tax savings from specified tax attributes.
  • The Sponsor agreed to cover transaction expenses exceeding $35 million in cash or forfeit an equivalent value of Class B common stock at closing.

Material Changes Versus Prior Comparable Period

The filing does not present a prior-period comparison. The material development is the execution of the merger agreement and related financing, voting, expense-cap, tax, lock-up, and registration-rights arrangements.

Outlook, Conditions, and Risks

  • Closing remains subject to Company and CompoSecure equity-holder approvals, Nasdaq listing approval, expiration of the applicable HSR Act waiting period, completion of the PIPE investments, execution of ancillary agreements, and satisfaction of financial and other customary conditions.
  • The merger may generally be terminated if it is not completed by December 31, 2021, extendable to no later than January 31, 2022 if HSR clearance remains pending, or if required approvals are not obtained or other specified breaches or legal impediments occur.
  • The voting agreement requires specified Company stockholders and CompoSecure holders to support the merger and oppose competing proposals or actions that could delay completion.
  • The transaction is subject to redemption risk, financing completion risk, regulatory and shareholder approval risk, transaction-cost risk, and the risk that anticipated strategic or financial benefits are not realized.
  • The filing contains forward-looking statements regarding completion of the merger, future performance, strategy, market opportunity, and projections. It states that actual results may differ materially and directs investors to the future proxy statement and related SEC filings.

Most Important Facts to Verify

  • Review the definitive merger agreement, proxy statement, and subsequent filings for final consideration, ownership percentages, dilution, and redemption assumptions.
  • Verify whether the $45 million equity PIPE and $130 million exchangeable-note financing closed and review their final terms.
  • Confirm CompoSecure’s historical and projected revenue, profitability, cash flow, debt, and liquidity, which are not provided clearly in this 8-K.
  • Assess the effect of the Up-C structure, tax receivable agreement, earn-out shares, exchangeable notes, and potential Class A share issuance on future dilution and cash obligations.
  • Monitor satisfaction or waiver of shareholder, Nasdaq, HSR, minimum-cash, net-debt, and net-tangible-asset closing conditions.