Filing identity and reporting period
Important: The supplied filing is Conyers Park II Acquisition Corp.’s Form 10-K, not an Advantage Solutions Inc. filing. It covers the period from incorporation on May 2, 2019 through December 31, 2019; it does not provide a standalone 2019 fourth-quarter comparison. Conyers Park II was a newly formed SPAC seeking a business combination, with a stated focus on consumer businesses. It had not begun operating or identified a specific target by year-end.
Financial results, liquidity and capital
- Revenue and operations: No operating revenue. The company reported no significant operating activity apart from formation, its July 2019 IPO and target search.
- Income: Net income was $2.47 million for the inception-to-year-end period, principally from $3.58 million of trust-account interest. Operating loss was $379,580; general and administrative expense was $279,580 and state franchise taxes were $100,000. Reported income tax expense was $730,672. Basic and diluted EPS were $0.05 for Class A and $0.00 for Class B.
- Cash flow: Operating cash use was $1.22 million; investing cash use was $449.24 million, largely the trust deposit; financing provided $451.41 million. Year-end cash and cash equivalents were $951,060.
- Assets and liquidity: Total assets were $454.11 million, including $452.82 million of marketable securities in trust and $951,060 of cash. The filing states approximately $437.07 million was available for a business combination after the $15.75 million deferred underwriting commission, before transaction fees and expenses. The company also reported approximately $1.04 million of working capital excluding prepaid income taxes.
- Liabilities and equity: Total liabilities were $15.98 million, including $15.75 million of deferred underwriting commissions; stockholders’ equity was $5.00 million. No outstanding borrowings under working-capital loans were reported. Public shares subject to possible redemption, recorded as temporary equity, totaled $433.13 million.
- Margins and debt: Operating and net margins are not meaningful because the company had no revenue. The filing reports no debt outstanding at year-end.
Material changes and transaction terms
The company completed its IPO on July 22, 2019, selling 45 million units at $10 each for $450 million gross proceeds, and issued 7.33 million private-placement warrants for $11 million. It placed $450 million in trust. Because this was its first reporting period, there is no comparable prior-year operating period or meaningful year-over-year trend.
The company was required to complete a business combination by July 22, 2021 or, subject to creditor claims and applicable law, redeem public shares and liquidate. The target generally had to represent at least 80% of trust assets under the stated test, and the post-transaction company had to acquire control of the target. Public shareholders had redemption rights; the filing describes a $5,000,001 minimum net tangible asset constraint. Warrants could expire worthless if no business combination is completed.
Outlook, risks and unusual items
- Management expected available funds outside the trust to support the search through the deadline, but warned estimates could prove inadequate. Sponsor or affiliate loans were possible but not committed; additional financing for a transaction was not assured.
- The filing identifies COVID-19 as a potential adverse factor for the search process and prospective targets. Its specific financial impact was not determinable at filing date; the financial statements included no COVID-related adjustment.
- Key SPAC risks include failure to find or complete a suitable transaction on time, redemptions reducing cash available to close, dilution from equity or warrants, and competition from better-resourced acquirers.
- Management disclosed potential conflicts: sponsor and executives had other investment, board and fiduciary obligations, including relationships with Centerview Capital and Simply Good Foods. The filing also describes possible affiliated acquisitions and future equity issuances.
- Trust assets could be reduced by creditor or bankruptcy claims. Sponsor indemnification has exceptions, its ability to pay was not verified, and public shareholders could receive less than $10 per share in some circumstances.
- The financial statements received an unqualified audit opinion. Management concluded disclosure controls were effective; no auditor attestation of internal control over financial reporting was provided under the newly public company transition provisions.
Most important facts for investors to verify
- Confirm the intended issuer: this filing is for Conyers Park II Acquisition Corp., not Advantage Solutions Inc.
- Review the audited financial statements and trust balance, including the $452.82 million trust asset and $437.07 million stated transaction funding figure.
- Check the source’s inconsistent reference to $830,672 of taxes in one accounting-policy passage; the audited statement of operations and tax note report $730,672.
- Review the complete redemption, liquidation, creditor-claim and sponsor-indemnity terms, including the July 22, 2021 deadline and warrant consequences.
- Assess potential dilution, conflicts of interest, financing needs and COVID-19 effects against any subsequent filings or transaction disclosures.