Better Home & Finance Holding Co current report, 22 August 2023

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Better Home & Finance Holding Company — Form 8-K Summary

Reporting period and context. Filed August 28, 2023, with the earliest reported events occurring August 22, 2023. The filing reports Aurora Acquisition Corp.’s domestication from the Cayman Islands to Delaware and completion of its business combination with Better Holdco, Inc. on August 22, 2023. The combined company was renamed Better Home & Finance Holding Company and ceased to be a shell company.

Transaction, capitalization, and liquidity

  • Aurora’s Class A and Class B ordinary shares converted into Better Home & Finance Class A common stock; Aurora warrants converted into Better Home & Finance warrants.
  • At closing, the company issued 40,601,825 Class A shares, 574,407,420 Class B shares, and 6,877,283 Class C shares in connection with the business combination.
  • Additional transactions resulted in the issuance of 41,700,000 Class A shares and 65,000,000 non-voting Class C shares.
  • Immediately after the transactions, 91,300,735 Class A shares, 574,407,420 Class B shares, and 71,877,283 Class C shares were outstanding.
  • No public shareholders exercised redemption rights. Approximately $21.4 million remained in Aurora’s trust account immediately before closing.
  • SoftBank’s $650 million of pre-closing bridge notes converted into 65.0 million Class C shares at $10.00 per share. The shares were issued to a distribution trust pending specified regulatory approvals or confirmation that approvals were unnecessary.
  • The Sponsor exchanged $100 million of bridge notes for 40.0 million Class A shares at $2.50 per share and purchased an additional 1.7 million Class A shares for $17 million.
  • The company issued SoftBank $528.6 million aggregate principal amount of senior subordinated convertible notes. The notes bear interest at 1% annually and mature August 15, 2028, unless earlier converted or redeemed.
  • The notes’ initial conversion price is based on 115% of the first-anniversary VWAP, with the VWAP subject to a stated range of $8.00 to $12.00, subject to adjustments. The company may redeem the notes at 115% of par plus accrued interest if specified trading-price conditions are met.
  • SoftBank’s maximum post-closing convertible-note funding commitment was reduced to $550 million after giving effect to trust-account cash and the Sponsor’s decision not to fund its $100 million commitment. The filing does not clearly state the amount of any remaining unfunded commitment after the $528.6 million note issuance.
  • Class B shares carry three votes per share, Class A shares carry one vote per share, and Class C shares are non-voting. Class B and Class C shares generally may be converted into Class A shares.

Financial results and operating metrics

The filing incorporates Better’s unaudited condensed consolidated financial statements for the six months ended June 30, 2023 and 2022, related management discussion and analysis, and unaudited pro forma combined financial information. The provided filing text does not include the underlying revenue, net income or loss, cash-flow, margin, debt-balance, liquidity, or other operating metric tables, so clear comparable-period values cannot be reported from the text supplied.

Material changes and corporate actions

  • Better Home & Finance Class A common stock began trading on Nasdaq under BETR on August 24, 2023; warrants began trading under BETRW. Aurora’s units and legacy securities were delisted or ceased trading.
  • Ownership immediately after the transactions was approximately 84.3% for former Better stockholders, 8.8% for the SoftBank-related distribution trust, 6.2% for the Sponsor, 1.2% for certain Major Aurora Shareholders, and approximately 0.0% for Aurora’s former public shareholders.
  • The company entered into an amended and restated registration rights agreement and indemnification agreements with directors and executive officers.
  • The company adopted a new Delaware certificate of incorporation, bylaws, code of business conduct and ethics, a 2023 incentive equity plan reserving 88,626,665 Class A shares, and an employee stock purchase plan reserving 16,113,939 Class A shares.
  • Vishal Garg became Chief Executive Officer; Kevin Ryan became Chief Financial Officer and President; Nicholas Calamari became Chief Administrative Officer and Senior Counsel; and Paula Tuffin became General Counsel and Chief Compliance Officer.
  • Several Aurora directors and executives departed, and a seven-member board was appointed. The company identified four directors as independent under Nasdaq standards.
  • Employee and executive loan arrangements were terminated or forgiven in connection with the transaction. The company agreed to reimburse certain related taxes.

Guidance, outlook, risks, and unusual items

  • The filing provides no quantitative financial guidance or specific revenue, profitability, cash-flow, or liquidity outlook in the supplied text.
  • Management identifies risks from elevated interest rates, lower home sales and refinancing activity, the company’s ability to achieve profitability, business-model execution, market-share growth, Nasdaq listing and trading liquidity, retention of personnel, product acceptance, and internal-control remediation.
  • The filing references existing material weaknesses and the need to implement and maintain effective internal controls over financial reporting.
  • The company remains subject to substantial potential dilution from convertible notes, Class B and Class C conversion rights, warrants, options, restricted stock units, the incentive plan, and the employee stock purchase plan.
  • On August 3, 2023, SEC staff informed Aurora and Better that an investigation initiated in 2022 was concluded and that staff did not intend to recommend an enforcement action against either entity.
  • The filing includes customary forward-looking-statement disclaimers and incorporates additional risk factors from the proxy statement/prospectus.

Investor verification checklist

  • Verify the six-month 2023 and 2022 revenue, net loss, cash flow, margins, balance-sheet cash, and debt figures in Exhibits 99.1–99.3.
  • Reconcile the $528.6 million convertible-note issuance with the stated $550 million maximum SoftBank commitment and determine the remaining unfunded amount, if any.
  • Review the convertible-note conversion formula, subordination provisions, redemption conditions, guarantees, and potential share dilution.
  • Confirm the final fully diluted share count, including warrants, options, RSUs, Class B and Class C conversion rights, and equity-plan reserves.
  • Assess voting control created by the three-votes-per-share Class B stock and the ownership and transfer restrictions affecting SoftBank and Sponsor holdings.
  • Review the pro forma financial information and related-party transactions, including executive loan terminations, tax reimbursements, and retention-loan forgiveness.
  • Check continued Nasdaq listing compliance, post-transaction trading liquidity, and the company’s disclosures regarding material weaknesses and remediation.