SEC filing summary: One Madison Corporation, Q1 2018
Important entity mismatch: The supplied filing is One Madison Corporation’s Form 10-Q, not a filing under Ranpak Holdings Corp. One Madison identifies itself as a blank-check company seeking a business combination; this filing does not report Ranpak’s operating results.
Business context and reporting period
The unaudited quarter ended March 31, 2018. One Madison had not commenced operations and was searching for a business-combination target, with an intended focus on consumer products, food and beverage, and related manufacturing or industrial services in North America or Western Europe. It completed its IPO on January 22, 2018.
Financial results and liquidity
- Revenue: $0; the company reported no operating revenue.
- Net income: $588,617, comprising $735,373 of trust-account interest income less $146,756 of expenses, including $20,000 in related-party administrative fees.
- Margins: Not meaningful given no revenue and no operating business.
- Cash flow: Operating cash use was $82,973; investing cash use was $300.0 million, deposited into the trust; financing provided $300.98 million. Period-end cash outside the trust was $898,930.
- Assets and liquidity: Total assets were $301.82 million, including $300.74 million in the trust account, principally U.S. Treasury bills. Trust funds are generally restricted until a business combination or liquidation. Current liabilities were $103,318; total liabilities were $11.40 million, including $10.50 million of deferred underwriting compensation and $800,000 of deferred legal fees payable upon a business combination.
- Debt: The sponsor note was fully repaid by March 31; no outstanding borrowings were reported. Future sponsor-affiliate working-capital loans may be available but are not committed.
Changes versus prior period
There is no comparable Q1 2017 operating period in the filing. Versus December 31, 2017, the balance sheet reflects the January IPO and private placement: trust assets rose to $300.74 million, cash to $898,930, and redeemable Class A shares were classified outside permanent equity. The over-allotment option expired in March, resulting in the forfeiture of 1.125 million founder shares.
Outlook, risks, and unusual items
- Management expected public-company and target-search costs to increase; the filing gives no earnings or revenue guidance and identifies no completed or announced target transaction.
- The company had 24 months from the IPO closing to complete a business combination, through January 22, 2020; otherwise, it generally must redeem public shares and liquidate. Public shareholders may redeem in connection with a transaction, subject to a $5,000,001 minimum net tangible asset condition.
- Forward-purchase agreements contemplate $150 million of securities at the business-combination closing, subject to the agreements and transaction completion; they are not cash already available at quarter-end.
- Key risks include failure to complete a transaction, insufficient funds for search or transaction costs, shareholder redemptions, creditor claims against trust assets, and potential dilution from warrants and founder shares. Public and private warrants generally have an $11.50 exercise price and may expire worthless if no business combination is completed.
- No legal proceedings or material changes to previously disclosed risk factors were reported. Management stated disclosure controls were effective and there were no material changes to internal control over financial reporting.
Important facts to verify
- Confirm the issuer and filing are the intended ones: the document names One Madison Corporation, not Ranpak Holdings Corp.
- Verify the status and terms of any business combination and whether the contemplated forward-purchase financing was completed.
- Check the amount and restrictions on trust assets, public-share redemptions, and deferred underwriting and legal fees.
- Review potential dilution, founder-share forfeiture or earnout terms, and warrant conditions in the underlying agreements.