Business Context and Reporting Period
This Form 8-K, dated October 23, 2019, reports on the Extraordinary General Meeting of Social Capital Hedosophia Holdings Corp. (SCH). The filing details the shareholder approval of a business combination with Virgin Galactic Holdings, Inc. (VGH, Inc.), which will result in SCH being renamed Virgin Galactic Holdings, Inc. and domesticated from the Cayman Islands to Delaware. The company expects to close the transaction on October 25, 2019, with trading under new symbols (SPCE, SPCE.U, SPCE.WS) commencing on October 28, 2019.
Key Financial Metrics and Capital Structure
This filing is a current report regarding corporate governance and transaction approval; it does not contain audited financial statements, revenue, profit, or cash flow data for the reporting period.
- Shareholder Participation: 61,352,156 shares were represented at the meeting, representing 74.39% of outstanding shares entitled to vote.
- Proposed Capital Structure: Authorized capital stock will change to 700,000,000 shares of common stock and 10,000,000 shares of preferred stock.
- Incentive Plan: The 2019 Incentive Award Plan was approved, making available shares equal to 10% of the sum of issued and outstanding shares at closing plus specific restricted stock units.
- Repurchase Option: Shareholders approved a proposal allowing Vieco US to repurchase up to 20,000,000 shares at $10.00 per share, contingent on available cash exceeding $500.0 million at closing (capped at $200.0 million).
Material Changes and Voting Results
Shareholders approved all proposals submitted at the Extraordinary General Meeting. The material changes include the merger of SCH subsidiaries with Virgin Galactic entities, the change of jurisdiction to Delaware, and the election of a new board of directors.
| Proposal | Votes For | Votes Against | Abstentions |
|---|---|---|---|
| Business Combination Agreement (BCA) | 58,700,121 | 2,547,135 | 107,700 |
| Domestication (Cayman to Delaware) | 57,702,295 | 3,547,467 | 105,194 |
| Organizational Documents (Capital Stock) | 57,696,338 | 3,551,846 | 106,772 |
| Director Elections (All 8 Directors) | 57,689,103 | 3,558,844 | 107,009 |
| Stock Issuance Proposal | 57,698,312 | 3,548,681 | 107,963 |
| Incentive Award Plan | 57,674,513 | 3,563,759 | 116,684 |
| Repurchase Proposal | 57,694,865 | 3,552,330 | 107,761 |
Outlook, Risks, and Management Commentary
Outlook: Management expects the Business Combination to close on October 25, 2019, subject to customary closing conditions. Public trading of the new securities is scheduled to begin on October 28, 2019.
Risks and Contingencies: The closing is not guaranteed and is subject to customary conditions. The repurchase of shares by Vieco US is contingent on the amount of "Available Cash" exceeding $500.0 million at closing.
Unusual Items: The transaction involves a complex multi-step merger structure involving multiple subsidiaries (Merger Sub A, B, and LLC) and a change in the company's legal domicile from the Cayman Islands to Delaware.
Key Facts for Investor Verification
- Verify the actual closing date of the Business Combination (expected October 25, 2019) and the commencement of trading under symbols SPCE, SPCE.U, and SPCE.WS.
- Confirm the final amount of "Available Cash" at closing to determine if the $200 million share repurchase option will be exercised.
- Review the definitive Proxy Statement for the full text of the 2019 Incentive Award Plan and the specific terms of the Stockholders' Agreement.
- Monitor the transition of the company's legal jurisdiction from the Cayman Islands to Delaware and the associated changes to the certificate of incorporation.