Utz Brands, Inc. current report, 19 August 2020

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Filing Overview

Registrant: Collier Creek Holdings, a Cayman Islands special purpose acquisition company, reporting on Form 8-K dated August 19, 2020. The filing concerns its proposed business combination with Utz Brands Holdings, LLC and related parties, which was expected to create the combined Utz Brands, Inc. public company.

Business Context and Reporting Period

The filing was made under Item 7.01, Regulation FD Disclosure, and Item 9.01. It supplements the definitive proxy statement/prospectus for the proposed Business Combination Agreement announced June 5, 2020. It does not report operating results for Utz or Collier Creek.

Collier Creek announced that its extraordinary general meeting scheduled for August 27, 2020 would be held remotely by teleconference because of COVID-19-related public health concerns and applicable governmental recommendations and orders.

Financial and Operating Metrics

  • The filing does not provide clear values for revenue, net income, cash flow, margins, debt, liquidity, or other operating metrics.
  • The filing states that certain financial advisors would receive deferred underwriting compensation at the closing of the Business Combination, but it does not state the amount.
  • No new financial guidance or quantified outlook is provided.

Material Changes and Supplemental Disclosures

  • Collier Creek stated that it was voluntarily supplementing the proxy statement to address alleged disclosure omissions raised in a purported shareholder letter. It denied that the additional disclosures were legally required or constituted an admission.
  • The supplemental disclosures state that Collier Creek contacted more than 40 potential targets after its IPO, entered into approximately 13 nondisclosure agreements, and conducted additional diligence or detailed discussions with approximately seven targets.
  • The disclosure provides additional details regarding 2019 valuation discussions, Utz’s advanced discussions with two potential acquisition targets, and due diligence by Collier Creek and its financial advisors.
  • The parties extended exclusivity arrangements several times during May 2020 while finalizing transaction documents and negotiating tax matters, affiliate transactions, seller exchange rights, management incentives, and governance.
  • Upon closing, Utz sellers and the sponsor or sponsor representative were each expected initially to have the right to nominate five directors. Existing Collier Creek officers and directors were expected to leave their positions and not remain employees of the combined company.

Outlook, Risks, and Contingencies

The filing contains forward-looking statements regarding the anticipated financial and other benefits of the Business Combination, satisfaction of closing conditions, and timing of completion. No assurance is given that the transaction would close.

  • Key contingencies included shareholder approval, satisfaction of other closing conditions, potential termination of the Business Combination Agreement, and the level of shareholder redemption requests.
  • Other identified risks included litigation, failure to obtain or maintain NYSE listing, transaction costs, disruption to operations, inability to realize expected benefits, competition, growth and integration challenges, employee retention, changes in law, and broader economic or competitive factors.
  • COVID-19 could amplify existing risks or create additional risks.
  • The filing states that Collier Creek believed the shareholder letter was without merit and that the supplemental disclosures were provided to avoid nuisance, cost, distraction, or delay to the transaction.

Investor Verification Points

  • Verify whether Collier Creek shareholders approved the proposed Business Combination and whether the transaction ultimately closed.
  • Review the definitive proxy statement/prospectus for transaction consideration, redemption mechanics, capitalization, pro forma financial information, and the complete risk factors.
  • Confirm the amount and treatment of deferred underwriting compensation and other transaction expenses.
  • Assess the impact of shareholder redemptions and any financing or liquidity conditions at closing.
  • Review subsequent SEC filings for the combined company’s actual operating results, debt, liquidity, governance, and post-closing integration performance.