SEC Form 8-K Summary
Registrant and period: Conyers Park II Acquisition Corp. filed this Current Report on September 8, 2020, regarding transactions involving Advantage Solutions Inc. The filing date is September 8, 2020; the merger agreement was executed on September 7, 2020.
Business Context and Proposed Transaction
Conyers Park II Acquisition Corp., a special purpose acquisition company, entered into a merger agreement with Advantage Solutions Inc., CP II Merger Sub, Inc., and Karman Topco L.P. Merger Sub is expected to merge with Advantage Solutions, with Advantage Solutions surviving as a wholly owned subsidiary of CP II. The transaction remains subject to shareholder, regulatory, financing, and other closing conditions.
- Merger consideration consists of 203,750,000 shares of CP II Class A common stock, plus 5,000,000 additional shares subject to vesting and forfeiture conditions.
- CP II shareholders will vote on the transaction at a special meeting following preparation and filing of a proxy statement.
- The closing target is subject to a termination date of March 7, 2021, unless extended or otherwise affected by the agreement.
Financial Metrics, Capitalization, and Liquidity
- CP II entered into subscription agreements for 50,000,000 Class A shares at aggregate proceeds of $500 million from institutional investors.
- Existing TopCo equityholders agreed to purchase 20,000,000 additional Class A shares for aggregate proceeds of $200 million; this commitment may increase in certain circumstances, including to cover shareholder redemptions.
- Advantage Sales & Marketing Inc., a wholly owned subsidiary of Advantage Solutions, obtained commitments for up to $2.5 billion of senior secured debt financing: a $2.1 billion term loan and a $400 million asset-based revolving facility. The filing states that only part, if any, of the revolver is expected to be drawn at closing.
- Debt financing is intended primarily to repay and terminate existing Company indebtedness and to fund related fees and expenses.
- The merger requires Available Closing Acquiror Cash of at least $1.15 billion and CP II net tangible assets of at least $5,000,001 immediately after closing.
- The filing text provided does not state Advantage Solutions’ revenue, net income, cash flow, margins, existing debt balance, cash balance, or other operating metrics. Supplemental financial information was furnished as Exhibit 99.3 but is not included in the provided text.
Material Changes and Transaction Terms
- The proposed merger changes CP II from a SPAC into the parent of Advantage Solutions, subject to completion of the transaction.
- CP II Sponsor and certain Class B holders agreed to vote in favor of the merger and waived certain Class B conversion-ratio adjustments related to the private placement.
- A stockholders agreement provides board nomination rights for CVC, LGP, Bain, and the CP II Sponsor, as well as four additional independent directors. TopCo also receives specified consent rights while it retains at least 50% of its post-closing Class A holdings.
- Registration rights include a requirement to file a shelf registration statement within 180 days after closing. Most transaction-related holders are subject to a 180-day transfer restriction, while the sponsor is generally subject to a one-year restriction.
Outlook, Risks, and Unusual Items
The filing provides transaction-related forward-looking statements but does not provide a standalone operating forecast or specific guidance for Advantage Solutions. Management identifies risks including failure to obtain shareholder approval, inability to secure or fund the committed financing, failure to satisfy regulatory or other closing conditions, changes required by regulators, litigation, disruption to operations, customer or employee retention issues, integration and growth challenges, transaction costs, competitive and economic conditions, and inability to realize anticipated benefits.
The debt commitment documentation had not been finalized, so actual financing terms may differ from those described. The debt commitments terminate upon specified events, including termination of the merger agreement or consummation of the merger with or without funding of the facilities.
The proposed transaction may be terminated in specified circumstances, including mutual consent, a final legal prohibition, failure to close by the termination date, failure to obtain CP II shareholder approval, or certain uncured breaches.
Investor Verification Checklist
- Review the definitive merger agreement, including the full merger consideration, vesting conditions, termination provisions, and any amendments.
- Verify the financial and operating information in Exhibit 99.3 and subsequent proxy materials, including revenue, profitability, cash flow, leverage, liquidity, and any COVID-19 impacts.
- Confirm the amount of cash available at closing after shareholder redemptions, private-placement proceeds, transaction expenses, and financing fees.
- Assess whether the $2.5 billion debt financing is finalized, funded, and subject to terms consistent with the commitment letter.
- Review the proxy statement for shareholder voting requirements, dilution, ownership percentages, redemption rights, and sponsor incentives.
- Evaluate regulatory approvals, litigation, material adverse-effect provisions, and the risk that the transaction does not close by March 7, 2021.