Business Context and Reporting Period
This Form 8-K was filed by Landcadia Holdings III, Inc., a SPAC, on May 3, 2021, reporting an event dated April 30, 2021. The request metadata identifies Hillman Solutions Corp., but the filing’s registrant is Landcadia Holdings III, Inc. The company had not generated operating revenue and would not do so until completing its initial business combination, at the earliest.
Financial Metrics and Accounting Impact
- The company reevaluated 16,666,667 public warrants and 8,000,000 sponsor warrants following an SEC staff statement on SPAC warrant accounting.
- The warrants were reclassified as derivative liabilities measured at fair value, with changes in fair value recognized in earnings.
- Initial warrant values were $18.830 million for public warrants and $9.200 million for sponsor warrants, totaling $28.030 million.
- At December 31, 2020, warrant values were $37.000 million for public warrants and $18.720 million for sponsor warrants, resulting in a total warrant derivative liability of $55.720 million.
- The company recorded a $27.690 million change in fair value of the warrant derivative liability in other income and expense for the year ended December 31, 2020.
- The warrant reclassification was non-cash. The filing does not provide clear revenue, operating margin, cash flow, debt, or liquidity values.
Material Changes Versus the Prior Comparable Period
Management and the Audit Committee concluded that the company’s previously issued audited financial statements for the year ended December 31, 2020 should no longer be relied upon. The company intends to amend its 2020 Form 10-K with restated audited financial statements. Previously reported financial information for the relevant period is superseded by the amended information.
Outlook, Risks, and Unusual Items
- Unless the warrant agreement is amended, the company expects to continue classifying the warrants as liabilities.
- Recurring fair-value measurement may create future non-cash gains or charges and could adversely affect reported results of operations.
- The filing does not provide business-combination guidance, revenue guidance, or an operating outlook.
- The company did not amend its balance sheet previously filed in the October 14, 2020 Form 8-K.
Investor Verification Items
- Verify the amended 2020 Form 10-K and restated financial statements when filed.
- Review the revised warrant liability valuation, fair-value methodology, and related income-statement effects.
- Confirm the identity of the applicable issuer, because the supplied metadata names Hillman Solutions Corp. while the filing names Landcadia Holdings III, Inc.
- Assess the potential volatility from future warrant fair-value changes and any subsequent amendment to the warrant agreement.