Business Context and Reporting Period
This Form 8-K, filed on April 8, 2021, by RumbleOn, Inc. (RMBL), discloses the entry into a definitive agreement to acquire RideNow Group, Inc. and its affiliates. The transaction involves the acquisition of up to 46 powersports retail dealerships operating under the RideNow brand, which sell motorcycles, ATVs, UTVs, and related vehicles. The filing also details an amendment to a secured promissory note with BRF Finance Co., LLC.
Key Financial Metrics and Obligations
The filing does not provide specific revenue, profit, or cash flow figures for RumbleOn or RideNow within the text body, though it references the inclusion of audited financial statements for RideNow for the years ended December 31, 2020, 2019, and 2018 as exhibits. The primary financial metric disclosed is a debt obligation:
- Debt Instrument: Amended and Restated Secured Promissory Note with BRF Finance Co., LLC.
- Principal Amount: $2,500,000.
- Maturity Date: The earlier of September 30, 2021, or the issuance of debt or equity in the aggregate amount of $2,650,000 or more (after May 1, 2021).
Material Changes and Transaction Details
The material change is the execution of a Plan of Merger and Equity Purchase Agreement dated March 12, 2021, and amended on April 8, 2021. Key terms include:
- Acquisition Structure: RumbleOn will acquire equity interests in the Transferred Entities and merge four specific subsidiaries (C&W Motors, Metro Motorcycle, Tucson Motorcycles, and Tucson Motorsports) into the RumbleOn corporate structure.
- Expected Closing: Second or third quarter of 2021.
- Minority Interest Risk: Certain RideNow minority equity holders possess rights of first refusal (ROFR). If exercised, RumbleOn may not acquire 100% of the equity interests, and the consideration payable will be reduced accordingly.
Guidance, Outlook, and Risks
Management anticipates the transaction will close in the second or third quarter of 2021, subject to several conditions. The filing includes extensive forward-looking statements regarding the benefits of the transaction and future performance, which are not guarantees.
Closing Conditions
- Receipt of all required antitrust clearances and governmental consents.
- Approval by RumbleOn stockholders.
- Listing approval of Class B Common Stock on Nasdaq.
- Consent from certain powersports manufacturers (OEMs).
Key Risks and Contingencies
- Financing Failure: Inability to obtain necessary debt or equity financing to complete the transaction.
- Regulatory and OEM Approval: Failure to secure antitrust clearance or manufacturer consents.
- Minority Holders: Uncertainty regarding whether minority owners will exercise ROFR rights, potentially reducing the scope of the acquisition.
- Integration and Operations: Risks related to integrating the businesses, retaining key employees, and the impact of the COVID-19 pandemic.
- Pro Forma Reliability: The unaudited pro forma financial statements included in the exhibits are not audited and should not be viewed as reliable predictions of future results.
Investor Verification Checklist
- Review the definitive proxy statement (to be filed) for detailed transaction terms and voting instructions.
- Examine Exhibit 99.1 and 99.2 for the audited financial statements of RideNow Group to assess historical performance.
- Monitor the status of OEM consents and antitrust waiting periods, as these are critical closing conditions.
- Verify the outcome of minority equity holder decisions regarding their rights of first refusal.
- Assess the terms of the $2.5 million promissory note and the company's ability to refinance or repay it by the September 2021 maturity date.