VERRA MOBILITY Corp current report, 21 June 2018

Business Context and Reporting Period

This Form 8-K, dated June 21, 2018, reports that Gores Holdings II, Inc. (the "Company") has entered into a definitive Merger Agreement to acquire Greenlight Holding II Corporation ("Greenlight"). The transaction is structured as a business combination involving two sequential mergers. The filing also discloses a concurrent private placement of equity securities to fund the transaction.

Key Financial Metrics and Transaction Structure

  • Total Aggregate Purchase Price: Approximately $2.3 billion.
  • Cash Consideration: Approximately $642 million payable to Greenlight stockholders at closing.
  • Stock Consideration: Newly issued Company Class A common stock valued at approximately $652 million (based on $10 per share).
  • Assumed Indebtedness: Approximately $852 million of Greenlight's debt (net of partial repayments).
  • Private Placement: The Company agreed to sell 43,478,261 shares of Class A common stock at $9.20 per share to raise proceeds for the cash consideration.
  • Earn-Out Potential: Up to 10 million additional shares of Class A common stock may be issued to certain Greenlight stockholders if stock price thresholds are met over five years.
  • Tax Receivable Agreement: The Company will pay 50% of net cash tax savings realized from Greenlight's pre-transaction tax attributes to certain Greenlight stockholders.

Material Changes and Conditions

The filing represents a material change in the Company's status from a special purpose acquisition company (SPAC) to an operating entity upon closing. The transaction is subject to several material conditions:

  • Approval by the Company's stockholders.
  • Expiration or termination of the Hart-Scott-Rodino Antitrust waiting period.
  • Availability of at least $550 million from the Company's trust account and the Private Placement for the Company's obligations.
  • Availability of at least $600 million in cash from the Company's trust account and the Private Placement for Greenlight's obligations.
  • The agreement may be terminated if the transaction is not consummated by January 19, 2019, unless the delay is due to a breach by the terminating party.

Outlook, Risks, and Management Commentary

Management intends to file a preliminary proxy statement for a special meeting of stockholders to vote on the proposed transactions. The filing includes standard forward-looking statements regarding the anticipated benefits of the combination, including growth opportunities and competitive positioning.

Key Risks Disclosed:

  • Failure to obtain stockholder approval or satisfy closing conditions.
  • Inability to complete the Private Placement.
  • Disruption to Greenlight's operations during the transaction process.
  • Failure to meet Nasdaq listing standards post-transaction.
  • General economic, business, and competitive factors affecting Greenlight.

Investor Verification Checklist

  • Verify the final terms of the Merger Agreement and the definitive proxy statement when filed.
  • Confirm the successful closing of the Private Placement and the availability of required cash funds.
  • Monitor the outcome of the Company's stockholder vote on the business combination.
  • Review the final valuation of the stock consideration, which is subject to market price fluctuations prior to closing.
  • Assess the impact of the Tax Receivable Agreement on future cash flows.