Wheels Up Experience Inc. — Form 8-K Summary
Reporting date: July 19, 2021, reporting events occurring primarily on July 13, 2021. The filing documents the completion of Wheels Up’s domestication and business combination with Wheels Up Partners Holdings LLC, formerly conducted by Aspirational Consumer Lifestyle Corp.
Business Context and Transaction
- Aspirational domesticated from the Cayman Islands into Delaware and changed its name to Wheels Up Experience Inc.
- The merger with Wheels Up Partners Holdings LLC and related blocker entities closed on July 13, 2021, after shareholder approval on July 12, 2021.
- The transaction implied aggregate merger consideration of approximately $1.885 billion, excluding potential earnout shares and certain equity awards.
- A concurrent PIPE investment raised $550 million through the sale of 55 million shares at $10.00 per share.
- Immediately after the transaction and PIPE investment, Wheels Up had 245,287,754 Class A common shares and 12,521,494 warrants outstanding.
- Class A common stock and warrants began trading on the NYSE under UP and UP WS, replacing Aspirational’s securities.
Financial Metrics, Liquidity and Capitalization
- The filing does not provide current-period revenue, net income, operating cash flow, margins, cash balances, or consolidated debt balances.
- Historical financial statements and management’s discussion are incorporated by reference from the proxy statement/prospectus, including WUP financial statements through March 31, 2021.
- The PIPE supplied $550 million of gross committed equity capital; the filing text does not state net proceeds after transaction expenses or the resulting cash balance.
- Potential dilution includes up to 9 million earnout shares, issuable in three equal tranches upon stock-price thresholds of $12.50, $15.00, and $17.50, plus shares issuable under options, profits interests, restricted awards, and warrants.
- No cash dividends had been paid. Management intended to retain future earnings, if any, and did not anticipate dividends in the foreseeable future.
Material Changes Versus the Prior Comparable Period
- The company transitioned from a special purpose acquisition company, Aspirational Consumer Lifestyle Corp., to the operating public company Wheels Up Experience Inc.
- Ownership immediately after closing was approximately 70.8% for WUP equityholders, 22.4% for PIPE investors, 6.8% for Aspirational public shareholders, and 2.4% for the sponsor and related parties.
- Wheels Up ceased being a shell company and adopted a Delaware certificate of incorporation and bylaws.
- The company implemented a new 2021 Long-Term Incentive Plan and converted legacy WUP options, profits interests, and restricted interests into Wheels Up equity awards.
- Marcum LLP was dismissed after completion of its review of Aspirational’s quarter ended June 30, 2021; Grant Thornton LLP was appointed as Wheels Up’s independent registered public accounting firm for 2021.
Guidance, Outlook, Risks and Unusual Items
- The filing provides no new quantitative revenue, earnings, cash-flow, or operating guidance.
- Forward-looking statements concern growth strategies, product expansion, profitability, financing, integration of acquisitions, and the anticipated benefits of the Business Combination.
- Key risks include reduced demand for private aviation, COVID-19 effects, competition, aircraft accidents, insurance availability, severe weather and other disruptions, technology failures, regulatory changes, litigation, access to capital, retention of key personnel, and the ability to achieve profitability.
- Aspirational previously identified a material weakness involving the accounting treatment of public and private placement warrants, which resulted in a restatement of its 2020 financial statements.
- The prior auditor’s report included an explanatory paragraph regarding substantial doubt about Aspirational’s ability to continue as a going concern; the filing does not state that this condition applies to the post-combination operating company.
- Registration rights, amended WUP governance documents, indemnification agreements, and financing and commercial agreements became effective or were reaffirmed in connection with closing.
Investor Verification Checklist
- Verify the post-closing cash balance, transaction expenses, liquidity runway, and outstanding debt in subsequent periodic filings.
- Review the March 31, 2021 historical and pro forma financial statements incorporated by reference, including revenue, profitability, cash flow, and margin trends.
- Assess dilution from the 9 million earnout shares, equity awards, and 12.5 million warrants.
- Review the warrant-accounting restatement and the status of internal-control remediation.
- Examine the registration rights agreement, lock-up provisions, Delta Air Lines relationships, and other related-party arrangements.
- Monitor whether Wheels Up achieves profitability and realizes the projected strategic benefits of the Business Combination.