Sky Harbour Group Corp current report, 17 January 2022

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Sky Harbour Group Corp. / Yellowstone Acquisition Company — Form 8-K Summary

Business context and reporting period

Yellowstone Acquisition Company, the SPAC that proposed combining with Sky Harbour LLC, filed this Form 8-K on January 18, 2022, reporting events dated January 17, 2022. Sky Harbour develops, leases, and manages private aviation hangars and related business-aviation infrastructure. Stockholders were scheduled to vote on the proposed Business Combination on January 25, 2022.

Material transaction and key financial terms

  • Yellowstone entered into an OTC equity prepaid forward transaction with ACM ARRT VII E LLC in connection with the proposed Business Combination.
  • The counterparty intended, but was not obligated, to purchase up to the lesser of 7 million shares and the number of shares that would keep its pro forma beneficial ownership below 9.9%.
  • If fewer than 2.5 million shares were acquired, the counterparty agreed to purchase additional shares from Yellowstone in a private placement so that the aggregate number of shares subject to the transaction would equal 2.5 million.
  • One business day after closing, Yellowstone would pay the counterparty from trust-account funds an amount equal to the applicable redemption price multiplied by the shares subject to the transaction. The press release described the arrangement as potentially involving up to $70 million.
  • The counterparty could sell shares and terminate the transaction in whole or in part. For terminated shares, it would generally pay Yellowstone an amount based on the applicable reset price.
  • A structuring fee of $2,500 per quarter would be paid to Midtown Madison Management LLC after closing.
  • The transaction was secured by liens on sale proceeds, a controlled deposit account, and related proceeds.
  • The securities potentially issued under the arrangement were expected to be unregistered, relying on the Section 4(a)(2) exemption.

Material changes, outlook, and risks

  • The counterparty agreed to waive redemption rights for subject shares, which could reduce the number of shares redeemed in the Business Combination and affect perceptions of transaction support.
  • Yellowstone disclosed that trust-account funds used for the prepayment would not be immediately available to the combined company and might never become available depending on settlement, potentially adversely affecting liquidity and capital needs.
  • The proxy statement was supplemented to disclose that Yellowstone’s board proceeded without obtaining a fairness opinion or retaining a financial adviser. The board cited management experience, industry materials, the CBRE feasibility study, valuation information, proposed financing, and due diligence.
  • Completion of the Business Combination remained subject to stockholder approval and other closing conditions, including successful completion of Sky Harbour’s proposed bond financing.
  • Risks included termination or failure to close the Business Combination, litigation, NYSE listing requirements, integration and growth challenges, competition, employee retention, transaction costs, regulatory changes, and broader economic and business risks.
  • The filing contains forward-looking statements and cautions that actual results may differ materially. The source text contains an apparent date inconsistency, referring in one proxy-statement supplement to January 28, 2022, although the agreement and other disclosures identify January 17, 2022.

Financial metrics

This Form 8-K does not provide operating revenue, profit, cash flow, margins, balance-sheet debt, or standalone liquidity figures for Sky Harbour or Yellowstone. The filing text does not provide a clear redemption price, aggregate trust balance, or final amount expected to be funded under the forward transaction.

Most important facts to verify

  • Whether stockholders approved and the parties ultimately completed the Business Combination.
  • The actual number of shares purchased or issued under the forward purchase arrangement and the resulting cash paid from the trust account.
  • The final redemption rate, trust-account balance, and post-closing liquidity available to the combined company.
  • Whether Sky Harbour completed the required bond financing and the amount and terms of that financing.
  • Resolution of the apparent January 28 versus January 17 agreement-date discrepancy in the proxy supplement.
  • Subsequent filings disclosing settlement, share sales, terminated shares, reset-price payments, and the counterparty’s ownership position.