Filed
Pursuant to Rule 424(b)(4)
Registration Nos. 333-145559 and 333-147880
PROSPECTUS
$900,000,000
Liberty Acquisition Holdings
Corp.
90,000,000 Units
Liberty Acquisition Holdings Corp. is a blank check company
recently formed to acquire one or more operating businesses
through a merger, stock exchange, asset acquisition,
reorganization or similar business combination. Our efforts in
identifying a prospective target business will not be limited to
a particular industry. We do not have any specific merger, stock
exchange, asset acquisition, reorganization or similar business
combination under consideration or contemplation. We will have
no more than 36 months to consummate a business
combination. If we fail to do so, we will liquidate and
distribute to our public stockholders the net proceeds of this
offering, plus certain interest, less certain costs, each as
described in this prospectus. We have not, nor has anyone on our
behalf (including our founders), contacted, or been contacted
by, any potential target business, conducted any evaluation or
had any substantive discussions, formal or otherwise, with
respect to such a transaction prior to, in anticipation of or
subsequent to our incorporation.
This is the initial public offering of our units. Each unit
consists of one share of common stock and one half (1/2) of one
warrant. We are offering 90,000,000 units. We expect that
the public offering price will be $10.00 per unit. Each warrant
entitles the holder to purchase one share of our common stock at
a price of $5.50 commencing on the later of our consummation of
a business combination or one year from the date of this
prospectus, provided in each case that there is an effective
registration statement covering the shares of common stock
underlying the warrants in effect. The warrants will expire six
years from the date of this prospectus, unless earlier redeemed.
Our principal stockholders and sponsors, Berggruen Acquisition
Holdings Ltd and Marlin Equities II, LLC, have agreed to
purchase in equal amounts an aggregate of 12,000,000 warrants at
a price of $1.00 per warrant ($12.0 million in the
aggregate) in a private placement that will occur immediately
prior to the consummation of this offering. The proceeds from
the sale of the warrants in the private placement will be
deposited into a trust account and subject to a trust agreement,
described below, and will be part of the funds distributed to
our public stockholders in the event we are unable to complete a
business combination. The sponsors warrants will be
substantially similar to the warrants included in the units sold
in this offering. Each of Berggruen Holdings and Marlin Equities
has agreed not to transfer, assign or sell, directly or
indirectly, any of these warrants (including the common stock to
be issued upon exercise of these warrants) until one year after
we consummate a business combination.
In addition, Berggruen Holdings and Marlin Equities have agreed
to purchase, directly or through their affiliates, in equal
amounts an aggregate of 6,000,000 units at a price of
$10.00 per unit ($60.0 million in the aggregate) in a
private placement that will occur immediately prior to our
consummation of a business combination. These private placement
units will be identical to the units sold in this offering. Each
of Berggruen Holdings and Marlin Equities has agreed not to
transfer, assign or sell, directly or indirectly, any of these
units or the common stock or warrants included in these units
(including the common stock to be issued upon exercise of these
warrants), until one year after we consummate a business
combination.
Currently, no public market exists for our units, common stock
or warrants. Our units have been approved for listing on the
American Stock Exchange under the symbol LIA.U upon
consummation of this offering. The common stock and warrants
comprising the units are expected to begin separate trading
thirty-five days (or such earlier number of days as the
underwriters may permit) after the consummation of this offering
(or as soon as practicable thereafter), subject to our filing a
Current Report on
Form 8-K
with the SEC containing an audited balance sheet reflecting our
receipt of the gross proceeds of this offering and issuing a
press release announcing when such separate trading will begin.
We expect that once the securities comprising the units begin
separate trading, the common stock and warrants will be traded
on the American Stock Exchange under the symbols LIA
and LIA.WS, respectively. We cannot assure you,
however, that our securities will be listed or will continue to
be listed on the American Stock Exchange.
The underwriters may also purchase up to an additional
13,500,000 units from us, at the public offering price less
the underwriting discounts and commissions, within 30 days
from the date of this prospectus to cover over-allotments, if
any.
Investing in our securities involves a high degree of risk.
See Risk Factors beginning on page 27 for a
discussion of information that should be considered in
connection with investing in our securities.
Neither the Securities and Exchange Commission nor any state
securities regulator has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
|
|
|
|
|
|
|
|
|
|
|
Per Unit
|
|
|
Total
|
|
|
Public offering price
|
|
$
|
10.00
|
|
|
$
|
900,000,000
|
|
Underwriting discounts and commissions(1)
|
|
$
|
0.55
|
|
|
$
|
49,500,000
|
|
Proceeds, before expenses, to us
|
|
$
|
9.45
|
|
|
$
|
850,500,000
|
|
|
|
|
(1)
|
|
Includes $23.85 million, or
$0.265 per unit, payable to the underwriters for deferred
underwriting discounts and commissions from the funds to be
placed in the trust account described below. Such funds will be
released to the underwriters only on consummation of an initial
business combination, as described in this prospectus.
|
The underwriters are offering the units on a firm commitment
basis. The underwriters expect to deliver the units to
purchasers on or about December 12, 2007. Of the proceeds
we receive from this offering and the sale of the sponsors
warrants to our sponsors described in this prospectus,
approximately $885.55 million, or approximately $9.84 per
unit, will be deposited into the trust account, of which
$23.85 million is attributable to the deferred
underwriters discounts and commissions, at Continental
Stock Transfer & Trust Company, as trustee.
Citi
Lehman Brothers
The date of this prospectus is December 6, 2007
TABLE OF
CONTENTS
|
|
|
|
|
1
|
|
|
5
|
|
|
26
|
|
|
27
|
|
|
46
|
|
|
47
|
|
|
51
|
|
|
51
|
|
|
53
|
|
|
54
|
|
|
57
|
|
|
80
|
|
|
89
|
|
|
91
|
|
|
94
|
|
|
105
|
|
|
112
|
|
|
116
|
|
|
116
|
|
|
116
|
|
|
F-1
|
i
This summary only highlights the more detailed information
appearing elsewhere in this prospectus. As this is a summary, it
does not contain all of the information that you should consider
in making an investment decision. References in this prospectus
to we, us or our company
refer to Liberty Acquisition Holdings Corp. References to
public stockholders refer to purchasers in this
offering and subsequent purchasers in the secondary market. To
the extent our founders purchase common stock in this offering
or thereafter in the open market they would be public
stockholders for liquidation and dissolution purposes, but
will vote all such shares in favor of our initial business
combination and therefore would not be eligible to seek
redemption in connection with a vote on a business combination.
Unless we tell you otherwise, the information in this prospectus
assumes that the underwriters will not exercise their
over-allotment option.
Except as otherwise specified, all information in this
prospectus and all per unit information has been adjusted to
reflect a
1-for-5 unit
dividend that was effected on December 6, 2007 (which is
after the date of our financial statements included in this
prospectus).
We are a blank check company formed under the laws of the State
of Delaware on June 27, 2007. We were formed to acquire a
currently unidentified operating business through a merger,
stock exchange, asset acquisition, reorganization or similar
business combination, which we refer to throughout this
prospectus as a business combination. To date, our efforts have
been limited to organizational activities. We have not, nor has
anyone on our behalf (including our founders), contacted, or
been contacted by, any potential target business, conducted any
evaluation or had any substantive discussions, formal or
otherwise, with respect to such a transaction prior to, in
anticipation of or subsequent to our incorporation.
Our efforts in identifying prospective target businesses will
not be limited to a particular industry. We intend to initially
focus on geographically targeted businesses with principal
business operations in North America that may provide
significant opportunities for growth. We have restricted our
geographic focus because our sponsors or their affiliates have
formed, and may form in the future, other special purpose
acquisition companies that are targeting investments, and that
may be offered or listed, outside of the United States or North
America.
Berggruen Acquisition Holdings Ltd, which we refer to in this
prospectus as Berggruen Holdings, and Marlin Equities II, LLC,
which we refer to in this prospectus as Marlin Equities, have
recently formed Liberty International Acquisition Company, which
we refer to as Liberty International. Liberty International is a
blank check company that will seek business combination
opportunities with companies with principal business operations
outside of North America. We are contractually prohibited from
seeking business combination opportunities with companies with
principal business operations outside of North America until the
earlier to occur of (a) the execution of a definitive
agreement for a business combination by Liberty International or
any blank check company formed by our sponsors with a
jurisdiction of incorporation outside of the United States and
with focus on effecting a business combination with a target
business with principal business operations outside of North
America, or (b) the liquidation and dissolution of Liberty
International or such international blank check companies. We
will not seek a waiver of these restrictions from Liberty
International or such international blank check companies. In
the event that we pursue a business combination with a target
business with principal business operations outside of North
America, our search criteria and guidelines will be the same as
that which we will employ for a business whose principal
operations are in North America, and we will also seek to
evaluate any additional risks that may arise from the location
of the target business, as described under Risk
Factors Since we may acquire a target business that
is located outside the United States, we may encounter risks
specific to one or more countries in which we ultimately
operate. These criteria and guidelines are described under
Proposed Business Business Strategy and
Proposed Business Selection of a target
business and structuring of a business combination.
We will seek to capitalize on the significant private equity
investing experience and contacts of the respective principals
of our principal stockholders and sponsors, Berggruen Holdings
and Marlin Equities.
1
However, our ability to benefit from these contacts will be
limited by conflict of interest procedures which require that
certain business opportunities be presented to other companies
before they are made available to us.
Berggruen Holdings and Marlin Equities share a similar
investment philosophy focused on businesses with sustainable
competitive advantages, a strong market position and strong free
cash flow characteristics. Businesses that the respective
principals of Berggruen Holdings and Marlin Equities have
previously invested in have a history of profitability and cash
flow generation. The principals of Berggruen Holdings and Marlin
Equities have invested together in the past and have a
complementary long-term perspective on their investment
holdings. However, our ability to benefit from these investment
philosophies will be limited by the conflict of interests
procedures described elsewhere in this prospectus.
Berggruen Holdings North America Ltd., an affiliate of Berggruen
Holdings, and Marlin Equities have previously invested together
in Freedom Acquisition Holdings, Inc., which we refer to as
Freedom, a blank check company that completed an initial public
offering in December 2006. On November 2, 2007, Freedom
consummated an acquisition of GLG Partners, a leading
alternative asset manager with gross assets under management of
over $20.0 billion and changed its name to GLG Partners,
Inc.
Founded in June of 1984 and advised by Nicolas Berggruen, our
president and chief executive officer, Berggruen Holdings Ltd
(which includes its predecessor companies and is an affiliate of
Berggruen Holdings) is a private investment company investing
internationally in an extensive range of asset classes on an
opportunistic basis, including direct private equity, stocks and
bonds, hedge funds, private equity funds, and real estate.
Berggruen Holdings Ltd and related entities have made over 50
control and non-control private equity investments over the last
20 years. Those have mostly been in branded consumer goods
businesses, services, light manufacturing, distribution, telecom
and media, both in the United States and Europe. In connection
with its prior acquisitions, Berggruen Holdings Ltd was not
restricted in its pursuit of such acquisitions as it was not
subject to the conflict of interest procedures described
elsewhere in this prospectus to which we will be subject. The
procedures in our letter agreements generally require that if a
business opportunity is competitive with a Berggruen Holdings
Ltd portfolio company, it must first be presented to such
company before it is made available to us. The agreements define
a Berggruen Holdings Ltd portfolio company as a company of which
Berggruen Holdings Ltd, directly or indirectly, controls a
majority of the voting stock or a majority of the board of
directors. We believe Berggruen Holdings Ltd is well positioned
to source a business combination as a result of its extensive
infrastructure which includes eight offices and a network of
investment professionals worldwide. Although none of these
investment professionals, other than Mr. Berggruen, will be
employees of ours, and although we have no offices located
outside of New York, Berggruen Holdings Ltd has agreed to make
three investment professionals located at the Berggruen Holdings
Ltds offices in New York, Los Angeles and London available
at no cost to us to actively source an acquisition for us. None
of Mr. Berggruen or any individuals and entities associated
with him are required to commit any specified amount of time to
our affairs.
Marlin Equities is an investment vehicle majority owned by its
managing member, Martin E. Franklin, the chairman of our board
of directors, and Ian G.H. Ashken, the other principal member
who has been Mr. Franklins business partner for over
15 years. Mr. Franklin has over 20 years of
experience in numerous businesses and has been involved in
originating, structuring, negotiating, managing and consummating
more than 75 transactions. None of Mr. Franklin or any
individuals and entities associated with him are required to
commit any specified amount of time to our affairs. However, in
his capacity as a member of Marlin Equities, Mr. Ashken may, but
is not required to, assist us in the due diligence of potential
target companies and the negotiation and structuring of a
business combination. Mr. Ashken has advised us that any
services that he provides to us will be at no cost to us, except
that we may reimburse him for out-of-pocket expenses, such as
travel costs, that he may incur. Marlin Equities does not have
any portfolio companies, where a Marlin Equities portfolio
company is defined as a company of which Marlin Equities,
directly or indirectly, controls a majority of the voting stock
or a majority of the board of directors. Therefore,
Mr. Franklin does not have any potential conflict of
interests with any entity other than Jarden Corporation, a
public consumer products company of which Mr. Franklin is
chairman and chief executive officer. The conflict of interests
procedures for Jarden are described elsewhere in this prospectus.
2
We believe that the extensive network of private equity sponsor
relationships as well as relationships with management teams of
public and private companies, investment bankers, attorneys and
accountants developed by the principals of Berggruen Holdings
and Marlin Equities should provide us with significant business
combination opportunities. However, in each of these cases, our
ability to benefit from these extensive relationships will be
limited by our conflict of interest procedures which require
that (i) if a business opportunity is competitive with a
Berggruen Holdings Ltd portfolio company it must first be
presented to such company before it is made available to us and
(ii) if a business opportunity fits within Jarden
Corporations publicly announced acquisition criteria, it
must first be presented to Jarden before it is made available to
us. Since Marlin Equities is a recently formed investment
vehicle whose first investment was in Freedom and whose second
investment will be in us, it does not have any operations and
its network, relationships and contacts that we expect to
benefit from will be the network, relationships and contacts of
Mr. Franklin.
Each of Berggruen Holdings, which is controlled by
Mr. Berggruen, and Marlin Equities, which is controlled by
Mr. Franklin, has agreed to purchase, directly or through
their affiliates, in equal amounts (i) an aggregate of
12,000,000 warrants, which we refer to as the sponsors
warrants, at a price of $1.00 per warrant ($12.0 million in
the aggregate) in a private placement that will occur
immediately prior to the consummation of this offering, and
(ii) an aggregate of 6,000,000 units, which we refer
to as the co-investment units, at a price of $10.00 per unit
($60.0 million in the aggregate) in a private placement
that will occur immediately prior to our consummation of a
business combination, which will not occur until after the
signing of a definitive business combination agreement and the
approval of that business combination by a majority of our
public stockholders.
The proceeds from the sale of the co-investment units will
provide us with additional equity capital to fund a business
combination. We believe that the net proceeds of this offering
and the private placement offerings will enable us to pursue
either spin off transactions with larger, well
established companies (whereby a business unit, subsidiary or
division of a larger company is separated into a stand-alone
entity and is sold) or acquisitions of mid-cap companies with
valuations between approximately $1.0 billion and
$4.0 billion. Our sole employee, Mr. Berggruen, does
not have any experience in acquiring businesses in this
specified target range, other than the Freedom/GLG Partners
transaction. In addition, we believe that the co-investment
demonstrates our sponsors commitment of significant
capital on the same terms as our public stockholders, which
helps differentiate our sponsors from the sponsors of other
similar blank check companies. The co-investment will occur
immediately prior to the consummation of a business combination,
rather than prior to the consummation of this offering, as our
sponsors want the use of those funds until such time as such
funds are needed to effect a business combination. We may need
to raise additional funds, in addition to the co-investment,
through a private offering of debt or equity securities if such
funds were required to consummate a business combination.
Subject to compliance with applicable securities laws, we would
only consummate such financing simultaneously with the
consummation of a business combination.
Our sponsors have agreed to act together for the purpose of
acquiring, holding, voting or disposing of our shares and will
be deemed to be a group for reporting purposes under
the Securities Exchange Act of 1934. The $12.0 million of
proceeds from the sale of the sponsors warrants will be
added to the proceeds of this offering and will be held in the
trust account pending our consummation of a business combination
on the terms described in this prospectus. If we do not complete
such a business combination, then the $12.0 million
proceeds from the sale of the sponsors warrants will be
part of the liquidating distribution to our public stockholders,
and the sponsors warrants will expire worthless. As the
proceeds from the sale of the co-investment units will not be
received by us until immediately prior to our consummation of a
business combination, these proceeds will not be deposited into
the trust account and will not be available for distribution to
our public stockholders in the event of a liquidating
distribution. Each of our sponsors has agreed to provide our
audit committee, on a quarterly basis, with evidence that such
sponsor has sufficient net liquid assets available to consummate
the co-investment. In the event that a sponsor is unable to
consummate the co-investment when required to do so, such
sponsor has agreed to surrender and forfeit its founders
units to us for cancellation.
3
Our initial business combination must be with one or more target
businesses whose fair market value, individually or
collectively, is equal to at least 80% of the sum of the balance
in the trust account (excluding deferred underwriting discounts
and commissions of $23.85 million or $27.43 million if
the underwriters over-allotment option is exercised in
full) at Continental Stock Transfer &
Trust Company at the time of such business combination plus
the proceeds of the co-investment. This may be accomplished by
identifying and acquiring a single business or multiple
operating businesses, which may or may not be related,
contemporaneously. Although there is no limitation on our
ability to raise funds privately or through loans that would
allow us to acquire a company with a fair market value greater
than 80% of the sum of the balance in the trust account plus the
proceeds of the co-investment, no such financing arrangements
have been entered into or contemplated with any third parties to
raise such additional funds through the sale of securities or
otherwise. If our initial business combination involves a
transaction in which we acquire less than a 100% interest in the
target company, the value of the interest that we acquire will
be equal to at least 80% of the sum of the balance in the trust
account (excluding deferred underwriting discounts and
commissions) plus the proceeds of the co-investment. We will not
become a holding company for a minority interest in a target
business. We will only seek to acquire greater than 50% of the
outstanding equity interests or voting power of one or more
target businesses.
Each of Berggruen Holdings and Marlin Equities has advanced
$125,000 to us ($250,000 in the aggregate) as of the date of
this prospectus to cover expenses related to this offering.
These advances are non-interest bearing, unsecured and are due
within 60 days following the consummation of this offering.
The loans will be repaid out of the proceeds of this offering
not placed in trust.
Mr. Berggruen and our other officer and directors have
advised us that they do not intend to participate in this
offering. However, they may purchase our units, common stock
and/or
warrants in the open market following this offering.
Our executive offices are located at 1114 Avenue of the
Americas, 41st Floor, New York, New York 10036,
and our telephone number is
(212) 380-2230.
4
In making your decision on whether to invest in our
securities, you should take into account not only the
backgrounds of our officers and directors, but also the special
risks we face as a blank check company and the fact that this
offering is not being conducted in compliance with Rule 419
promulgated under the Securities Act of 1933. You will not be
entitled to protections normally afforded to investors in
Rule 419 blank check offerings.
|
|
|
Securities offered:
|
|
90,000,000 units, each unit consisting of:
|
|
|
|
one share of common stock; and
|
|
|
|
one half (1/2) of one warrant.
|
|
Trading commencement and separation of common stock and
warrants:
|
|
The units will begin trading on or promptly after the date of
this prospectus. The common stock and warrants comprising the
units are expected to begin separate trading thirty-five days
(or such earlier number of days as the underwriters may permit)
after the consummation of this offering (or as soon as
practicable thereafter), subject to our having filed the Current
Report on
Form 8-K
described below and having issued a press release announcing
when such separate trading will begin.
|
|
Separate trading of the common stock and warrants is
prohibited until we have filed a
Current Report on
Form 8-K:
|
|
In no event will the common stock and warrants be traded
separately until we have filed a Current Report on
Form 8-K
with the SEC containing an audited balance sheet reflecting our
receipt of the gross proceeds of this offering. We will file the
Current Report on
Form 8-K
as promptly as practicable following the consummation of this
offering, which is anticipated to take place three business days
from the date of this prospectus. If the underwriters
over-allotment option is exercised following the initial filing
of such Current Report on
Form 8-K,
a second or amended Current Report on
Form 8-K
will be filed to provide updated financial information to
reflect the exercise of the underwriters over-allotment
option.
|
|
Number of securities to be outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior to
|
|
|
After this
|
|
|
After the
|
|
|
|
this Offering(1)
|
|
|
Offering(2)
|
|
|
Co-Investment(4)
|
|
|
Units
|
|
|
25,875,000
|
|
|
|
112,500,000
|
|
|
|
118,500,000
|
|
Common Stock
|
|
|
25,875,000
|
|
|
|
112,500,000
|
|
|
|
118,500,000
|
|
Warrants
|
|
|
12,937,500
|
|
|
|
68,250,000
|
(3)
|
|
|
71,250,000
|
(3)
|
|
|
|
|
|
|
|
|
|
(1) Includes 3,375,000 founders units (representing
3,375,000 founders shares and 1,687,500 founders
warrants) that will be forfeited by our founders to the extent
the underwriters over-allotment option is not exercised
and gives effect to our unit dividend.
|
|
|
|
(2) Assumes the underwriters over-allotment option is
not exercised and the founders units referred to in
note 1 above have
|
5
|
|
|
|
|
been forfeited. If the underwriters over-allotment is
exercised in full there will be 129,375,000 units and
shares of common stock outstanding and 76,687,500 warrants
outstanding.
|
|
|
|
(3) Includes 12,000,000 sponsors warrants described
below.
|
|
|
|
(4) Assumes the underwriters over-allotment option is
not exercised and the founders units referred to in note
(1) above have been forfeited. If the underwriters
over-allotment option is exercised in full, there will be
135,375,000 units and shares of common stock outstanding and
79,687,500 warrants outstanding.
|
|
Warrants:
|
|
|
|
Exercisability:
|
|
Each warrant is exercisable to purchase one share of our common
stock. Because each unit includes one half (1/2) of one warrant,
holders will need to have two units in order to have one
warrant. Warrants may be exercised only in increments of one
whole warrant.
|
|
Exercise price:
|
|
$5.50
|
|
Exercise period:
|
|
The warrants will become exercisable on the later of:
|
|
|
|
the consummation of our initial business combination
with one or more target businesses; or
|
|
|
|
one year from the date of this prospectus,
|
|
|
|
provided in each case that there is an effective registration
statement covering the shares of common stock underlying the
warrants in effect.
|
|
|
|
The warrants will expire at 5:00 p.m., New York time, on
December 12, 2013 or earlier upon redemption.
|
|
Redemption:
|
|
Once the warrants become exercisable and except as described
below with respect to the warrants attached to the
founders units and the sponsors warrants, we may
redeem the outstanding warrants:
|
|
|
|
in whole but not in part;
|
|
|
|
at a price of $0.01 per warrant;
|
|
|
|
upon a minimum of 30 days prior written
notice of redemption; and
|
|
|
|
if, and only if, the last sale price of our common
stock equals or exceeds $15.00 per share for any 20 trading days
within a 30 trading day period ending three business days before
we send the notice of redemption.
|
|
|
|
If we call the warrants for redemption as described above, our
management will have the option to require all holders that wish
to exercise warrants to do so on a cashless basis.
In such event, each holder would pay the exercise price by
surrendering the warrants for that number of shares of common
stock equal to the quotient obtained by dividing (x) the
product of the number of
|
6
|
|
|
|
|
shares of common stock underlying the warrants, multiplied by
the difference between the exercise price of the warrants and
the fair market value (defined below) by
(y) the fair market value. The fair market
value shall mean the average reported last sale price of
the common stock for the 10 trading days ending on the third
trading day prior to the date on which the notice of redemption
is sent to the holders of warrants. Warrants may not be settled
on a cashless basis unless they have been called for redemption
and we have required all warrants to be settled on that basis.
|
|
Reasons for redemption limitations:
|
|
We have established the above conditions to our exercise of
redemption rights to provide:
|
|
|
|
warrant holders with adequate notice of exercise
only after the then-prevailing common stock price is
substantially above the warrant exercise price; and
|
|
|
|
a sufficient differential between the
then-prevailing common stock price and the warrant exercise
price so there is a buffer to absorb the market reaction, if
any, to our redemption of the warrants.
|
|
|
|
If the foregoing conditions are satisfied and we issue a notice
of redemption, each warrant holder can exercise his, her or its
warrant prior to the scheduled redemption date. However, the
price of the common stock may fall below the $15.00 trigger
price or the warrant exercise price after the redemption notice
is issued.
|
|
Founders Units:
|
|
On August 9, 2007, Berggruen Holdings, Marlin Equities and
our three independent directors purchased an aggregate of
25,875,000 of our units (including the escrowed founders
units described below and after giving effect to our unit
dividend) for an aggregate purchase price of $25,000 in a
private placement. We sometimes collectively refer to Berggruen
Holdings, Marlin Equities and our three independent directors as
our founders.
|
|
|
|
Each unit consisted of one share of common stock and one half
(1/2) of one warrant. We refer to these units, shares of common
stock and warrants included in these units as the founders
units, founders common stock and founders warrants
throughout this prospectus.
|
|
|
|
The founders units are identical to those sold in this
offering, except that:
|
|
|
|
each of our founders has agreed to vote its
founders common stock in the same manner as a majority of
the public stockholders who vote at the special or annual
meeting called for the purpose of approving our initial business
combination. As a result, they will not be able to exercise
redemption rights (as described below) with respect to the
founders common stock if our initial business combination
is approved by a majority of our public stockholders;
|
|
|
|
each of our founders has agreed that the
founders common stock will not participate with the common
stock included in
|
7
|
|
|
|
|
the units sold in this offering in any liquidating distribution;
and
|
|
|
|
the founders warrants:
|
|
|
|
will become exercisable after our
consummation of a business combination if and when the last
sales price of our common stock exceeds $15.00 per share for any
20 trading days within a 30 trading day period beginning
90 days after such business combination;
|
|
|
|
will be non-redeemable so long as they
are held by our founders or their permitted transferees; and
|
|
|
|
may be exercised by the holder on a
cashless basis.
|
|
|
|
Our founders have agreed to place 3,375,000 founders units
in escrow, or the escrowed founders units, until the
earlier of the time that the underwriters over-allotment
option is exercised or expires. If the underwriters exercise
their over-allotment option in full, all 3,375,000 of these
escrowed founders units will be released to the founders
upon the closing of the underwriters over-allotment option
exercise. If the underwriters exercise their over-allotment
option in part, a
pro rata
amount of these escrowed
founders units will be released to the founders upon the
closing of the underwriters over-allotment option exercise
such that the number of founders units the founders hold
will be equal to 20% of the total number of units outstanding
after this offering, and the remainder of the escrowed
founders units will be forfeited by our founders and
returned to us to be cancelled without any payment to our
founders. Accordingly, the number of founders units and
shares of founders common stock may be reduced by up to
3,375,000, and the number of founders warrants may be
reduced by up to 1,687,500, if the underwriters
over-allotment option is not exercised in full by the
underwriters.
|
|
|
|
Pursuant to a registration rights agreement between us and our
founders, the holders of each of our founders units,
founders common stock and founders warrants
(including the common stock to be issued upon exercise of the
founders warrants) will be entitled to two demand
registration rights and two piggy-back registration
rights commencing one year after the consummation of a business
combination.
|
|
|
|
Each of our founders has agreed, subject to certain exceptions
described below, not to sell, assign or otherwise transfer,
directly or indirectly, any of its founders units,
founders common stock or founders warrants
(including the common stock to be issued upon exercise of the
founders warrants) until one year from the date of the
consummation of a business combination. These transfer
restrictions also apply to the transfers of the ownership
interests in Berggruen Holdings and Marlin Equities.
|
|
|
|
Each of our founders is permitted to transfer its founders
units, founders common stock or founders warrants
(including the common stock to be issued upon exercise of the
founders warrants) to our officers and directors, and
other persons or entities
|
8
|
|
|
|
|
associated with the sponsors, but the transferees receiving such
securities will be subject to the same agreement as our
founders. Persons or entities associated with our sponsors means
(i) relatives of such person, (ii) any corporation or
organization of which such person is an officer or partner or
directly or indirectly the beneficial owner of 10% or more of
any class of equity securities and (iii) any trust or
estate in which such person has a substantial beneficial
interest or as to which such person serves as a trustee,
executor or in a similar fiduciary capacity. Any of the
foregoing transfers will be made in accordance with applicable
securities laws.
|
|
Sponsors warrants purchased through private
placement:
|
|
Our sponsors have agreed to purchase, directly or through their
affiliates, in equal amounts an aggregate of 12,000,000 warrants
at a price of $1.00 per warrant ($12.0 million in the
aggregate) from us in a private placement that will occur
immediately prior to the consummation of this offering. We refer
to these warrants as the sponsors warrants throughout this
prospectus. The sponsors warrants will be purchased
separately and not in combination with common stock in the form
of units.
|
|
|
|
The proceeds from the sale of the sponsors warrants will
be added to the proceeds from this offering to be held in the
trust account pending our consummation of a business
combination. If we do not complete a business combination that
meets the criteria described in this prospectus, then the
$12.0 million purchase price of the sponsors warrants
will become part of any liquidating distribution to our public
stockholders following our liquidation and dissolution and the
sponsors warrants will expire worthless.
|
|
|
|
The sponsors warrants will be non-redeemable so long as
they are held by our sponsors or their permitted transferees and
may be exercised on a cashless basis at the option of the
holder. In addition, pursuant to the registration rights
agreement, the holders of our sponsors warrants (including
the common stock to be issued upon exercise of the
sponsors warrants) will be entitled to two demand
registration rights and two piggy-back registration
rights commencing one year after the consummation of a business
combination. With those exceptions, the sponsors warrants
have terms and provisions that are otherwise identical to those
of the warrants being sold as part of the units in this offering.
|
|
|
|
Each of our sponsors has agreed, subject to certain exceptions
described below, not to transfer, assign or sell, directly or
indirectly, any of its sponsors warrants (including the
common stock to be issued upon exercise of the sponsors
warrants) until one year after we consummate a business
combination. These transfer restrictions also apply to the
transfers of the ownership interests in Berggruen Holdings and
Marlin Equities.
|
|
|
|
Each of our sponsors will be permitted to transfer its
sponsors warrants (including the common stock to be issued
upon exercise of the sponsors warrants) in certain limited
circumstances, such as to our officers and directors, and other
persons or entities
|
9
|
|
|
|
|
associated with such sponsor, but the transferees receiving such
sponsors warrants will be subject to the same sale
restrictions imposed on our sponsors. Such transfers will be
made in accordance with applicable securities laws.
|
|
Co-Investment units purchased through private placement:
|
|
Our sponsors have agreed to purchase, directly or through their
affiliates, in equal amounts an aggregate of 6,000,000 of our
units at a price of $10.00 per unit for an aggregate purchase
price of $60.0 million from us in a private placement that
will occur immediately prior to our consummation of a business
combination, which will not occur until after the signing of a
definitive business combination agreement and the approval of
that business combination by a majority of our public
stockholders. Each unit will consist of one share of common
stock and one half (1/2) of one warrant. We refer to this
private placement as the co-investment and these private
placement units, shares of common stock and warrants as the
co-investment units, co-investment common stock and
co-investment warrants, respectively, throughout this
prospectus. The proceeds from the sale of the co-investment
units will provide us with additional equity capital to fund a
business combination.
|
|
|
|
|
|
The co-investment units will be identical to the units sold in
this offering. However, as the proceeds from the sale of the
co-investment units will not be received by us until immediately
prior to our consummation of a business combination, these
proceeds will not be deposited into the trust account and will
not be available for distribution to our public stockholders in
the event of a liquidating distribution. Our sponsors will not
receive any additional carried interest (in the form of
additional units, common stock, warrants or otherwise) in
connection with the co-investment.
|
|
|
|
Pursuant to the registration rights agreement, the holders of
our co-investment units, co-investment common stock and our
co-investment warrants (including the common stock to be issued
upon exercise of the co-investment warrants) will be entitled to
two demand registration rights and two piggy-back
registration rights commencing one year after the consummation
of a business combination. These transfer restrictions also
apply to the transfers of the ownership interests in Berggruen
Holdings and Marlin Equities.
|
|
|
|
Each of our sponsors has agreed, subject to certain exceptions
described below, not to transfer, assign or sell, directly or
indirectly, any of its co-investment units, the co-investment
common stock or co-investment warrants (including the common
stock to be issued upon exercise of the co-investment warrants)
until one year after we consummate a business combination.
|
|
|
|
Each of our sponsors will be permitted to transfer its
co-investment units, co-investment common stock or co-investment
warrants (including the common stock to be issued upon exercise
of the co-investment warrants) to our officers and directors,
and other persons or entities associated with such sponsor, but
the
|
10
|
|
|
|
|
transferees receiving such securities will be subject to the
same agreement as our sponsors. Such transfers will be made in
accordance with applicable securities laws.
|
|
|
|
Each of our sponsors has agreed to provide our audit committee,
on a quarterly basis, with evidence that such sponsor has
sufficient net liquid assets available to consummate the
co-investment. In the event that a sponsor is unable to
consummate the co-investment when required to do so, such
sponsor has agreed to surrender and forfeit its founders
units to us to be cancelled.
|
|
Target Geography
|
|
Our efforts in identifying prospective target businesses will
not be limited to a particular industry. We intend to initially
focus on geographically targeted businesses with principal
business operations in North America that may provide
significant opportunities for growth. We have restricted our
geographic focus because our sponsors or their affiliates have
formed, and may form in the future, other special purpose
acquisition companies that are targeting investments, and that
may be offered or listed, outside of the United States or North
America. Berggruen Holdings and Marlin Equities have recently
formed Liberty International. Liberty International is a blank
check company that will seek business combination opportunities
with companies with principal business operations outside of
North America. We are contractually prohibited from seeking
business combination opportunities with companies with principal
business operations outside of North America until the earlier
to occur of (a) the execution of a definitive agreement for
a business combination by Liberty International or any blank
check company formed by our sponsors with a jurisdiction of
incorporation outside of the United States and with focus on
effecting a business combination with a target business with
principal business operations outside of North America, or
(b) the liquidation and dissolution of Liberty
International or such international blank check companies. We
will not seek a waiver of these restrictions from Liberty
International or such international blank check companies. In
the event that we pursue a business combination with a target
business with principal business operations outside of North
America, our search criteria and guidelines will be the same as
that which we will employ for a business whose principal
operations are in North America, and we will also seek to
evaluate any additional risks that may arise from the location
of the target business, as described under Risk
Factors Since we may acquire a target business that
is located outside the United States, we may encounter risks
specific to one or more countries in which we ultimately
operate. These criteria and guidelines are described under
Proposed Business Business Strategy and
Proposed Business Selection of a target
business and structuring of a business combination.
|
11
|
|
|
Right of first review; potential conflict of interests with
affiliates of our sponsors and
our independent
directors:
|
|
We have entered into agreements with Berggruen Holdings,
Berggruen Holdings Ltd and three of its investment
professionals that from the date of this prospectus until the
earlier of the consummation of our initial business combination
or our dissolution, we will have a right of first review that
provides that if Berggruen Holdings, Berggruen Holdings Ltd or
one of such investment professionals, becomes aware of, or
involved with, business combination opportunities with an
enterprise value of $750.0 million or more, such entity or
individual will first offer the business opportunity to us and
will only pursue such business opportunity if our board of
directors determines that we will not do so, unless such
business combination opportunity is competitive with one of the
portfolio companies of Berggruen Holdings Ltd, in which case it
would first be offered to such portfolio company. A business
combination opportunity will be considered competitive with a
Berggruen Holdings Ltd portfolio company if the target company
is engaged in the design, development, manufacture, distribution
or sale of any products, or the provision of any services, which
are the same as, or competitive with, the products or services
which a Berggruen Holdings Ltd portfolio company designs,
develops, manufactures, distributes or sells. Berggruen Holdings
Ltds portfolio companies presently include a print
finishing company, a media storage company, a financial services
company, a wood treatment company, an enterprise software
business and an aerospace parts supplier. Berggruen Holdings may
at any time, or from time to time, acquire additional portfolio
companies or dispose of existing portfolio companies. Any such
newly acquired portfolio company would be covered by this
obligation.
|
|
|
|
Although Mr. Berggruen is the president of Berggruen
Holdings Ltd, Mr. Berggruen is not on the board of
directors nor is he an officer of any of the portfolio companies
of Berggruen Holdings Ltd and therefore does not owe any direct
fiduciary duties to such portfolio companies. In addition,
during the period while we are pursuing the acquisition of a
target business and except as discussed above with respect to
Berggruen Holdings, Mr. Berggruen has agreed to present
business combination opportunities that fit within our criteria
and guidelines to us. None of the investment professionals that
are being made available to us by Berggruen Holdings Ltd owe any
fiduciary duty to us, and none of them is required to commit any
specified amount of time to our affairs. These individuals will
only help identify target companies and assist with the due
diligence of the target company. Each of those individuals has
agreed with us that such individual will not present us with a
potential business combination opportunity with a company
(i) with which such individual has had any discussions,
formal or otherwise, with respect to a business combination with
another company prior to the consummation of this offering or
(ii) that is competitive with any portfolio company of
Berggruen Holdings Ltd until after such individual has presented
the
|
12
|
|
|
|
|
opportunity to such portfolio company and such portfolio company
has determined not to proceed with that opportunity. Freedom was
not, and GLG Partners is not, a portfolio company of Berggruen
Holdings Ltd for that purpose.
|
|
|
|
We recognize that Mr. Berggruen may be deemed an affiliate
of Berggruen Holdings Ltds portfolio companies and that a
conflict of interest could arise if an opportunity is an
appropriate fit for one of such companies. We believe that the
procedures established with respect to the sourcing of a deal by
the employees of Berggruen Holdings Ltd whereby a potential
business combination opportunity with a company that is
competitive with any portfolio company of Berggruen Holdings Ltd
will not be presented to us until after such individual has
presented the opportunity to such portfolio company and such
portfolio company has determined not to proceed, eliminates such
conflict for Mr. Berggruen.
|
|
|
|
Mr. Franklin is chairman and chief executive officer of
Jarden Corporation. Jardens publicly announced acquisition
criteria is to acquire focused, niche consumer product companies
that demonstrate a combination of attractive margins, strong
cash flow characteristics, category leading positions and
products that generate recurring revenues, with a particular
focus on businesses or brands with product offerings that
provide expansion into related categories that can be marketed
through its existing distribution channels or provide it with
new distribution channels for its existing products. We have
entered into an agreement with Mr. Franklin whereby
(i) we have acknowledged that Mr. Franklin has
committed to Jardens Board of Directors that we generally
do not intend to seek transactions that fit within Jardens
publicly announced acquisition criteria and (ii) we will
not interfere with Mr. Franklins obligations to
Jarden. However, in order to avoid the potential for a conflict
of interest, Mr. Franklin has further committed to Jarden
that he will review any potential target company to determine
whether such company fits within Jardens publicly
announced acquisition criteria. If Mr. Franklin determines
that such company fits within such criteria, Mr. Franklin
will first confirm with an independent committee of
Jardens Board of Directors that Jarden is not interested
in pursuing a potential business combination opportunity with
such company (whether such a transaction was sourced by
Mr. Franklin, Mr. Berggruen, another Berggruen
Holdings Ltd investment professional or any other person). If
the independent committee concludes that Jarden is interested in
that opportunity, we have agreed not to continue with that
transaction. We do not believe that the potential conflict of
interest with Jarden will cause undue difficulty in finding
acquisition opportunities for us given the nature of
Jardens acquisition criteria. Freedom was not, and GLG
Partners is not, a portfolio company of Marlin Equities or
Jarden Corporation.
|
|
|
|
We will not acquire an entity that is either a portfolio company
of, or has otherwise received a financial investment from, our
sponsors or their affiliates. Neither we nor any of our
directors have given, or will give, any consideration to
entering into a
|
13
|
|
|
|
|
business combination with companies affiliated with our founders
or our directors.
|
|
|
|
Each of Mr. Berggruen and Mr. Franklin is a director
of GLG Partners, Inc. GLG Partners was previously a blank check
company formed by our sponsors in June 2006 which consummated
its initial business combination on November 2, 2007. GLG
Partners operates in the alternative asset management sector.
Although we do not have an industry focus, we may compete with
GLG Partners for acquisition opportunities in the alternative
asset management sector. We have entered into an agreement with
each of Messrs. Berggruen and Franklin whereby we have
acknowledged that we will not interfere with their obligations
to GLG Partners. Additionally, in order to avoid the potential
for a conflict of interest, Messrs. Berggruen and Franklin
have committed to GLG Partners that each of them will first
review any potential target company identified by him to
determine whether such company fits within GLG Partners
acquisition criteria. If either Messrs. Berggruen or Franklin
determine that a target company does fit within the acquisition
criteria of GLG Partners, he will first present such potential
target to GLG Partners. Neither Messrs. Berggruen nor Franklin
will present the potential business combination opportunity to
us or our board unless GLG Partners confirms that it is not
interested in pursuing a business combination with such company.
Accordingly, all potential business combination opportunities
with target companies in the alternative asset management sector
that are identified by Messrs. Berggruen or Franklin will
be required to be presented first to GLG Partners before they
can be presented to us. This procedure will make it unlikely
that we will acquire a target company in the alternative asset
management sector.
|
|
|
|
Mr. Berggruen is an officer and director of Liberty
International and Mr. Franklin is a director of Liberty
International. We may compete with Liberty International for
acquisition opportunities. In order to avoid the potential for a
conflict of interest, Messrs. Berggruen and Franklin have
committed to us and to Liberty International that each will
first review any potential target company identified by them to
determine whether such company fits within our or Liberty
Internationals acquisition criteria. If
Messrs. Berggruen and Franklin determine that a target
company fits within our acquisition criteria, they will first
present such potential target to us. If Messrs. Berggruen
and Franklin determine that a target company fits within the
acquisition criteria of Liberty International, they will first
present such potential target to Liberty International. Other
than as described above, neither Messrs. Berggruen nor
Franklin will present potential business combination
opportunities with a target business with principal business
operations outside of North America first to us. Accordingly,
all potential business combination opportunities with target
companies with principal business operations outside North
America that are identified by Messrs. Berggruen or
Franklin will be required to be presented first to Liberty
International before they can be presented to us. We do not
believe that the potential
|
14
|
|
|
|
|
conflict of interest with Liberty International will cause undue
difficulty in finding acquisition opportunities for us.
|
|
|
|
In addition, although we do not expect our independent directors
to present investment and business opportunities to us, they may
become aware of business opportunities that may be appropriate
for presentation to us. In such instances they may determine to
present these business opportunities to other entities with
which they are or may be affiliated, in addition to, or instead
of, presenting them to us. Due to these existing or future
affiliations, Mr. Berggruen and our other officer and
directors may have fiduciary obligations to present potential
business combination opportunities to those entities prior to
presenting them to us which could cause additional conflicts of
interest.
|
|
American Stock Exchange Listing
|
|
Our securities have been approved for listing on the American
Stock Exchange upon consummation of this offering. Although
after giving effect to this offering we expect to meet on a pro
forma basis the minimum initial listing standards set forth in
Section 101(c) of the AMEX Company Guide, which only
requires that we meet certain requirements relating to
stockholders equity, market capitalization, aggregate
market value of publicly held shares and distribution
requirements, we cannot assure you that our securities will
continue to be listed on the American Stock Exchange as we might
not meet certain continued listing standards such as income from
continuing operations.
|
|
American Stock Exchange symbols for our:
|
|
|
|
Units:
|
|
LIA.U
|
|
Common stock:
|
|
LIA
|
|
Warrants:
|
|
LIA.WS
|
15
|
|
|
Offering and sponsors warrants private placement
proceeds to be held in trust
account and amounts payable
prior to trust
account distribution or liquidation:
|
|
Approximately $885.55 million, or approximately $9.84 per
unit (approximately $1,016.70 million, or approximately
$9.82 per unit, if the underwriters over-allotment option
is exercised in full) of the proceeds of this offering will be
placed in a trust account at Continental Stock
Transfer & Trust Company, pursuant to an
agreement to be entered into on the date of this prospectus.
These proceeds include the $12.0 million purchase price of
the sponsors warrants and $23.85 million in deferred
underwriting discounts and commissions (or $27.43 million
if the underwriters over-allotment option is exercised in
full). We believe that the inclusion in the trust account of the
purchase price of the sponsors warrants and the deferred
underwriting discounts and commissions is a benefit to our
public stockholders because additional proceeds will be
available for distribution to investors if a liquidation of our
company occurs prior to our completing an initial business
combination. Proceeds in the trust account will not be released
until the earlier of consummation of a business combination or a
liquidating distribution. Unless and until a business
combination is consummated, proceeds held in the trust account
will not be available for our use for any purpose, including the
payment of expenses related to:
|
|
|
|
this offering and
|
|
|
|
investigation, selection and negotiation of an
agreement with one or more target businesses, except there can
be released to us from the trust account:
|
|
|
|
interest income earned on the trust
account balance to pay any income taxes on such interest, and
|
|
|
|
interest income earned on the trust
account balance of up to 1% of the gross proceeds of this
offering ($9.0 million, or $10.35 million if the
underwriters over-allotment option is exercised in full)
to fund our working capital requirements, which include expenses
for the due diligence and investigation of a target business or
businesses; legal, accounting and other expenses associated with
structuring, negotiating and documenting an initial business
combination; administrative services and support payable to
Berggruen Holdings, Inc., an affiliate of Mr. Berggruen,
upon consummation of this offering; reserve for liquidation
expenses; legal and accounting fees relating to our SEC
reporting obligations; and general working capital that will be
used for miscellaneous expenses and reserves.
|
|
|
|
With these exceptions, expenses incurred by us while seeking a
business combination may be paid prior to a business combination
only from the net proceeds of this offering not held in the
trust account (initially, approximately $100,000). The proceeds
held in trust may be subject to claims which would take priority
over the
|
16
|
|
|
|
|
claims of our public stockholders and, as a result, the
per-share liquidation price could be less than $9.84 due to such
claims.
|
|
|
|
There will be no fees, reimbursements or cash payments made to
our directors or their affiliates other than:
|
|
|
|
repayment of an initial $250,000 loan that is
non-interest bearing that was made to us by our sponsors to
cover offering expenses;
|
|
|
|
a payment of an aggregate of $10,000 per month to
Berggruen Holdings, Inc., an affiliate of Mr. Berggruen,
for office space, administrative services and secretarial
support from the consummation of this offering until the earlier
of our consummation of a business combination or our
liquidation; and
|
|
|
|
reimbursement of out-of-pocket expenses incident to
identifying, investigating and consummating a business
combination with one or more target businesses, none of which
have been incurred to date.
|
|
|
|
Our audit committee will review and approve all expense
reimbursements made to our directors.
|
|
|
|
Any expense reimbursements payable to members of our audit
committee will be reviewed and approved by our board of
directors, with any interested director abstaining from such
review and approval.
|
|
|
|
We estimate that the amount of funds that will be available to
us for expenses and working capital will be $9.1 million
($10.45 million if the underwriters over-allotment
option is exercised in full) from interest that will be paid out
of the trust account and net offering proceeds not held in
trust. If we do not consummate a business combination within the
36 months following this offering, we expect our primary
liquidity requirements during that period to include
approximately $4,100,000 for expenses for the due diligence and
investigation of a target business or businesses; approximately
$4,100,000 for legal, accounting and other expenses associated
with structuring, negotiating and documenting an initial
business combination; an aggregate of up to $360,000 for
administrative services and support payable to Berggruen
Holdings, Inc., an affiliate of Mr. Berggruen, representing
$10,000 per month for up to 36 months beginning upon
consummation of this offering; $125,000 as a reserve for
liquidation expenses; $125,000 for legal and accounting fees
relating to our SEC reporting obligations; and approximately
$290,000 for general working capital that will be used for
miscellaneous expenses and reserves. These expenses are
estimates only. Our actual expenditures for some or all of these
items may differ from the estimates set forth herein.
|
17
|
|
|
All amounts held in the trust account that are not paid to
redeem common stock, released
to us in the form of
interest income or
payable to the underwriters for
deferred
discounts and commissions will be released
to
us on closing of our initial business
combination:
|
|
All amounts held in the trust account that are not:
|
|
|
|
distributed to public stockholders who exercise
redemption rights (as described below),
|
|
|
|
released to us as interest income, or
|
|
|
|
payable to the underwriters for deferred discounts
and commissions,
|
|
|
|
will be released to us on closing of our initial business
combination.
|
|
|
|
At the time we complete an initial business combination,
following our payment of amounts due to any public stockholders
who exercise their redemption rights, there will be released to
the underwriters from the trust account their deferred
underwriting discounts and commissions that are equal to 2.65%
of the gross proceeds of this offering, or $23.85 million
(or $27.43 million if the underwriters over-allotment
option is exercised in full). Funds released from the trust
account to us can be used to pay all or a portion of the
purchase price of the business or businesses with which our
initial business combination occurs. If the business combination
is paid for using stock or debt securities, we may apply the
cash released to us from the trust account to general corporate
purposes, including for maintenance or expansion of operations
of the acquired businesses, the payment of principal or interest
due on indebtedness incurred in consummating our initial
business combination or to fund the purchase of other companies,
or for working capital.
|
|
Stockholders must approve our initial business
combination:
|
|
We are required to seek stockholder approval before effecting
our initial business combination, even if the business
combination would not ordinarily require stockholder approval
under applicable state law. If a majority of the shares held by
public stockholders are not voted in favor of a proposed initial
business combination but 30 months has not yet passed since
the consummation of this offering, we may seek other target
businesses with which to effect our initial business combination
that meet the criteria set forth in this prospectus. If at the
end of such 30-month period (or 36 months if a letter of
intent, agreement in principle or definitive agreement has been
executed within such 30-month period but as to which a business
combination is not yet complete) we have not obtained
stockholder approval for an alternate initial business
combination, we will dissolve as promptly as practicable and
liquidate and release only to our public stockholders, as part
of our plan of distribution, the proceeds of the trust account,
including accrued interest, net of income taxes payable
|
18
|
|
|
|
|
on such interest and net of interest income of up to 1% of the
gross proceeds of this offering ($9.0 million, or
$10.35 million if the underwriters over-allotment
option is exercised in full) previously released to us to fund
our working capital requirements. In addition, if within
90 days before the expiration of such 30- or 36-month
period, as the case may be, we seek approval from our
stockholders to consummate a business combination, the proxy
statement related to such business combination will also seek
stockholder approval for our dissolution and our boards
recommended plan of distribution in the event our stockholders
do not approve such business combination or if such business
combination is not consummated for other reasons.
|
|
|
|
The requirement that we seek stockholder approval before
effecting our initial business combination is set forth in
Article FIFTH of our amended and restated certificate of
incorporation, which requires, in addition to the vote of our
board of directors required by Delaware law, the affirmative
vote of at least 80% of the voting power of our outstanding
voting stock to amend such provision. The requirement that we
seek stockholder approval before effecting our initial business
combination therefore may be eliminated only by a vote of our
board and the vote of at least 80% of the voting power of our
outstanding voting stock. Our sponsors have agreed not to
request that the board consider such a proposal to eliminate or
amend this provision. In addition, we will not seek stockholder
approval to extend this 30- or 36-month period, as the case may
be.
|
|
|
|
In connection with the stockholder vote required to approve our
initial business combination, each of our founders has agreed to
vote its founders common stock in the same manner as a
majority of the public stockholders who vote at the special or
annual meeting called for the purpose of approving our initial
business combination. Each of our founders has agreed that if it
acquires shares of common stock in or following this offering,
it will vote all such acquired shares in favor of our initial
business combination. Therefore, additional purchases of shares
of common stock by our founders would likely allow them to exert
additional influence over the approval of our initial business
combination. Our founders have advised us that the factors that
they would consider in deciding whether to make any such
additional purchases would include consideration of the current
trading price of our common stock and whether they believed that
such securities were undervalued and represented a good
investment, as well as the fact that any such additional
purchases would likely increase the chances that our initial
business combination would be approved. As a result of the fact
that they will be required to vote any of our shares that they
may acquire prior to, in or after this offering in favor of our
initial business combination, our founders will not be able to
exercise the redemption rights (as described below) with respect
to such shares if our initial business combination is approved
by a majority of our public stockholders.
|
19
|
|
|
Conditions to consummating our initial business
combination:
|
|
Our initial business combination must occur with one or more
target businesses that have a fair market value of at least 80%
of the sum of the balance in the trust account (excluding
deferred underwriting discounts and commissions of
$23.85 million or $27.43 million if the
underwriters over-allotment option is exercised in full)
at the time of such business combination plus the proceeds of
the co-investment. If our initial business combination involves
a transaction in which we acquire less than a 100% interest in
the target company, the value of that interest that we acquire
will be equal to at least 80% of the sum of the balance in the
trust account (excluding deferred underwriting discounts and
commissions) plus the proceeds of the co-investment. We will
not become a holding company for a minority interest in a target
business. We will only seek to acquire greater than 50% of the
outstanding equity interests or voting power of one or more
target businesses.
|
|
|
|
|
|
We will consummate our initial business combination only if a
majority of the shares of common stock voted by the public
stockholders are voted in favor of our initial business
combination and public stockholders owning 30% or more of the
shares sold in this offering do not exercise their redemption
rights described below. Each of our founders has agreed that it
will vote its founders common stock in the same manner as
a majority of the public stockholders. The requirement that we
not consummate our initial business combination if public
stockholders owning 30% or more of the shares sold in this
offering exercise their redemption rights described below is set
forth in Article FIFTH of our amended and restated
certificate of incorporation and may only be eliminated by a
vote of our board and the vote of at least 80% of the voting
power of our outstanding voting stock. Our sponsors have agreed
not to request that the board consider such a proposal to
eliminate or amend this provision. It is important to note that
voting against our initial business combination alone will not
result in redemption of a stockholders shares for a
pro
rata
share of the trust account, which only occurs when the
stockholder exercises the redemption rights described below.
|
|
Redemption rights for stockholders voting to reject our
initial business combination:
|
|
Public stockholders voting against our initial business
combination will be entitled to cause us to redeem their shares
of common stock for a
pro rata
share of the aggregate
amount then on deposit in the trust account, before payment of
deferred underwriting discounts and commissions and including
interest earned on their
pro rata
portion of the trust
account, net of income taxes payable on such interest and net of
interest income earned on the trust account balance of up to 1%
of the gross proceeds of this offering ($9.0 million, or
$10.35 million if the underwriters over-allotment
option is exercised in full) previously released to us to fund
our working capital requirements, if our initial business
combination is approved and completed. Public stockholders who
cause us to redeem their common stock for a
pro rata
share of the trust account will be paid their redemption
price as promptly as
|
20
|
|
|
|
|
practicable after consummation of a business combination and
will continue to have the right to exercise any warrants they
own. This redemption could have the effect of reducing the
amount distributed to us from the trust account by up to
approximately $265.6 million (assuming redemption of the
maximum of up to 30% of the eligible shares of common stock). We
intend to structure and consummate any potential business
combination in a manner such that if public stockholders holding
up to 30% of our shares issued in this offering vote against our
initial business combination and cause us to redeem their shares
of common stock for a
pro rata
share of the aggregate
amount then on deposit in the trust account, the business
combination could still be consummated.
|
|
|
|
An eligible stockholder may request redemption of all of its
shares of common stock at any time after the mailing to our
stockholders of the proxy statement and prior to the vote taken
with respect to a proposed business combination at a meeting
held for that purpose, but the request will not be granted
unless the stockholder votes against the business combination
and the business combination is approved and completed.
Additionally, we may require public stockholders, whether they
are a record holder or hold their shares in street
name, to either tender their certificates to our transfer
agent at any time through the vote on the business combination
or to deliver their shares to the transfer agent electronically
using Depository Trust Companys DWAC
(Deposit/Withdrawal At Custodian) System, at the holders
option. There is a nominal cost associated with this tendering
process and the act of certificating the shares or delivering
them through the DWAC system. The transfer agent will typically
charge the tendering broker $35 and it would be up to the broker
whether or not to pass this cost on to the redeeming holder.
|
|
|
|
The proxy solicitation materials that we will furnish to
stockholders in connection with the vote for any proposed
business combination will indicate whether we are requiring
stockholders to satisfy such certification and delivery
requirements. Accordingly, a stockholder would have from the
time we send out our proxy statement through the vote on the
business combination to deliver his shares if he wishes to seek
to exercise his redemption rights. This time period varies
depending on the specific facts of each transaction. However, as
the delivery process can be accomplished by the stockholder,
whether or not he is a record holder or his shares are held in
street name, in a matter of hours by simply
contacting the transfer agent or his broker and requesting
delivery of his shares through the DWAC System, we believe this
time period is sufficient for an average investor.
|
|
|
|
Any request for redemption, once made, may be withdrawn at any
time prior to the vote taken with respect to a proposed business
combination at the meeting held for that purpose. Furthermore,
if a stockholder delivers his certificate for redemption and
subsequently withdraws his request for redemption, he may simply
request that the transfer agent return the certificate
(physically or electronically).
|
21
|
|
|
|
|
The initial per share redemption price is approximately $9.84
per share. Since this amount is less than the $10.00 per unit
price in this offering and may be lower than the market price of
the common stock on the date of redemption, there may be a
disincentive on the part of public stockholders to exercise
their redemption rights. Because stockholders who exercise their
redemption rights will receive their proportionate share of
deferred underwriting compensation and the underwriters will be
paid the full amount of the deferred underwriting compensation
at the time of closing of our initial business combination, the
non-redeeming stockholders will bear the financial effect of
such payments to both the redeeming stockholders and the
underwriters.
|
|
Dissolution and liquidation if no business combination:
|
|
If we do not effect our initial business combination within
30 months after consummation of this offering (or within
36 months from the consummation of this offering if a
letter of intent, agreement in principle or definitive agreement
has been executed within 30 months after consummation of
this offering and the business combination has not yet been
consummated within such 30-month period), pursuant to the terms
of the trust agreement by and between us and Continental Stock
Transfer & Trust Company, our amended and
restated certificate of incorporation and applicable provisions
of the Delaware General Corporation Law, we will dissolve as
promptly as practicable and liquidate and release only to our
public stockholders, as part of our plan of distribution, the
amount in our trust account, including (i) all accrued
interest, net of income taxes payable on such interest and net
of interest earned on the trust account balance of up to 1% of
the gross proceeds of this offering ($9.0 million, or
$10.35 million if the underwriters over-allotment
option is exercised in full) previously released to us to fund
our working capital requirements and (ii) all deferred
underwriting discounts and commissions plus any remaining assets.
|
|
|
|
This period is longer than similar blank check company offerings
because this offering is larger in size than almost all other
blank check company offerings with similar business purposes.
Accordingly, we believe that fewer target businesses fit within
our stated acquisition criteria and it is therefore appropriate
for us to have a longer period to consummate a business
combination. In addition, given the size of the potential
acquisition targets, we believe that the process of searching
for, negotiating and consummating a business combination may
take longer than it would for a smaller business combination and
that a shorter time period would disadvantage us in negotiations
with potential target companies.
|
|
|
|
We cannot provide investors with assurances of a specific
timeframe for our dissolution and liquidation. Pursuant to our
amended and restated certificate of incorporation, upon the
expiration of such 30- or
36-month
time period, as applicable, it is intended that our purposes and
powers will be limited to dissolving, liquidating and winding
up. Also contained in our amended and restated certificate of
incorporation is the requirement that our board of directors, to
the fullest extent permitted by law,
|
22
|
|
|
|
|
consider a resolution to dissolve our company at that time.
Consistent with such obligations, our board of directors will
seek stockholder approval for any such plan of distribution, and
our founders have agreed to vote in favor of such dissolution
and liquidation. As promptly as practicable upon the later to
occur of (i) the approval by our stockholders of our plan
of distribution or (ii) the effective date of such approved
plan of distribution, we will liquidate our trust account to our
public stockholders.
|
|
|
|
Each of our founders has agreed to waive its right to
participate in any liquidating distribution as part of our plan
of distribution with respect to the shares of founders
common stock acquired by it before this offering if we fail to
consummate a business combination and to vote in favor of any
such plan of distribution. There will be no distribution from
the trust account with respect to our warrants, and all rights
of our warrants will terminate on our liquidation.
|
|
|
|
We estimate that our total costs and expenses for implementing
and completing our stockholder-approved dissolution and plan of
distribution, if not done in connection with a stockholder vote
with respect to a potential business combination, will be
between $75,000 and $125,000. This amount includes all costs and
expenses relating to filing a certificate of dissolution with
the State of Delaware, the winding up of our company, printing
and mailing a proxy statement, holding a stockholders
meeting relating to the approval by our stockholders of our
dissolution and plan of distribution, legal fees and other
filing fees. We believe that there should be sufficient funds
available either outside of the trust account or made available
to us out of the net interest earned on the trust account and
released to us as working capital, to fund the $75,000 to
$125,000 in costs and expenses.
|
|
|
|
In the event we seek stockholder approval for our dissolution
and plan of distribution and do not obtain such approval, we
will nonetheless continue to pursue stockholder approval for our
dissolution. Pursuant to the terms of our amended and restated
certificate of incorporation, it is intended that our powers
following the expiration of the permitted time periods for
consummating a business combination will automatically
thereafter be limited to acts and activities relating to
dissolving and winding up our affairs, including liquidation. If
no proxy statement seeking the approval of our stockholders for
a business combination has been filed 60 days prior to the
date which is 30 months from the consummation of this
offering (or 60 days prior to the date which is
36 months from the consummation of this offering if a
letter of intent, agreement in principle or definitive agreement
has been executed within 30 months after consummation of
this offering and the business combination has not yet been
consummated within such 30-month period), our board will, prior
to such date, convene, adopt and recommend to our stockholders
our dissolution and plan of distribution, and on such date file
a proxy statement with the SEC seeking stockholder approval for
such plan. Pursuant to the trust agreement governing such funds,
the funds held in our trust account may not be distributed
except upon our dissolution and, unless and until such approval
is obtained from
|
23
|
|
|
|
|
our stockholders, the funds held in our trust account will not
be released (other than in connection with the funding of
working capital, a redemption or a business combination as
described elsewhere in this prospectus). Consequently, holders
of a majority of our outstanding stock must approve our
dissolution and plan of distribution in order to receive the
funds held in our trust account and, other than in connection
with a redemption or a business combination, the funds will not
be available for any other corporate purpose.
|
|
Audit committee to monitor compliance:
|
|
We will establish and maintain an audit committee to, among
other things, monitor compliance on a quarterly basis with the
terms described above and the other terms relating to this
offering. If any noncompliance is identified, then the audit
committee will be charged with the responsibility to immediately
take all action necessary to rectify such noncompliance or
otherwise cause compliance with the terms of this offering.
|
|
Determination of offering amount:
|
|
We determined the size of this offering based on our estimate of
the capital required to facilitate our combination with one or
more viable target businesses with sufficient scale to operate
as a stand-alone public entity. We believe that raising the
amount described in this offering will offer us a broad range of
potential target businesses possessing some or all of the
characteristics we believe are important in evaluating target
businesses. In determining the size of this offering, our
officers and directors concluded, based on their collective
experience, that an offering of this size, together with the
proceeds of the sponsors warrants, would provide us with
sufficient equity capital to execute our business plan of
pursuing an acquisition of one or more target businesses with
valuations between approximately $1.0 billion and
$4.0 billion. We believe that this amount of equity capital
can be raised in a single offering and, together with our
ability to finance an acquisition using equity or debt in
addition to the cash held in the trust account, will give us
substantial flexibility in selecting such an acquisition of one
or more target businesses and structuring our initial business
combination. This belief is not based on any research, analysis,
evaluations, discussions, or compilations of information with
respect to any particular investment or any such action
undertaken in connection with our organization. We cannot assure
you that our belief is correct, that we will be able to
successfully identify acquisition candidates, that we will be
able to obtain any necessary financing or that we will be able
to consummate a transaction with one or more target businesses
whose fair market value, collectively, is equal to at least 80%
of the sum of the balance in the trust account (excluding
deferred underwriting discounts and commissions of
$23.85 million or $27.43 million if the
underwriters over-allotment option is exercised in full)
at the time of the initial business combination plus the
proceeds of the co-investment.
|
24
Risks
We are a newly formed company that has conducted no operations
and has generated no revenues. Until we complete a business
combination, we will have no operations and will generate no
operating revenues. In making your decision on whether to invest
in our securities, you should take into account not only the
background of our officers, our directors and the employees of
Berggruen Holdings Ltd made available to us, but also the
special risks we face as a blank check company including
reliance on Mr. Berggruens ability to choose an
appropriate target business and either conduct due diligence or
monitor due diligence conducted by others, conflicts of interest
of Messrs. Berggruen and Franklin, and the control of our
company exercised by Messrs. Berggruen and Franklin by
virtue of their direct and indirect equity interests. In
addition, you will experience immediate and substantial dilution
from the purchase of our common stock. This offering is not
being conducted in compliance with Rule 419 promulgated
under the Securities Act. Accordingly, you will not be entitled
to protections normally afforded to investors in Rule 419
blank check offerings. You should carefully consider these and
the other risks set forth in the section entitled Risk
Factors beginning on page 27 of this prospectus.
25
The following table summarizes the relevant financial data for
our business and should be read with our financial statements,
which are included in this prospectus. We have not had any
significant operations to date, so only balance sheet data is
presented.
|
|
|
|
|
|
|
|
|
|
|
August 9, 2007
|
|
Balance Sheet Data:
|
|
Actual
|
|
|
As Adjusted
|
|
|
Working capital (deficiency)
|
|
$
|
(294,743
|
)
|
|
$
|
861,825,257
|
|
Total assets
|
|
|
595,507
|
|
|
|
885,675,257
|
|
Total liabilities
|
|
|
570,250
|
|
|
|
23,850,000
|
|
Value of common stock which may be redeemed for cash
(approximately $9.84 per share)
|
|
|
|
|
|
|
265,576,445
|
|
Stockholders equity
|
|
|
25,257
|
|
|
|
596,248,812
|
|
The as adjusted information gives effect to the sale
of the units we are offering including the application of the
related gross proceeds, the receipt of $12.0 million from
the sale of the sponsors warrants and the payment of the
estimated remaining expenses of this offering. The as
adjusted working capital and as adjusted total
assets include $23.85 million being held in the trust
account representing deferred underwriting discounts and
commissions.
The as adjusted working capital and total assets
amounts include approximately $885.6 million to be held in
the trust account, which will be distributed on consummation of
our initial business combination (i) to any public
stockholders who exercise their redemption rights, (ii) to
the underwriters in the amount of $23.85 million in payment
of their deferred underwriting discounts and commissions and
(iii) to us in the amount remaining in the trust account
following the payment to any public stockholders who exercise
their redemption rights and payment of deferred discounts and
commissions to the underwriters. All such proceeds will be
distributed from the trust account only upon the consummation of
a business combination within the time period described in this
prospectus. If a business combination is not so consummated, we
will dissolve and the proceeds held in the trust account,
including the deferred underwriting discounts and commission and
all interest thereon, net of income taxes on such interest and
net of interest income earned on the trust account balance of up
to 1% of the gross proceeds of this offering ($9.0 million,
or $10.35 million if the underwriters over-allotment
option is exercised in full) previously released to us to fund
our working capital requirements, will be distributed to our
public stockholders as part of a plan of distribution.
We will not consummate a business combination if public
stockholders owning 30% or more of the shares sold in this
offering vote against the business combination and exercise
their redemption rights. Accordingly, we may effect a business
combination if public stockholders owning in the aggregate one
share less than 30% of the 90,000,000 shares sold in this
offering exercise their redemption rights. If this occurred, we
would be required to redeem for cash up to 30% of the shares of
common stock sold in this offering less one share, or
26,999,999 shares of common stock (31,049,999 if the
underwriters exercise their over-allotment option in full) at an
initial per-share redemption price of approximately $9.84 for
approximately $265,576,445 in the aggregate (approximately
$304,909,080 in the aggregate if the underwriters exercise their
over-allotment option in full). The actual per-share redemption
price will be equal to the aggregate amount then on deposit in
the trust account, before payment of deferred underwriting
discounts and commissions and including accrued interest, net of
income taxes on such interest and net of interest income on the
trust account balance previously released to us as described
above, as of two business days prior to the proposed
consummation of the business combination, divided by the number
of shares of common stock included in the units sold in this
offering. We intend to structure and consummate any potential
business combination in a manner such that if public
stockholders holding up to 30% of our shares issued in this
offering vote against our initial business combination and cause
us to redeem their shares of common stock for a
pro rata
share of the aggregate amount then on deposit in the trust
account, the business combination could still be consummated.
26
An investment in our securities involves a high degree of
risk. You should consider carefully all of the material risks
described below, together with the other information contained
in this prospectus before making a decision to invest in our
units. If any of the following events occur, our business,
financial condition and operating results may be materially and
adversely affected. In that event, the trading price of our
securities could decline, and you could lose all or part of your
investment.
We are
a newly formed, development stage company with no operating
history and no revenues, and you have no basis on which to
evaluate our ability to achieve our business
objective.
We are a recently formed development stage company with no
operating results, and we will not commence operations until
obtaining funding through this offering. Because we lack an
operating history, you have no basis on which to evaluate our
ability to achieve our business objective of completing a
business combination with one or more target businesses. We have
no plans, arrangements or understandings with any prospective
target businesses concerning a business combination and may be
unable to complete a business combination. We will not generate
any revenues from operations until after completing a business
combination. If we expend all of the $100,000 in proceeds from
this offering not held in trust and interest income earned on
the balance of the trust account of up to 1% of the gross
proceeds of this offering ($9.0 million, or
$10.35 million if the underwriters over-allotment
option is exercised in full) that may be released to us to fund
our working capital requirements in seeking a business
combination but fail to complete such a combination, we will
never generate any operating revenues.
We may
not be able to consummate a business combination within the
required time frame, in which case, we would dissolve and
liquidate our assets.
Pursuant to our amended and restated certificate of
incorporation, among other things, we must complete a business
combination with a fair market value of at least 80% of the sum
of the balance of the trust account at the time of the business
combination (excluding deferred underwriting discounts and
commissions of $23.85 million, or $27.43 million if
the underwriters over-allotment option is exercised in
full), plus the proceeds of the co-investment within
30 months after the consummation of this offering (or
within 36 months after the consummation of this offering if
a letter of intent, agreement in principle or a definitive
agreement has been executed within 30 months after the
consummation of this offering and the business combination
relating thereto has not yet been consummated within such
30-month
period). If we fail to consummate a business combination within
the required time frame, we will, in accordance with our amended
and restated certificate of incorporation dissolve, liquidate
and wind up. The foregoing requirements are set forth in
Article FIFTH of our amended and restated certificate of
incorporation and may not be eliminated without the vote of our
board and the vote of at least 80% of the voting power of our
outstanding voting stock. We may not be able to find suitable
target businesses within the required time frame. In addition,
our negotiating position and our ability to conduct adequate due
diligence on any potential target may be reduced as we approach
the deadline for the consummation of a business combination. We
do not have any specific business combination under
consideration, and neither we, nor any representative acting on
our behalf (including our founders), has had any contacts with
any target businesses regarding a business combination, nor
taken any direct or indirect actions to locate or search for a
target business prior to, in anticipation of or subsequent to
our incorporation.
If we
dissolve and liquidate before consummating a business
combination, our public stockholders will receive less than
$10.00 per share on distribution of trust account funds and our
warrants will expire worthless.
If we are unable to complete a business combination and must
dissolve and liquidate our assets, the per-share liquidating
distribution will be less than $10.00 because of the expenses of
this offering, our general and administrative expenses and the
planned costs of seeking a business combination. We expect these
costs and expenses to include approximately $4,100,000 for
expenses for the due diligence and investigation of a target
business or businesses; approximately $4,100,000 for legal,
accounting and other
27
expenses associated with structuring, negotiating and
documenting an initial business combination; an aggregate of up
to $360,000 for office space, administrative services and
secretarial support payable to Berggruen Holdings, Inc., an
affiliate of Mr. Berggruen, representing $10,000 per month
for up to 36 months beginning upon consummation of this
offering; $125,000 as a reserve for liquidation expenses;
$125,000 for legal and accounting fees relating to our SEC
reporting obligations; and approximately $290,000 for general
working capital that will be used for miscellaneous expenses and
reserves. If we were unable to conclude an initial business
combination and expended all of the net proceeds of this
offering, other than the proceeds deposited in the trust
account, and without taking into account interest, if any,
earned on the trust account, net of income taxes payable on such
interest and net of interest income earned on the trust account
balance of up to 1% of the gross proceeds of this offering
($9.0 million, or $10.35 million if the
underwriters over-allotment option is exercised in full)
previously released to us to fund working capital requirements,
the initial per-share liquidation price would be $9.84, or $0.16
less than the
per-unit
offering price of $10.00. Furthermore, our outstanding warrants
are not entitled to participate in a liquidating distribution
and the warrants will therefore expire worthless if we dissolve
and liquidate before completing a business combination.
You
will not receive protections normally afforded to investors in
blank check companies.
Since the net proceeds of this offering are designated for
completing a business combination with a target business that
has not been identified, we may be deemed a blank
check company under the United States securities
laws. However, because on consummation of this offering we will
have net tangible assets in excess of $5.0 million and will
at that time file a Current Report on
Form 8-K
with the SEC that includes an audited balance sheet
demonstrating this fact, we are exempt from SEC rules such as
Rule 419 that are designed to protect investors in blank
check companies. Accordingly, investors in this offering will
not receive the benefits or protections of that rule. Among
other things, this means our units will be immediately tradable
and we will have a longer period of time to complete a business
combination than do companies subject to Rule 419.
We
have one year longer than most other blank check companies to
effect a business combination.
The period of time we have to complete a business combination is
longer than blank check companies subject to Rule 419,
which have 18 months to complete a business combination, or
other special purpose acquisition companies, which typically
have 18 or 24 months to complete a business combination.
This is because of the relatively large size of this offering
and our belief that fewer target businesses fit within our
stated acquisition criteria and that the process of searching
for, negotiating and consummating a business combination may
take us longer than it would for a smaller business combination.
As a result, if we do complete a business combination, it may
take longer than it would for other blank check companies, and
if we do not complete a business combination, the proceeds of
this offering will remain in trust for a longer period of time
before they are released to you.
If
third parties bring claims against us, the proceeds held in
trust may be reduced and the per share liquidation price
received by you will be less than $9.84 per share.
Our placing of funds in trust may not protect those funds from
third party claims against us. Although we will seek to have all
vendors (such as accountants, lawyers and investment bankers)
that we engage after the consummation of this offering,
prospective target businesses or other entities we engage
execute agreements with us waiving any right, title, interest or
claim of any kind in or to any monies held in the trust account,
there is no guarantee that they will execute such agreements, or
if executed, that this will prevent potential contracted parties
from making claims against the trust account. Nor is there any
guarantee that such entities will agree to waive any claims they
may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with us and will not seek
recourse against the trust account for any reason. Accordingly,
the proceeds held in trust may be subject to claims which would
take priority over the claims of our public stockholders and, as
a result, the per-share liquidation price could be less than
$9.84 due to such claims. If we are unable to complete a
business combination and are forced to
28
dissolve and liquidate, each of Mr. Berggruen and
Mr. Franklin have agreed to personally indemnify us for any
and all loss, liability, claim, damage and expense which we may
become subject to as a result of a claim by any vendor,
prospective target business or other entity that is owed money
by us for services rendered or products sold but only to the
extent necessary to ensure that such loss, liability, claim,
damage or expense does not reduce the amount of funds held in
the trust account. Based on representations made to us by
Mr. Berggruen and Mr. Franklin, we believe that they
are each of substantial means and capable of funding their
indemnity obligations, even though we have not asked them to
reserve funds for such an eventuality. Our audit committee will
not be periodically reviewing any evidence that such individuals
have sufficient net liquid assets to indemnify us. However, we
cannot assure you that Mr. Berggruen or Mr. Franklin
will be able to satisfy those obligations. Accordingly, the
proceeds held in the trust account could be subject to claims
which could take priority over those of our public stockholders
and, as a result, the per-share liquidation amount would be less
than $9.84 due to such claims.
Additionally, if we are forced to file a bankruptcy case or an
involuntary bankruptcy case is filed against us which is not
dismissed, the funds held in our trust account will be subject
to applicable bankruptcy law, and may be included in our
bankruptcy estate and subject to claims of third parties with
priority over the claims of our public stockholders. To the
extent bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return to our public stockholders
the liquidation amounts due them.
Our
stockholders may be held liable for claims by third parties
against us to the extent of distributions received by
them.
We will dissolve and liquidate if we do not complete a business
combination within 30 months after the consummation of this
offering (or within 36 months after the consummation of
this offering if a letter of intent, agreement in principle or a
definitive agreement has been executed within 30 months
after the consummation of this offering and the business
combination relating thereto has not yet been consummated within
such
30-month
period). Under the Delaware General Corporation Law,
stockholders may be held liable for claims by third parties
against a corporation to the extent of certain unlawful
distributions received by them in a dissolution conducted in
accordance with the Delaware General Corporation Law. We do not
intend to comply with the procedures set forth in
Section 280 of the Delaware General Corporation Law, which
prescribes various procedures by which stockholder liability may
be limited. Because we will not be complying with
Section 280, we will seek stockholder approval to comply
with Section 281(b) of the Delaware General Corporation
Law, requiring us to adopt a plan of dissolution that will
reasonably provide for our payment, based on facts known to us
at such time, of (i) all existing claims, including those
that are contingent, (ii) all pending proceedings to which
we are a party and (iii) all claims that may be potentially
brought against us within the subsequent 10 years. However,
because we are a blank check company, rather than an operating
company, and our operations will be limited to searching for
prospective target businesses to acquire, the only likely claims
to arise would be from our vendors that we engage after the
consummation of this offering and potential target businesses.
We intend to have all vendors that we engage after the
consummation of this offering and prospective target businesses
execute agreements with us waiving any right, title, interest or
claim of any kind in or to any monies held in the trust account,
although we have not received any such agreements to date. If
our plan of distribution complies with Section 281(b) of
the Delaware General Corporation Law, any liability of
stockholders with respect to a liquidating distribution is
limited to the lesser of such stockholders
pro rata
share of the claim or the amount distributed to the
stockholder. A plan of distribution in compliance with
Section 281(b) of the Delaware General Corporation Law does
not bar stockholder liability for claims not brought in a
proceeding before the third anniversary of the dissolution (or
such longer period directed by the Delaware Court of Chancery).
Accordingly, we cannot assure you that third parties will not
seek to recover from our public stockholders amounts owed to
them by us even after that date.
29
We
will dissolve and liquidate if we do not consummate a business
combination, in which case our public stockholders will receive
less than $10.00 per share on distribution.
Pursuant to our amended and restated certificate of
incorporation, among other things, we must complete a business
combination within 30 months after the consummation of this
offering (or within 36 months after the consummation of
this offering if a letter of intent, agreement in principle or a
definitive agreement has been executed within 30 months
after the consummation of this offering and the business
combination relating thereto has not yet been consummated within
such
30-month
period). If we do not comply with this requirement, we will
dissolve. The foregoing requirements are set forth in
Article FIFTH of our amended and restated certificate of
incorporation and may not be eliminated without the vote of our
board and the vote of at least 80% of the voting power of our
outstanding voting stock. Upon dissolution and pursuant to the
trust agreement, we will distribute to all of our public
stockholders, in proportion to their respective equity interest,
an aggregate sum equal to the amount in the trust account (net
of taxes payable and that portion of the interest earned
previously released to us). Each of our founders has waived
their rights to participate in any liquidating distribution with
respect to its founders common stock and has agreed to
vote in favor of any dissolution and plan of distribution which
we will present to our stockholders for vote. There will be no
distribution from the trust account with respect to our warrants
which will expire worthless. We will pay the costs of our
dissolution and liquidation of the trust account from our
remaining assets outside of the trust fund, and we estimate such
costs to be between $75,000 and $125,000, if not done in
connection with a stockholder vote with respect to a potential
business combination. Upon notice from us, the trustee of the
trust account will liquidate the investments constituting the
trust account and will turn over the proceeds to our transfer
agent for distribution to our public stockholders as part of our
stockholder-approved dissolution and plan of distribution.
Concurrently, we shall pay, or reserve for payment, from
interest released to us from the trust account if available, our
liabilities and obligations, although we cannot give you
assurances that there will be sufficient funds for such purpose.
The amounts held in the trust account may be subject to claims
by third parties, such as vendors, prospective target businesses
or other entities, if we do not obtain waivers in advance from
such third parties prior to such parties providing us with
services or entering into arrangements with them. We have not
received any waiver agreements at this time and we cannot assure
you that such waivers will be obtained or will be enforceable by
operation of law.
If we
do not consummate a business combination and dissolve, payments
from the trust account to our public stockholders may be
delayed.
We currently believe that any dissolution and plan of
distribution in connection with to the expiration of the 30 and
36 month deadlines would proceed in approximately the
following manner:
|
|
|
|
|
prior to such deadline, our board of directors will, consistent
with its obligations described in our amended and restated
certificate of incorporation and Delaware law, consider a
resolution for us to dissolve and consider a plan of
distribution which it may then vote to recommend to our
stockholders; at such time it will also cause to be prepared a
preliminary proxy statement setting out such plan of
distribution as well as the boards recommendation of such
plan;
|
|
|
|
upon such deadline, we would file our preliminary proxy
statement with the SEC;
|
|
|
|
if the SEC does not review the preliminary proxy statement,
then, 10 days following the passing of such deadline, we
will mail the proxy statements to our stockholders, and
30 days following the passing of such deadline we will
convene a meeting of our stockholders, at which they will either
approve or reject our dissolution and plan of
distribution; and
|
|
|
|
if the SEC does review the preliminary proxy statement, we
currently estimate that we will receive their comments
30 days following the passing of such deadline. We will
mail the proxy statements to our stockholders following the
conclusion of the comment and review process (the length of
which we cannot predict with any certainty, and which may be
substantial) and we will convene a meeting of our stockholders
at which they will either approve or reject our dissolution and
plan of distribution.
|
30
In the event we seek stockholder approval for our dissolution
and plan of distribution and do not obtain such approval, we
will nonetheless continue to pursue stockholder approval for our
dissolution. Pursuant to the terms of our amended and restated
certificate of incorporation, it is intended that our powers
following the expiration of the permitted time periods for
consummating a business combination will automatically
thereafter be limited to acts and activities relating to
dissolving and winding up our affairs, including liquidation.
Pursuant to the trust agreement governing such funds, the funds
held in our trust account may not be distributed except upon our
dissolution and, unless and until such approval is obtained from
our stockholders, the funds held in our trust account will not
be released (other than in connection with the funding of
working capital, a redemption or a business combination as
described elsewhere in this prospectus). Consequently, holders
of a majority of our outstanding stock must approve our
dissolution in order to receive the funds held in our trust
account and the funds will not be available for any other
corporate purpose.
These procedures, or a vote to reject any dissolution and plan
of distribution by our stockholders, may result in substantial
delays in the liquidation of our trust account to our public
stockholders as part of our plan of distribution.
Since
we have not yet selected a particular industry or any target
business with which to complete a business combination, you will
be unable to currently ascertain the merits or risks of the
industry or business in which we may ultimately
operate.
We intend to consummate a business combination with a company
with principal business operations in North America in any
industry we choose that we believe will provide significant
opportunities for growth and we are not limited to any
particular industry or type of business. We have restricted our
geographic focus because our sponsors or their affiliates have
formed, and may form in the future, other special purpose
acquisition companies that are targeting investments, and that
may be offered or listed, outside of the United States or North
America. Accordingly, we will likely always be prohibited from
consummating a business combination with a target business whose
principal business operations are outside of North America
unless such opportunity was first presented to each such other
entity and each such entity chose not to pursue such
opportunity. If such special purpose acquisition companies are
no longer searching for target businesses or they determine for
any reason not to pursue a specific opportunity while we are
still seeking a target business, we may expand our focus
geography to pursue such target business outside of North
America if we identify an attractive opportunity. In the event
that we pursue a business combination opportunity outside of
North America, our search criteria and guidelines will be the
same as that which we will employ for a business whose principal
business operations are in North America. Accordingly, there is
no current basis for you to evaluate the possible merits or
risks of the particular industry in which we may ultimately
operate or the target business or businesses with which we may
ultimately enter a business combination. Although we will
evaluate the risks inherent in a particular target business, we
cannot assure you that we will properly ascertain or assess all
of the significant risks present in that target business. Even
if we properly assess those risks, some of them may be outside
of our control or ability to affect. We also cannot assure you
that an investment in our units will not ultimately prove to be
less favorable to investors in this offering than a direct
investment, if an opportunity were available, in a target
business.
Your
only opportunity to evaluate and affect the investment decision
regarding a potential business combination will be limited to
voting for or against the business combination submitted to our
stockholders for approval.
You will be relying on Mr. Berggruens ability to
choose a suitable business combination. At the time of your
investment in us, you will not be provided with an opportunity
to evaluate the specific merits or risks of one or more target
businesses. Accordingly, your only opportunity to evaluate and
affect the investment decision regarding a potential business
combination will be limited to voting for or against the
business combination submitted to our stockholders for approval.
In addition, a proposal that you vote against the business
combination could still be approved if a sufficient number of
public stockholders vote for the proposed business combination.
Alternatively, a proposal that you vote for the business
combination
31
could still be rejected if a sufficient number of public
stockholders vote against the proposed business combination.
We may
require stockholders who wish to redeem their shares in
connection with a proposed business combination to comply with
specific requirements for redemption that may make it more
difficult for them to exercise their redemption rights prior to
the deadline for exercising their rights.
We may require public stockholders who wish to exercise their
redemption rights regarding their shares in connection with a
proposed business combination to either tender their
certificates to our transfer agent at any time prior to the vote
taken at the stockholder meeting relating to such business
combination or to deliver their shares to the transfer agent
electronically using the Depository Trust Companys
DWAC (Deposit/Withdrawal At Custodian) System. In order to
obtain a physical stock certificate, a stockholders broker
and/or
clearing broker, DTC and our transfer agent will need to act to
facilitate this request. It is our understanding that
stockholders should generally allot at least two weeks to obtain
physical certificates from the transfer agent. However, because
we do not have any control over this process or over the brokers
or DTC, it may take significantly longer than two weeks to
obtain a physical stock certificate. While we have been advised
that it takes a short time to deliver shares through the DWAC
System, we cannot assure you of this fact. Accordingly, if it
takes longer than we anticipate for stockholders to deliver
their shares, stockholders who wish to exercise their redemption
rights may be unable to meet the deadline for exercising their
redemption rights and thus may be unable to redeem their shares.
We
will proceed with a business combination even if public
stockholders owning in the aggregate one share less than 30% of
the shares sold in this offering exercise their redemption
rights.
We will proceed with a business combination only if public
stockholders owning at most an aggregate of one share less than
30% of the shares sold in this offering exercise their
redemption rights. Accordingly, the public stockholders owning
in the aggregate one share less than 30% of the shares sold in
this offering may exercise their redemption rights and we could
still consummate a proposed business combination. We have
increased the redemption percentage (from the 20% that is
customary in similar offerings to 30%) in order to reduce the
likelihood that a small group of investors holding a block of
our stock will be able to stop us from completing a business
combination that may otherwise be approved by a large majority
of our public stockholders. As a result of this change, it may
be easier for us to complete a business combination even in the
face of a strong stockholder dissent, thereby negating some of
the protections of having a lower redemption threshold to public
stockholders. Furthermore, the ability to consummate a
transaction despite stockholder disapproval in excess of what
would be permissible in a traditional blank check offering may
be viewed negatively by potential investors seeking stockholder
protections consistent with traditional blank check offerings.
Our business combination may require us to use substantially all
of our cash to pay the purchase price. In such a case, because
we will not know how many stockholders may exercise their
redemption rights, we may need to arrange third party financing
to help fund our business combination in case a larger
percentage of stockholders exercise their redemption rights than
we expect. Additionally, even if our business combination does
not require us to use substantially all of our cash to pay the
purchase price, if a significant number of stockholders exercise
their redemption rights, we will have less cash available to use
in furthering our business plans following a business
combination and may need to arrange third party financing. We
have not taken any steps to secure third party financing for
either situation, and we cannot assure you that we would be able
to obtain such financing on terms favorable to us or at all.
We
will not be required to obtain a fairness opinion from an
independent investment banking firm as to the fair market value
of the target business unless the Board of Directors is unable
to independently determine the fair market value.
The fair market value of a target business or businesses will be
determined by our board of directors based upon standards
generally accepted by the financial community, such as actual
and potential sales, the values of comparable businesses,
earnings and cash flow, and book value. If our board is not able
to independently determine that the target business has a
sufficient fair market value to meet the threshold criterion, we
will obtain an opinion from an unaffiliated, independent
investment banking firm which is a
32
member of the Financial Industry Regulatory Authority, or FINRA,
formerly known as the National Association of Securities
Dealers, Inc., with respect to the satisfaction of such
criterion. In all other instances, we will have no obligation to
obtain or provide you with a fairness opinion. If we were to
obtain an opinion, we do not anticipate that stockholders would
be entitled to rely on such opinion, nor would we take this into
consideration when deciding which investment banking firm to
hire. The lack of a fairness opinion may increase the risk that
a proposed business target may be improperly valued by the board
of directors.
If we
issue capital stock or redeemable debt securities to complete a
business combination, your equity interest in us could be
reduced or there may be a change in control of our
company.
Our amended and restated certificate of incorporation authorizes
the issuance of up to 200,000,000 shares of common stock,
par value $0.0001 per share, and 1,000,000 shares of
preferred stock, par value $0.0001 per share. Immediately after
this offering (assuming no exercise of the underwriters
over-allotment option and thus the cancellation of the escrowed
founders units, and not including the co-investment or the
sponsors warrants), there will be 31,250,000 authorized
but unissued shares of our common stock available for issuance
(after appropriate reservation for the issuance of shares upon
full exercise of our outstanding warrants, including the
founders warrants and sponsors warrants) and all of
the 1,000,000 shares of preferred stock available for
issuance. If the underwriters over-allotment option is
exercised in full (not including the co-investment), there will
not be any authorized but unissued shares of our common stock
available for issuance (after appropriate reservation for the
issuance of shares upon full exercise of our outstanding
warrants, including the founders warrants and
sponsors warrants) and all of the 1,000,000 shares of
preferred stock available for issuance. We may, with the
approval of our stockholders, issue a substantial number of
additional shares of our common stock or may issue preferred
stock, or a combination of both, including through redeemable
debt securities, to complete a business combination,
particularly as we intend to focus primarily on acquisitions of
mid-cap companies with valuations between approximately
$1.0 billion and $4.0 billion. Our issuance of
additional shares of common stock or any preferred stock:
|
|
|
|
|
may significantly reduce your equity interest in us;
|
|
|
|
may cause a change in control if a substantial number of our
shares of common stock are issued, which may among other things
limit our ability to use any net operating loss carry forwards
we have, result in the resignation of Mr. Berggruen and our
other officer and directors and cause our public stockholders to
become minority stockholders of the combined entity;
|
|
|
|
may, in certain circumstances, have the effect of delaying or
preventing a change in control of us; and
|
|
|
|
may adversely affect the then-prevailing market price for our
common stock.
|
The value of your investment in us may decline if any of these
events occur.
If we
acquire a company by issuing debt securities, our
post-combination operating results may decline due to increased
interest expense or our liquidity may be adversely affected by
an acceleration of our indebtedness.
We may elect to enter into a business combination that requires
us to issue debt securities as part of the purchase price for a
target business, particularly as we intend to focus primarily on
acquisitions of mid-cap companies with valuations between
approximately $1.0 billion and $4.0 billion. If we
issue debt securities, such issuances may result in:
|
|
|
|
|
default and foreclosure on our assets if our operating cash flow
after a business combination were insufficient to pay our debt
obligations;
|
33
|
|
|
|
|
acceleration, even if we are then current in our debt service
obligations, if the debt securities have covenants that require
us to meet certain financial ratios or maintain designated
reserves, and any such covenants are breached without a waiver
or renegotiation;
|
|
|
|
a required immediate payment of all principal and accrued
interest, if any, if the debt security was payable on
demand; and
|
|
|
|
our inability to obtain additional financing, if necessary, if
the debt securities contain covenants restricting our ability to
obtain additional financing.
|
Our
officers and directors may negotiate employment or consulting
agreements with a target business in connection with a
particular business combination. These agreements may provide
for them to receive compensation following a business
combination and as a result, may cause them to have conflicts of
interest in determining whether a particular business
combination is the most advantageous.
Our officers and directors may be able to remain with the
company after the consummation of a business combination only if
they are able to negotiate employment or consulting agreements
in connection with the business combination or be asked to
continue to serve on the board of directors of the combined
entity. Such negotiations would take place simultaneously with
the negotiation of the business combination and could provide
for such individuals to receive compensation in the form of cash
payments
and/or
our
securities for services they would render to the company after
the consummation of the business combination. The personal and
financial interests of such individuals may influence their
motivation in identifying and selecting a target business.
However, we believe the ability of such individuals to remain
with the company after the consummation of a business
combination will not be the determining factor in our decision
as to whether or not we will proceed with any potential business
combination, and such individuals have executed letter
agreements with us, which affirmatively provide that they will
not take into consideration the retention of their position in
determining which acquisition to pursue. We cannot assure you
that any of our officers and directors will remain in senior
management or advisory positions with the combined company after
the consummation of a business combination. The determination as
to whether any of our officers and directors will remain with
the combined company will be made at or prior to the time of our
initial business combination and fully disclosed in the required
proxy materials sent to our stockholders.
Our
sponsors, Berggruen Holdings and Marlin Equities, currently
control us and may influence certain actions requiring a
stockholder vote.
Our sponsors, Berggruen Holdings and Marlin Equities, have
agreed to act together for the purpose of acquiring, holding,
voting or disposing of our shares and will be deemed to be a
group for reporting purposes under the Exchange Act.
Assuming neither of our sponsors purchases units in this
offering or in the open market, our sponsors will beneficially
own, in the aggregate, 19.8% of our issued and outstanding
shares of common stock when this offering is completed (23.8% in
the aggregate, upon consummation of the co-investment).
Mr. Berggruen and Mr. Franklin will each be deemed to
beneficially own 9.9% of the then issued and outstanding shares
of our common stock (11.9% upon consummation of the
co-investment). All of the shares our common stock that they
will be deemed to beneficially own and control will be owned
indirectly through their respective affiliates. Other than as
described in this prospectus, neither of our sponsors has
indicated to us that they intend to purchase units in this
offering. Our sponsors have agreed that any common stock they
acquire in or after this offering will be voted in favor of a
business combination that is presented to our public
stockholders. Accordingly, shares of common stock acquired by
our sponsors in or after this offering will not have the same
voting or redemption rights as our public stockholders with
respect to a potential business combination, and our sponsors
will not be eligible to exercise redemption rights for those
shares if a business combination is approved by a majority of
our public stockholders.
Because our sponsors will hold warrants to purchase
23,106,000 shares of our common stock (assuming the
underwriters over-allotment option is not exercised, or
24,771,900 shares if the option is exercised in full)
immediately prior to our consummation of a business combination
(warrants to purchase 26,106,000 shares of our common stock
including the co-investment warrants assuming the
underwriters
34
over-allotment option is not exercised, or
27,771,900 shares if the option is exercised in full), the
exercise of those warrants may increase their ownership in us.
This increase could allow our sponsors to influence the outcome
of matters requiring stockholder approval, including the
election of directors and approval of significant corporate
transactions after consummation of our initial business
combination. In addition, neither our sponsors nor their
affiliates are prohibited from purchasing units in this offering
or our units or common stock in the aftermarket. If they do so,
our sponsors will have a greater influence on the vote taken in
connection with a business combination.
Our
founders may purchase additional units or shares of our common
stock in or after this offering and thus may exert additional
influence on certain actions requiring a stockholder
vote.
None of our founders or their affiliates has advised us of any
intention to purchase additional units or shares of common stock
either in this offering or thereafter in the open market.
However, they are not prohibited from making any such purchases.
Because our founders have agreed to vote any shares so acquired
in favor of any business combination presented to the public
stockholders, they may have increased influence upon such a
vote, which may enable us to consummate an initial business
combination that would not have been approved but for the
additional purchases.
Our founders have advised us that they have not established any
specific criteria that would trigger purchases of our securities
in the aftermarket. They have also advised us that they would
most likely consider a variety of factors, including the current
trading price of our common stock and whether they believed that
such securities were undervalued and represented a good
investment, as well as the fact that any such additional
purchases would likely increase the chances that our initial
business combination would be approved.
Messrs. Berggruen
and Franklin and our other officer and directors are or may in
the future become affiliated with entities engaged in business
activities similar to those intended to be conducted by us, and
may have conflicts of interest in allocating their time and
business opportunities.
Messrs. Berggruen and Franklin and our other officer and
directors are or may in the future become affiliated with
entities, including Liberty International Acquisition Company
and other blank check companies, engaged in business
activities similar to those intended to be conducted by us.
Messrs. Berggruen and Franklin are directors of Liberty
International Acquisition Company and Mr. Hauslein is a
director in Atlas Acquisition Corp. Mr. Franklin previously
served as a director of another blank check company, Marathon
Acquisition Corp., but resigned as a director of that company
prior to the effectiveness of its registration statement in
connection with his discussions to serve as a principal and
director of Freedom. We can not assure you that
Mr. Berggruen, Mr. Franklin, Mr. Hauslein or our
other officer and directors will not become involved in one or
more other business opportunities that would present conflicts
of interest in the time they allocate to us. None of
Mr. Berggruen, our other officer or our directors are
obligated to spend any specified amount of time on our affairs.
Although Mr. Berggruen is the president of Berggruen
Holdings Ltd, Mr. Berggruen is not on the board of
directors nor is he an officer of any of the portfolio companies
of Berggruen Holdings Ltd and therefore does not owe any direct
fiduciary duties to such portfolio companies. In addition,
during the period while we are pursuing the acquisition of a
target business, subject to the exceptions described below,
Mr. Berggruen has agreed to present business combination
opportunities that fit within our criteria and guidelines to us.
However, we recognize that Mr. Berggruen may be deemed an
affiliate of Berggruen Holdings Ltds portfolio companies
and that a conflict of interest could arise if an opportunity is
an appropriate fit for one of such companies. Berggruen Holdings
Ltds portfolio companies presently include a print
finishing company, a media storage company, a financial services
company, a wood treatment company, an enterprise software
business and an aerospace parts supplier. Berggruen Holdings Ltd
may at any time, or from time to time, acquire additional
portfolio companies or dispose of existing portfolio companies.
Any such newly acquired portfolio company would be covered by
this obligation. Freedom was not, and GLG Partners is not, a
portfolio company of Berggruen Holdings Ltd. Although we believe
that we
35
have put appropriate procedures in place to eliminate such
conflicts for Mr. Berggruen, we cannot assure you that a
conflict of interest wont arise if an opportunity is an
appropriate fit for one of such companies.
Each of Mr. Berggruen and Mr. Franklin is a director
of GLG Partners, Inc. GLG Partners was previously a blank check
company formed by our sponsors in June 2006 which consummated
its initial business combination on November 2, 2007. GLG
Partners operates in the alternative asset management sector.
Although we do not have an industry focus, we may compete with
GLG Partners for acquisition opportunities in the alternative
asset management sector. We have entered into an agreement with
each of Messrs. Berggruen and Franklin whereby we have
acknowledged that we will not interfere with their obligations
to GLG Partners. Additionally, in order to avoid the potential
for a conflict of interest, Messrs. Berggruen and Franklin
have committed to GLG Partners that each of them will first
review any potential target company identified by him to
determine whether such company fits within GLG Partners
acquisition criteria. If either Messrs. Berggruen or
Franklin determine that a target company does fit within the
acquisition criteria of GLG Partners, he will first present such
potential target to GLG Partners. Neither Messrs. Berggruen
nor Franklin will present the potential business combination
opportunity to us or our board unless GLG Partners confirms that
it is not interested in pursuing a business combination with
such company. Accordingly, all potential business combination
opportunities with target companies in the alternative asset
management sector that are identified by Messrs. Berggruen
or Franklin will be required to be presented first to GLG
Partners before they can be presented to us. This procedure will
make it unlikely that we will acquire a target company in the
alternative asset management sector.
Mr. Berggruen is an officer and director of Liberty
International and Mr. Franklin is a director of Liberty
International. We may compete with Liberty International for
acquisition opportunities. In order to avoid the potential for a
conflict of interest, Messrs. Berggruen and Franklin have
committed to us and to Liberty International that each will
first review any potential target company identified by them to
determine whether such company fits within our or Liberty
Internationals acquisition criteria. If
Messrs. Berggruen and Franklin determine that a target
company fits within our acquisition criteria, they will first
present such potential target to us. If Messrs. Berggruen
and Franklin determine that a target company fits within the
acquisition criteria of Liberty International, they will first
present such potential target to Liberty International. Other
than as described above, neither Messrs. Berggruen nor
Franklin will present potential business combination
opportunities with a target business with principal business
operations outside of North America first to us. Accordingly,
all potential business combination opportunities with target
companies with principal business operations outside North
America that are identified by Messrs. Berggruen or
Franklin will be required to be presented first to Liberty
International before they can be presented to us. We do not
believe that the potential conflict of interest with Liberty
International will cause undue difficulty in finding acquisition
opportunities for us.
In addition, although we do not expect our independent directors
to present any business combination opportunities to us, they
may become aware of business opportunities that may be
appropriate for presentation to us. In such instances they may
determine to present these business opportunities to other
entities with which they are or may be affiliated, in addition
to, or instead of, presenting them to us. Due to these existing
or future affiliations, Mr. Berggruen and our other officer
and directors may have fiduciary obligations to present
potential business combination opportunities to those entities
prior to presenting them to us which could cause additional
conflicts of interest.
Neither
Berggruen Holdings nor Berggruen Holdings Ltd is obligated to
provide us with first review of any business opportunities below
$750.0 million and we have agreed not to pursue any
business opportunities that Jarden Corporation might
consider.
We have entered into agreements with Berggruen Holdings,
Berggruen Holdings Ltd and three of its investment professionals
that from the date of this prospectus until the earlier of the
consummation of our initial business combination or our
liquidation, we will have a right of first review that provides
that if Berggruen Holdings, Berggruen Holdings Ltd or one of
such investment professionals, becomes aware of, or involved
with, business combination opportunities with an enterprise
value of $750.0 million or more, such entity or individual
will first offer the business combination opportunity to us and
will only pursue such
36
business opportunity if our board of directors determines that
we will not do so, unless such business combination opportunity
is competitive with one of the portfolio companies of Berggruen
Holdings Ltd, in which case it would first be offered to such
portfolio company. A business combination opportunity will be
considered competitive with a Berggruen Holdings Ltd portfolio
company if the target company is engaged in the design,
development, manufacture, distribution or sale of any products,
or the provision of any services, which are the same as, or
competitive with, the products or services which a Berggruen
Holdings Ltd portfolio company designs, develops, manufactures,
distributes or sells.
In addition, Mr. Franklin is chairman and chief executive
officer of Jarden Corporation. Jardens publicly announced
acquisition criteria is to acquire focused, niche consumer
product companies that demonstrate a combination of attractive
margins, strong cash flow characteristics, category leading
positions and products that generate recurring revenues, with a
particular focus on businesses or brands with product offerings
that provide expansion into related categories that can be
marketed through its existing distribution channels or provide
it with new distribution channels for its existing products. We
have entered into an agreement with Mr. Franklin whereby
(i) we have acknowledged that Mr. Franklin has
committed to Jardens Board of Directors that we generally
do not intend to seek transactions that fit within Jardens
publicly announced acquisition criteria and (ii) we will
not interfere with Mr. Franklins obligations to
Jarden. However, in order to avoid the potential for a conflict
of interest, Mr. Franklin has further committed to Jarden
that he will review any potential target company to determine
whether such company fits within Jardens publicly
announced acquisition criteria. If Mr. Franklin determines
that such company fits within such criteria, Mr. Franklin
will first confirm with an independent committee of
Jardens Board of Directors that Jarden is not interested
in pursuing a potential business combination opportunity with
such company (whether such a transaction was sourced by
Mr. Franklin, Mr. Berggruen, another Berggruen
Holdings Ltd investment professional or any other person). If
the independent committee concludes that Jarden was interested
in that opportunity, we have agreed not to continue with that
transaction. Although we do not believe that the potential
conflict of interest with Jarden will cause undue difficulty in
finding acquisition opportunities for us given the nature of
Jardens acquisition criteria, Jarden may change its
publicly announced acquisition criteria at any time without
notice and additional conflicts of interest may arise. We cannot
assure you that these conflicts will be resolved in our favor.
Resources
could be wasted in researching acquisitions that are not
consummated, which could materially adversely affect subsequent
attempts to locate and acquire or merge with another
business.
It is anticipated that the investigation of each specific target
business and the negotiation, drafting, and execution of
relevant agreements, disclosure documents, and other instruments
will require substantial management time and attention and
substantial costs for accountants, attorneys and others. If a
decision is made not to complete a specific business
combination, the costs incurred up to that point for the
proposed transaction likely would not be recoverable.
Furthermore, even if an agreement is reached relating to a
specific target business, we may fail to consummate the business
combination for any number of reasons including those beyond our
control such as that public stockholders representing 30% or
more of our shares issued in this offering vote against the
business combination and opt to have us redeem their stock for a
pro rata
share of the trust account even if a majority of
our stockholders approve the business combination. Any such
event will result in a loss to us of the related costs incurred
which could materially adversely affect subsequent attempts to
locate and acquire or merge with another business.
Each
of our founders may have a conflict of interest in deciding if a
particular target business is a good candidate for a business
combination.
Each of our founders has agreed to waive its right to receive
distributions with respect to its founders common stock
purchased by it before this offering if we dissolve and
liquidate because we fail to complete a business combination.
Berggruen Holdings and Marlin Equities will purchase an
aggregate of 12,000,000 sponsors warrants immediately
prior to the consummation of this offering, and will also agree
to purchase an aggregate of 6,000,000 co-investment units
immediately prior to our consummation of a business combination.
Each of our founders who are also directors owns 110,400
founders units. The shares of common stock and warrants
owned by our founders will be worthless if we do not consummate
a business
37
combination. Furthermore, the $12.0 million purchase price
of the sponsors warrants will be included in the working
capital that is distributed to our public stockholders in the
event of our dissolution and liquidation. Our directors
and officers desire to avoid rendering their common stock
and warrants worthless may result in a conflict of interest when
they determine whether the terms, conditions and timing of a
particular business combination are appropriate and in our
stockholders best interest.
Unless
we complete a business combination, Mr. Berggruen and our
other officer and directors will not receive reimbursement for
any out-of-pocket expenses they incur if such expenses exceed
the amount not in the trust account. Therefore, they may have a
conflict of interest in determining whether a particular target
business is appropriate for a business combination and in the
public stockholders best interest.
Mr. Berggruen and our other officer and directors will not
receive reimbursement for any out-of-pocket expenses incurred by
them to the extent that such expenses exceed the amount not
required to be retained in the trust account unless the business
combination is consummated. Mr. Berggruen and our other
officer and directors may, as part of any such combination,
negotiate the repayment of some or all of any such expenses. If
the target business owners do not agree to such repayment,
this could cause our management to view such potential business
combination unfavorably, thereby resulting in a conflict of
interest. The financial interest of Mr. Berggruen and our
other officer and directors could influence their motivation in
selecting a target business and thus, there may be a conflict of
interest when determining whether a particular business
combination is in the stockholders best interest. In
addition, the proceeds we receive from the co-investment may be
used to repay the expenses for which Mr. Berggruen and our
other officer and directors may negotiate repayment as part of
our business combination.
We estimate that the amount of funds that will be available to
us for expenses and working capital will be $9.0 million
($10.35 million if the underwriters over-allotment
option is exercised in full), consisting of interest that will
be paid out of the trust account and net offering proceeds not
held in trust. If we do not enter into a definitive business
combination agreement within the 36 months following this
offering, we expect our primary liquidity requirements during
that period to include approximately $4,100,000 for expenses for
the due diligence and investigation of a target business or
businesses; approximately $4,100,000 for legal, accounting and
other expenses associated with structuring, negotiating and
documenting an initial business combination; an aggregate of up
to $360,000 for administrative services and support payable to
Berggruen Holdings, Inc., an affiliate of Mr. Berggruen,
representing $10,000 per month for up to 36 months
beginning upon consummation of this offering; $125,000 as a
reserve for liquidation expenses; $125,000 for legal and
accounting fees relating to our SEC reporting obligations; and
approximately $290,000 for general working capital that will be
used for miscellaneous expenses and reserves.
We
will probably complete only one business combination with the
proceeds of this offering, meaning our operations will depend on
a single business that is likely to operate in a non-diverse
industry or segment of an industry.
The net proceeds from this offering and the offering of the
sponsors warrants will provide us with approximately
$861.7 million (approximately $989.3 million if the
underwriters over-allotment option is exercised in full)
that we may use to complete a business combination
($921.7 million after the consummation of the co-investment
(approximately $1,049.3 million if the underwriters
over-allotment option is exercised in full)). Our initial
business combination must be with a target business or
businesses with a fair market value of at least 80% of the sum
of the balance in the trust account at the time of such business
combination (excluding deferred underwriting discounts and
commissions of $23.85 million or $27.43 million if the
underwriters over-allotment option is exercised in full)
plus the proceeds of the co-investment. We may not be able to
acquire more than one target business because of various
factors, including the existence of complex accounting issues
and the requirement that we prepare and file pro forma financial
statements with the SEC that present operating results and the
financial condition of several target businesses as if they had
been operated on a combined basis. Additionally, we may
encounter numerous logistical issues if we pursue multiple
target businesses, including the difficulty of coordinating the
timing of negotiations, proxy statement disclosure and closings.
We may also be exposed to the risk that
38
our inability to satisfy conditions to closing with one or more
target businesses would reduce the fair market value of the
remaining target businesses in the combination below the
required threshold of 80% of the sum of the balance in the trust
account (excluding deferred underwriting discounts and
commissions of $23.85 million or $27.43 million if the
underwriters over-allotment option is exercised in full)
plus the proceeds of the co-investment. Due to these added
risks, we are more likely to choose a single target business
with which to pursue a business combination than multiple target
businesses. Unless we combine with a target business in a
transaction in which the purchase price consists substantially
of common stock
and/or
preferred stock, it is likely we will complete only our initial
business combination with the proceeds of this offering.
Accordingly, the prospects for our success may depend solely on
the performance of a single business. If this occurs, our
operations will be highly concentrated and we will be exposed to
higher risk than other entities that have the resources to
complete several business combinations, or that operate in,
diversified industries or industry segments.
If we
do not conduct an adequate due diligence investigation of a
target business with which we combine, we may be required to
subsequently take write-downs or write-offs, restructuring, and
impairment or other charges that could have a significant
negative effect on our financial condition, results of
operations and our stock price, which could cause you to lose
some or all of your investment.
In order to meet our disclosure and financial reporting
obligations under the federal securities laws, and in order to
develop and seek to execute strategic plans for how we can
increase the revenues
and/or
profitability of a target business, realize operating synergies
or capitalize on market opportunities, we must conduct a due
diligence investigation of one or more target businesses.
Intensive due diligence is time consuming and expensive due to
the operations, accounting, finance and legal professionals who
must be involved in the due diligence process. Even if we
conduct extensive due diligence on a target business with which
we combine, we cannot assure you that this diligence will
surface all material issues that may be present inside a
particular target business, or that factors outside of the
target business and outside of our control will not later arise.
If our diligence fails to identify issues specific to a target
business, industry or the environment in which the target
business operates, we may be forced to later write-down or
write-off assets, restructure our operations, or incur
impairment or other charges that could result in our reporting
losses. Even though these charges may be non-cash items and not
have an immediate impact on our liquidity, the fact that we
report charges of this nature could contribute to negative
market perceptions about us or our common stock. In addition,
charges of this nature may cause us to violate net worth or
other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by
virtue of our obtaining post-combination debt financing.
We
will depend on the limited funds available outside of the trust
account and a portion of the interest earned on the trust
account balance to fund our search for a target business or
businesses and to complete our initial business
combination.
Of the net proceeds of this offering, $100,000 will be available
to us initially outside the trust account to fund our working
capital requirements. We will depend on sufficient interest
being earned on the proceeds held in the trust account to
provide us with the additional working capital we will need to
identify one or more target businesses and to complete our
initial business combination. While we are entitled to have
released to us for such purposes interest income earned on the
trust account balance of up to 1% of the gross proceeds of this
offering ($9.0 million, or $10.35 million if the
underwriters over-allotment option is exercised in full),
a substantial decline in interest rates may result in our having
insufficient funds available with which to structure, negotiate
or close an initial business combination. In such event, we
would need to borrow additional funds from our sponsors,
Mr. Berggruen or our directors to operate or we may
dissolve and liquidate. None of our sponsors,
Mr. Berggruen, our other officer or directors or any other
person is obligated to lend us such funds.
39
We may
be unable to obtain additional financing if necessary to
complete a business combination or to fund the operations and
growth of a target business, which could compel us to
restructure or abandon a particular business
combination.
We may consider a business combination that will require
additional financing (in addition to the co-investment),
particularly as we intend to primarily focus on acquisitions of
mid-cap companies with valuations between approximately
$1.0 billion and $4.0 billion. However, we cannot
assure you that we will be able to complete a business
combination or that we will have sufficient capital with which
to complete a combination with a particular target business. If
the net proceeds of this offering and the co-investment are not
sufficient to facilitate a particular business combination
because:
|
|
|
|
|
of the size of the target business;
|
|
|
|
of the depletion of offering proceeds not in trust or available
to us from interest earned on the trust account balance that is
expended in search of a target business; or
|
|
|
|
we must redeem for cash a significant number of shares of common
stock owned by stockholders who elect to exercise their
redemption rights,
|
we will be required to seek additional financing. We cannot
assure you that such financing would be available on acceptable
terms, if at all. If additional financing is unavailable to
consummate a particular business combination, we would be
compelled to restructure or abandon the combination and seek an
alternative target business. Even if we do not need additional
financing to consummate a business combination, we may require
such financing to operate or grow the target business. If we
fail to secure such financing, this failure could have a
material adverse effect on the operations or growth of the
target business. Other than the co-investment, none of our
officers, our directors nor any other party is required to
provide any financing to us in connection with, or following, a
business combination.
Our
founders paid approximately $0.000966 per share for their shares
and, accordingly, you will experience immediate and substantial
dilution from the purchase of our common stock.
The difference between the public offering price per share of
our common stock (allocating all of the unit purchase price to
the common stock and none to the warrant included in the unit)
and the pro forma net tangible book value per share of our
common stock after this offering constitutes the dilution to you
and other investors in this offering. The fact that our founders
acquired their founders shares of common stock at a
nominal price significantly contributed to this dilution.
Assuming this offering is completed and no value is ascribed to
the warrants included in the units, you and the other new
investors will incur an immediate and substantial dilution of
approximately 32.9% or $3.29 per share (the difference between
the pro forma net tangible book value per share after this
offering of $6.71, and the initial offering price of $10.00 per
unit).
Our
outstanding warrants may adversely affect the market price of
our common stock and make it more difficult to effect a business
combination.
The units being sold in this offering include warrants to
purchase 45,000,000 shares of common stock (or
51,750,000 shares of common stock if the underwriters
over-allotment option is exercised in full). We also have sold
or will sell warrants to our founders (including the
sponsors warrants) to purchase an aggregate of
23,250,000 shares of our common stock (26,250,000 including
the co-investment warrants), assuming the underwriters
over-allotment option is not exercised. The 11,250,000
founders warrants included in this number are identical to
those warrants sold as part of the units in this offering except
that the founders warrants become exercisable after our
consummation of a business combination if and when the last
sales price of our common stock exceeds $15.00 per share for any
20 trading days within a 30 trading day period beginning
90 days after such business combination, will be
non-redeemable so long as they are held by our founders or their
permitted transferees, may be exercised by the holder on a
cashless basis and are entitled to two demand registration
rights and two piggy-back registration rights
commencing one year after the consummation of a business
combination. The 12,000,000 sponsors warrants included in
this number are identical to those warrants sold as part of the
units in this offering except that the
40
sponsors warrants will be non-redeemable so long as they
are held by our sponsors or their permitted transferees, may be
exercised by the holder on a cashless basis and pursuant to the
registration rights agreement, the holders of our sponsors
warrants and the underlying common stock will be entitled to two
demand registration rights and two piggy-back
registration rights commencing one year after the consummation
of a business combination. The 3,000,000 co-investment warrants
included in this number are identical to those warrants sold as
part of the units in this offering except that the holders of
the co-investment warrants (including the common stock to be
issued upon exercise of the co-investment warrants) will be
entitled to two demand registration rights and two
piggy-back registration rights commencing one year
after the consummation of a business combination. If we issue
common stock to conclude a business combination, the potential
issuance of additional shares of common stock on exercise of
these warrants could make us a less attractive acquisition
vehicle to some target businesses. This is because exercise of
the warrants will increase the number of issued and outstanding
shares of our common stock and reduce the value of the shares
issued to complete the business combination. Our warrants may
make it more difficult to complete a business combination or
increase the purchase price sought by one or more target
businesses. Additionally, the sale or possibility of sale of the
shares underlying the warrants could have an adverse effect on
the market price for our common stock or our units, or on our
ability to obtain other financing. If and to the extent these
warrants are exercised, you may experience dilution to your
holdings.
The
grant of registration rights to our founders may make it more
difficult to complete a business combination, and the future
exercise of such rights may adversely affect the market price of
our common stock.
Our founders will have two demand registration rights and two
piggyback registration rights with respect to the resale of
(i) their shares of common stock and (ii) their
warrants (including the common stock to be issued upon exercise
of the co-investment warrants) at any time after one year from
the date we complete a business combination. We will bear the
cost of registering these securities. If our founders exercise
their registration rights in full, there will then be an
additional 25,875,000 shares of common stock and
27,937,500 warrants (including 3,000,000 co-investment
warrants)
and/or
up to
27,937,500 shares of common stock issued on exercise of the
warrants that are eligible for trading in the public market. The
registration and availability of such a significant number of
securities for trading in the public market may have an adverse
effect on the market price of our common stock. In addition, the
existence of the registration rights may make a business
combination more costly or difficult to conclude. This is
because the stockholders of the target business may increase the
equity stake they seek in the combined entity or ask for more
cash consideration to offset the negative impact on the market
price of our common stock that is expected when the securities
owned by our founders are registered.
You
will not be able to exercise your warrants if we dont have
an effective registration statement in place when you desire to
do so.
No warrants will be exercisable, and we will not be obligated to
issue shares of common stock upon exercise of warrants by a
holder unless, at the time of such exercise, we have a
registration statement under the Securities Act of 1933, as
amended, in effect covering the shares of common stock issuable
upon the exercise of the warrants and a current prospectus
relating to that common stock. We have agreed to use our best
efforts to have a registration statement in effect covering
shares of common stock issuable upon exercise of the warrants
from the date the warrants become exercisable and to maintain a
current prospectus relating to that common stock until the
warrants expire or are redeemed. However, we cannot assure you
that we will be able to do so. In addition, we may determine to
exercise our right to redeem the outstanding warrants while a
current prospectus relating to the common stock issuable upon
exercise of the warrants is not available, in which case the
warrants will not be exercisable prior to their redemption.
Additionally, we have no obligation to settle the warrants for
cash in the absence of an effective registration statement or
under any other circumstances. The warrants may be deprived of
any value, the market for the warrants may be limited and the
holders of warrants may not be able to exercise their warrants
if there is no registration statement in effect covering the
shares of common stock issuable upon the exercise of the
41
warrants or the prospectus relating to the common stock issuable
upon the exercise of the warrants is not current.
There
is currently no market for our securities and a market for our
securities may not develop, which would adversely affect the
liquidity and price of our securities.
There is currently no market for our securities. Stockholders
therefore have no access to information about prior market
history on which to base their investment decision. Following
this offering, the price of our securities may vary
significantly due to our reports of operating losses, one or
more potential business combinations, the filing of periodic
reports with the SEC, and general market or economic conditions.
Furthermore, an active trading market for our securities may
never develop or, if developed, it may not be sustained. You may
be unable to sell your securities unless a market can be
established and sustained.
If we
are deemed to be an investment company, we may be required to
institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to
complete a business combination.
Although we intend to structure the investment of our assets to
meet the requirements for exemption provided in Rule 3a-1
of the Investment Company Act of 1940, we may be deemed to be an
investment company, as defined under Sections 3(a)(1)(A)
and (C) of the Investment Company Act of 1940, if,
following this offering and prior to the consummation of a
business combination, we are viewed as engaging in the business
of investing in securities or we own investment securities
having a value exceeding 40% of our total assets. If we are
deemed to be an investment company under the Investment Company
Act of 1940, we may be subject to certain restrictions that may
make it difficult for us to complete a business combination,
including:
|
|
|
|
|
restrictions on the nature of our investments; and
|
|
|
|
restrictions on our issuance of securities.
|
In addition, we may have imposed upon us burdensome
requirements, including:
|
|
|
|
|
registration as an investment company;
|
|
|
|
adoption of a specific form of corporate structure; and
|
|
|
|
reporting, record keeping, voting, proxy and disclosure
requirements and other rules and regulations.
|
We do not believe that our anticipated activities will subject
us to the Investment Company Act of 1940 as the net proceeds of
this offering and sale of warrants in our private placement
offering that are to be held in trust may only be invested by
the trust agent in government securities with
specific maturity dates. By restricting the investment of the
trust account to these instruments, we intend to meet the
requirements for the exemption provided in
Rule 3a-1
promulgated under the Investment Company Act of 1940. If we were
deemed to be subject to the Investment Company Act of 1940,
compliance with these additional regulatory burdens would
require additional expense that we have not allotted for.
Companies
with similar business plans to ours have had limited success in
completing a business transaction. There can be no assurance
that we will successfully identify a potential target business,
or complete a business combination.
Based upon publicly available information as of June 30,
2007, we have identified over 100 similarly structured companies
which have gone public since 2003, of which approximately
one-half have actually consummated a business combination, or
announced they have entered into a definitive agreement for a
business combination. As of such date, the remaining companies
have more than $5.8 billion in trust and are seeking to
consummate business combinations. While some of those companies
have specific industries or geographies that they must complete
a business combination in, a number of them may consummate a
business combination in any industry they choose. We may
therefore be subject to competition from these and other
companies seeking to consummate a business plan similar to ours,
which will, as a result, increase
42
demand for privately-held companies to combine with companies
structured similarly to ours. Further, the fact that
approximately only half of such companies have either completed
a business combination or have entered into a definitive
agreement for a business combination may be an indication that
there are only a limited number of attractive target businesses
available to such entities or that many privately-held target
businesses may not be inclined to enter into business
combinations with publicly held blank check companies like us.
We cannot assure you that we will be able to successfully
compete for an attractive business combination. Additionally,
because of this competition, we cannot assure you that we will
be able to effectuate a business combination within the required
time periods. If we are unable to find a suitable target
business within such time periods, we will be forced to
liquidate.
We are
dependent upon Mr. Berggruen, Mr. Franklin and
Berggruen Holdings Ltds investment professionals and the
loss of any of them could adversely affect our ability to
operate.
Our operations are dependent upon a relatively small group of
individuals and, in particular, upon Mr. Berggruen and
Mr. Franklin. We believe that our success depends on the
continued service of Mr. Berggruen and Mr. Franklin,
at least until we have consummated a business combination. We
cannot assure you that such individuals will remain with us for
the immediate or foreseeable future. In addition, neither
Mr. Berggruen nor Mr. Franklin are required to commit
any specified amount of time to our affairs and, accordingly,
they will have conflicts of interest in allocating management
time among various business activities, including identifying
potential business combinations and monitoring the related due
diligence. Moreover, Mr. Berggruen does not have any
experience in acquiring businesses in our specified target range
of $1.0 billion to $4.0 billion, other than the
Freedom/GLG Partners transaction. We do not have employment
agreements with, or key-man insurance on the life of, either of
these individuals. The unexpected loss of the services of either
of these individuals could have a detrimental effect on us.
In addition, Berggruen Holdings Ltd has agreed to make available
three investment professionals located at its offices in New
York, Los Angeles and London to actively source an acquisition
for us. Although Berggruen Holdings Ltd has agreed to make these
individuals available at no cost to us, none of these
individuals are required to commit any specified amount of time
to our affairs.
The
American Stock Exchange may delist our securities which could
limit investors ability to make transactions in our
securities and subject us to additional trading
restrictions.
Our securities have been approved for listing on the American
Stock Exchange upon consummation of this offering. Although
after giving effect to this offering we expect to meet on a pro
forma basis the minimum initial listing standards set forth in
Section 101(c) of the AMEX Company Guide, which only
requires that we meet certain requirements relating to
stockholders equity, market capitalization, aggregate
market value of publicly held shares and distribution
requirements, we cannot assure you that our securities will
continue to be listed on the American Stock Exchange as we might
not meet certain continued listing standards such as income from
continuing operations. Additionally, in connection with our
business combination, it is likely that the American Stock
Exchange may require us to file a new initial listing
application and meet its initial listing requirements as opposed
to its more lenient continued listing requirements. We cannot
assure you that we will be able to meet those initial listing
requirements at that time.
If the American Stock Exchange delists our securities from
trading, we could face significant consequences including:
|
|
|
|
|
a limited availability for market quotations for our securities;
|
|
|
|
reduced liquidity with respect to our securities;
|
|
|
|
a determination that our common stock is a penny
stock which will require brokers trading in our common
stock to adhere to more stringent rules and possibly result in a
reduced level of trading activity in the secondary trading
market for our common stock;
|
|
|
|
limited amount of news and analyst coverage for our
company; and
|
43
|
|
|
|
|
a decreased ability to issue additional securities or obtain
additional financing in the future.
|
The
determination of the offering price of our units and the size of
this offering is more arbitrary than the pricing of securities
and size of an offering of an operating company in a particular
industry.
Prior to this offering there has been no public market for any
of our securities. The public offering price of the units and
the terms of the warrants were negotiated between us and the
underwriters. In determining the size of this offering,
management held customary organizational meetings with
representatives of the underwriters, both prior to our inception
and thereafter, with respect to the state of capital markets,
generally, and the amount the representatives believed they
reasonably could raise on our behalf. Factors considered in
determining the size of this offering, prices and terms of the
units, including the common stock and warrants underlying the
units, include:
|
|
|
|
|
the history and prospects of companies whose principal business
is the acquisition of other companies;
|
|
|
|
prior offerings of those companies;
|
|
|
|
our prospects for acquiring an operating business at attractive
values;
|
|
|
|
whether the net proceeds of this offering, together with the
proceeds of the sponsors warrants and the co-investment,
would be sufficient to allow us to acquire an operating business
having a valuation between approximately $1.0 billion and
$4.0 billion, assuming the need to raise additional funds,
in addition to the co-investment, through a private offering of
debt or equity securities;
|
|
|
|
our ability to raise additional funds in the debt or equity
markets;
|
|
|
|
a review of debt to equity ratios in leveraged transactions;
|
|
|
|
our capital structure;
|
|
|
|
an assessment of our management and their experience in
identifying operating companies;
|
|
|
|
general conditions of the securities markets and the credit
markets at the time of this offering; and
|
|
|
|
other factors as were deemed relevant.
|
However, although these factors were considered, the
determination of our offering price is more arbitrary than the
pricing of securities of an operating company in a particular
industry since we have no historical operations or financial
results to which to compare them.
Since
we may acquire a target business that is located outside the
United States, we may encounter risks specific to one or more
countries in which we ultimately operate.
As described above, we plan to acquire a business or businesses
with principal business operations located in the North America.
We have restricted our geographic focus because our sponsors or
their affiliates have formed, and may form in the future, other
special purpose acquisition companies that are targeting
investments, and that may be offered or listed, outside of the
United States or North America. If such special purpose
acquisition companies are no longer searching for target
businesses or they determine for any reason not to pursue a
specific opportunity while we are still seeking a target
business, we may expand our focus geography to pursue such
target business outside of North America if we identify an
attractive opportunity. In the event that we pursue a business
combination opportunity outside of North America, our search
criteria and guidelines will be the same as that which we will
employ for a business whose principal business operations are in
North America. In evaluating a business combination opportunity
outside the United States, we will also seek to evaluate any
additional risks that may arise from the location of the target
business. If we acquire a company that has operations outside
the United States, we will be exposed to risks that could
negatively impact our future results of operations following a
business combination. The additional risks we may be exposed to
in these cases include but are not limited to:
|
|
|
|
|
tariffs and trade barriers;
|
44
|
|
|
|
|
regulations related to customs and import/export matters;
|
|
|
|
tax issues, such as tax law changes and variations in tax laws
as compared to the U.S.;
|
|
|
|
cultural and language differences;
|
|
|
|
foreign exchange controls;
|
|
|
|
crime, strikes, riots, civil disturbances, terrorist attacks and
wars; and
|
|
|
|
deterioration of political relations with the United States.
|
Because
we must furnish our stockholders with target business financial
statements prepared in accordance with or reconciled to U.S.
generally accepted accounting principles, we may not be able to
complete a business combination with some prospective target
businesses unless their financial statements are first
reconciled to U.S. generally accepted accounting
principles.
The federal securities laws require that a business combination
meeting certain financial significance tests include historical
and pro forma financial statement disclosure in periodic reports
and proxy materials submitted to stockholders. Because our
initial business combination must be with a target business that
has a fair market value of at least 80% of the sum of the
balance in the trust account (excluding deferred underwriting
discounts and commissions of $23.85 million or
$27.43 million if the underwriters over-allotment
option is exercised in full) at the time of our initial business
combination plus the proceeds of the co-investment, we will be
required to provide historical and pro forma financial
information to our stockholders when seeking approval of a
business combination with one or more target businesses. These
financial statements must be prepared in accordance with, or be
reconciled to, U.S. generally accepted accounting
principles, or GAAP, and the historical financial statements
must be audited in accordance with the standards of the Public
Company Accounting Oversight Board (United States), or PCAOB. If
a proposed target business, including one located outside of the
U.S., does not have financial statements that have been prepared
in accordance with, or that can be reconciled to, U.S. GAAP
and audited in accordance with the standards of the PCAOB, we
will not be able to acquire that proposed target business. These
financial statement requirements may limit the pool of potential
target businesses with which we may combine.
Compliance
with the Sarbanes-Oxley Act of 2002 will require substantial
financial and management resources and may increase the time and
costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act of 2002 requires that
we evaluate and report on our system of internal controls
beginning with our Annual Report on
Form 10-K
for the year ending December 31, 2008. If we fail to
maintain the adequacy of our internal controls, we could be
subject to regulatory scrutiny, civil or criminal penalties
and/or
stockholder litigation. Any inability to provide reliable
financial reports could harm our business. Section 404 of
the Sarbanes-Oxley Act also requires that our independent
registered public accounting firm report on managements
evaluation of our system of internal controls. A target company
may not be in compliance with the provisions of the
Sarbanes-Oxley Act regarding adequacy of their internal
controls. The development of the internal controls of any such
entity to achieve compliance with the Sarbanes-Oxley Act may
increase the time and costs necessary to complete any such
acquisition. Furthermore, any failure to implement required new
or improved controls, or difficulties encountered in the
implementation of adequate controls over our financial processes
and reporting in the future, could harm our operating results or
cause us to fail to meet our reporting obligations. Inferior
internal controls could also cause investors to lose confidence
in our reported financial information, which could have a
negative effect on the trading price of our stock.
45
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this prospectus that are not purely
historical are forward-looking statements. Our forward-looking
statements include, but are not limited to, statements regarding
our or our managements expectations, hopes, beliefs,
intentions or strategies regarding the future. In addition, any
statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including
any underlying assumptions, are forward-looking statements. The
words anticipates, believe,
continue, could, estimate,
expect, intend, may,
might, plan, possible,
potential, predict, project,
should, would and similar expressions
may identify forward-looking statements, but the absence of
these words does not mean that a statement is not
forward-looking. Forward-looking statements in this prospectus
may include, for example, statements about our:
|
|
|
|
|
ability to complete a combination with one or more target
businesses;
|
|
|
|
success in retaining or recruiting, or changes required in, our
officers or directors following a business combination;
|
|
|
|
officers and directors allocating their time to other businesses
and potentially having conflicts of interest with our business
or in approving a business combination, as a result of which
they would then receive expense reimbursements;
|
|
|
|
potential inability to obtain additional financing to complete a
business combination;
|
|
|
|
limited pool of prospective target businesses;
|
|
|
|
potential change in control if we acquire one or more target
businesses for stock;
|
|
|
|
public securities limited liquidity and trading;
|
|
|
|
failure to list or delisting of our securities from the American
Stock Exchange or an inability to have our securities listed on
the American Stock Exchange following a business combination;
|
|
|
|
use of proceeds not in trust or available to us from interest
income on the trust account balance; or
|
|
|
|
financial performance following this offering.
|
The forward-looking statements contained in this prospectus are
based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no
assurance that future developments affecting us will be those
that we have anticipated. These forward-looking statements
involve a number of risks, uncertainties (some of which are
beyond our control) or other assumptions that may cause actual
results or performance to be materially different from those
expressed or implied by these forward-looking statements. These
risks and uncertainties include, but are not limited to, those
factors described under the heading Risk Factors.
Should one or more of these risks or uncertainties materialize,
or should any of our assumptions prove incorrect, actual results
may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be
required under applicable securities laws.
46
We estimate that the net proceeds of this offering and the
private placement of the sponsors warrants will be as set
forth in the following table:
|
|
|
|
|
|
|
|
|
|
|
Without Over-Allotment
|
|
With Over-Allotment
|
|
|
Option Exercised
|
|
Option Exercised
|
|
Offering gross proceeds
|
|
$
|
900,000,000
|
|
|
$
|
1,035,000,000
|
|
Sponsors warrants purchased by sponsors
|
|
|
12,000,000
|
|
|
|
12,000,000
|
|
|
|
|
|
|
|
|
|
|
Total gross proceeds(1)
|
|
$
|
912,000,000
|
|
|
$
|
1,047,000,000
|
|
|
|
|
|
|
|
|
|
|
Offering expenses(2):
|
|
|
|
|
|
|
|
|
Underwriting discount
(5.5% of gross proceeds)
|
|
$
|
49,500,000
|
|
|
$
|
56,925,000
|
|
Legal fees and expenses
|
|
|
300,000
|
|
|
|
300,000
|
|
Printing and engraving expenses
|
|
|
100,000
|
|
|
|
100,000
|
|
Accounting fees and expenses
|
|
|
60,000
|
|
|
|
60,000
|
|
SEC registration fee
|
|
|
31,775
|
|
|
|
31,775
|
|
FINRA registration fee
|
|
|
75,500
|
|
|
|
75,500
|
|
American Stock Exchange fees
|
|
|
70,000
|
|
|
|
70,000
|
|
Miscellaneous expenses
|
|
|
62,725
|
|
|
|
62,725
|
|
|
|
|
|
|
|
|
|
|
Total offering expenses
|
|
$
|
50,200,000
|
|
|
$
|
57,625,000
|
|
|
|
|
|
|
|
|
|
|
Proceeds after offering expenses
|
|
$
|
861,800,000
|
|
|
$
|
989,375,000
|
|
|
|
|
|
|
|
|
|
|
Net offering proceeds held in trust
|
|
$
|
885,550,000
|
|
|
$
|
1,016,702,500
|
|
Deferred underwriting discounts and commissions held in trust
|
|
|
23,850,000
|
|
|
|
27,427,500
|
|
|
|
|
|
|
|
|
|
|
Total held in trust
|
|
$
|
861,700,000
|
|
|
$
|
989,275,000
|
|
|
|
|
|
|
|
|
|
|
Net offering proceeds not held in trust
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Capital-funded from net proceeds not held in trust
($100,000) and interest earned on monies held in trust
($9,000,000)(3)
|
|
|
|
|
|
|
|
|
Due diligence of prospective target businesses, including fees
for market research or consultants used to perform due
diligence, if any
|
|
$
|
4,100,000
|
|
|
|
|
|
Legal, accounting and other non-due diligence expenses,
including structuring and negotiating a business combination
|
|
|
4,100,000
|
|
|
|
|
|
Payment for office space, administrative and support services
payable to Berggruen Holdings, Inc. ($10,000 per month for up to
36 months)
|
|
|
360,000
|
|
|
|
|
|
Liquidation expense reserve
|
|
|
125,000
|
|
|
|
|
|
Legal and accounting fees relating to SEC reporting obligations
|
|
|
125,000
|
|
|
|
|
|
Working capital to cover general and miscellaneous expenses
|
|
|
290,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
9,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excludes $60.0 million of additional proceeds from the sale
of 6,000,000 co-investment units to our sponsors to be paid to
us immediately prior to our consummation of a business
combination.
|
47
|
|
|
(2)
|
|
These expenses are estimates only. The offering expenses will be
primarily funded from the proceeds of this offering. All of the
offering expenses to date have been paid from advances we
received from our founders described below. These advances will
be repaid within 60 days from the consummation of this
offering out of the proceeds of this offering not held in the
trust account.
|
|
(3)
|
|
These expenses are estimates only. Our actual expenditures for
some or all of these items may differ from the estimates set
forth herein. For example, we may incur greater legal and
accounting expenses than our current estimates in connection
with negotiating and structuring a business combination based
upon the level of complexity of that business combination. We do
not anticipate any change in our intended use of proceeds, other
than fluctuations among the current categories of allocated
expenses, which fluctuations, to the extent they exceed current
estimates for any specific category of expenses, would be
deducted from our excess working capital. Any such interest
income not used to fund our working capital requirements or
repay advances from our founders or for due diligence or legal,
accounting and non-due diligence expenses will be usable by us
to pay other expenses that may exceed our current estimates.
|
A total of approximately $885.6 million (or approximately
$1,016.7 million if the underwriters over-allotment
option is exercised in full) of the net proceeds from this
offering and the sale of the sponsors warrants described
in this prospectus, including $23.85 million (or
$27.43 million if the underwriters over-allotment
option is exercised in full) of deferred underwriting discounts
and commissions, will be placed in a trust account at
Continental Stock Transfer & Trust Company with
Continental Stock Transfer & Trust Company, as
trustee. Except for a portion of the interest income released to
us, the proceeds held in trust will not be released from the
trust account until the earlier of the consummation of a
business combination or our liquidation. All amounts held in the
trust account that are not:
|
|
|
|
|
distributed to public stockholders who exercise redemption
rights,
|
|
|
|
released to us as interest income or to pay income taxes on such
income, or
|
|
|
|
payable to the underwriters for deferred discounts and
commissions,
|
will be released to us on closing of our initial business
combination.
Our initial business combination will be with one or more target
businesses which have a fair market value of at least 80% of the
sum of the balance in the trust account (excluding deferred
underwriting discounts and commissions of $23.85 million or
$27.43 million if the underwriters over-allotment
option is exercised in full) at the time of such business
combination plus the proceeds of the co-investment, subject to:
|
|
|
|
|
a majority of our public stockholders voting in favor of the
business combination and less than 30% of the public
stockholders electing to exercise their redemption rights and
|
|
|
|
such deferred underwriting discount and commission having been
paid to the underwriters.
|
If our initial business combination involves a transaction in
which we acquire less than a 100% interest in the target
company, the value of that interest that we acquire must be
equal to at least 80% of the sum of the balance in the trust
account (excluding deferred underwriting discounts and
commissions) plus the proceeds of the co-investment. We will not
become a holding company for a minority interest in a target
business. We will only seek to acquire greater than 50% of the
outstanding equity interests or voting power of one or more
target businesses.
On release of funds from the trust account and after payment of
the redemption price to any public stockholders who exercise
their redemption rights, the underwriters will receive their
deferred underwriting discounts and commissions, and the
remaining funds will be released to us and can be used to pay
all or a portion of the purchase price of the business or
businesses with which our initial combination occurs. If the
business combination is paid for using stock or debt securities,
we may apply the cash released to us from the trust account to
pay additional expenses that we may incur, including expenses
relating to the business combination, operating expenses, any
finders fee and general corporate purposes such as
maintenance or
48
expansion of operations of an acquired business, the payment of
principal or interest due on indebtedness incurred in
consummating a business combination, additional business
combinations and working capital.
Upon the consummation of this offering, we have agreed to pay
Berggruen Holdings, Inc., an affiliate of Mr. Berggruen, a
total of $10,000 per month for office space, administrative
services and secretarial support until the earlier of our
consummation of a business combination or our liquidation. This
arrangement is being agreed to by Berggruen Holdings, Inc. for
our benefit and is not intended to provide Berggruen Holdings,
Inc. compensation in lieu of a management fee or other
remuneration because it is anticipated that the expenses to be
paid by Berggruen Holdings, Inc. will approximate the monthly
reimbursement. We believe that such fees are at least as
favorable as we could have obtained from an unaffiliated person.
Upon consummation of a business combination or our liquidation,
we will cease paying these monthly fees. Prior to the
consummation of this offering, Berggruen Holdings has agreed to
provide us with office space, administrative services and
secretarial support at no charge.
We expect that due diligence of prospective target businesses
will be monitored or performed by Mr. Berggruen and the
Berggruen Holdings Ltds investment professionals made
available to us. Additionally, we may engage market research
firms and/or third party consultants. Mr. Berggruen, his
affiliates or associates, will not receive any compensation for
their due diligence of prospective target businesses, but would
be reimbursed for any out-of-pocket expenses (such as travel
expenses) incurred in connection with such due diligence
activities. Our audit committee will review and approve all
expense reimbursements made to Mr. Berggruen and any
expense reimbursements payable to members of our audit committee
will be reviewed and approved by our board of directors, with
the interested director or directors abstaining from such review
and approval.
We believe that amounts not held in trust and the interest
income earned on the trust account balance of up to 1% of the
gross proceeds of this offering ($9.0 million, or
$10.35 million if the underwriters over-allotment
option is exercised in full) that may be released to us (as
described in more detail below) will be sufficient to pay the
costs and expenses to which such proceeds are allocated, such as
operating expenses, deposits and finders fees. This belief
is based on the fact that in-depth due diligence will be
undertaken only after we have negotiated and signed a letter of
intent or other preliminary agreement that addresses the terms
of a business combination. However, if our estimate of the costs
of undertaking in-depth due diligence and negotiating a business
combination is less than the actual amount necessary to do so,
we may be required to raise additional capital, the amount,
availability and cost of which is currently unascertainable. In
this event, we could seek such additional capital through loans
or additional investments from our sponsors, Mr. Berggruen
or our directors, but, except for the co-investment, none of
such sponsors, Mr. Berggruen or our directors is under any
obligation to advance funds to, or invest in, us.
If we complete a business combination, the out-of-pocket
expenses incurred by Mr. Berggruen and our other officer
and directors prior to the business combinations closing
will become an obligation of the post-combination business,
assuming these out-of-pocket expenses have not been reimbursed
prior to the closing. These expenses would be a liability of the
post-combination business and would be treated in a manner
similar to any other account payable of the combined business.
Mr. Berggruen and our other officer and directors may, as
part of any such combination, negotiate the repayment of some or
all of any such expenses. If the target business owners do
not agree to such repayment, this could cause Mr. Berggruen
and our other officer and directors to view such potential
business combination unfavorably and result in a conflict of
interest.
As of the date of this prospectus, our sponsors have advanced to
us a total of $250,000 which was used to pay a portion of the
expenses of this offering referenced in the line items above for
the SEC registration fee, FINRA registration fee, American Stock
Exchange fee and accounting and legal fees and expenses. These
advances are non-interest bearing, unsecured and are due within
60 days following the consummation of this offering. The
loan will be repaid out of the proceeds of the offering or the
interest we receive on the balance of the trust account.
The net proceeds of this offering not held in the trust account
and not immediately required for the purposes set forth above
will be invested only in United States government
securities (as such term is
49
defined in the Investment Company Act of 1940) and one or
more money market funds, selected by us, which invest
principally in either short-term securities issued or guaranteed
by the United States having a rating in the highest investment
category granted thereby by a recognized credit rating agency at
the time of acquisition or short-term tax exempt municipal bonds
issued by governmental entities located within the United
States, so that we are not deemed to be an investment company
under the Investment Company Act. Interest income earned on the
trust account balance of up to 1% of the gross proceeds of this
offering ($9.0 million, or $10.35 million if the
underwriters over-allotment option is exercised in full)
is releasable to us from the trust account to fund a portion of
our working capital requirements.
Other than the fee for office space and administrative and
secretarial services described above, no compensation of any
kind (including finders and consulting fees) will be paid
to any of Mr. Berggruen or our other officer or directors,
or any of their affiliates, for services rendered to us prior to
or in connection with the consummation of the business
combination. However, Mr. Berggruen and our other officer
and directors will receive reimbursement for any out-of-pocket
expenses incurred by them in connection with activities on our
behalf, such as identifying potential target businesses and
performing due diligence on suitable business combinations. To
the extent that such expenses exceed the available proceeds not
deposited in the trust account and interest income of up to 1%
of the gross proceeds of this offering that is released to us
from the trust account, such out-of-pocket expenses would not be
reimbursed by us unless we consummate a business combination.
Since the role of present management after a business
combination is uncertain, we have no current ability to
determine what remuneration, if any, will be paid to those
persons after a business combination.
A stockholder will be entitled to receive funds from the trust
account (including interest earned on his, her or its portion of
the trust account, net of taxes payable with respect to such
interest, and less interest income released to us from the trust
account in the manner described above) only in the event of our
liquidation if we fail to complete a business combination within
the allotted time or if the public stockholder seeks to have us
redeem such shares for cash in connection with a business
combination that the public stockholder voted against and that
we actually complete. In no other circumstances will a
stockholder have any right or interest of any kind in or to
funds in the trust account.
On consummation of an initial business combination, the
underwriters will receive the deferred underwriters
discounts and commissions held in the trust account. If we do
not complete an initial business combination and the trustee
must therefore distribute the balance in the trust account on
our liquidation, the underwriters have agreed (i) to
forfeit any rights or claims to the deferred underwriting
discounts and commissions, together with any accrued interest
thereon, in the trust account and (ii) that the trustee is
authorized to distribute the deferred underwriting discounts and
commissions, together with any accrued interest thereon, net of
income taxes payable on such interest, to the public
stockholders on a
pro rata
basis.
50
Except for the 1-for-5 unit dividend that was effected on
December 6, 2007 (which is after the date of the financial
statements included in this prospectus), we have not paid any
dividends on our common stock to date and we do not intend to
pay cash dividends prior to the consummation of a business
combination. After we complete a business combination, the
payment of dividends will depend on our revenues and earnings,
if any, capital requirements and general financial condition.
The payment of dividends after a business combination will be
within the discretion of our then-board of directors. Our board
of directors currently intends to retain any earnings for use in
our business operations and, accordingly, we do not anticipate
the board declaring any dividends in the foreseeable future.
The difference between the public offering price per share of
common stock, assuming no value is attributed to the warrants
included in the units, and the pro forma net tangible book value
per share of our common stock after this offering constitutes
the dilution to investors in this offering. Net tangible book
value per share is determined by dividing our net tangible book
value, which is our total tangible assets less total liabilities
(including the value of common stock which may be redeemed for
cash), by the number of outstanding shares of our common stock.
The information below assumes the payment in full of the
underwriters discounts and commissions, including amounts
held in the trust account, and no exercise of the
underwriters over-allotment option.
At August 9, 2007, our net tangible book value was a
deficiency of $(294,743), or approximately $(0.01) per share of
common stock. After giving effect to the sale of
90,000,000 shares of common stock included in the units and
the sale of 12,000,000 sponsors warrants, and the
deduction of underwriting discounts and estimated expenses of
this offering, our pro forma net tangible book value (as
decreased by the value of 26,999,999 shares of common stock
which may be redeemed for cash) at August 9, 2007 would
have been $596,248,812 or $6.71 per share, representing an
immediate increase in net tangible book value of $6.72 per share
to our founders and an immediate dilution of $3.29 per share or
32.9% to new investors not exercising their redemption rights.
After giving effect to the sale of 6,000,000 co-investment
shares of common stock included in the co-investment units, our
pro forma net tangible book value (as decreased by the value of
26,999,999 shares of common stock which may be redeemed for
cash) upon consummation of our business combination will be
$656,248,812 or $6.92 per share, representing an increase in net
tangible book value of $6.93 per share to our founders and an
immediate dilution of $3.08 per share or 30.8% to new investors
not exercising their redemption rights. For purposes of
presentation, our pro forma net tangible book value after this
offering is approximately $265,576,445 less than it otherwise
would have been because if we effect a business combination, the
redemption rights of the public stockholders may result in the
redemption for cash of up to 30% of the aggregate number of the
shares sold in this offering less one share at a per-share
redemption price equal to the amount in the trust account as of
two business days prior to the proposed consummation of a
business combination, inclusive of any interest, net of any
taxes due on such interest and net of interest income earned on
the trust account balance of up to 1% of the gross proceeds of
this offering ($9.0 million, or approximately
$10.35 million if the underwriters over-allotment
option is exercised in full) previously released to us to fund
working capital requirements, divided by the number of shares
sold in this offering.
The following table illustrates the dilution to the new
investors on a per-share basis, assuming no value is attributed
to the warrants included in the units:
|
|
|
|
|
|
|
|
|
Public offering price
|
|
|
|
|
|
$
|
10.00
|
|
Net tangible book value before this offering
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase attributable to new investors
|
|
|
6.72
|
|
|
|
|
|
Pro forma net tangible book value after this offering
|
|
|
|
|
|
|
6.71
|
|
|
|
|
|
|
|
|
|
|
Dilution to new investors
|
|
|
|
|
|
$
|
3.29
|
|
|
|
|
|
|
|
|
|
|
51
The following table sets forth information with respect to our
founders and the new investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Purchased
|
|
|
Total Consideration
|
|
|
Average Price
|
|
|
|
Number
|
|
|
Percentage
|
|
|
Amount
|
|
|
Percentage
|
|
|
per Share
|
|
|
Founders shares(1)(2)
|
|
|
25,875,000
|
|
|
|
22.3
|
|
|
$
|
25,000
|
|
|
|
.01
|
%
|
|
|
0.000966
|
|
New investors
|
|
|
90,000,000
|
|
|
|
77.7
|
|
|
|
900,000,000
|
|
|
|
99.99
|
|
|
|
10.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
115,875,000
|
|
|
|
100.0
|
%
|
|
$
|
900,025,000
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Following the co-investment, our founders will (i) own
31,875,000 shares of our common stock, comprising 24.1% of
our common stock purchased and (ii) have paid aggregate
consideration of $60,025,000, comprising 6.3% of the total
consideration that we received for our outstanding common stock.
|
|
(2)
|
|
Includes 3,375,000 founders units (representing 3,375,000
founders shares and 1,687,500 founders warrants)
that will be forfeited by our founders to the extent the
underwriters over-allotment option is not exercised.
Following the underwriters over-allotment option, whether
exercised in whole or in part, the amount of founders
shares outstanding will be 20.0% of the total shares.
|
The pro forma net tangible book value after this offering is
calculated as follows:
|
|
|
|
|
Numerator:
|
|
|
|
|
Net tangible book value before this offering and sale of
sponsors warrants
|
|
$
|
(294,743
|
)
|
Proceeds from this offering
|
|
|
885,650,000
|
|
Plus: Offering costs accrued for and paid in advance, excluded
from tangible book value before this offering
|
|
|
320,000
|
|
Less: Deferred underwriters fee paid upon consummation of
a business combination
|
|
|
(23,850,000
|
)
|
|
|
|
|
|
Less: proceeds held in trust subject to redemption to cash
($885,550,000 × 0.2999)
|
|
|
(265,576,445
|
)
|
|
|
|
|
|
|
|
$
|
596,248,812
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
Shares of common stock outstanding prior to this offering(a)
|
|
|
25,875,000
|
|
Shares of common stock included in the units offered
|
|
|
90,000,000
|
|
|
|
|
|
|
Less: shares subject to redemption (90,000,000 ×
30.0% 1 share)
|
|
|
(26,999,999
|
)
|
|
|
|
|
|
|
|
|
88,875,001
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Includes the escrowed founders units.
|
52
The following table sets forth our capitalization on:
|
|
|
|
|
an actual basis at August 9, 2007 (as if our unit dividend
occurred on such date);
|
|
|
|
an as adjusted basis to give effect to the sale of our units and
the sponsors warrants, and the application of the
estimated net proceeds derived from the sale of such securities;
and
|
|
|
|
a pro forma as adjusted basis to give effect to the sale of our
units, the sponsors warrants and the co-investment units,
and the application of the estimated net proceeds derived from
the sale of such securities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of August 9, 2007
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
Actual
|
|
|
As Adjusted
|
|
|
as Adjusted
|
|
|
|
(Unaudited)
|
|
|
Notes payable to affiliates(1)
|
|
$
|
250,000
|
|
|
$
|
|
|
|
$
|
|
|
Deferred underwriting discounts and commissions
|
|
$
|
|
|
|
$
|
23,850,000
|
|
|
$
|
23,850,000
|
|
Common stock, 0, 26,999,999 and 26,999,999 shares which are
subject to possible redemption, shares at redemption value(2)
|
|
|
0
|
|
|
$
|
265,576,445
|
|
|
$
|
265,576,445
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 1,000,000 shares
authorized; none issued or outstanding
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Common stock, $0.0001 par value, 200,000,000 shares
authorized; 25,875,000 shares issued and outstanding;
85,500,001 shares issued and outstanding (excluding
26,999,999 shares subject to possible redemption), as
adjusted; 91,500,001 shares issued and outstanding
(excluding 26,999,999 shares subject to possible
redemption), pro forma as adjusted
|
|
|
2,588
|
|
|
|
8,550
|
|
|
|
9,150
|
|
Additional paid-in capital
|
|
|
22,412
|
|
|
|
596,240,005
|
|
|
|
656,239,405
|
|
Income accumulated during the development stage
|
|
|
257
|
|
|
|
257
|
|
|
|
257
|
|
Total stockholders equity
|
|
$
|
25,257
|
|
|
$
|
596,248,812
|
|
|
$
|
656,248,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
275,257
|
|
|
$
|
885,675,257
|
|
|
$
|
945,675,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Notes payable to affiliates are comprised of promissory notes
issued in the amount of $125,000 to Berggruen Holdings and
$125,000 to Marlin Equities. The notes are due within
60 days following the consummation of this offering.
|
|
(2)
|
|
If we consummate a business combination, the redemption rights
afforded to our public stockholders may result in the redemption
for cash of up to 30% of the aggregate number of shares sold in
this offering less one share at a per-share redemption price
equal to the aggregate amount then on deposit in the trust
account (initially approximately $9.84 per share), before
payment of deferred underwriting discounts and commissions and
including accrued interest, net of any income taxes due on such
interest, which income taxes, if any, shall be paid from the
trust account, and net of interest income previously released to
us for working capital requirements, as of two business days
prior to the proposed consummation of a business combination
divided by the number of shares sold in this offering.
|
53
MANAGEMENTS
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We were formed on June 27, 2007, to effect a merger, stock
exchange, asset acquisition, reorganization or similar business
combination with an operating business which we believe has
significant growth potential. We do not have any specific
business combination under current consideration, and neither
we, nor any representative acting on our behalf (including our
founders), has had any contacts with any target businesses
regarding a business combination prior to, in anticipation of or
subsequent to our incorporation. We intend to effect a business
combination using cash from the proceeds of this offering, our
capital stock, debt or a combination of cash, stock and debt.
The issuance of additional shares of our stock in a business
combination:
|
|
|
|
|
may significantly reduce the equity interest of our then
stockholders;
|
|
|
|
may cause a change in control if a substantial number of shares
of our stock are issued, which may affect, among other things,
our ability to use our net operating loss carry-forwards, if
any, may result in the resignation or removal of
Mr. Berggruen or one or more of our other present officer
or directors, and may cause our public stockholders to become
minority stockholders of the combined entity; and
|
|
|
|
may adversely affect prevailing market prices for our common
stock.
|
Similarly, debt securities issued by us in a business
combination may result in:
|
|
|
|
|
default and foreclosure on our assets if our operating revenues
after a business combination were insufficient to pay our debt
obligations;
|
|
|
|
acceleration of our obligations to repay the indebtedness even
if we have made all principal and interest payments when due if
the debt security contained covenants requiring the maintenance
of certain financial ratios or reserves and any such covenant
was breached without a waiver or renegotiation of that covenant;
|
|
|
|
our immediate payment of all principal and accrued interest, if
any, if the debt security was payable on demand; and
|
|
|
|
our inability to obtain additional financing, if necessary, if
the debt security contained covenants restricting our ability to
obtain additional financing while such debt security was
outstanding.
|
We have neither engaged in any operations nor generated any
revenues to date. Our only activities since inception have been
organizational activities and those necessary to prepare for
this offering. Following this offering, we will not generate any
operating revenues until consummation of a business combination.
We will generate non-operating income in the form of interest
income on cash and cash equivalents after this offering.
Liquidity
and Capital Resources
Our liquidity needs have been satisfied to date through receipt
of $25,000 from the sale of 25,875,000 units to our founders
(after giving effect to our unit dividend), and advances from
our founders that are more fully described below. Please see
Description of Securities for additional information
concerning such units. We estimate that the net proceeds from
(i) the sale of the units in this offering, after deducting
approximately $26.35 million to be applied to underwriting
discounts, offering expenses and working capital and
$23.85 million of deferred underwriting discounts (or
$27.43 million if the underwriters over-allotment
option is exercised in full) and (ii) the sale of the
sponsors warrants for a purchase price of
$12.0 million, will be approximately $861.8 million
(or $989.4 million if the underwriters over-allotment
option is exercised in full). Approximately $885.6 million
(or approximately $1,016.7 million if the
underwriters over-allotment option is exercised in full),
will be held in trust, which includes $23.85 million (or
$27.43 million if the underwriters over-allotment
option is exercised in full) of deferred underwriting discounts
and commissions. The remaining $100,000 will not be held in
trust.
54
We will use substantially all of the net proceeds of this
offering to acquire one or more target businesses, including
identifying and evaluating prospective target businesses,
selecting one or more target businesses, and structuring,
negotiating and consummating the business combination. If the
business combination is paid for using stock or debt securities,
we may apply the cash released to us from the trust account to
pay additional expenses that we may incur, including expenses
relating to the business combination, operating expenses, any
finders fee and general corporate purposes such as
maintenance or expansion of operations of an acquired business,
the payment of principal or interest due on indebtedness
incurred in consummating a business combination, additional
business combinations and working capital.
Following consummation of this offering, we believe the funds
available to us outside of the trust account, together with
interest income earned on the balance of the trust account of up
to 1% of the gross proceeds of this offering ($9.0 million,
or $10.35 million if the underwriters over-allotment
option is exercised in full) to be released to us for working
capital requirements, will be sufficient to allow us to operate
for at least the next 36 months, assuming a business
combination is not completed during that time. We expect our
primary liquidity requirements during that period to include
approximately $4,100,000 for expenses for the due diligence and
investigation of a target business or businesses; approximately
$4,100,000 for legal, accounting and other expenses associated
with structuring, negotiating and documenting an initial
business combination; an aggregate of up to $360,000 for office
space, administrative services and secretarial support payable
to Berggruen Holdings, Inc., an affiliate of Mr. Berggruen,
representing $10,000 per month for up to 36 months
beginning upon consummation of this offering; $125,000 as a
reserve for liquidation expenses; $125,000 for legal and
accounting fees relating to our SEC reporting obligations; and
approximately $290,000 for general working capital that will be
used for miscellaneous expenses and reserves. These expenses are
estimates only. Our actual expenditures for some or all of these
items may differ from the estimates set forth herein. If our
estimate of the costs of undertaking in-depth due diligence and
negotiating a business combination is less than the actual
amount necessary to do so, we may be required to raise
additional capital, the amount, availability and cost of which
is currently unascertainable. In this event, we could seek such
additional capital through loans or additional investments from
our sponsors, Mr. Berggruen or our directors, but, except
for the co-investment, none of such sponsors, Mr. Berggruen
or our directors is under any obligation to advance funds to, or
invest in, us. Any such interest income not used to fund our
working capital requirements or repay advances from our founders
or for due diligence or legal, accounting and non-due diligence
expenses will be usable by us to pay other expenses that may
exceed our current estimates.
We do not believe we will need to raise additional funds
following this offering in order to meet the expenditures
required for operating our business. However, we may need to
raise additional funds, in addition to the co-investment,
through a private offering of debt or equity securities if such
funds were required to consummate a business combination. Such
debt securities may include a working capital revolving debt
facility or a longer term debt facility. Subject to compliance
with applicable securities laws, we would only consummate such
financing in connection with the consummation of a business
combination.
We intend to focus on potential target businesses with
valuations between $1.0 billion and $4.0 billion. We
believe that our available working capital following this
offering, together with the issuance of additional equity and/or
the issuance of debt, would support the acquisition of such a
target business. Such debt securities may include a long term
debt facility, a high-yield notes offering or mezzanine debt
financing, and depending upon the business of the target
company, inventory, receivable or other secured asset-based
financing. The mix of additional equity and/or debt would depend
on many factors. The proposed funding for any such business
combination would be disclosed in the proxy statement relating
to the required stockholder approval for a business combination.
We would only consummate such financing in connection with the
consummation of a business combination. We will only seek
stockholder approval of such financing as an item separate and
apart from the approval of the overall transaction if such
separate approval was required by applicable securities laws or
the Rules of the American Stock Exchange or other similar body.
Related
Party Transaction
As of the date of this prospectus, each of Berggruen Holdings
and Marlin Equities has advanced on our behalf a total of
$125,000 and $125,000, respectively, for payment of offering
expenses. These advances
55
are non-interest bearing, unsecured and are due within
60 days following the consummation of this offering. The
loans will be repaid out of the proceeds of this offering not
placed in trust. Please see Certain Transactions for
further information concerning such advances.
We believe that the sale of the sponsors warrants and
amendment to the terms of the founders warrants (which was
effected prior to this offering to conform the terms and
exercise price of the founders warrants to those of the
warrants issued as part of the units in this offering) may
result in the recognition of a non-cash stock-based compensation
expense at the time we prepare our financial statements
reflecting our receipt of the gross proceeds of this offering.
However, the actual fair value of such warrants and any
resulting stock-based compensation expense will be determined
based upon an independent valuation that will be performed in
connection with the preparation of those financial statements.
The valuation date for the founders warrants for this
purpose will be the date of the modification and the valuation
date of the sponsors warrants for this purpose will be the
date of sale.
56
Introduction
We are a Delaware blank check company formed on June 27,
2007 to complete a business combination with one or more
operating businesses. Our efforts in identifying a prospective
target business will not be limited to a particular industry. We
do not have any specific merger, stock exchange, asset
acquisition, reorganization or other business combination under
consideration or contemplation and we have not, nor has anyone
on our behalf (including our founders), contacted, or been
contacted by, any potential target business, conducted any
evaluation or had any discussions, formal or otherwise, with
respect to such a transaction prior to, in anticipation of or
subsequent to our incorporation. To date our efforts have been
limited to organizational activities as well as activities
related to this offering.
Business
Strategy
We have identified the following criteria and guidelines that we
believe are important in evaluating prospective target
businesses. We will use these criteria and guidelines in
evaluating acquisition opportunities. However, we may decide to
enter into a business combination with a target business that do
not meet these criteria and guidelines.
|
|
|
|
|
Established Companies with Proven Track
Records.
We will seek to acquire established
companies with sound historical financial performance. We will
typically focus on companies with a history of strong operating
and financial results and we do not intend to acquire
start-up
companies.
|
|
|
|
Companies with Strong Free Cash Flow
Characteristics.
We will seek to acquire
companies that have a history of strong, stable free cash flow
generation. We will focus on companies that have predictable,
recurring revenue streams and an emphasis on low working capital
and capital expenditure requirements.
|
|
|
|
Strong Competitive Industry
Position.
We will seek to acquire businesses
that operate within industries that have strong fundamentals.
The factors we will consider include growth prospects,
competitive dynamics, level of consolidation, need for capital
investment and barriers to entry. Within these industries, we
will focus on companies that have a leading market position. We
will analyze the strengths and weaknesses of target businesses
relative to their competitors, focusing on product quality,
customer loyalty, cost impediments associated with customers
switching to competitors, patent protection and brand
positioning. We will seek to acquire businesses that demonstrate
advantages when compared to their competitors, which may help to
protect their market position and profitability and deliver
strong free cash flow.
|
|
|
|
Experienced Management Team.
We will
seek to acquire businesses that have strong, experienced
management teams. We will focus on management teams with a
proven track record of driving revenue growth, enhancing
profitability and generating strong free cash flow. We believe
that the operating expertise of our founding stockholders will
complement, not replace the targets management team.
|
|
|
|
Diversified Customer and Supplier
Base.
We will seek to acquire businesses that
have a diversified customer and supplier base. Companies with a
diversified customer and supplier base are generally better able
to endure economic downturns, industry consolidation, changing
business preferences and other factors that may negatively
impact their customers, suppliers and competitors.
|
57
Competitive
Advantages
We believe that we have the following competitive advantages
over other entities with business objectives similar to ours:
Management
Expertise
We believe our sponsor, Berggruen Holdings, is well positioned
to source a business combination as a result of the extensive
infrastructure of its indirect parent Berggruen Holdings Ltd,
which includes eight offices and a network of investment
professionals worldwide. Although none of these investment
professionals, other than Mr. Berggruen will be employees
of ours, and although we have no offices located outside of New
York, Berggruen Holdings Ltd has agreed to make three investment
professionals located at the Berggruen Holdings Ltds
offices in New York, Los Angeles and London available at no cost
to us to actively source an acquisition for us. Berggruen
Holdings Ltd is industry opportunistic and has a bias towards
positive cash flow with respect to the investment opportunities
that it sources. In addition, Berggruen Holdings Ltd has over
20 years experience sourcing and executing investment
opportunities in businesses through leveraged buyouts, public
market securities, distressed situations and balance sheet
restructurings. We believe that Berggruen Holdings Ltds
contacts will create opportunities to find prospective target
businesses before they are offered for sale in a competitive bid
process. In connection with its prior acquisitions, Berggruen
Holdings Ltd was not restricted in its pursuit of such
acquisitions as it was not subject to the conflict of interest
procedures described elsewhere in this prospectus to which we
will be subject.
Marlin Equities is an investment vehicle majority owned by its
managing member, Martin E. Franklin, the chairman of our board
of directors, and Ian G.H. Ashken the other principal member who
has been Mr. Franklins business partner for over
15 years. Mr. Franklin is the chairman and chief
executive officer of Jarden Corporation, a broad based consumer
products company. Jardens publicly announced acquisition
criteria is to acquire focused, niche consumer product companies
that demonstrate a combination of attractive margins, strong
cash flow characteristics, category leading positions and
products that generate recurring revenues, with a particular
focus on businesses or brands with product offerings that
provide expansion into related categories that can be marketed
through its existing distribution channels or provide it with
new distribution channels for its existing products. At Jarden,
Mr. Franklin has overseen more than 10 acquisitions,
ranging in size from less than $10 million to approximately
$1.2 billion, with combined revenues as of
December 31, 2006 of over $3.8 billion. We have
entered into an agreement with Mr. Franklin whereby we have
acknowledged that Mr. Franklin has committed to
Jardens Board of Directors that we will be seeking
transactions outside of those that fit within Jardens
publicly announced acquisition criteria and that we will not
interfere with Mr. Franklins obligations to Jarden.
Mr. Franklin also committed to Jardens Board of
Directors that in order to avoid the potential for a conflict,
prior to us pursuing any acquisition transaction that Jarden
might consider, Mr. Franklin would first confirm with an
independent committee of Jardens Board of Directors that
Jarden was not interested in pursuing the potential acquisition
opportunity. If the independent committee concludes that Jarden
was interested in that opportunity, we would not continue with
that transaction.
Prior to their involvement with Jarden, Messrs. Franklin
and Ashken had extensive executive experience in running public
companies. Mr. Franklin held the positions of Chairman and
CEO of Lumen Technologies, Inc. (formerly BEC Group, Inc.), an
NYSE listed company, from May 1996 to March 1998, and of its
predecessor, Benson Eyecare Corporation, from October 1992 to
May 1996, of which he was also President from November 1993 to
May 1996. Mr. Franklin was also Executive Chairman of Lumen
Technologies from March 1998 until its sale in December 1998.
Mr. Franklin served as executive chairman of Bollé
Inc., an American Stock Exchange listed company, from July 1997
until its sale in February 2000. Both Lumen Technologies and
Bollé were spin-offs from Benson Eyecare. In addition,
during the last five years Mr. Franklin served as a
non-executive director of Specialty Catalog Corp., from 1994 to
2004, of Bally Total Fitness from March 2003 to April 2004, and
of Guideline, Inc. from November 2001 to December 2005.
Mr. Franklin currently serves on the boards of Kenneth Cole
Productions, Inc. Marlin Equities does not have any portfolio
companies. Freedom was not, and GLG Partners is not, a portfolio
58
company of Marlin Equities. Therefore, Mr. Franklin does
not have any potential conflict of interests with any entity
other than Jarden Corporation, Liberty International and GLG
Partners, and the conflict of interests procedures with regard
to these entities are described elsewhere in this prospectus.
Berggruen Holdings North America Ltd., an affiliate of Berggruen
Holdings, and Marlin Equities have previously invested together
in Freedom, a blank check company that completed an initial
public offering in December 2006. On November 2, 2007,
Freedom consummated its acquisition of GLG Partners, a leading
alternative asset manager with gross assets under management of
over $20.0 billion and changed its name to GLG Partners,
Inc.
Berggruen Holdings and Marlin Equities have recently formed
Liberty International. Liberty International is a blank check
company that will seek business combination opportunities with
companies with principal business operations outside of North
America. We are contractually prohibited from seeking business
combination opportunities with companies with principal business
operations outside of North America until the earlier to occur
of (a) the execution of a definitive agreement for a
business combination by Liberty International or any blank check
company formed by our sponsors with a jurisdiction of
incorporation outside of the United States and with focus on
effecting a business combination with a target business with
principal business operations outside of North America, or
(b) the liquidation and dissolution of Liberty
International or such international blank check companies. We
will not seek a waiver of these restrictions from Liberty
International or such international blank check companies. In
the event that we pursue a business combination with a target
business with principal business operations outside of North
America, our search criteria and guidelines will be the same as
that which we will employ for a business whose principal
operations are in North America, and we will also seek to
evaluate any additional risks that may arise from the location
of the target business, as described under Risk
Factors Since we may acquire a target business that
is located outside the United States, we may encounter risks
specific to one or more countries in which we ultimately
operate. These criteria and guidelines are described under
Proposed Business Business Strategy and
Proposed Business Selection of a target
business and structuring of a business combination.
None of Mr. Berggruen, Mr. Franklin or any individuals
and entities associated with them are required to commit any
specified amount of time to our affairs and, accordingly, they
will have conflicts of interest in allocating management time
among various business activities, including identifying
potential business combinations and monitoring or performing the
related due diligence.
Established
deal sourcing network
We believe that the extensive network of private equity sponsor
relationships as well as relationships with management teams of
public and private companies, investment bankers, attorneys and
accountants developed by the principals of Berggruen Holdings
and Marlin Equities, and their respective investment
professionals or members described below, should provide us with
significant business combination opportunities. However, in each
of these cases, our ability to benefit from these extensive
relationships will be limited by the conflict of interest
procedures which require that (i) if a business opportunity
is competitive with a Berggruen Holdings Ltd portfolio company,
where a Berggruen Holdings Ltd portfolio company is defined as
company of which Berggruen Holdings Ltd, directly or indirectly,
controls a majority of the voting stock or a majority of the
board of directors, it must first be presented to such company
before it is made available to us and (ii) if a business
opportunity fits within Jarden Corporations publicly
announced acquisition criteria, it must first be presented to
Jarden before it is made available to us. Since Marlin Equities
is a recently formed investment vehicle whose first investment
was in Freedom and whose second will be in us, it does not have
any operations and its network, relationships and contacts that
we expect to benefit from will be the network, relationships and
contacts of Mr. Franklin.
59
Disciplined
Acquisition Approach
Our sponsors will use the same disciplined approach in acquiring
target businesses on our behalf as they use in connection with
their private equity investing. Accordingly, we will seek to
reduce the risks posed by the acquisition of a target business
by:
|
|
|
|
|
focusing on companies with leading market positions and strong
cash flow;
|
|
|
|
engaging in extensive due diligence from the perspective of a
long-term investor; and
|
|
|
|
investing at low price to cash flow multiples.
|
Assistance
from Berggruen Holdings Ltds Employees
In addition to Mr. Berggruen and Mr. Franklin,
Berggruen Holdings Ltd committed in an agreement with us that
the employees noted below will help identify target companies
and assist with the due diligence of the target company for us.
None of these individuals are required to commit any specified
amount of time to our affairs. Berggruen Holdings Ltd has agreed
to make these individuals available at no cost to us, except
that we may reimburse the investment professionals for
out-of-pocket expenses, such as travel costs, that they may
incur. Pursuant to this agreement, supporting us is part of the
employment duties of such individuals to Berggruen Holdings Ltd.
Jared S. Bluestein
has been our secretary since
inception. He also has served as the Chief Operating Officer of
Berggruen Holdings Ltd since June 1996 and has been involved in
the execution and oversight of over 40 direct investments in the
United States and Europe. He plays a key role in Berggruen
Holdings Ltds buyout activities, investment sourcing,
portfolio oversight and firm administration. Mr. Bluestein
also serves on the board of directors of Bonded Services Inc., a
storage and distribution services company for the entertainment
industry, Desa International, a manufacturer and marketer of
branded home improvement products, Hoover Treated Wood Products,
Inc., a producer of fire-retardant treated wood, FGX
International Holdings Limited, a designer and marketer of
non-prescription reading glasses, sunglasses and costume
jewelry, and Apex Design Technology, a manufacturer and
integrator of hydraulic, pneumatic and electronic systems, all
of which are or were portfolio companies of Berggruen Holdings
Ltd. Mr. Bluestein holds degrees in Finance and
International Business from The Pennsylvania State University.
Eric Hanson
joined Berggruen Holdings Ltd in May
2000. From 1992 until 2000, he served as senior vice president
at MacAndrews & Forbes, a holding company with
interests in a diversified portfolio of public and private
companies, where he was involved in a number of merger and
acquisition transactions, including leading the management
buyout of the MasterCraft Boat Company. From 1986 until 1992, he
served as President of International Proteins Corporation, a
supplier, distributor, and manufacturer of specialty feed and
food ingredients, which he built through acquisitions before
selling off the various parts. Prior to 1986 he served as the
vice president of acquisitions in the United States at Hanson
PLC (no relation), a British based conglomerate of international
building material companies. He currently serves as a director
of Hoover Treated Wood Products, Inc., a producer of
fire-retardant treated wood, Bonded Services Inc., a storage and
distribution services company for the entertainment industry and
Global Supply Chain Finance AG, provider of bespoke supply chain
finance solutions, all of which are portfolio companies of
Berggruen Holdings Ltd. Mr. Hanson holds a M.A. from
Cambridge University and a Masters in Business Administration
from INSEAD.
Jennifer D. Stewart
joined Berggruen Holdings Ltd
in 2005. From September 2001 until July 2005 she was a partner
of The 180 Group, a private equity fund, where she invested
$110 million of equity capital in a diverse range of
industries, including health care practice management,
aerospace, specialty retail, and both branded and unbranded
consumer goods. From 1998 to 2000, Ms. Stewart worked as an
associate at Bear Stearns Merchant Banking, an institutional
private equity firm, and was involved in the groups
investment, portfolio oversight, and institutional fundraising
activities. From 1993 to 1996 Ms. Stewart held several
operating positions at Exxon. She is currently a director of The
Mexmil Company, a manufacturer of aerospace thermal and
acoustical insulation systems, Lee Cooper, a designer,
distributor, and marketer of branded jeans, clothing,
accessories, and footwear, Apex Design Technology, a
manufacturer and integrator
60
of hydraulic, pneumatic and electronic systems, and FGX
International Holdings Limited, a designer and marketer of
non-prescription reading glasses, sunglasses and costume
jewelry. Apex Design Technology is, and FGX International
Holdings Limited was, a portfolio company of Berggruen Holdings
Ltd. Ms. Stewart earned her B.S. Chemical Engineering
degree, with Honors and High Distinction, from The Pennsylvania
State University and M.B.A. from Harvard Business School. She is
currently a director of The Mexmil Company, Lee Cooper, and Apex
Design Technology.
Effecting
a Business Combination
General
We are not presently engaged in, and we will not engage in, any
operations for an indefinite period of time following this
offering. We intend to utilize the cash proceeds of this
offering, our capital stock, debt or a combination of these as
the consideration to be paid in a business combination. While
substantially all of the net proceeds of this offering are
allocated to completing a business combination, the proceeds are
not otherwise designated for more specific purposes.
Accordingly, prospective investors will at the time of their
investment in us not be provided an opportunity to evaluate the
specific merits or risks of one or more target businesses. If
the business combination is paid for using stock or debt
securities, we may apply the cash released to us from the trust
account for general corporate purposes, including for
maintenance or expansion of operations of the acquired business
or businesses, the payment of principal or interest due on
indebtedness incurred in consummating our initial business
combination, to fund the purchase of other companies, or for
working capital. We may engage in a business combination with a
company that does not require significant additional capital but
is seeking a public trading market for its shares, and which
wants to merge with an already public company to avoid the
uncertainties associated with undertaking its own public
offering. These uncertainties include time delays, compliance
and governance issues, significant expense, a possible loss of
voting control, and the risk that market conditions will not be
favorable for an initial public offering at the time this
offering is ready to be sold. We may seek to effect a business
combination with more than one target business, although our
limited resources may serve as a practical limitation on our
ability to do so. Additionally, although it is unlikely that we
will do so, we may seek to effect a business combination with a
publicly traded mid-cap company. In this event, we would face
higher legal, printing and solicitation agent fees than we would
if we were to effect a business combination with a private
company.
We do not have any specific business combination under
consideration and we have not, nor has anyone on our behalf
(including our founders), contacted, or been contacted by, any
potential target business, conducted any evaluation or had any
substantive discussions, formal or otherwise, with respect to
such a transaction prior to, in anticipation of or subsequent to
our incorporation. Additionally, we have not engaged or retained
any agent or other representative to identify or locate any
suitable acquisition candidate, to conduct any research or take
any measures, directly or indirectly, to locate or contact a
target business.
Prior to consummation of a business combination, we will seek to
have all vendors (such as, accountants, lawyers and investment
bankers), prospective target businesses or other entities that
we may engage, which we refer to as potential contracted parties
or a potential contracted party, execute agreements with us
waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account for the benefit of our
public stockholders. There is no assurance that we will be able
to get waivers from our vendors and there is no assurance that
such waivers will be enforceable by operation of law or that
creditors would be prevented from bringing claims against the
trust. In the event that a potential contracted party were to
refuse to execute such a waiver, we will execute an agreement
with that entity only if our management first determines that we
would be unable to obtain, on a reasonable basis, substantially
similar services or opportunities from another entity willing to
execute such a waiver. Examples of instances where we may engage
a third party that refused to execute a waiver would be the
engagement of a third party consultant whose particular
expertise or skills are believed by management to be superior to
those of other consultants that would agree to execute a waiver
or a situation where management does not believe it would be
able to find a provider of required services willing to provide
the waiver. If a potential contracted party refuses to execute
such a waiver, Mr. Berggruen and Mr. Franklin have
agreed that they will personally
61
indemnify us for any and all loss, liability, claim, damage and
expense which we may become subject to as a result of a claim by
any vendor, prospective target business or other entity that is
owed money by us for services rendered or products sold but only
to the extent necessary to ensure that such loss, liability,
claim, damage or expense does not reduce the amount of funds
held in the trust account. Based on representations made to us
by Mr. Berggruen and Mr. Franklin, we believe that
they are each of substantial means and capable of funding their
indemnity obligations, even though we have not asked them to
reserve funds for such an eventuality. However, we cannot assure
you that Mr. Berggruen or Mr. Franklin will be able to
satisfy those obligations. Our audit committee will not be
periodically reviewing any evidence that such individual has
sufficient net liquid assets to indemnify us. Accordingly, the
proceeds held in the trust account could be subject to claims
which could take priority over those of our public stockholders
and, as a result, the per-share liquidation amount would be less
than $9.84 due to such claims. We will not waive
Mr. Berggruen and Mr. Franklins obligations to
indemnify us and under these circumstances, our board of
directors, a majority of which are independent directors, may
have a fiduciary obligation to our stockholders to bring a claim
against Messrs. Berggruen and Franklin to enforce their
liability obligation.
Subject to the requirement that a target business or businesses
have a fair market value of at least 80% of the sum of the
balance in the trust account (excluding deferred underwriting
discounts and commissions of $23.85 million or
$27.43 million if the underwriters over-allotment
option is exercised in full) at the time of our initial business
combination plus the proceeds of the co-investment, we have
flexibility in identifying and selecting one or more prospective
target businesses. Accordingly, there is no current basis for
investors in this offering to evaluate the possible merits or
risks of the target business with which we may ultimately
complete a business combination. Although our management will
assess the risks inherent in a particular target business with
which we may combine, we cannot assure you that this assessment
will result in our identifying all risks that a target business
may encounter. Furthermore, some of those risks may be outside
of our control, meaning that we can do nothing to control or
reduce the chances that those risks will adversely impact a
target business.
We intend to focus on potential target businesses with
valuations between $1.0 billion and $4.0 billion. We
believe that our available working capital following this
offering, together with the issuance of additional equity and/or
the issuance of debt, would support the acquisition of such a
target business. The mix of additional equity and/or debt would
depend on many factors. The proposed funding for any such
business combination would be disclosed in the proxy statement
relating to the required stockholder approval of a business
combination.
Sources
of target businesses
We anticipate that target businesses may be brought to our
attention from various unaffiliated parties such as investment
banking firms, venture capital funds, private equity funds,
leveraged buyout funds, management buyout funds and similar
sources. We may also identify a target business through
managements contacts within the private equity industry.
We will not acquire an entity that is either a portfolio company
of, or has otherwise received a financial investment from, our
sponsors or their affiliates. Neither we nor our officers and
directors have given, or will give, any consideration to
entering into a business combination with companies affiliated
with our founders, Mr. Berggruen or our directors. While
Mr. Berggruen is not committed to spending any specified
amount of time on our business and our directors have no
commitment to spend any specified amount of time in identifying
or performing due diligence on potential target businesses,
Mr. Berggruen and Mr. Franklin believe that the
relationships they have developed over their careers in the
private equity industry may generate a number of potential
target businesses that will warrant further investigation.
We may pay fees or compensation to third parties for their
efforts in introducing us to potential target businesses. Such
payments are typically, although not always, calculated as a
percentage of the dollar value of the transaction. We have not
anticipated use of a particular percentage fee, but instead will
seek to negotiate the smallest reasonable percentage fee
consistent with the attractiveness of the opportunity and the
alternatives, if any, that are then available to us. Our
officers and board of directors will take the following factors
into consideration when determining the size of and payment
terms relating to any finders
62
fee that they would obligate us to pay: the uniqueness of the
opportunity presented, similar fees paid by other companies for
acquisitions of a similar size and the general exercise of their
business judgment. The payment of any such fee would be
disclosed to our public stockholders in connection with a vote
upon a potential business combination. We may make such payments
to entities we engage for this purpose or entities that approach
us on an unsolicited basis. Payment of finders fees would
always be tied to the successful consummation of a transaction.
Although it is possible that we may pay a breakup type fee to a
finder in the case of an uncompleted transaction, we consider
this possibility to be extremely remote. Our working capital is
limited to the $100,000 of proceeds from this offering that will
not be held in trust and interest earned on the trust account
balance of up to 1% of the gross proceeds of this offering
($9.0 million, or $10.35 million if the
underwriters over-allotment option is exercised in full)
that may be released to us. If we agree to pay a finders
fee or breakup fee and thereafter complete a business
combination, any such fee in excess of our available working
capital would be paid from funds released from the trust account
in the same manner as other acquisition expenses. If we do not
complete a business combination and have agreed to pay a breakup
fee that is in excess of the available amount of working capital
at the time we liquidate, such excess would be covered by the
indemnification agreements with Messrs. Berggruen and
Franklin in the same manner as other claims by vendors,
prospective target businesses or other entities owed money by
us. In no event will we pay any of our sponsors,
Mr. Berggruen, our other officer or our directors or any
entity with which they are affiliated any finders fee or
other compensation for services rendered to us prior to or in
connection with the consummation of a business combination. In
addition, none of Mr. Berggruen or our other officer or
directors, our sponsors or their affiliates, portfolio companies
of sponsors or their affiliates, or companies that have a
material financial investment by officers, directors, sponsors,
Berggruen investment professionals, or any of their affiliates
will receive any finders fee, consulting fees or any
similar fees from any person or entity in connection with any
business combination involving us. Following such business
combination, however, Mr. Berggruen and our other officer
and directors may receive compensation or fees including
compensation approved by the compensation committee of our board
of directors for Mr. Berggruen and our other officer if
they remain officers following such business combination or
customary directors fees for our directors that remain
following such business combination. Mr. Berggruen and our
other officer and directors have executed agreements stating
that they will not take an offer regarding their compensation or
fees following a business combination into consideration when
determining which target businesses to pursue.
Selection
of a target business and structuring of a business
combination
Subject to the requirement that our initial business combination
must be with a target business with a fair market value that is
at least 80% of the sum of the balance in the trust account
(excluding deferred underwriting discounts and commissions of
$23.85 million or $27.43 million if the
underwriters over-allotment option is exercised in full)
at the time of such business combination plus the proceeds of
the co-investment, our management will have flexibility in
identifying and selecting a prospective target business. If our
initial business combination involves a transaction in which we
acquire less than a 100% interest in the target company, the
value of that interest that we acquire must be equal to at least
80% of the sum of the balance in the trust account (excluding
deferred underwriting discounts and commissions) plus the
proceeds of the co-investment. We will not become a holding
company for a minority interest in a target business. We will
only seek to acquire greater than 50% of the outstanding equity
interests or voting power of one or more target businesses.
In evaluating a prospective target business, our management will
primarily consider the criteria and guidelines set forth above
under the caption Proposed Business Business
Strategy. In addition, our management will consider, among
other factors, the following:
|
|
|
|
|
financial condition and results of operations;
|
|
|
|
growth potential;
|
|
|
|
brand recognition and potential;
|
|
|
|
experience and skill of management and availability of
additional personnel;
|
63
|
|
|
|
|
capital requirements;
|
|
|
|
competitive position;
|
|
|
|
barriers to entry by competitors;
|
|
|
|
stage of development of the business and its products or
services;
|
|
|
|
existing distribution arrangements and the potential for
expansion;
|
|
|
|
degree of current or potential market acceptance of the products
or services;
|
|
|
|
proprietary aspects of products and the extent of intellectual
property or other protection for products or formulas;
|
|
|
|
impact of regulation on the business;
|
|
|
|
regulatory environment of the industry;
|
|
|
|
seasonal sales fluctuations and the ability to offset these
fluctuations through other business combinations, introduction
of new products, or product line extensions;
|
|
|
|
the limited amount of working capital available to us; and
|
|
|
|
costs associated with effecting the business combination.
|
These criteria are not intended to be exhaustive. Any evaluation
relating to the merits of a particular business combination will
be based, to the extent relevant, on the above factors as well
as other considerations deemed relevant by our management to our
business objective. In evaluating a prospective target business,
we expect to conduct an extensive due diligence review which
will encompass, among other things, meetings with incumbent
management and employees, document reviews, interviews of
customers and suppliers, inspection of facilities, as well as
review of financial and other information which will be made
available to us. In evaluating a business combination
opportunity outside the United States, we will also seek to
evaluate any additional risks that may arise from the location
of the target business, as described under Risk
Factors Since we may acquire a target business that
is located outside the United States, we may encounter risks
specific to one or more countries in which we ultimately
operate.
The time required to select and evaluate a target business and
to structure and complete the business combination, and the
costs associated with this process, are not currently
ascertainable with any degree of certainty. Any costs incurred
with respect to the identification and evaluation of a
prospective target business with which a business combination is
not ultimately completed will result in our incurring losses and
will reduce the funds we can use to complete another business
combination. We will not pay any finders or consulting fees to
our sponsors, officers or directors, or any of their respective
affiliates, for services rendered to or in connection with a
business combination.
Fair
market value of target business or businesses
The initial target business or businesses with which we combine
must have a collective fair market value equal to at least 80%
of the sum of the balance in the trust account (excluding
deferred underwriting discounts and commissions of
$23.85 million or $27.43 million if the
underwriters over-allotment option is exercised in full)
at the time of such business combination plus the proceeds of
the co-investment.
In contrast to many other companies with business plans similar
to ours that must combine with one or more target businesses
that have a fair market value equal to 80% or more of the
acquirors net assets, we will not combine with a target
business or businesses unless the fair market value of such
entity or entities meets a minimum valuation threshold of 80% of
the sum of the balance in the trust account (excluding deferred
underwriting discounts and commissions of $23.85 million or
$27.43 million if the underwriters over-allotment
option is exercised in full) plus the proceeds of the
co-investment. We have used this criterion to provide investors
and our officers and directors with greater certainty as to the
fair market value that a target business or businesses must have
in order to qualify for a business combination with us. The
64
determination of net assets requires an acquiror to have
deducted all liabilities from total assets to arrive at the
balance of net assets. Given the on-going nature of legal,
accounting, stockholder meeting and other expenses that will be
incurred immediately before and at the time of a business
combination, the balance of an acquirors total liabilities
may be difficult to ascertain at a particular point in time with
a high degree of certainty. Accordingly, we have determined to
use the valuation threshold of 80% of the sum of the balance in
the trust account (excluding deferred underwriting discounts and
commissions of $23.85 million or $27.43 million if the
underwriters over-allotment option is exercised in full)
plus the proceeds of the co-investment for the fair market value
of the target business or businesses with which we combine so
that our officers and directors will have greater certainty when
selecting, and our investors will have greater certainty when
voting to approve or disapprove a proposed combination with, a
target business or businesses that will meet the minimum
valuation criterion for our initial business combination.
The fair market value of a target business or businesses will be
determined by our board of directors based upon standards
generally accepted by the financial community, such as actual
and potential sales, the values of comparable businesses,
earnings and cash flow, and book value. If our board is not able
to independently determine that the target business has a
sufficient fair market value to meet the threshold criterion, we
will obtain an opinion from an unaffiliated, independent
investment banking firm which is a member of the FINRA with
respect to the satisfaction of such criterion. Any such opinion
will be included in our proxy soliciting materials furnished to
our stockholders in connection with a business combination, and
the independent investment banking firm giving such opinion will
be a consenting expert. We will not be required to obtain an
opinion from an investment banking firm as to the fair market
value of the business if our board of directors independently
determines that the target business or businesses has sufficient
fair market value to meet the threshold criterion. If we were to
obtain an opinion, we do not anticipate that stockholders would
be entitled to rely on such opinion, nor would we take this into
consideration when deciding which investment banking firm to
hire.
Although there is no limitation on our ability to raise funds
privately or through loans that would allow us to acquire a
company with a fair market value greater than 80% of the sum of
the balance in the trust account plus the proceeds of the
co-investment, no such financing arrangements have been entered
into or contemplated with any third parties to raise such
additional funds through the sale of securities or otherwise.
Issuance
of additional debt or equity
Although not required to do so, we intend to focus on potential
target businesses with valuations between $1.0 billion and
$4.0 billion. We determined to value this offering at
$750 million in order to facilitate a transaction in our
targeted range. We believe that our available working capital
following this offering would support the acquisition of such a
target business. To consummate such an acquisition we would need
to raise additional equity and/or incur additional debt
financing. As the valuation of the proposed target business
moves from the lower end to the higher end of that range, a
greater amount of such additional equity or debt would be
required. The mix of debt or equity would be dependent on nature
of the potential target business, including its historical and
projected cash flow and its projected capital needs. It would
also depend on general market conditions at the time including
prevailing interest rates and debt to equity coverage ratios.
For example, capital intensive businesses usually require more
equity and mature businesses with steady historical cash flow
may sustain higher debt levels than growth companies.
We believe that it is typical for private equity firms and other
financial buyers to use leverage to acquire operating
businesses. Such debt is often in the form of both senior
secured debt as well as subordinated debt, which may be
available from a variety of sources. Banks and other financial
institutions may provide senior or senior secured debt based on
the target companys cash flow. Mezzanine debt funds or
similar investment vehicles may provide additional funding on a
basis that is subordinate to the senior or secured lenders. Such
instruments typically carry higher interest rates and are often
accompanied by equity coverage such as warrants. We cannot
assure you that such financing would be available on acceptable
terms, if at all. The proposed funding for any such business
combination would be disclosed in the proxy statement relating
to the required stockholder approval for the business
combination.
65
Lack
of business diversification
While we may seek to effect business combinations with more than
one target business, our initial business combination must be
with one or more target businesses whose collective fair market
value is at least equal to 80% of the sum of the balance in the
trust account (excluding deferred underwriting discounts and
commissions of $23.85 million or $27.43 million if the
underwriters over-allotment option is exercised in full)
at the time of such business combination plus the proceeds of
the co-investment, as discussed above. Consequently, we expect
to complete only a single business combination, although this
may entail a simultaneous combination with several operating
businesses at the same time. At the time of our initial business
combination, we may not be able to acquire more than one target
business because of various factors, including complex
accounting or financial reporting issues. For example, we may
need to present pro forma financial statements reflecting the
operations of several target businesses as if they had been
combined historically.
A simultaneous combination with several target businesses also
presents logistical issues such as the need to coordinate the
timing of negotiations, proxy statement disclosure and closings.
In addition, if conditions to closings with respect to one or
more of the target businesses are not satisfied, the fair market
value of the business could fall below the required fair market
value threshold of 80% of the sum of the balance in the trust
account (excluding deferred underwriting discounts and
commissions of $23.85 million or $27.43 million if the
underwriters over-allotment option is exercised in full)
plus the proceeds of the co-investment.
Accordingly, while it is possible that we may attempt to effect
our initial business combination with more than one target
business, we are more likely to choose a single target business
if all other factors appear equal. This means that for an
indefinite period of time, the prospects for our success may
depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete
business combinations with multiple entities in one or several
industries, it is probable that we will not have the resources
to diversify our operations and mitigate the risks of being in a
single line of business. By consummating a business combination
with only a single entity, our lack of diversification may:
|
|
|
|
|
subject us to negative economic, competitive and regulatory
developments, any or all of which may have a substantial adverse
impact on the particular industry in which we operate after a
business combination, and
|
|
|
|
cause us to depend on the marketing and sale of a single product
or limited number of products or services.
|
If we complete a business combination structured as a merger in
which the consideration is our stock, we would have a
significant amount of cash available to make add-on acquisitions
following our initial business combination.
Limited
ability to evaluate the target business
management
Although we intend to closely scrutinize the management of a
prospective target business when evaluating the desirability of
effecting a business combination with that business, we cannot
assure you that our assessment of the target business
management will prove to be correct. In addition, we cannot
assure you that the future management will have the necessary
skills, qualifications or abilities to manage a public company.
Furthermore, the future role of Mr. Berggruen and our other
officer or directors, if any, in the target business cannot
presently be stated with any certainty. Although we expect our
current management and directors will remain associated with us
after the consummation of a business combination, we cannot
ensure that any or all of them will be able to maintain their
positions with us subsequent to a business combination. In any
event, it is unlikely that any of them will devote their full
efforts to our affairs subsequent to a business combination.
Moreover, we cannot assure you that Mr. Berggruen and our
other officer or directors will have significant experience or
knowledge relating to the operations of the particular target
business.
66
Following a business combination, we may seek to recruit
additional managers to supplement the incumbent management of
the target business. We cannot assure you that we will have the
ability to recruit additional managers, or that additional
managers will have the requisite skills, knowledge or experience
necessary to enhance the incumbent management.
Limited
available information for privately-held target
companies
In accordance with our acquisition strategy, we will likely seek
a business combination with one or more privately-held
companies. Generally, very little public information exists
about these companies, and we will be required to rely on the
ability of Mr. Berggruen and our other officer or directors
to obtain adequate information to evaluate the potential returns
from investing in these companies. If we are unable to uncover
all material information about these companies, then we may not
make a fully informed investment decision, and we may lose money
on our investments.
Limited
resources and significant competition for business
combinations
We will encounter intense competition from entities having a
business objective similar to ours, including private equity
groups and leveraged buyout funds, as well as operating
businesses seeking strategic acquisitions. Many of these
entities are well established and have extensive experience in
identifying and completing business combinations. A number of
these competitors possess greater technical, financial, human
and other resources than we do. Our limited financial resources
may have a negative effect on our ability to compete in
acquiring certain sizable target businesses. Further, because we
must obtain stockholder approval of a business combination, this
may delay the consummation of a transaction, while our
obligation to redeem for cash the shares of common stock held by
public stockholders who elect redemption may reduce the
financial resources available for a business combination. Our
outstanding warrants and the future dilution they potentially
represent may not be viewed favorably by certain target
businesses. In addition, if our initial business combination
entails a simultaneous purchase of several operating businesses
owned by different sellers, we may be unable to coordinate a
simultaneous closing of the purchases. This may result in a
target business seeking a different buyer and our being unable
to meet the threshold requirement that the target business has,
or target businesses collectively have, a fair market value
equal to at least 80% of the sum of the balance in the trust
account (excluding deferred underwriting discounts and
commissions of $23.85 million or $27.43 million if the
underwriters over-allotment option is exercised in full)
at the time of such combination plus the proceeds of the
co-investment.
Any of these factors may place us at a competitive disadvantage
in successfully negotiating a business combination. We cannot
assure you that we will be able to successfully compete for an
attractive business combination. Additionally, because of these
factors, we cannot assure you that we will be able to effectuate
a business combination within the required time periods. If we
are unable to find a suitable target business within such time
periods, we will dissolve and liquidate.
Opportunity
for stockholder approval of business combination
Prior to the consummation of our initial business combination,
we will submit the transaction to our stockholders for approval,
even if the nature of the acquisition is such as would not
ordinarily require stockholder approval under applicable state
law. If a majority of the shares of our common stock held by
public stockholders are not voted in favor of a proposed initial
business combination, we may continue to seek other target
businesses with which to effect our initial business combination
that meet the criteria set forth in this prospectus until the
expiration of 30 months from consummation of this offering.
In connection with seeking stockholder approval of a business
combination, we will furnish our stockholders with proxy
solicitation materials prepared in accordance with the Exchange
Act, which, among other matters, will include a description of
the operations of the target business and audited historical
financial statements of the target business based on United
States generally accepted accounting principles.
In connection with the vote required for any business
combination, each of our founders has agreed to vote its
respective shares of common stock acquired by it prior to this
offering in accordance with the
67
majority of the shares of common stock voted by the public
stockholders. As a result, if a majority of the shares of stock
voted by the public stockholders are voted for the business
combination, our founders may not exercise their redemption
rights with respect to common stock acquired before this
offering. Each of our founders has also agreed that it will vote
any shares it purchases in the open market in or after this
offering in favor of a business combination. As a result, if our
founders acquire shares in or after this offering, they must
vote those shares in favor of the proposed initial business
combination with respect to those shares, and will therefore not
be eligible to exercise redemption rights for those shares. We
will proceed with the business combination only if a majority of
the shares of our common stock are voted in favor of the
business combination and public stockholders owning less than
30% of the shares sold in this offering exercise their
redemption rights. Voting against the business combination alone
will not result in redemption of a stockholders shares for
a
pro rata
share of the trust account. To do so, a
stockholder must have also exercised the redemption rights
described below. In addition, if within 90 days before the
expiration of such 30- or 36-month period, as the case may be,
we seek approval from our stockholders to consummate a business
combination, we expect that the proxy statement related to such
business combination will also seek stockholder approval for our
boards recommended dissolution and plan of distribution in
the event our stockholders do not approve such business
combination or if such business combination is not consummated
for other reasons. The requirements that we seek stockholder
approval before effecting our initial business combination and
not consummate our initial business combination if public
stockholders owning 30% or more of the shares sold in this
offering exercise their redemption rights below, are set forth
in Article FIFTH of our amended and restated certificate of
incorporation, which requires, in addition to the vote of our
board of directors required by Delaware law, the affirmative
vote of at least 80% of the voting power of our outstanding
voting stock to amend such provision. Our sponsors have agreed
not to request that the board consider such a proposal to
eliminate or amend this provision. In addition, we will not seek
stockholder approval to extend this 30- or 36-month period, as
the case may be.
Redemption
rights
Each public stockholder has the right to have such
stockholders shares of common stock redeemed for cash if
the stockholder votes against the business combination and the
business combination is approved and completed. The actual
per-share redemption price will be equal to the aggregate amount
then on deposit in the trust account, before payment of deferred
underwriting discounts and commissions and including accrued
interest, net of any income taxes on such interest, which shall
be paid from the trust account, and net of interest income of up
to 1% of the gross proceeds of this offering ($9.0 million,
or $10.35 million if the underwriters over-allotment
option is exercised in full) previously released to us to fund
our working capital requirements (calculated as of two business
days prior to the consummation of the proposed business
combination), divided by the number of shares sold in this
offering. The initial per-share redemption price would be
approximately $9.84, or $0.16 less than the
per-unit
offering price of $10.00. The proceeds held in trust may be
subject to claims which would take priority over the claims of
our public stockholders and, as a result, the per-share
liquidation price could be less than $9.84 due to such claims.
If our founders acquire shares in or after this offering, each
of our founders has agreed that it must vote such shares in
favor of a business combination, meaning that Mr. Berggruen
and our other officer or directors cannot exercise redemption
rights that are exercisable by our public stockholders.
An eligible stockholder may request redemption at any time after
the mailing to our stockholders of the proxy statement, which
will occur at least ten days prior to the stockholders
meeting, and prior to the vote taken with respect to a proposed
business combination at a meeting held for that purpose
(including at the meeting itself), but the request will not be
granted unless the stockholder votes against the business
combination and the business combination is approved and
completed. Additionally, we may require public stockholders,
whether they are a record holder or hold their shares in
street name, to either tender their certificates to
our transfer agent at any time through the vote on the business
combination or to deliver their shares to the transfer agent
electronically using Depository Trust Companys DWAC
(Deposit/Withdrawal At Custodian) System, at the holders
option. The proxy solicitation materials that we will furnish to
stockholders in connection with the vote for any proposed
business combination will indicate
68
whether we are requiring stockholders to satisfy such
certification and delivery requirements. Accordingly, a
stockholder would have from the time we send out our proxy
statement through the vote on the business combination to tender
his shares if he wishes to seek to exercise his redemption
rights. This time period varies depending on the specific facts
of each transaction. However, as the delivery process can be
accomplished by the stockholder, whether or not he is a record
holder or his shares are held in street name, in a
matter of hours by simply contacting the transfer agent or his
broker and requesting delivery of his shares through the DWAC
System, we believe this time period is sufficient for an average
investor. However, because we do not have any control over this
process, it may take significantly longer than we anticipated
and investors may not be able to seek redemption in time.
Accordingly, we will only require stockholders to deliver their
certificates prior to the vote if we give stockholders at least
two weeks between the mailing of the proxy solicitation
materials and the meeting date. Traditionally, in order to
perfect redemption rights in connection with a blank check
companys business combination, a holder could simply vote
against a proposed business combination and check a box on the
proxy card indicating such holder was seeking to redeem. After
the business combination was approved, the company would contact
such stockholder to arrange for him to deliver his certificate
to verify ownership. As a result, the stockholder then had an
option window after the consummation of the business
combination during which he could monitor the price of the stock
in the market. If the price rose above the redemption price, he
could sell his shares in the open market before actually
delivering his shares to the company for cancellation. Thus, the
redemption right, to which stockholders were aware they needed
to commit before the stockholder meeting, would become a
continuing right surviving past the consummation of the business
combination until the redeeming holder delivered his certificate
for redemption at the redemption price. We have added this
requirement for physical or electronic delivery prior to the
meeting to ensure that a redeeming holders election to
redeem is irrevocable once the business combination is approved.
There is a nominal cost associated with the above-referenced
tendering process and the act of certificating the shares or
delivering them through the DWAC system. The transfer agent will
typically charge the tendering broker $35 and it would be up to
the broker whether or not to pass this cost on to the redeeming
holder. However, this fee would be incurred regardless of
whether or not we require holders seeking to exercise redemption
rights to tender their shares prior to the meeting as the need
to deliver shares is a requirement of redemption regardless of
the timing of when such delivery must be effectuated.
Accordingly, this would not result in any increased cost to
stockholders when compared to the traditional process unless the
stockholders elect redemption and the transaction is not
approved, which may result in a stockholder incurring a $35 fee.
Any request for redemption, once made, may be withdrawn at any
time prior to the vote taken with respect to the business
combination. Furthermore, if a stockholder delivered his
certificate for redemption and subsequently decided prior to the
meeting not to elect redemption, he may simply request that the
transfer agent return the certificate (physically or
electronically). It is anticipated that the funds to be
distributed to stockholders entitled to redeem their shares who
elect redemption will be distributed promptly after completion
of a business combination. Public stockholders who redeem their
stock for their share of the trust account still have the right
to exercise any warrants they still hold. If a stockholder votes
against the business combination but fails to properly exercise
its redemption rights, such stockholder will not have its shares
of common stock redeemed for its
pro rata
distribution of
the trust account.
If a vote on our initial business combination is held and the
business combination is not approved, we may continue to try to
consummate a business combination with a different target until
30 (or 36) months from the date of this prospectus. If the
initial business combination is not approved or completed for
any reason, then public stockholders voting against our initial
business combination who exercised their redemption rights would
not be entitled to redeem their shares of common stock for a
pro rata
share of the aggregate amount then on deposit in
the trust account. In such case, if we have required public
stockholders to tender their certificates prior to the meeting,
we will promptly return such certificates to the tendering
public stockholder. Public stockholders would be entitled to
receive their
pro rata
share of the aggregate amount on
deposit in the trust account only in the event that the initial
business combination they voted against was duly approved and
subsequently completed, or in connection with our liquidation,
whether or not they have previously delivered their shares for
redemption without any further action on their part.
69
We will not complete our proposed initial business combination
if public stockholders owning 30% or more of the shares sold in
this offering exercise their redemption rights. We intend to
structure and consummate any potential business combination in a
manner such that if public stockholders holding up to 30% of our
shares issued in this offering vote against our initial business
combination and cause us to redeem their shares of common stock
for a
pro rata
share of the aggregate amount then on
deposit in the trust account, the business combination could
still be consummated. As a result, we will be able to complete a
business combination even in the face of strong stockholder
dissent. Furthermore, the ability to consummate a transaction
despite stockholder disapproval in excess of what would be
permissible in a traditional blank check offering may be viewed
negatively by potential investors seeking stockholder
protections consistent with traditional blank check offerings.
However, we believe the benefit of approving a transaction with
a large majority outweighs these potential negatives.
The initial redemption price will be approximately $9.84 per
share. As this amount is lower than the $10.00 per unit offering
price and it may be less than the market price of the common
stock on the date of redemption, there may be a disincentive on
the part of public stockholders to exercise their redemption
rights.
Dissolution
and liquidation if no business combination
Pursuant to the terms of the trust agreement between us and
Continental Stock Transfer & Trust Company, if we
do not complete a business combination within 30 months
after the consummation of this offering, or within
36 months if the extension criteria described below have
been satisfied, we will dissolve and as promptly as practicable
return and liquidate all funds from our trust account only to
our public stockholders, as part of our dissolution and plan of
distribution and in accordance with the applicable provisions of
the Delaware General Corporation Law. This period is longer than
similar blank check company offerings because this offering is
larger in size than almost all other blank check company
offerings with similar business purposes. Accordingly, we
believe that fewer target businesses fit within our stated
acquisition criteria and it is therefore appropriate for us to
have a longer period to consummate a business combination. In
addition, given the size of the potential acquisition targets,
we believe that the process of searching for, negotiating and
consummating a business combination may take longer than it
would for a smaller business combination and that a shorter time
period would disadvantage us in negotiations with potential
target companies. The liquidating distribution to public
stockholders will consist of an aggregate sum equal to the
amount in the trust fund, inclusive of any interest not
previously released to us less the amount of taxes paid, if any,
on interest earned and will be made in proportion to our public
stockholders respective equity interests. In the event we
seek stockholder approval for our dissolution and plan of
distribution and do not obtain such approval, we will
nonetheless continue to pursue stockholder approval for our
dissolution. Pursuant to the terms of our amended and restated
certificate of incorporation, it is intended that our powers
following the expiration of the permitted time periods for
consummating a business combination will automatically
thereafter be limited to acts and activities relating to
dissolving and winding up our affairs, including liquidation.
Pursuant to the trust agreement governing such funds, the funds
held in our trust account may not be distributed except upon our
dissolution and, unless and until such approval is obtained from
our stockholders, the funds held in our trust account will not
be released (other than in connection with the funding of
working capital, a redemption or a business combination as
described elsewhere in this prospectus). Consequently, holders
of a majority of our outstanding stock must approve our
dissolution in order to receive the funds held in our trust
account and, other than in connection with a redemption or a
business combination, the funds will not be available for any
other corporate purpose. As promptly as practicable upon the
later to occur of (i) the approval by our stockholders of
our plan of distribution or (ii) the effective date of such
approved plan of distribution, we will liquidate our trust
account to our public stockholders. Concurrently, we shall pay,
or reserve for payment, from interest released to us from the
trust account if available, our liabilities and obligations. As
more fully described below, each of Mr. Berggruen and
Mr. Franklin has agreed that, if we dissolve prior to the
consummation of a business combination, they will be personally
liable to ensure that the proceeds in the trust account are not
reduced by such liabilities and obligations.
70
Each of our founders has agreed to waive its rights to
participate in any liquidation of our trust account or other
assets with respect to its founders common stock and to
vote their founders common stock in favor of any
dissolution and plan of distribution which we submit to a vote
of stockholders. There will be no distribution from the trust
account with respect to our warrants, which will expire
worthless if we are liquidated. As the proceeds from the sale of
the co-investment units will not be received by us until
immediately prior to our consummation of a business combination,
these proceeds will not be deposited into the trust account and
will not be available for distribution to our public
stockholders in the event of a dissolution and liquidation.
We estimate that our total costs and expenses for implementing
and completing a stockholder-approved dissolution and plan of
distribution will be between $75,000 and $125,000. This amount
includes all costs and expenses relating to filing a certificate
of dissolution with the State of Delaware, the winding up of our
company, printing and mailing a proxy statement, holding a
stockholders meeting relating to the approval by our
stockholders of our dissolution and plan of distribution, legal
fees and other filing fees. We believe that there should be
sufficient funds available from the interest earned on the trust
account and released to us as working capital, to fund the
$75,000 to $125,000 in costs and expenses.
If we were unable to conclude an initial business combination
and expended all of the net proceeds of this offering, other
than the proceeds deposited in the trust account, and without
taking into account interest, if any, earned on the trust
account, net of income taxes payable on such interest and net of
interest income earned on the trust account balance of up to 1%
of the gross proceeds of this offering ($9.0 million, or
$10.35 million if the underwriters over-allotment
option is exercised in full) previously released to us to fund
working capital requirements, the initial per-share liquidation
price would be $9.84, or $0.16 less than the
per-unit
offering price of $10.00. The per share liquidation price
includes approximately $23.85 million in deferred
underwriting discounts and commissions (or $27.43 million
if the underwriters over-allotment option is exercised in
full) that would also be distributable to our public
stockholders.
The proceeds deposited in the trust account could, however,
become subject to the claims of our creditors which would be
prior to the claims of our public stockholders. Although we will
seek to have all vendors, prospective target businesses or other
entities we engage execute agreements with us waiving any right,
title, interest or claim of any kind in or to any monies held in
the trust account for the benefit of our public stockholders,
there is no guarantee that they will execute such agreements or
even if they execute such agreements that they would be
prevented from bringing claims against the trust account,
including but not limited to, fraudulent inducement, breach of
fiduciary responsibility or other similar claims, as well as
claims challenging the enforceability of the waiver, in each
case in order to gain an advantage with a claim against our
assets, including the funds held in the trust account. If any
third party refused to execute an agreement waiving such claims
to the monies held in the trust account, we would perform an
analysis of the alternatives available to us if we chose not to
engage such third party and evaluate if such engagement would be
in the best interest of our stockholders if such third party
refused to waive such claims. Examples of possible instances
where we may engage a third party that refused to execute a
waiver include the engagement of a third party consultant whose
particular expertise or skills are believed by management to be
significantly superior to those of other consultants that would
agree to execute a waiver or in cases where management is unable
to find a provider of required services willing to provide the
waiver. In any event, our management would perform an analysis
of the alternatives available to it and would only enter into an
agreement with a third party that did not execute a waiver if
management believed that such third partys engagement
would be significantly more beneficial to us than any
alternative. In addition, there is no guarantee that such
entities will agree to waive any claims they may have in the
future as a result of, or arising out of, any negotiations,
contracts or agreements with us and will not seek recourse
against the trust account for any reason.
Each of Mr. Berggruen and Mr. Franklin has agreed
that, if we dissolve prior to the consummation of a business
combination, they will personally indemnify us for any and all
loss, liability, claim, damage and expense which we may become
subject to as a result of a claim by any vendor, prospective
target business or other entity that is owed money by us for
services rendered or products sold but only to the extent
necessary to ensure that such loss, liability, claim, damage or
expense does not reduce the amount of funds
71
held in the trust account. Based on representations made to us
by Mr. Berggruen and Mr. Franklin, we believe that
they are each of substantial means and capable of funding their
indemnity obligations, even though we have not asked them to
reserve funds for such an eventuality. However, we cannot assure
you that Mr. Berggruen or Mr. Franklin will be able to
satisfy those obligations. Our audit committee will not be
periodically reviewing any evidence that such individual has
sufficient net liquid assets to indemnify us. Accordingly, the
proceeds held in the trust account could be subject to claims
which could take priority over those of our public stockholders
and, as a result, the per-share liquidation amount would be less
than $9.84 due to such claims. We will not waive
Mr. Berggruen and Mr. Franklins obligations to
indemnify us and under these circumstances, our board of
directors, a majority of which are independent directors, may
have a fiduciary obligation to our stockholders to bring a claim
against Messrs. Berggruen and Franklin to enforce their
liability obligation. Neither Mr. Berggruen nor
Mr. Franklin will be personally liable to pay any of our
debts and obligations except as provided above. Accordingly, we
cannot assure you that due to claims of creditors the actual
per-share liquidation price will not be less than $9.84, plus
interest, net of income taxes payable on such interest and net
of interest income earned on the trust account balance of up to
1% of the gross proceeds of this offering ($9.0 million, or
$10.35 million if the underwriters over-allotment
option is exercised in full) previously released to us to fund
working capital requirements. Additionally, if we do not
complete an initial business combination and the trustee must
distribute the balance of the trust account, the underwriters
have agreed that (i) on our liquidation they will forfeit
any rights or claims to their deferred underwriting discounts
and commissions, including any accrued interest thereon, then in
the trust account and (ii) the deferred underwriting
discounts and commission will be distributed on a
pro rata
basis among the public stockholders, together with any
accrued interest thereon and net of income taxes payable on such
interest.
If we enter into either a letter of intent, an agreement in
principle or a definitive agreement to complete a business
combination prior to the expiration of 30 months after the
consummation of this offering, but are unable to complete the
business combination within the
30-month
period, then we will have an additional six months in which to
complete the business combination contemplated by the letter of
intent, agreement in principle or definitive agreement. If we
are unable to do so by the expiration of the
36-month
period from the consummation of this offering, we will be
dissolved and liquidated as described in the first paragraph of
this subsection. Upon notice from us, the trustee of the trust
account will commence liquidating the investments constituting
the trust account and will turn over the proceeds to our
transfer agent for distribution to our public stockholders. Our
instruction to the trustee will be given promptly after the
later to occur of (i) the approval by our stockholders of
our dissolution and plan of distribution or (ii) the
effective date of such approved dissolution and plan of
distribution.
Our public stockholders shall be entitled to receive funds from
the trust account only in the event of our dissolution or if the
stockholders seek to have us redeem their respective shares for
cash upon a business combination which the stockholder voted
against and which is actually completed by us. In no other
circumstances shall a stockholder have any right or interest of
any kind to or in the trust account. Prior to our completing an
initial business combination or liquidating, we are permitted
only to have released from the trust account interest income to
pay taxes and up to 1% of the gross proceeds of this offering,
to fund our working capital requirements.
If the corporation complies with certain procedures set forth in
Section 280 of the Delaware General Corporation Law
intended to ensure that it makes reasonable provision for all
claims against it, including a
60-day
notice period during which any third-party claims can be brought
against the corporation, a
90-day
period during which the corporation may reject any claims
brought, and we apply to the Court of Chancery for approval of
such reasonable provisions of claims, any liability of
stockholders with respect to a liquidating distribution is
limited to the lesser of such stockholders
pro rata
share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be
barred if a proceeding with respect to such claim is not brought
by the third anniversary of the dissolution (or such longer
period directed by the Delaware Court of Chancery). Although we
will seek stockholder approval for our dissolution and plan of
distribution providing for the liquidation of the trust account
to our public
72
stockholders, we do not intend to comply with the procedures set
forth in Section 280 of the Delaware General Corporation
Law. Because we will not be complying with Section 280, we
will seek stockholder approval of a plan of distribution
complying with Section 281(b) of the Delaware General
Corporation Law that will reasonably provide for our payment,
based on facts known to us at such time, of (i) all
existing claims, including those that are contingent,
(ii) all pending proceedings to which we are a party and
(iii) all claims that may be potentially brought against us
within the subsequent 10 years. However, because we are a
blank check company, rather than an operating company, and our
operations will be limited to searching for prospective target
businesses to acquire, the only likely claims to arise would be
from our vendors that we engage after the consummation of this
offering or potential target businesses. As described above, we
intend to have all vendors that we engage after the consummation
of this offering, prospective target businesses and other
entities execute agreements with us waiving any right, title,
interest or claim of any kind in or to any monies held in the
trust account.
Additionally, if we are forced to file a bankruptcy case or an
involuntary bankruptcy case is filed against us which is not
dismissed, the funds held in our trust account will be subject
to applicable bankruptcy law, and may be included in our
bankruptcy estate and subject to claims of third parties with
priority over the claims of our public stockholders. To the
extent bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return to our public stockholders
the liquidation amounts due them.
We expect that all costs associated with the implementation and
completion of our dissolution and plan of distribution
(currently estimated to be between $75,000 and $125,000 if not
done in connection with a stockholder vote with respect to a
potential business combination) as well as funds for payments to
creditors, if any, will be funded by the interest earned on the
trust account released to us, although we cannot give you
assurances that there will be sufficient funds for such purposes.
We currently believe that any dissolution and plan of
distribution in connection with to the expiration of the 30- and
36-month deadlines would proceed in approximately the following
manner:
|
|
|
|
|
prior to such deadline, our board of directors will, consistent
with its obligations described in our amended and restated
certificate of incorporation and Delaware law, consider a
resolution for us to dissolve and consider a plan of
distribution which it may then vote to recommend to our
stockholders; at such time it will also cause to be prepared a
preliminary proxy statement setting out such plan of
distribution as well as the boards recommendation of such
plan;
|
|
|
|
upon such deadline, we would file our preliminary proxy
statement with the SEC;
|
|
|
|
if the SEC does not review the preliminary proxy statement,
then, 10 days following the passing of such deadline, we
will mail the proxy statements to our stockholders, and
30 days following the passing of such deadline we will
convene a meeting of our stockholders, at which they will either
approve or reject our dissolution and plan of distribution; and
|
|
|
|
if the SEC does review the preliminary proxy statement, we
currently estimate that we will receive their comments
30 days following the passing of such deadline. We will
mail the proxy statements to our stockholders following the
conclusion of the comment and review process (the length of
which we cannot predict with any certainty, and which may be
substantial) and we will convene a meeting of our stockholders
at which they will either approve or reject our dissolution and
plan of distribution.
|
In the event we seek stockholder approval for a plan of
distribution and do not obtain such approval, we will
nonetheless continue to pursue stockholder approval for our
dissolution. Pursuant to the terms of our amended and restated
certificate of incorporation, it is intended that our powers
following the expiration of the permitted time periods for
consummating a business combination will automatically
thereafter be limited to acts and activities relating to
dissolving and winding up our affairs, including liquidation. If
no proxy statement seeking the approval of our stockholders for
a business combination has been filed 60 days prior to the
date which is 30 months from the consummation of this
offering (or 60 days prior to the date which is
36 months from the consummation of this offering if a
letter of intent, agreement in principle or
73
definitive agreement has been executed within 30 months
after consummation of this offering and the business combination
has not yet been consummated within such 30-month period), we
expect that our board will, prior to such date, convene, adopt
and recommend to our stockholders a plan of dissolution and
distribution, and on such date file a proxy statement with the
SEC seeking stockholder approval for such plan. Pursuant to the
trust agreement governing such funds, the funds held in our
trust account may not be distributed except upon our dissolution
and, unless and until such approval is obtained from our
stockholders, the funds held in our trust account will not be
released (other than in connection with the funding of working
capital, a redemption or a business combination as described
elsewhere in this prospectus). Consequently, holders of a
majority of our outstanding stock must approve our dissolution
in order to receive the funds held in our trust account and the
funds will not be available for any other corporate purpose
other than with respect to redemption and a business combination.
Amended
and Restated Certificate of Incorporation
Our amended and restated certificate of incorporation sets forth
certain requirements and restrictions relating to this offering
that apply to us until the consummation of a business
combination. Specifically, our amended and restated certificate
of incorporation provides, among other things, that:
|
|
|
|
|
prior to the consummation of a business combination, we shall
submit such business combination to our stockholders for
approval;
|
|
|
|
we may consummate the business combination if approved and
public stockholders owning less than 30% of the shares sold in
this offering exercise their redemption rights;
|
|
|
|
if a business combination is approved and consummated, public
stockholders who voted against the business combination may
exercise their redemption rights and receive their
pro rata
share of the trust account;
|
|
|
|
if a business combination is not consummated or a letter of
intent, an agreement in principle or a definitive agreement is
not signed within the time periods specified in this prospectus,
then it is intended that our purpose and powers will be limited
to dissolving, liquidating and winding up; provided, however,
that we will reserve our rights under Section 278 of the
Delaware General Corporation Law to bring or defend any action,
suit or proceeding brought by or against us;
|
|
|
|
our management take all actions necessary to liquidate our trust
account to our public stockholders as part of our plan of
distribution if a business combination is not consummated or a
letter of intent, an agreement in principle or a definitive
agreement is not signed within the time periods specified in
this prospectus; and
|
|
|
|
our stockholders rights to receive a portion of the trust
fund are limited such that they may only receive a portion of
the trust fund upon liquidation of our trust account to our
public stockholders as part of our plan of distribution or upon
the exercise of their redemption rights.
|
The above-referenced requirements and restrictions included in
our amended and restated certificate of incorporation may only
be amended prior to consummation of a business combination with
the vote of our board of directors and the affirmative vote of
at least 80% of the voting power of our outstanding voting
stock. We will not propose for approval by our stockholders any
changes to such requirements and restrictions prior to our
consummation of a business combination.
74
Comparison
of This Offering to Those of Blank Check Companies Subject to
Rule 419
The following table compares the terms of this offering to the
terms of an offering by a blank check company subject to the
provisions of Rule 419. This comparison assumes that the
gross proceeds, underwriting discounts and underwriting expenses
of our offering would be identical to those of an offering
undertaken by a company subject to Rule 419, and that the
underwriters will not exercise their over-allotment option. None
of the provisions of Rule 419 apply to our offering.
|
|
|
|
|
|
|
Terms of Our Offering
|
|
Terms Under a Rule 419 Offering
|
|
Escrow of offering proceeds
|
|
Approximately $885.55 million of the net offering proceeds,
including $23.85 million in deferred underwriting discounts and
commissions, will be deposited into a trust account at
Continental Stock Transfer & Trust Company maintained by
Continental Stock Transfer & Trust Company, as trustee.
|
|
$775.6 million of the offering proceeds would be required to be
deposited into either an escrow account with an insured
depositary institution or in a separate bank account established
by a broker-dealer in which the broker- dealer acts as trustee
for persons having the beneficial interests in the account.
|
|
|
|
|
|
Investment of net proceeds
|
|
The $885.55 million of net offering proceeds held in trust will
only be invested in U.S. government securities, as
defined under the Investment Company Act of 1940, and one or
more money market funds, selected by us, which invest
principally in either short-term securities issued or guaranteed
by the United States having a rating in the highest investment
category granted thereby by a recognized credit rating agency at
the time of acquisition or short-term tax exempt municipal bonds
issued by governmental entities located within the United
States.
|
|
Proceeds could be invested only in specified securities such as
a money market fund meeting conditions of the Investment Company
Act of 1940 or in securities that are direct obligations of, or
obligations guaranteed as to principal or interest by, the
United States.
|
|
|
|
|
|
Limitation on Fair Value or Net Assets of Target Business
|
|
The initial target business that we acquire must have a fair
market value equal to at least 80% of the sum of the balance in
the trust account (excluding deferred underwriting discounts and
commissions of $23.85 million) at the time of such acquisition
plus the proceeds of the co-investment.
|
|
The fair value or net assets of a target business must represent
at least 80% of the maximum offering proceeds.
|
|
|
|
|
|
Trading of securities issued
|
|
The units will begin trading on or promptly after the date of
this prospectus. The common stock and warrants comprising the
units are expected to begin separate trading thirty-five days
(or such earlier number of days as the underwriters may permit)
after the consummation of this offering (or as soon as
practicable thereafter), subject to our having filed the
|
|
No trading of the units or the underlying common stock and
warrants would be permitted until the consummation of a business
combination. During this period, the securities would be held in
the escrow or trust account.
|
75
|
|
|
|
|
|
|
Terms of Our Offering
|
|
Terms Under a Rule 419 Offering
|
|
|
|
Current Report on Form 8-K described below and having issued a
press release announcing when such separate trading will begin.
|
|
|
|
|
|
|
|
|
|
In no event will the common stock and warrants be traded
separately until we have filed a Current Report on Form 8- K
with the SEC containing an audited balance sheet reflecting our
receipt of the gross proceeds of this offering. We will file the
Current Report on
Form 8-K
as promptly as practicable following the consummation of this
offering, which is anticipated to take place three business days
from the date of this prospectus.
|
|
|
|
|
|
|
|
Exercise of the warrants
|
|
The warrants cannot be exercised until the later of the
consummation of a business combination or one year from the date
of this prospectus (assuming in each case that there is an
effective registration statement covering the shares of common
stock underlying the warrants in effect) and, accordingly, will
only be exercised after the trust account has been terminated
and distributed.
|
|
The warrants could be exercised prior to the consummation of a
business combination, but securities received and cash paid in
connection with the exercise would be deposited in the escrow or
trust account.
|
|
|
|
|
|
Election to remain an investor
|
|
Stockholders will have the opportunity to vote on the initial
business combination. Each stockholder will be sent a proxy
statement containing information required by the SEC. A
stockholder following the procedures described in this
prospectus is given the right to cause us to redeem his, her or
its shares for a
pro rata
share of the trust account,
before payment of deferred underwriting discounts and
commissions and including accrued interest, net of income taxes
on such interest and net of interest income of up to 1% of the
gross proceeds of this offering ($9.0 million, or
$10.35 million if the underwriters over- allotment
option is exercised in full) previously released to us to fund
our working capital requirements. However, a stockholder who
does not follow these procedures or a stockholder who does not
take any action would not be entitled to the return of any
|
|
A prospectus containing information required by the SEC would be
sent to each investor. Each investor would be given the
opportunity to notify the company in writing, within a period of
no less than 20 business days and no more than 45 business days
from the effective date of a post-effective amendment to the
companys registration statement, to decide if he, she or
it elects to remain a stockholder of the company or require the
return of his, her or its investment. If the company has not
received the notification by the end of the 45th business day,
funds and interest or dividends, if any, held in the trust or
escrow account are automatically returned to the stockholder.
Unless a sufficient number of investors elect to remain
investors, all funds on deposit in the escrow account must be
returned to all of the investors and none of the securities are
issued.
|
76
|
|
|
|
|
|
|
Terms of Our Offering
|
|
Terms Under a Rule 419 Offering
|
|
|
|
funds from the trust account. If a majority of the shares of
common stock voted by the public stockholders are not voted in
favor of a proposed initial business combination but 30 months
has not yet passed since the consummation of this offering, we
may seek other target businesses with which to effect our
initial business combination that meet the criteria set forth in
this prospectus. If at the end of such 30- month period (or 36
months if a letter of intent, agreement in principle or
definitive agreement has been executed within such 30-month
period but as to which a combination is not yet complete) we
have not obtained stockholder approval for an alternate initial
business combination, we will dissolve and liquidate and
promptly distribute the proceeds of the trust account, including
accrued interest, net of income taxes on such interest and net
of interest income of up to 1% of the gross proceeds of this
offering previously released to us to fund our working capital
requirements.
|
|
|
|
|
|
|
|
Business combination deadline
|
|
Our initial business combination must occur within 30 months
after the consummation of this offering or within 36 months
after the consummation of this offering if a letter of intent,
agreement in principle or definitive agreement relating to a
prospective business combination is executed before the 30-
month period ends; if our initial business combination does not
occur within these time frames and we are dissolved as described
herein, funds held in the trust account, including deferred
underwriting discounts and commissions, will be returned to
investors as promptly as practicable, including accrued
interest, net of income taxes on such interest and net of
interest income of up to 1% of the gross proceeds of this
offering previously released to us to fund our working capital
requirements.
|
|
If an acquisition has not been consummated within 18 months
after the effective date of the companys registration
statement, funds held in the trust or escrow account are
returned to investors.
|
Release of funds
|
|
Except with respect to interest income released to you, as
described
|
|
The proceeds held in the escrow account are not released until
the
|
77
|
|
|
|
|
|
|
Terms of Our Offering
|
|
Terms Under a Rule 419 Offering
|
|
|
|
elsewhere in this prospectus, the proceeds held in the trust
account are not released until the earlier of the consummation
of our initial business combination or the failure to complete
our initial business combination within the allotted time.
|
|
earlier of the consummation of a business combination or the
failure to effect a business combination within the allotted
time.
|
Interest earned on funds in trust account
|
|
Up to 1% of the gross proceeds of this offering
($9.0 million, or $10.35 million if the
underwriters over- allotment option is exercised in full)
of interest earned on the trust account will be released to us
to fund our working capital requirements. Stockholders who
redeem their common stock for cash in connection with a business
combination will not receive any portion of that amount that has
been previously released to us; upon our liquidation,
stockholders shall be entitled to a portion of the interest
earned on funds held in trust, if any, not previously released
to us to fund our working capital requirements, net of taxes
payable on such funds held in trust.
|
|
The interest earned on proceeds held in trust (net of taxes
payable) would be held for the sole benefit of investors, and we
would be unable to access such interest for working capital
purposes.
|
Competition
In identifying, evaluating and selecting a target business for a
business combination, we may encounter intense competition from
other entities having a business objective similar to ours
including other blank check companies, private equity groups and
leveraged buyout funds, and operating businesses seeking
acquisitions. Many of these entities are well established and
have extensive experience identifying and effecting business
combinations directly or through affiliates. Moreover, many of
these competitors possess greater financial, technical, human
and other resources than us. While we believe there are numerous
potential target businesses with which we could combine, our
ability to acquire larger target businesses will be limited by
our available financial resources. This inherent limitation
gives others an advantage in pursuing the acquisition of a
target business. Furthermore:
|
|
|
|
|
our obligation to seek stockholder approval of our initial
business combination or obtain necessary financial information
may delay the consummation of a transaction;
|
|
|
|
our obligation to redeem for cash shares of common stock held by
our public stockholders who vote against the business
combination and exercise their redemption rights may reduce the
resources available to us for a business combination;
|
|
|
|
our outstanding warrants, and the future dilution they
potentially represent, may not be viewed favorably by certain
target businesses; and
|
|
|
|
the requirement to acquire an operating business that has a fair
market value equal to at least 80% of the sum of the balance of
the trust account at the time of the acquisition (excluding
deferred underwriting discounts and commissions of
$23.85 million or $27.43 million if the
underwriters over-allotment option is exercised in full)
plus the proceeds of the co-investment could require us to
acquire the assets of several operating businesses at the same
time, all of which sales would be
|
78
|
|
|
|
|
contingent on the closings of the other sales, which could make
it more difficult to consummate the business combination.
|
Any of these factors may place us at a competitive disadvantage
in successfully negotiating a business combination.
Facilities
We currently maintain our executive offices at 1114 Avenue of
the Americas, 41st Floor, New York, New York 10036. The cost for
this space will be included in the $10,000 per-month fee
described above that Berggruen Holdings, Inc. will charge us for
office space, administrative services and secretarial support
from the consummation of this offering until the earlier offer
consummation of a business combination or our liquidation. Prior
to the consummation of this offering, Berggruen Holdings Inc.
has agreed to provide us with office space, administrative
services and secretarial support at no charge. We believe, based
on rents and fees for similar services in the New York City
metropolitan area that the fee that will be charged by Berggruen
Holdings, Inc. is at least as favorable as we could have
obtained from an unaffiliated person. We consider our current
office space adequate for our current operations.
Employees
We currently have only two officers. These individuals are not
obligated to devote any specific number of hours to our business
and intend to devote only as much time as they deem necessary to
our business. We do not intend to have any full-time employees
prior to the consummation of a business combination.
Periodic
Reporting and Financial Information
We have registered our securities under the Exchange Act and
after this offering will have public reporting obligations,
including the filing of annual and quarterly reports with the
SEC. In accordance with the requirements of the Exchange Act,
our annual report will contain financial statements audited and
reported on by our independent registered public accounting firm
and our quarterly reports will contain financial statements
reviewed by our independent registered public accounting firm.
We will not acquire a target business if we cannot obtain
audited financial statements based on United States
generally accepted accounting principles for such target
business. We will provide these financial statements in the
proxy solicitation materials sent to stockholders for the
purpose of seeking stockholder approval of our initial business
combination. We believe that the need for target businesses to
have, or be able to obtain, audited financial statements may
limit the pool of potential target businesses available for
acquisition.
We may be required to comply with the internal control
requirements of the Sarbanes-Oxley Act for the fiscal year
ending December 31, 2008. A target company may not be in
compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve
compliance with the Sarbanes-Oxley Act may increase the time and
costs necessary to complete any such acquisition.
Legal
Proceedings
There is no material litigation currently pending against us,
Mr. Berggruen or our other officer or directors in their
capacity as such.
79
Directors
and Executive Officer
Our directors and executive officers as of the date of this
prospectus are as follows:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Nicolas Berggruen
|
|
|
46
|
|
|
President, Chief Executive Officer and Director
|
Martin E. Franklin
|
|
|
43
|
|
|
Chairman of the Board
|
James N. Hauslein
|
|
|
48
|
|
|
Director
|
Nathan Gantcher
|
|
|
67
|
|
|
Director
|
Paul B. Guenther
|
|
|
67
|
|
|
Director
|
Nicolas Berggruen
has been our president, chief
executive officer and a member of our board of directors since
our inception in June 2007. Mr. Berggruen founded what
became Berggruen Holdings, Inc. in 1984 to act as investment
advisor to a Berggruen family trust that has made over 50
control and non-control direct investments in operating
businesses since 1984. Mr. Berggruen has served as the
president of Berggruen Holdings, Inc. since its inception. In
1984 he also co-founded Alpha Investment Management, a
multi-billion dollar hedge fund management company that was sold
to Safra Bank in 2004. Mr. Berggruen also serves on the
board of directors of GLG Partners, Inc. Mr. Berggruen
obtained his B.S. in finance and international business from New
York University.
Martin E. Franklin
has been the chairman of our
board of directors since our inception in June 2007.
Mr. Franklin has served as chairman and chief executive
officer of Jarden Corporation, a broad based consumer products
company, since 2001. Prior to joining Jarden Corporation,
Mr. Franklin served as chairman and a director of
Bollé, Inc. from 1997 to 2000, chairman of Lumen
Technologies from 1996 to 1998, and as chairman and chief
executive officer of its predecessor, Benson Eyecare Corporation
from 1992 to 1996. Mr. Franklin also serves on the board of
directors of GLG Partners, Inc. and Kenneth Cole Productions,
Inc. Mr. Franklin also serves as a director and trustee of
a number of private companies and charitable institutions.
James N. Hauslein
has been a member of our board
of directors since August 2007. Mr. Hauslein has also
served as President of Hauslein & Company, Inc., a
private equity firm, since May 1991. From July 1991 until April
2001, Mr. Hauslein served as Chairman of the Board of
Sunglass Hut International, Inc., the worlds largest
specialty retailer of non-prescription sunglasses.
Mr. Hauslein also served as Sunglass Huts Chief
Executive Officer from May 1997 to February 1998 and again from
January 2001 to May 2001. Mr. Hauslein is also currently a
member of the Board of Directors of GLG Partners, Inc.,
Promethean India, PLC, Atlas Acquisition Corp. and two private
companies. Mr. Hauslein serves on several philanthropic
boards and foundations and is a member of several Alumni
Advisory Boards at Cornell University. Mr. Hauslein
received his M.B.A., with Distinction, from Cornell
Universitys Johnson Graduate School of Management and his
B.S. in chemical engineering from Cornell University.
Nathan Gantcher
has been a member of our board of
directors since August 2007. Mr. Gantcher has also served
as a Managing Member of EXOP Capital LLC, a private investment
firm, since 2004. From 2002 to 2004, he served as Co-Chairman
and CEO of Alpha Investment Management LLC until it was sold to
Safra National Bank. From 1997 to 2002, Mr. Gantcher served
as the Vice Chairman of CIBC World Markets Corporation, the U.S.
Section broker/dealer of Canadian Imperial Bank of Commerce
(CIBC). CIBC acquired Oppenheimer & Company in
November 1997. Mr. Gantcher had been with Oppenheimer since
1968 and served as its President and Co-Chief Executive Officer
from 1983 until the firm was acquired in 1997. In 2003,
Mr. Gantcher retired from the Board of Trustees of Tufts
University where he had been a member since 1983 and Chairman
for the prior eight years. He is also a member of the Board of
Overseers at Columbia Business School. He is a member of the
Council on Foreign Relations, a director of Mack-Cali Realty
Corporation, Centerline Capital Group, NDS GROUP plc and
Liquidnet. Mr. Gantcher is a member of the steering
committee of the Wall Street division of the U.J.A., a past
Director of the Jewish Communal Fund, and a Trustee of the
Anti-Defamation League Foundation.
80
Mr. Gantcher received his M.B.A. from Columbia University
and his B.A. in economics and biology from Tufts University.
Paul B. Guenther
has been a member of our board of
directors since August 2007. Mr. Guenther has also served
as President of PaineWebber Group, Inc. from January 1994 to
April 1995. Mr. Guenther served as President of PaineWebber
Incorporated from December 1988 until January 1994.
Mr. Guenther has served as Chairman of the New York
Philharmonic since September 1996. Mr. Guenther also
currently chairs the Audit Committee of the Board of Directors
of The Guardian Life Insurance Company and is a member of the
Board of Directors of RS Investments. Mr. Guenther serves
on several philanthropic boards and is a member of several
charitable organizations. Mr. Guenther received his M.B.A.
from Columbia Graduate School of Business and his B.S. in
economics from Fordham University.
Number
and Terms of Office of Directors
Upon consummation of this offering, our board of directors will
consist of five directors. These individuals will play a key
role in evaluating prospective acquisition candidates, selecting
the target business, and structuring, negotiating and
consummating its acquisition. Collectively, through their
positions described above, our directors have extensive
experience in the private equity business. Other than
Messrs. Berggruen, Franklin and Hauslein, none of these
individuals has been a principal of or affiliated with a public
company or blank check company that executed a business plan
similar to our business plan and none of these individuals is
currently affiliated with such an entity. However, we believe
that the skills and expertise of these individuals, their
collective access to target businesses, and their ideas,
contacts, and acquisition expertise should enable them to
successfully assist us in completing a business combination.
However, there is no assurance such individuals will, in fact,
be successful in doing so.
Executive
Officer and Director Compensation
Each of our independent directors purchased 110,400 units (which
includes the escrowed founders units and gives effect to
our unit dividend) for a purchase price of $106.66. While Messrs
Gantcher, Hauslein and Guenther were offered the opportunity to
purchase these units prior to the filing of this Registration
Statement on the same terms as management, none of them will
serve as officers of ours nor receive any compensation for
serving in such role, other than reimbursement of actual
out-of-pocket expenses. As the price paid was fair market value
at the time, we do not consider the value of the units at the
offering price to be compensation. Rather, we believe that
because they own such shares, no compensation (other than
reimbursement of out of pocket expenses) is necessary and such
persons agreed to serve in such role without compensation
(notwithstanding any non-cash stock-based compensation expense
we may be required to recognize under GAAP as a result of the
amendments to the founders warrants).
We have agreed to pay Berggruen Holdings, Inc., an affiliate of
Mr. Berggruen, a total of $10,000 per month for office
space, administrative services and secretarial support from the
consummation of this offering until the earlier of our
consummation of a business combination or our liquidation. This
arrangement is being agreed to by Berggruen Holdings, Inc. for
our benefit and is not intended to provide Berggruen Holdings,
Inc. compensation in lieu of a management fee. We believe that
such fees are at least as favorable as we could have obtained
from an unaffiliated third party.
Other than this $10,000 per-month fee, no compensation of any
kind, including finders and consulting fees, has been or
will be paid by us or our affiliates to Mr. Berggruen, our
other officer, our directors, or any of their respective
affiliates, for services rendered to us prior to or in
connection with a business combination. However, these
individuals, the sponsors and the three Berggruen Holdings Ltd
investment professionals will be reimbursed for any
out-of-pocket expenses, such as travel expenses, incurred in
connection with activities on our behalf to identify potential
target businesses and perform due diligence on suitable business
combinations. None of the sponsors, directors, officers or the
three Berggruen Holdings Ltd investment professionals will be
reimbursed for their payments to third parties for third
parties performance of due diligence. After a business
combination, Mr. Berggruen and our other officer or
directors who remain with us may be paid consulting, management
or other fees from the combined
81
company with any and all amounts being fully disclosed to
stockholders, to the extent then known, in the proxy
solicitation materials furnished to our stockholders. It is
unlikely the amount of such compensation will be known at the
time of a stockholder meeting held to consider a business
combination, as it will be up to the directors of the
post-combination business to determine executive and director
compensation.
Director
Independence
Our board of directors has determined that each of
Mr. Hauslein, Mr. Gantcher and Mr. Guenther are
independent directors as such term is defined in
Rule 10A-3
of the Exchange Act and the rules of the American Stock Exchange.
Board
Committees
Prior to the consummation of this offering, our board of
directors will form an audit committee, a compensation committee
and a governance and nominating committee. Each committee will
be comprised of three directors.
Audit
Committee
On consummation of this offering, our audit committee will
consist of each of Mr. Hauslein, Mr. Gantcher and
Mr. Guenther, all of whom have been determined to be
independent as defined in
Rule 10A-3
of the Exchange Act and the rules of the American Stock
Exchange. Our board of directors has determined that each of the
members of our audit committee satisfies the financial literacy
and experience requirements of the American Stock Exchange and
the rules of the SEC such that each member is an audit
committee financial expert. The responsibilities of our
audit committee will include:
|
|
|
|
|
meeting with our management periodically to consider the
adequacy of our internal control over financial reporting and
the objectivity of our financial reporting;
|
|
|
|
appointing the independent registered public accounting firm,
determining the compensation of the independent registered
public accounting firm and pre-approving the engagement of the
independent registered public accounting firm for audit and
non-audit services;
|
|
|
|
overseeing the independent registered public accounting firm,
including reviewing independence and quality control procedures
and experience and qualifications of audit personnel that are
providing us audit services;
|
|
|
|
meeting with the independent registered public accounting firm
and reviewing the scope and significant findings of the audits
performed by them, and meeting with management and internal
financial personnel regarding these matters;
|
|
|
|
reviewing our financing plans, the adequacy and sufficiency of
our financial and accounting controls, practices and procedures,
the activities and recommendations of the auditors and our
reporting policies and practices, and reporting recommendations
to our full board of directors for approval;
|
|
|
|
establishing procedures for the receipt, retention and treatment
of complaints regarding internal accounting controls or auditing
matters and, if applicable, the confidential, anonymous
submissions by employees of concerns regarding questionable
accounting or auditing matters;
|
|
|
|
following the consummation of this offering, preparing the
report required by the rules of the SEC to be included in our
annual proxy statement; and
|
|
|
|
reviewing and approving all expense reimbursements made to our
officers and directors, provided that any expense reimbursements
payable to members of our audit committee will be reviewed and
approved by our board of directors, with the interested director
or directors abstaining from such review and approval.
|
82
Compensation
Committee
On consummation of this offering, our compensation committee
will consist of each of Mr. Hauslein, Mr. Gantcher and
Mr. Guenther, all of whom have been determined to be
independent as defined in
Rule 10A-3
of the Exchange Act and the rules of the American Stock
Exchange. The functions of our compensation committee will
include:
|
|
|
|
|
establishing overall compensation policies and recommending to
our board of directors major compensation programs;
|
|
|
|
subsequent to our consummation of a business combination,
reviewing and approving the compensation of our officers and
directors, including salary and bonus awards;
|
|
|
|
administering any employee benefit, pension and equity incentive
programs;
|
|
|
|
reviewing officers and director indemnification and insurance
matters; and
|
|
|
|
following the consummation of this offering, preparing an annual
report on executive compensation for inclusion in our proxy
statement.
|
Governance
and Nominating Committee
On consummation of this offering, our governance and nominating
committee will consist of each of Mr. Hauslein,
Mr. Gantcher and Mr. Guenther, all of whom have been
determined to be independent as defined in
Rule 10A-3
of the Exchange Act and the rules of the American Stock
Exchange. The functions of our governance and nominating
committee will include:
|
|
|
|
|
recommending qualified candidates for election to our board of
directors;
|
|
|
|
evaluating and reviewing the performance of existing directors;
|
|
|
|
making recommendations to our board of directors regarding
governance matters, including our certificate of incorporation,
bylaws and charters of our committees; and
|
|
|
|
developing and recommending to our board of directors governance
and nominating guidelines and principles applicable to us.
|
Code of
Ethics and Committee Charters
We will adopt a code of ethics that applies to our officers and
directors. We have filed copies of our code of ethics and our
board committee charters as exhibits to the registration
statement of which this prospectus is a part. You may review
these documents by accessing our public filings at the
SECs web site at www.sec.gov. In addition, a copy of the
code of ethics will be provided without charge upon request to
us. We intend to disclose any amendments to or waivers of
certain provisions of our code of ethics in a Current Report on
Form 8-K.
Conflicts
of Interest
General
Potential investors should be aware of the following potential
conflicts of interest:
|
|
|
|
|
None of our officers or directors are required to commit any
specified amount of time to our affairs and, accordingly, they
will have conflicts of interest in allocating management time
among various business activities.
|
|
|
|
In the course of their other business activities, our officers
and directors may become aware of investment and business
opportunities which may be appropriate for presentation to our
company as well as the other entities with which they are
affiliated. They may have conflicts of interest in determining
to which entity a particular business opportunity should be
presented. Accordingly, we do not expect our independent
directors to present investment and business opportunities to
us. For a
|
83
|
|
|
|
|
complete description of our managements other
affiliations, see the previous section entitled Directors
and Executive Officer.
|
|
|
|
|
|
Our officers and directors are or may in the future become
affiliated with entities, including other blank check companies,
engaged in business activities similar to those intended to be
conducted by our company, which may include blank check
companies with a focus on North American companies with
valuations between $1.0 billion to $4.0 billion. As
described in more detail below, entities affiliated with
Mr. Franklin currently include Jarden Corporation, GLG
Partners and Liberty International and entities affiliated with
Mr. Berggruen currently include GLG Partners and Liberty
International, each of which has the size and wherewithal to
compete with us to acquire an entity with valuations between
$1.0 billion to $4.0 billion. You should assume that
these conflicts will not be resolved in our favor.
|
|
|
|
Our directors may have a conflict of interest in determining
whether a particular target business is appropriate for us and
our stockholders since two of our directors,
Messrs. Berggruen and Franklin, are affiliated with our
sponsors. Each of our sponsors will be subject to transfer
restrictions, which only terminate one year following our
consummation of a business combination. The personal and
financial interests of our directors may influence his/their
motivation in identifying and selecting a target business,
completing a business combination timely and securing the
release of founders common stock.
|
|
|
|
In the event we elect to make a substantial down payment, or
otherwise incur significant expenses, in connection with a
potential business combination, our expenses could exceed the
remaining proceeds not held in trust. Our officers and directors
may have a conflict of interest with respect to evaluating a
particular business combination if we incur such excess
expenses. Specifically, our officers and directors may tend to
favor potential business combinations with target businesses
that offer to reimburse any expenses in excess of our available
proceeds not held in trust as well as the interest income earned
on the trust account balance of up to 1% of the gross proceeds
of this offering ($9.0 million, or $10.35 million if
the underwriters over-allotment option is exercised in
full) that may be released to us. While the board of directors
has not yet determined what procedures it will use to determine
the reasonableness of expenditures and down payments in
connection with a proposed acquisition, it will use its business
judgment in analyzing such issues.
|
|
|
|
Our officers and directors may have a conflict of interest with
respect to evaluating a particular business combination if the
retention or resignation of Mr. Berggruen and any such
other officer or directors were included by a target business as
a condition to any agreement with respect to a business
combination. We have been advised by Mr. Berggruen and our
other officer and directors that they will not take retaining
their positions into consideration in determining which
acquisition to pursue.
|
In general, officers and directors of a corporation incorporated
under the laws of the State of Delaware are required to present
business opportunities to a corporation if:
|
|
|
|
|
the corporation could financially undertake the opportunity;
|
|
|
|
the opportunity is within the corporations line of
business;
|
|
|
|
the corporation has an interest or expectancy in the
opportunity; and
|
|
|
|
by taking the opportunity, the fiduciary will be placed in a
position that conflicts with his duties to the corporation.
|
Accordingly, as a result of affiliations with the entities
described in the Management section of this
prospectus, Mr. Berggruen and our other officer and
directors may have similar legal obligations to present business
opportunities meeting the above listed criteria to the entities
described in the Management
84
section of this prospectus. We do not expect our independent
directors to present investment and business opportunities to
us. In addition, conflicts of interest may arise when our board
of directors evaluates a particular business opportunity with
respect to the above-listed criteria. We cannot assure you that
any of the above mentioned conflicts will be resolved in our
favor.
Mr. Berggruen and each of our other officer and directors
has, or may come to have, other fiduciary obligations.
Mr. Berggruen and a majority of our other officer and
directors have fiduciary obligations to other companies on whose
board of directors they presently sit, or may have obligations
to companies whose board of directors they may join in the
future. To the extent that they identify business opportunities
that may be suitable for us or other companies on whose board of
directors they may sit, our directors will honor those fiduciary
obligations. Accordingly, they may not present opportunities to
us that come to their attention in the performance of their
duties as directors of such other entities unless the other
companies have declined to accept such opportunities or clearly
lack the resources to take advantage of such opportunities.
Additionally, Mr. Berggruen and our other officer and
directors may become aware of business opportunities that may be
appropriate for presentation to us as well as the other entities
with which they are or may be affiliated. As set forth above, we
do not expect our independent directors to present investment
and business opportunities to us.
Conflict
of Interest Procedures with Respect to
Mr. Berggruen
Although Mr. Berggruen is the president of Berggruen
Holdings Ltd, Mr. Berggruen is not on the board of
directors nor is he an officer of any of the portfolio companies
of Berggruen Holdings Ltd and therefore does not owe any direct
fiduciary duties to such portfolio companies. Mr. Berggruen
is a director of GLG Partners and Liberty International, neither
of which is a portfolio company of Berggruen Holdings Ltd. In
addition, during the period while we are pursuing the
acquisition of a target business and except as discussed below
with respect to Berggruen Holdings Ltd, Mr. Berggruen has
agreed to present business combination opportunities that fit
within our criteria and guidelines to us in accordance with the
procedures outlined below.
We recognize that Mr. Berggruen may be deemed an affiliate
of Berggruen Holdings Ltds portfolio companies and that a
conflict of interest could arise if an opportunity is an
appropriate fit for one of such companies. We believe that the
procedures established with respect to the sourcing of a deal by
the employees of Berggruen Holdings Ltd whereby a potential
business combination opportunity with a company that is
competitive with any portfolio company of Berggruen Holdings Ltd
will not be presented to us until after such individual has
presented the opportunity to such portfolio company and such
portfolio company has determined not to proceed, eliminates such
conflict for Mr. Berggruen. A business combination
opportunity will be considered competitive with a Berggruen
Holdings Ltd portfolio company if the target company is engaged
in the design, development, manufacture, distribution or sale of
any products, or the provision of any services, which are the
same as, or competitive with, the products or services which a
Berggruen Holdings Ltd portfolio company designs, develops,
manufactures, distributes or sells. Berggruen Holdings
Ltds portfolio companies presently include a print
finishing company, a media storage company, a financial services
company, a wood treatment company, an enterprise software
business and an aerospace parts supplier. Berggruen Holdings Ltd
may at any time, or from time to time, acquire additional
portfolio companies or dispose of existing portfolio companies.
Any such newly acquired portfolio company would be covered by
this obligation.
Conflict
of Interest Procedures with Respect to Berggruen Holdings and
Berggruen Holdings Ltd.
We have entered into letter agreements with our sponsor,
Berggruen Holdings, Berggruen Holdings Ltd, and three of its
investment professionals that from the date of this prospectus
until the earlier of the consummation of our initial business
combination or our liquidation, we will have a right of first
review that provides that if Berggruen Holdings, Berggruen
Holdings Ltd, or any of such investment professionals
85
becomes aware of, or involved with, business combination
opportunities with an enterprise value of $750.0 million or
more, such entity or individual will first offer the business
opportunity to us and will only pursue such business opportunity
if our board of directors determines that we will not do so,
unless such business combination opportunity is competitive with
one of the portfolio companies of Berggruen Holdings Ltd, where
a Berggruen Holdings Ltd portfolio company is defined as a
company of which Berggruen Holdings Ltd, directly or indirectly,
controls a majority of the voting stock or a majority of the
board of directors, in which case it would first be offered to
such portfolio company. We will not have any such right of first
review with respect to business combination opportunities with
an enterprise value of less than $750.0 million. None of
the Berggruen Holdings Ltd portfolio companies has the size and
wherewithal to compete with us to acquire an entity with
valuations between $1.0 billion to $4.0 billion
without significant financing from an existing investor or from
a third party. In addition, none of the Berggruen Holdings Ltd
portfolio companies has stated criteria for businesses it may
seek to acquire in the future although they are not prohibited
from acquiring businesses with valuations in the
$1.0 billion to $4.0 billion range. Freedom was not,
and GLG Partners is not, a portfolio company of Berggruen
Holdings Ltd for this purpose. Berggruen Holdings Ltd will be
subject to the conflict of interest procedures described above
and as a result will not compete with us regarding acquisition
opportunities.
Conflict
of Interest Procedures with Respect to Berggruen Holdings
Ltds Employees
None of the investment professionals that are being made
available to us by Berggruen Holdings Ltd owe any fiduciary duty
to us, and none of them is required to commit any specified
amount of time to our affairs. These individuals will only help
identify target companies and assist with the due diligence of
the target company. Each of those individuals has agreed with us
that such individual will not present us with a potential
business combination opportunity with a company (i) with
which such individual has had any discussions, formal or
otherwise, with respect to a business combination with another
company prior to the consummation of this offering or
(ii) that is competitive with any portfolio company of
Berggruen Holdings Ltd, until after such individual has
presented the opportunity to such portfolio company and such
portfolio company has determined not to proceed with that
opportunity. A business combination opportunity will be
considered competitive with a Berggruen Holdings Ltd portfolio
company if the target company is engaged in the design,
development, manufacture, distribution or sale of any products,
or the provision of any services, which are the same as, or
competitive with, the products or services which a Berggruen
Holdings Ltd portfolio company designs, develops, manufactures,
distributes or sells.
Conflict
of Interest Procedures with Respect to Mr. Franklin and
Jarden Corporation
Mr. Franklin is chairman and chief executive officer of
Jarden Corporation. Jarden Corporation is a leading provider of
niche consumer products used in and around the home. Jarden
Corporation operates in three primary business segments through
a number of well recognized brands, including: (1) Branded
Consumables:
Ball
®
,
Bee
®
,
Bicycle
®
,
Crawford
®
,
Diamond
®
,
Dicon
®
,
First
Alert
®
,
Forster
®
,
Hoyle
®
,
Java
Log
®
,
Kerr
®
,
Lehigh
®
,
Leslie-Locke
®
,
Loew-Cornell
®
and Pine
Mountain
®
;
(2) Consumer Solutions:
Bionaire
®
,
Crock-Pot
®
,
FoodSaver
®
,
Harmony
®
,
Health o
meter
®
,
Holmes
®
,
Mr. Coffee
®
,
Oster
®
,
Patton
®
,
Rival
®
,
Seal-a-Meal
®
,
Sunbeam
®
,
VillaWare
®
and White
Mountain
tm
;
and (3) Outdoor Solutions: Abu
Garcia
®
,
Berkley
®
,
Campingaz
®
,
Coleman
®
,
Fenwick
®
,
Gulp
®
,
JT
®
,
K2
®
,
Marker
®
,
Marmot
®
,
Mitchell
®
,
Penn
®
,
Rawlings
®
,
Shakespeare
®
,
Sevylor
®
,
Stearns
®
,
Stren
®
,
Trilene
®
and
Volkl
®
.
Jardens publicly announced acquisition criteria is to
acquire focused, niche consumer product companies that
demonstrate a combination of attractive margins, strong cash
flow characteristics, category leading positions and products
that generate recurring revenues, with a particular focus on
businesses or brands with product offerings that provide
expansion into related categories that can be marketed through
its existing distribution channels or provide it with new
distribution channels for its existing products.
We have entered into an agreement with Mr. Franklin whereby
(i) we have acknowledged that Mr. Franklin has
committed to Jardens Board of Directors that we generally
do not intend to seek transactions that fit within Jardens
publicly announced acquisition criteria and (ii) we will
not interfere with Mr. Franklins obligations to
Jarden. However, in order to avoid the potential for a conflict
of interest,
86
Mr. Franklin has further committed to Jarden that he will
review any potential target company to determine whether such
company fits within Jardens publicly announced acquisition
criteria. If Mr. Franklin determines that such company fits
within such criteria, Mr. Franklin will first confirm with
an independent committee of Jardens Board of Directors
that Jarden is not interested in pursuing a potential business
combination opportunity with such company (whether such a
transaction was sourced by Mr. Franklin,
Mr. Berggruen, another Berggruen Holdings Ltd investment
professional or any other person). If the independent committee
concludes that Jarden was interested in that opportunity, we
have agreed not to continue with that transaction. Although
Jardens stated acquisition criteria do not specify a
valuation range for the businesses they may seek to acquire,
Jarden may, and has the size and wherewithal to, acquire an
entity with valuations in the $1.0 billion to
$4.0 billion range. We do not believe that the potential
conflict of interest with Jarden will cause undue difficulty in
finding acquisition opportunities for us given the nature of
Jardens acquisition criteria. Freedom was not, and GLG
Partners is not, a portfolio company of Marlin Equities or
Jarden Corporation.
Conflict
of Interest Procedures with Respect to GLG
Partners
Each of Mr. Berggruen and Mr. Franklin is a director
of GLG Partners, Inc. GLG Partners was previously a blank check
company formed by our sponsors in June 2006 which consummated
its initial business combination on November 2, 2007. GLG
Partners operates in the alternative asset management sector.
Although we do not have an industry focus, we may compete with
GLG Partners for acquisition opportunities in the alternative
asset management sector. GLG Partners does not have stated
criteria for businesses it may seek to acquire in the future.
However, GLG Partners may, and has the size and wherewithal to,
acquire an entity with valuations in the $1.0 billion to
$4.0 billion range. We have entered into an agreement with
each of Messrs. Berggruen and Franklin whereby we have
acknowledged that we will not interfere with their obligations
to GLG Partners. Additionally, in order to avoid the potential
for a conflict of interest, Messrs. Berggruen and Franklin
have committed to GLG Partners that each of them will first
review any potential target company identified by him to
determine whether such company fits within GLG Partners
acquisition criteria. If either Messrs. Berggruen or
Franklin determine that a target company does fit within the
acquisition criteria of GLG Partners, he will first present such
potential target to GLG Partners. Neither Messrs. Berggruen
nor Franklin will present the potential business combination
opportunity to us or our board unless GLG Partners confirms that
it is not interested in pursuing a business combination with
such company.
Accordingly, all potential business combination opportunities
with target companies in the alternative asset management sector
that are identified by Messrs. Berggruen or Franklin will
be required to be presented first to GLG Partners before they
can be presented to us. This procedure will make it unlikely
that we will acquire a target company in the alternative asset
management sector.
Conflict
of Interest Procedures with Respect to Liberty International
Acquisition Company
Berggruen Holdings and Marlin Equities have recently formed
Liberty International. Liberty International is a blank check
company that will seek business combination opportunities with
companies with principal business operations outside of North
America. We are contractually prohibited from seeking business
combination opportunities with companies with principal business
operations outside of North America until the earlier to occur
of (a) the execution of a definitive agreement for a
business combination by Liberty International or any blank check
company formed by our sponsors with a jurisdiction of
incorporation outside of the United States and with focus on
effecting a business combination with a target business with
principal business operations outside of North America, or
(b) the liquidation and dissolution of Liberty
International or such international blank check companies. We
will not seek a waiver of these restrictions from Liberty
International or such international blank check companies. In
the event that we pursue a business combination with a target
business with principal business operations outside of North
America, our search criteria and guidelines will be the same as
that which we will employ for a business whose principal
operations are in North America, and we will also seek to
evaluate any additional risks that may arise from the location
of the target business, as described under Risk
Factors Since we may
87
acquire a target business that is located outside the United
States, we may encounter risks specific to one or more countries
in which we ultimately operate. These criteria and
guidelines are described under Proposed
Business Business Strategy and Proposed
Business Selection of a target business and
structuring of a business combination. Accordingly, all
potential business combination opportunities with target
companies with principal business operations outside North
America that are identified by Messrs. Berggruen or
Franklin will be required to be presented first to Liberty
International before they can be presented to us. Liberty
Internationals stated acquisition criteria includes the
acquisition of businesses with valuations between
1.0 billion to 4.0 billion (approximately
$1.5 billion to $5.9 billion). We do not believe that
the potential conflict of interest with Liberty International
will cause undue difficulty in finding acquisition opportunities
for us.
Other
Conflict of Interest Limitations
To further minimize potential conflicts of interest, we will not
acquire an entity that is either a portfolio company of, or has
otherwise received a financial investment from, our sponsors,
directors, officers or their affiliates. In addition, we will
not enter into a business combination with any underwriters or
selling group members or any of their affiliates, unless we
obtain an opinion from an unaffiliated, independent investment
banking firm which is a member of the FINRA that a business
combination with such target business is fair to our
stockholders from a financial point of view. Any such opinion
will be included in our proxy solicitation materials, furnished
to stockholders in connection with their vote on such a business
combination. If we were to obtain an opinion, we do not
anticipate that stockholders would be entitled to rely on such
opinion, nor would we take this into consideration when deciding
which investment banking firm to hire.
Our officers, directors, and sponsors are free to become
affiliated with new blank check companies or entities engaged in
similar business activities prior to our identifying and
acquiring a target business. Each of our sponsors, officers and
directors has agreed that if he or it becomes involved with any
new blank check companies whose acquisition criteria include
North American companies with valuations between
$1.0 billion to $4.0 billion prior to the consummation
of our initial business combination, any potential opportunities
that fit such criteria would first be presented to us. Other
than as described under Management Conflicts
of Interest in this prospectus, none of our sponsors,
officers or directors currently owe a pre-existing fiduciary
duty to any other entity to present investment opportunities of
this size to such entity prior to presenting them to us.
88
The following table sets forth information regarding the
beneficial ownership of our common stock as of the date of this
prospectus, and as adjusted to reflect the sale of our common
stock included in the units offered by this prospectus, and
assuming no purchase of units in this offering, by:
|
|
|
|
|
each person known by us to be the beneficial owner of more than
5% of our outstanding shares of common stock;
|
|
|
|
Mr. Berggruen and each of our other directors; and
|
|
|
|
Mr. Berggruen and all our other directors as a group.
|
Unless otherwise indicated, we believe that all persons named in
the table have sole voting and investment power with respect to
all shares of common stock beneficially owned by them. The
following table does not reflect record or beneficial ownership
of the co-investment common stock, or the founders
warrants, the sponsors warrants and the co-investment
warrants as these warrants are not exercisable within
60 days of the date of this prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Approximate Percentage of
|
|
|
|
of Common Stock
|
|
|
Outstanding Common Stock
|
|
|
|
Beneficially
|
|
|
Before
|
|
|
After
|
|
Name and Address of Beneficial Owner(1)
|
|
Owned
|
|
|
Offering
|
|
|
Offering
|
|
|
Berggruen Acquisition Holdings Ltd (2)
|
|
|
11,106,000
|
(4)
|
|
|
49.4
|
%
|
|
|
9.9
|
%(6)
|
Marlin Equities II, LLC
|
|
|
11,106,000
|
(4)
|
|
|
49.4
|
|
|
|
9.9
|
(6)
|
Nicolas Berggruen(2)
|
|
|
11,106,000
|
(4)
|
|
|
49.4
|
|
|
|
9.9
|
(6)
|
Martin E. Franklin(3)
|
|
|
11,106,000
|
(4)
|
|
|
49.4
|
|
|
|
9.9
|
(6)
|
James N. Hauslein
|
|
|
96,000
|
(5)
|
|
|
*
|
|
|
|
*
|
|
Nathan Gantcher
|
|
|
96,000
|
(5)
|
|
|
*
|
|
|
|
*
|
|
Paul B. Guenther
|
|
|
96,000
|
(5)
|
|
|
*
|
|
|
|
*
|
|
All directors and executive officers as a group (5 individuals)
|
|
|
22,500,000
|
|
|
|
100.0
|
%
|
|
|
20.0
|
%
|
|
|
|
*
|
|
Less than 1%
|
|
(1)
|
|
The business address of Marlin Equities and Mr. Franklin is
555 Theodore Fremd Avenue,
Suite B-302,
Rye, New York 10580. The business address of Berggruen Holdings,
Mr. Berggruen and each of the other individuals is c/o
Liberty Acquisition Holdings Corp., 1114 Avenue of the Americas,
41st Floor, New York New York 10036.
|
|
(2)
|
|
Our sponsor Berggruen Acquisition Holdings Ltd, a British Virgin
Islands business company, is the direct subsidiary of Berggruen
Holdings North America Ltd., a British Virgin Islands business
company, or BHNA. BHNA is the managing and majority shareholder
of Berggruen Holdings and a direct, wholly-owned subsidiary of
Medici I Investments Corp., a British Virgin Islands company, or
Medici, which is a direct, wholly-owned subsidiary of Berggruen
Holdings Ltd, a British Virgin Islands business company. All of
the shares of Berggruen Holdings Ltd are owned by Tarragona
Trust, a British Virgin Islands trust. The trustee of Tarragona
Trust is Maitland Trustees Limited, a British Virgin Islands
corporation acting as an institutional trustee in the ordinary
course of business without the purpose or effect of changing or
influencing control of us. Mr. Berggruen is a director of
Berggruen Holdings Ltd and may be considered to have beneficial
ownership of Berggruen Holdings interests in us.
Mr. Berggruen disclaims beneficial ownership of any shares
in which he does not have a pecuniary interest.
|
|
(3)
|
|
Mr. Franklin is the majority owner and managing member of
Marlin Equities and may be considered to have beneficial
ownership of Marlin Equities interests in us.
Mr. Franklin disclaims beneficial ownership of any shares
in which he does not have a pecuniary interest.
|
|
(4)
|
|
Excludes 1,665,900 founders shares that will be forfeited
to the extent the underwriters over-allotment option is
not exercised.
|
89
|
|
|
(5)
|
|
Excludes 14,400 founders shares that will be forfeited to
the extent the underwriters over-allotment option is not
exercised.
|
|
(6)
|
|
Upon consummation of the co-investment, each of Berggruen
Holdings and Marlin Equities and Messrs. Berggruen and
Franklin will beneficially own 23.8% of our outstanding shares.
All of the shares of our common stock that Mr. Berggruen
and Mr. Franklin will be deemed to beneficially own and
control will be owned indirectly through their respective
affiliates. Neither Mr. Berggruen nor Mr. Franklin
directly owns or controls any of our shares of common stock.
|
If we and the underwriters determine the size of this offering
should be increased or decreased, a stock dividend, stock
combination or a contribution back to capital, as applicable,
would be effectuated in order to maintain our existing
stockholders ownership at the same percentage of the
number of shares to be sold in this offering.
Our sponsors have agreed to act together for the purpose of
acquiring, holding, voting or disposing of our shares and will
be deemed to be a group for reporting purposes under
the Exchange Act. Neither Mr. Berggruen nor our officer or
directors has indicated to us that he or she intends to purchase
units in this offering. Immediately after this offering,
Berggruen Holdings, Marlin Equities, Mr. Berggruen and
Mr. Franklin will beneficially own 19.7% of the then issued
and outstanding shares of our common stock. Because of this
ownership block, they may be able to effectively influence the
outcome of all matters requiring approval by our stockholders,
including the election of directors and approval of significant
corporate transactions other than approval of a business
combination. All of the shares of our common stock that
Mr. Berggruen and Mr. Franklin will be deemed to
beneficially own and control will be owned indirectly through
their respective affiliates. Neither Mr. Berggruen nor
Mr. Franklin directly owns or controls any of our shares of
common stock.
On August 9, 2007, each of Berggruen Holdings, which is
controlled by Mr. Berggruen, and Marlin Equities, which is
controlled by Mr. Franklin, entered into an agreement with
us to purchase, directly or through their affiliates, in equal
amounts (i) an aggregate of 12,000,000 warrants at a price
of $1.00 per warrant ($12.0 million in the aggregate) in a
private placement that will occur immediately prior to the
consummation of this offering, and (ii) an aggregate of
6,000,000 units at a price of $10.00 per unit
($60.0 million in the aggregate) in a private placement
that will occur immediately prior to our consummation of a
business combination, which will not occur until after the
signing of a definitive business combination agreement and the
approval of that business combination by a majority of our
public stockholders. The $12.0 million of proceeds from the
sale of the sponsors warrants will be added to the
proceeds of this offering and will be held in the trust account
pending our consummation of a business combination on the terms
described in this prospectus. If we do not complete such a
business combination, then the $12.0 million proceeds from
the sale of the sponsors warrants will be part of the
liquidating distribution to our public stockholders, and the
warrants will expire worthless. As the proceeds from the sale of
the co-investment units will not be received by us until
immediately prior to our consummation of a business combination,
these proceeds will not be deposited into the trust account and
will not be available for distribution to our public
stockholders in the event of a dissolution and liquidating
distribution. The sponsors warrants, the underlying shares
of common stock and the co-investment units are entitled to
registration rights as described under Description of
Securities.
In addition, in connection with the vote required for our
initial business combination, each of our founders has agreed to
vote the shares of common stock acquired by it before this
offering in accordance with the majority of the shares of common
stock voted by the public stockholders. Each of our founders has
also agreed to vote any shares acquired by it in or after this
offering in favor of our initial business combination.
Therefore, if such entity acquires shares in or after this
offering, it must vote such shares in favor of the proposed
business combination and has, as a result, waived the right to
exercise redemption rights for those shares in the event that
our initial business combination is approved by a majority of
our public stockholders.
90
On August 9, 2007, Berggruen Holdings, which is controlled
by Mr. Berggruen, purchased 12,771,900 of our units (which
includes the escrowed founders units and gives effect to
our unit dividend) for an aggregate purchase price of $12,340.01
and Marlin Equities, which is controlled by Mr. Franklin,
purchased 12,771,900 of our units (which includes the escrowed
founders units and gives effect to our unit dividend) for
an aggregate purchase price of $12,340.01. In addition, on
August 9, 2007, each of our independent directors purchased
110,400 (which includes the escrowed founders units and
gives effect to our unit dividend) units for a purchase price of
$106.66. The units are identical to those sold in this offering,
except that:
|
|
|
|
|
each of our founders has agreed to vote its founders
common stock in the same manner as a majority of the public
stockholders who vote at the special or annual meeting called
for the purpose of approving our initial business combination.
As a result, they will not be able to exercise redemption rights
with respect to the founders common stock if our initial
business combination is approved by a majority of our public
stockholders;
|
|
|
|
each of our founders has agreed that the founders common
stock included therein will not participate with the common
stock included in the units sold in this offering in any
liquidating distribution;
|
|
|
|
the warrants underlying such units will become exercisable after
our consummation of a business combination if and when the last
sales price of our common stock exceeds $15.00 per share for any
20 trading days within a 30 trading day period beginning
90 days after such business combination;
|
|
|
|
the warrants underlying such units will be non-redeemable for so
long as they are held by our founders or their permitted
transferees; and
|
|
|
|
the warrants underlying such units may be exercised by the
holder on a cashless basis.
|
Our founders have agreed to place 3,375,000 founders units
in escrow until the earlier of the time that the
underwriters over-allotment option is exercised or
expires. If the underwriters exercise their over-allotment
option in full, all 3,375,000 of these escrowed founders
units will be released to the founders upon the closing of the
underwriters over-allotment option exercise. If the
underwriters exercise their over-allotment option in part, a pro
rata amount of these escrowed founders units will be
released to the founders upon the closing of the
underwriters over-allotment option exercise such that the
number of founders units they hold will be equal to 20% of
the total number of units outstanding after this offering, and
the remainder of the escrowed founders units will be
forfeited by our founders and returned to us for cancellation.
Accordingly, the number of founders units and shares of
founders common stock may be reduced by up to 3,375,000,
and the number of founders warrants may be reduced by up
to 1,687,500 if the underwriters over-allotment option is
not exercised in full by the underwriters.
On August 9, 2007, Berggruen Holdings agreed to invest
$6.0 million in us in the form of sponsors warrants
to purchase 6,000,000 shares of our common stock at a price
of $1.00 per warrant. Berggruen Holdings is obligated to
purchase such sponsors warrants from us immediately prior
to the consummation of this offering.
On August 9, 2007, Berggruen Holdings agreed to invest
$30.0 million in us in the form of co-investment units at a
price of $10.00 per unit. Berggruen Holdings is obligated to
purchase such co-investment units from us immediately prior to
the consummation of a business combination.
On August 9, 2007, Marlin Equities agreed to invest
$6.0 million in us in the form of sponsors warrants
to purchase 6,000,000 shares of our common stock at a price
of $1.00 per warrant. Marlin Equities is obligated to purchase
such sponsors warrants from us immediately prior to the
consummation of this offering.
91
On August 9, 2007, Marlin Equities agreed to invest
$30.0 million in us in the form of co-investment units at a
price of $10.00 per unit. Marlin Equities is obligated to
purchase such co-investment units from us immediately prior to
the consummation of a business combination.
On December 6, 2007 we amended and restated the
subscription agreements relating to the sponsors warrants
and the co-investment to reflect the amendments to the terms of
the warrants and an increase in the co-investment amount. Please
see Managements Discussion and Analysis of Financial
Condition and Results of Operations Related Party
Transactions for a discussion of an expense we may
recognize as a result.
Pursuant to a registration rights agreement between us and our
founders, our founders will be entitled to certain registration
rights. Specifically, each of (i) the sponsors
warrants and the underlying common stock, and the co-investment
warrants and the underlying common stock; (ii) the
founders warrants and the underlying common stock; and
(iii) the founders units, founders common
stock, co-investment units and co-investment common stock will
be entitled to two demand registration rights and two
piggy-back registration rights commencing one year
after the consummation of a business combination. We are only
required to use our best efforts to cause a registration
statement relating to the resale of such securities to be
declared effective and, once effective, only to use our best
efforts to maintain the effectiveness of the registration
statement. The holders of warrants do not have the rights or
privileges of holders of our common stock or any voting rights
until such holders exercise their respective warrants and
receive shares of our common stock. Certain persons and entities
that receive any of the above described securities from our
founders will, under certain circumstances, be entitled to the
registration rights described herein. We will bear the expenses
incurred in connection with the filing of any such registration
statements.
Upon the consummation of this offering, we have agreed to pay
Berggruen Holdings, Inc., an affiliate of Mr. Berggruen, a
total of $10,000 per month for office space, administrative
services and secretarial support until the earlier of our
consummation of a business combination or our liquidation. This
arrangement is being agreed to by Berggruen Holdings, Inc. for
our benefit and is not intended to provide Berggruen Holdings,
Inc. compensation in lieu of a management fee. We believe that
such fees are at least as favorable as we could have obtained
from an unaffiliated third party. Prior to the consummation of
this offering, Berggruen Holdings has agreed to provide us with
office space, administrative services and secretarial support at
no charge.
Each of our sponsors has advanced $125,000 to us ($250,000 in
the aggregate) as of the date of this prospectus to cover
expenses related to this offering. These advances are
non-interest bearing, unsecured and are due within 60 days
following the consummation of this offering. The loans will be
repaid out of the proceeds of this offering not placed in trust.
We will reimburse Mr. Berggruen and our other officer and
directors for any reasonable out-of-pocket business expenses
incurred by them in connection with certain activities on our
behalf such as identifying and investigating possible target
businesses and business combinations. Subject to availability of
proceeds not placed in the trust account and interest income
earned on the balance in the trust account of up to 1% of the
gross proceeds of this offering ($9.0 million, or
$10.35 million if the underwriters over-allotment
option is exercised in full), there is no limit on the amount of
out-of-pocket expenses that could be incurred. The amount was a
result of a negotiation between us and the underwriters and was
meant to help maximize the amount of money in the trust account
that would be returned to the investors if we do not consummate
a business combination agreement within the permitted time. Our
audit committee will review and approve all expense
reimbursements made to Mr. Berggruen and our other officer
and directors and any expense reimbursements payable to members
of our audit committee will be reviewed and approved by our
board of directors, with the interested director or directors
abstaining from such review and approval. To the extent such
out-of-pocket expenses exceed the available proceeds not
deposited in the trust account, such out-of-pocket expenses
would not be reimbursed by us unless we consummate a business
combination.
Other than the $10,000 per month administrative fees and
reimbursable out-of-pocket expenses payable to
Mr. Berggruen and our other officer and directors, no
compensation or fees of any kind, including finders and
consulting fees, will be paid to Mr. Berggruen or our other
directors who owned our common stock
92
prior to this offering, or to any of their respective affiliates
for services rendered to us prior to or with respect to the
business combination.
After a business combination, Mr. Berggruen and any of our
other officer and directors who remain with us may be paid
consulting, management or other fees from the combined company
with any and all amounts being fully disclosed to stockholders,
to the extent then known, in the proxy solicitation materials
furnished to our stockholders. It is unlikely the amount of such
compensation will be known at the time of a stockholder meeting
held to consider a business combination, as it will be up to the
directors of the post-combination business to determine
executive and director compensation. In this event, such
compensation will be publicly disclosed at the time of its
determination in a Current Report on
Form 8-K,
as required by the SEC.
All ongoing and future transactions between us and
Mr. Berggruen and our other officer or directors or their
respective affiliates, including loans by Mr. Berggruen and
our other officer or directors, will be on terms believed by us
at that time, based upon other similar arrangements known to us,
to be no less favorable than are available from unaffiliated
third parties. Such transactions or loans, including any
forgiveness of loans, will require prior approval in each
instance by a majority of our disinterested
independent directors, to the extent we have
independent directors, or the members of our board who do not
have an interest in the transaction, in either case who had
access, at our expense, to our attorneys or independent legal
counsel. It is our intention to obtain estimates from
unaffiliated third parties for similar goods or services to
ascertain whether such transactions with affiliates are on terms
that are no less favorable to us than are otherwise available
from such unaffiliated third parties. If a transaction with an
affiliated third party were found to be on terms less favorable
to us than with an unaffiliated third party, we would not engage
in such transaction.
During the period while we are pursuing the acquisition of a
target business, Mr. Berggruen has agreed to present
business combination opportunities that fit within our criteria
and guidelines to us.
Berggruen Holdings has agreed to make three investment
professionals of Berggruen Holdings Ltd located at the Berggruen
Holdings Ltds offices in New York, Los Angeles and London
available at no cost to us to actively source an acquisition for
us. Each of these investment professionals has agreed with us
that such individual will not present us with a potential
business combination opportunity with a company (i) with
which such individual has had any discussions, formal or
otherwise, with respect to a business combination with another
company prior to the consummation of this offering or
(ii) that is competitive with any portfolio company of
Berggruen Holdings Ltd until after such individual has presented
the opportunity to such portfolio company and such portfolio
company has determined not to proceed with that opportunity.
Our policies and procedures for the review, approval or
ratification of certain related party transactions are described
above in the section entitled Management
Conflicts of Interest. We intend to adopt policies and
procedures for related persons transactions in connection with
our initial business combination.
We consider each of Berggruen Holdings, Marlin Equities, Mr.
Berggruen and Mr. Franklin to be a promoter of ours,
as such term is defined within the rules promulgated by the SEC
under the Securities Act of 1933.
93
DESCRIPTION
OF SECURITIES
Our authorized capital stock consists of 200,000,000 shares
of common stock, $0.0001 par value, and 1,000,000 shares of
undesignated preferred stock, $0.0001 par value. Assuming no
exercise of the underwriters over-allotment option,
112,500,000 shares of our common stock will be outstanding
following this offering (118,500,000 upon issuance of the
co-investment common stock). No shares of preferred stock are or
will be outstanding immediately following this offering. The
following description summarizes the material terms of our
capital stock. Because it is only a summary, it may not contain
all the information that is important to you. For a complete
description you should refer to our amended and restated
certificate of incorporation and bylaws, which are filed as
exhibits to the registration statement of which this prospectus
is a part, and to the applicable provisions of the Delaware
General Corporation Law.
Units
Public
Stockholders Units
Each unit consists of one share of common stock and one half
(1/2) of one warrant. Each warrant entitles the holder to
purchase one share of common stock. Because each unit includes
one half (1/2) of one warrant, holders will need to have two
units in order to have one warrant. Warrants may be exercised
only in increments of one whole warrant. The common stock and
warrants comprising the units are expected to begin separate
trading thirty-five days (or such earlier number of days as the
underwriters may permit) after the consummation of this offering
(or as soon as practicable thereafter), subject to our having
filed the Current Report on
Form 8-K
described below and having issued a press release announcing
when such separate trading will begin.
In no event will the common stock and warrants be traded
separately until we have filed with the SEC a Current Report on
Form 8-K
which includes an audited balance sheet reflecting our receipt
of the gross proceeds of this offering. We will file a Current
Report on
Form 8-K
which includes this audited balance sheet upon the consummation
of this offering.
Founders
Units
On August 9, 2007, Berggruen Holdings, Marlin Equities and
our three independent directors purchased an aggregate of
25,875,000 of our units (after giving effect to our unit
dividend) for an aggregate purchase price of $25,000 in a
private placement (which includes the escrowed founders
units). Each unit consisted of one share of common stock and one
half (1/2) of one warrant. The founders units are
identical to those sold in this offering, except that:
|
|
|
|
|
each of our founders has agreed to vote its founders
common stock in the same manner as a majority of the public
stockholders who vote at the special or annual meeting called
for the purpose of approving our initial business combination.
As a result, they will not be able to exercise redemption rights
(as described below) with respect to the founders common
stock if our initial business combination is approved by a
majority of our public stockholders;
|
|
|
|
each of our founders has agreed that the founders common
stock included therein will not participate with the common
stock included in the units sold in this offering in any
liquidating distribution;
|
|
|
|
the founders warrants will become exercisable after our
consummation of a business combination if and when the last
sales price of our common stock exceeds $15.00 per share for any
20 trading days within a 30 trading day period beginning
90 days after such business combination;
|
|
|
|
the founders warrants will be non-redeemable so long as
they are held by our founders or their transferees (permitted as
described below); and
|
|
|
|
the warrants underlying such units may be exercised by the
holder on a cashless basis.
|
94
Pursuant to a registration rights agreement between us and our
founders, the holders of each of (i) our founders
units, founders common stock and (ii) our
founders warrants and the underlying common stock will be
entitled to two demand registration rights and two
piggy-back registration rights commencing one year
after the consummation of a business combination.
Each of our founders has agreed, subject to certain exceptions
described below, not to sell, assign or otherwise transfer,
directly or indirectly, any of its founders units,
founders common stock or founders warrants
(including the common stock to be issued upon exercise of the
founders warrants) until one year from the date of the
consummation of a business combination. These transfer
restrictions also apply to the transfers of the ownership
interests in Berggruen Holdings and Marlin Equities.
Each of our founders is permitted to transfer its founders
units, founders common stock or founders warrants
(including the common stock to be issued upon exercise of the
founders warrants) to our officers and directors, and
other persons or entities associated with such founder, but the
transferees receiving such securities will be subject to the
same agreement as our founders. Persons or entities associated
with our sponsors means (i) relatives of such person,
(ii) any corporation or organization of which such person
is an officer or partner or directly or indirectly the
beneficial owner of 10% or more of any class of equity
securities and (iii) any trust or estate in which such
person has a substantial beneficial interest or as to which such
person serves as a trustee, executor or in a similar fiduciary
capacity. Any of the foregoing transfers will be made in
accordance with applicable securities laws.
Co-Investment
Units
Immediately prior to our consummation of a business combination,
our sponsors will purchase in equal amounts an aggregate of
6,000,000 of our units at a price of $10.00 per unit for an
aggregate purchase price of $60.0 million. Each unit will
consist of one share of common stock and one half (1/2) of one
warrant.
The co-investment units will be identical to the units sold in
this offering. However, as the proceeds from the sale of the
co-investment units will not be received by us until immediately
prior to our consummation of a business combination, these
proceeds will not be deposited into the trust account and will
not be available for distribution to our public stockholders in
the event of a dissolution and liquidating distribution. Our
sponsors will not receive any additional carried interest (in
the form of additional units, common stock, warrants or
otherwise) in connection with the co-investment.
Pursuant to the registration rights agreement, the holders of
(i) our co-investment units and co-investment common stock
and (ii) the co-investment warrants and the underlying
common stock will be entitled to two demand registration rights
and two piggy-back registration rights commencing
one year after the consummation of a business combination.
Each of our sponsors has agreed, subject to certain exceptions
described below, not to sell, assign or otherwise transfer,
directly or indirectly, any of its co-investment units,
co-investment common stock or co-investment warrants (including
the common stock to be issued upon exercise of the co-investment
warrants) until one year from the date of the consummation of a
business combination. These transfer restrictions also apply to
the transfers of the ownership interests in Berggruen Holdings
and Marlin Equities.
Each of our sponsors will be permitted to transfer its
co-investment units, co-investment common stock or co-investment
warrants (including the common stock to be issued upon exercise
of the co-investment warrants) to our officers and directors,
and other persons or entities associated with such sponsor, but
the transferees receiving such securities will be subject to the
same agreement as our sponsors. Such transfers will be made in
accordance with applicable securities laws.
Each of our sponsors has agreed to provide our audit committee,
on a quarterly basis, with evidence that such sponsor has
sufficient net liquid assets available to consummate the
co-investment. Such net
95
liquid assets will include cash and marketable securities held
by Mr. Berggruen and Mr. Franklin. In the event that a
sponsor is unable to consummate the co-investment when required
to do so, such sponsor has agreed to surrender and forfeit its
founders units to us for cancellation.
Common
Stock
As of the date of this prospectus, there were
25,875,000 shares of our common stock outstanding held by
five stockholders of record, including the escrowed
founders units. Upon closing of this offering (assuming no
exercise of the underwriters over-allotment option), there
will be 112,500,000 shares of our common stock outstanding
(118,500,000 upon issuance of the co-investment common stock).
Except for such voting rights that may be given to one or more
series of preferred stock issued by the board of directors
pursuant to the blank check power granted by our amended and
restated certification of incorporation or required by law,
holders of common stock will have exclusive voting rights for
the election of our directors and all other matters requiring
stockholder action. Holders of common stock will be entitled to
one vote per share on matters to be voted on by stockholders and
also will be entitled to receive such dividends, if any, as may
be declared from time to time by our board of directors in its
discretion out of funds legally available therefor. After a
business combination is concluded, if ever, and upon our
dissolution, our public stockholders will be entitled to receive
pro rata
all assets remaining available for distribution
to stockholders after payment of all liabilities and provision
for the liquidation of any shares of preferred stock at the time
outstanding. There is no cumulative voting with respect to the
election of directors, with the result that the holders of more
than 50% of the shares voted for the election of directors can
elect all of the directors.
In connection with the vote required for our initial business
combination, each of our founders has agreed to vote the shares
of common stock owned by it immediately before this offering in
accordance with the majority of the shares of common stock voted
by the public stockholders. Furthermore, each of our founders
has agreed that it will vote any shares of common stock acquired
by it in or after this offering in favor of a proposed business
combination. As a result, if our founders acquire shares in or
after this offering, they must vote in favor of the proposed
business combination with respect to those shares, and will
therefore waive the right to exercise the redemption rights
granted to public stockholders. In connection with the vote
required for our initial business combination, a majority of our
issued and outstanding common stock (whether or not held by
public stockholders) will constitute a quorum. Our founders have
agreed to act together for the purpose of voting our shares. If
any matters are voted on by our stockholders at an annual or
special meeting, our founders may vote all their shares,
whenever acquired, as they see fit. On consummation of our
initial business combination, the underwriters will be entitled
to receive the deferred underwriters discounts and
commissions then held in the trust account, exclusive of
interest thereon.
We will proceed with the business combination only if a majority
of the shares of our common stock voted are voted in favor of
the business combination and public stockholders owning less
than 30% of the shares sold in this offering exercise their
redemption rights discussed below. Voting against the business
combination alone will not result in redemption of a
stockholders shares for a
pro rata
share of the
trust account. A stockholder must have also exercised the
redemption rights described below for a redemption to be
effective.
If we liquidate prior to a business combination, we have agreed
in the trust agreement governing the trust account that our
public stockholders are entitled to share ratably in the trust
account, inclusive of any interest not previously released to us
to fund working capital requirements, and net of any income
taxes due on such interest, which income taxes, if any, shall be
paid from the trust fund, and any assets remaining available for
distribution to them after payment of liabilities. Liquidation
expenses will only be paid from funds held outside of the trust
account. If we do not complete an initial business combination
and the trustee must distribute the balance of the trust account
pursuant to the trust agreement, the underwriters have agreed
that: (i) they will forfeit any rights or claims to their
deferred underwriting discounts and commissions, including any
accrued interest thereon, then in the trust account and
(ii) the deferred underwriters discounts and
commission will be distributed on a
pro rata
basis among
the public stockholders, together with any accrued interest
thereon and net of income taxes payable on such interest. Each
of our founders has agreed to waive its respective rights to
participate in any liquidating distribution occurring
96
upon our failure to consummate a business combination with
respect to all shares of common stock owned by it before this
offering.
Our stockholders have no conversion, preemptive or other
subscription rights and there are no sinking fund or redemption
provisions applicable to the common stock, except that public
stockholders have the right to have their shares of common stock
redeemed for cash equal to their
pro rata
share of the
trust account plus any interest if they vote against the
business combination and the business combination is approved
and completed. Public stockholders who cause us to redeem their
common stock for their
pro rata
share of the trust
account will retain the right to exercise any warrants they own
if they previously purchased units or warrants.
The payment of dividends, if ever, on the common stock will be
subject to the prior payment of dividends on any outstanding
preferred stock, of which there is currently none.
Preferred
Stock
Our amended and restated certificate of incorporation provides
that shares of preferred stock may be issued from time to time
in one or more series. Our board of directors will be authorized
to fix the voting rights, if any, designations, powers,
preferences, the relative, participating, optional or other
special rights and any qualifications, limitations and
restrictions thereof, applicable to the shares of each series.
Our board of directors will be able to, without stockholder
approval, issue preferred stock with voting and other rights
that could adversely affect the voting power and other rights of
the holders of the common stock and could have anti-takeover
effects. The ability of our board of directors to issue
preferred stock without stockholder approval could have the
effect of delaying, deferring or preventing a change of control
of us or the removal of existing management. We have no
preferred stock outstanding at the date hereof. Although we do
not currently intend to issue any shares of preferred stock, we
cannot assure you that we will not do so in the future. No
shares of preferred stock are being issued or registered in this
offering.
Warrants
Public
Stockholders Warrants
Each warrant entitles the registered holder to purchase one
share of our common stock at a price of $5.50 per share, subject
to adjustment as discussed below, at any time commencing on the
later of:
|
|
|
|
|
the consummation of a business combination; or
|
|
|
|
one year from the date of this prospectus,
|
provided in each case that there is an effective registration
statement covering the shares of common stock underlying the
warrants in effect.
The warrants will expire at 5:00 p.m., New York time on
December 12, 2013 or earlier upon redemption. Once the
warrants become exercisable, we may call the warrants for
redemption:
|
|
|
|
|
in whole but not in part,
|
|
|
|
at a price of $0.01 per warrant,
|
|
|
|
upon not less than 30 days prior written notice of
redemption to each warrant holder, and
|
|
|
|
if, and only if, the reported last sale price of the common
stock equals or exceeds $15.00 per share for any 20 trading days
within a 30 trading day period ending on the third business day
prior to the notice of redemption to warrant holders.
|
We have established these redemption criteria to provide warrant
holders with a significant premium to the initial warrant
exercise price as well as a sufficient degree of liquidity to
cushion the market reaction, if any, to our redemption call. If
the foregoing conditions are satisfied and we issue notice of
redemption of the warrants, each warrant holder shall be
entitled to exercise his or her warrant prior to the scheduled
97
redemption date. However, the price of the common stock may fall
below the redemption trigger price or the warrant exercise price
after the redemption notice is issued.
If we call the warrants for redemption as described above, our
management will have the option to require any holder that
wishes to exercise his, her or its warrant (including the
founders warrants) to do so on a cashless
basis. If our management takes advantage of this option,
all holders of warrants would pay the exercise price by
surrendering his, her or its warrants for that number of shares
of common stock equal to the quotient obtained by dividing
(x) the product of the number of shares of common stock
underlying the warrants, multiplied by the difference between
the exercise price of the warrants and the fair market
value (defined below) by (y) the fair market value.
The fair market value shall mean the average
reported last sale price of the common stock for the 10 trading
days ending on the third trading day prior to the date on which
the notice of redemption is sent to the holders of warrants. If
our management takes advantage of this option, the notice of
redemption will contain the information necessary to calculate
the number of shares of common stock to be received upon
exercise of the warrants, including the fair market
value in such case. Requiring a cashless exercise in this
manner will reduce the number of shares to be issued and thereby
lessen the dilutive effect of a warrant redemption. We believe
this feature is an attractive option to us if we do not need the
cash from the exercise of the warrants after a business
combination. If we call our warrants for redemption and our
management does not take advantage of this option, our founders
and their respective transferees would still be entitled to
exercise their founders warrants and sponsor warrants, as
applicable, for cash or on a cashless basis using the same
formula described above that other warrant holders would have
been required to use had all warrant holders been required to
exercise their warrants on a cashless basis, as described in
more detail below.
The warrants will be issued in registered form under a warrant
agreement between Continental Stock Transfer &
Trust Company, as warrant agent, and us. You should review
a copy of the warrant agreement, which has been filed as an
exhibit to the registration statement of which this prospectus
is a part, for a complete description of the terms and
conditions of the warrants.
The exercise price and number of shares of common stock issuable
on exercise of the warrants may be adjusted in certain
circumstances including in the event of a stock dividend, or our
recapitalization, reorganization, merger or consolidation.
However, the exercise price and number of shares of common stock
issuable on exercise of the warrants will not be adjusted for
issuances of common stock at a price below the warrant exercise
price.
The warrants may be exercised upon surrender of the warrant
certificate on or prior to the expiration date at the offices of
the warrant agent, with the exercise form on the reverse side of
the warrant certificate completed and executed as indicated,
accompanied by full payment of the exercise price, by certified
check payable to us, for the number of warrants being exercised.
Warrant holders do not have the rights or privileges of holders
of common stock, including voting rights, until they exercise
their warrants and receive shares of common stock. After the
issuance of shares of common stock upon exercise of the
warrants, each holder will be entitled to one vote for each
share held of record on all matters to be voted on by
stockholders.
No warrants will be exercisable unless at the time of exercise
we have a registration statement under the Securities Act in
effect covering the shares of common stock issuable upon the
exercise of the warrants and a current prospectus relating to
that common stock. Under the warrant agreement, we have agreed
that prior to the commencement of the exercise period, we will
file a registration statement with the SEC for the registration
of the common stock issuable upon exercise of the warrants, use
our best efforts to cause the registration statement to become
effective on or prior to the commencement of the exercise period
and to maintain a current prospectus relating to the common
stock issuable upon the exercise of the warrants until the
warrants expire or are redeemed. However, we cannot assure you
that we will be able to be able to keep the prospectus included
in such registration statement current. The warrants may be
deprived of any value and the market for the warrants may be
limited if there is no registration statement in effect covering
the shares of the common stock issuable upon the exercise of the
warrants or if the prospectus relating to the common stock
issuable on the exercise of the warrants is not current.
98
No fractional shares will be issued upon exercise of the
warrants. If a holder exercises warrants and would be entitled
to receive a fractional interest of a share, we will round up
the number of shares of common stock to be issued to the warrant
holder to the nearest whole number of shares.
Founders
Warrants
The founders warrants are substantially similar to those
being issued in this offering, except that the founders
warrants:
|
|
|
|
|
will become exercisable after our consummation of a business
combination if and when the last sales price of our common stock
exceeds $15.00 per share for any 20 trading days within a 30
trading day period beginning 90 days after such business
combination;
|
|
|
|
will be non-redeemable so long as they are held by our founders
or their transferees (permitted as described below); and
|
|
|
|
may be exercised at the option of the holder on a cashless basis.
|
If holders of the founders warrants elect to exercise them
on a cashless basis, they would pay the exercise price by
surrendering his, her or its warrants for that number of shares
of common stock equal to the quotient obtained by dividing
(x) the product of the number of shares of common stock
underlying the warrants, multiplied by the difference between
the exercise price of the warrants and the fair market
value (defined below) by (y) the fair market value.
The fair market value shall mean the average
reported last sale price of the common stock for the 10 trading
days ending on the third trading day prior to the exercise date
of such warrant. The reason that we have agreed that these
warrants will be exercisable on a cashless basis so long as they
are held by our founders or their affiliates and transferees
that were permitted as described below is because it is not
known at this time whether they will be affiliated with us
following a business combination. If they remain affiliated with
us, their ability to sell our securities in the open market will
be significantly limited. We expect to have policies in place
that prohibit insiders from selling our securities except during
specific periods of time. Even during such periods of time when
insiders will be permitted to sell our securities, an insider
cannot trade in our securities if he or she is in possession of
material non-public information. Accordingly, unlike public
stockholders who could exercise their warrants and sell the
shares of common stock received upon such exercise freely in the
open market in order to recoup the cost of such exercise, the
insiders could be significantly restricted from selling such
securities. As a result, we believe that allowing the holders to
exercise such warrants on a cashless basis is appropriate.
Our founders will be permitted to transfer founders
warrants (including the common stock to be issued upon exercise
of the founders warrants) in certain limited
circumstances, such as to our officers and directors, and other
persons or entities associated with a sponsor, but the
transferees receiving such founders warrants will be
subject to the same sale restrictions imposed on our founders.
Such transfers will be made in accordance with applicable
securities laws.
Pursuant to the registration rights agreement, the founders
holding founders warrants will be entitled to two demand
registration rights and two piggy-back registration
rights commencing one year after the consummation of a business
combination for the registration of the common stock issuable
upon exercise of the founders warrants and we have agreed
to use our best efforts to cause the registration statement to
become effective and to maintain a current prospectus relating
to the common stock issuable upon the exercise of the
founders warrants until these warrants expire.
Each of our founders has agreed, subject to certain exceptions,
not to sell, assign or otherwise transfer, directly or
indirectly, any of its founders warrants (including the
common stock to be issued upon exercise of the founders
warrants) until one year from the date of the consummation of a
business combination. These transfer restrictions also apply to
the transfers of the ownership interests in Berggruen Holdings
and Marlin Equities.
99
Sponsors
Warrants
The sponsors warrants will have terms and provisions that
are identical to the warrants included in the units being sold
in this offering, except that these warrants:
|
|
|
|
|
will not be (and the common stock to be issued upon exercise of
these warrants will not be) transferable, assignable or salable,
directly or indirectly, by our sponsors or their permitted
transferees until one year after we consummate a business
combination;
|
|
|
|
will be non-redeemable so long as our sponsors or their
transferees (permitted as described below) hold such warrants;
and
|
|
|
|
may be exercised at the option of the holder on a cashless basis.
|
Our sponsors will be permitted to transfer sponsors
warrants (including the common stock to be issued upon exercise
of the sponsors warrants) in certain limited
circumstances, such as to our officers and directors, and other
persons or entities associated with such sponsor, but the
transferees receiving such sponsors warrants will be
subject to the same sale restrictions imposed on our sponsors.
Such transfers will be made in accordance with applicable
securities laws. The proceeds from the sale of the
sponsors warrants will be part of the funds distributed to
our public stockholders in the event we are unable to complete a
business combination. Pursuant to the registration rights
agreement, the sponsors will be entitled to two demand
registration rights and two piggy-back registration
rights commencing one year after the consummation of a business
combination for the registration of the common stock issuable
upon exercise of the sponsors warrants, and we have agreed
to use our best efforts to cause the registration statement to
become effective and to maintain a current prospectus relating
to the common stock issuable upon the exercise of the
sponsors warrants until these warrants expire.
If holders of the sponsors warrants elect to exercise them
on a cashless basis, they would pay the exercise price by
surrendering his, her or its warrants for that number of shares
of common stock equal to the quotient obtained by dividing
(x) the product of the number of shares of common stock
underlying the warrants, multiplied by the difference between
the exercise price of the warrants and the fair market
value (defined below) by (y) the fair market value.
The fair market value shall mean the average
reported last sale price of the common stock for the 10 trading
days ending on the third trading day prior to the exercise date
of such warrants. The reason that we have agreed that these
warrants will be exercisable on a cashless basis so long as they
are held by our sponsors or their affiliates and permitted
transferees is because it is not known at this time whether they
will be affiliated with us following a business combination. If
they remain affiliated with us, their ability to sell our
securities in the open market will be significantly limited. We
expect to have policies in place that prohibit insiders from
selling our securities except during specific periods of time.
Even during such periods of time when insiders will be permitted
to sell our securities, an insider cannot trade in our
securities if he or she is in possession of material non-public
information. Accordingly, unlike public stockholders who could
exercise their warrants and sell the shares of common stock
received upon such exercise freely in the open market in order
to recoup the cost of such exercise, the insiders could be
significantly restricted from selling such securities. As a
result, we believe that allowing the holders to exercise such
warrants on a cashless basis is appropriate.
Co-Investment
Warrants
The co-investment warrants will have terms and provisions that
are identical to the warrants included in the units being sold
in this offering, except that these warrants (including the
common stock to be issued upon exercise of these warrants) will
not be transferable, assignable or salable, directly or
indirectly, by our sponsors or their transferees (permitted as
described below) until one year after we complete a business
combination.
Our sponsors will be permitted to transfer co-investment
warrants (including the common stock to be issued upon exercise
of the co-investment warrants) in certain limited circumstances,
such as to our officers and directors, and other persons or
entities associated with such sponsor, but the transferees
receiving such co-investment warrants will be subject to the
same sale restrictions imposed on our sponsors. Such transfers
100
will be made in accordance with applicable securities laws.
Pursuant to the registration rights agreement, the sponsors will
be entitled to two demand registration rights and two
piggy-back registration rights commencing one year
after the consummation of a business combination for the
registration of the common stock issuable upon exercise of the
co-investment warrants, and we have agreed to use our best
efforts to cause the registration statement to become effective
and to maintain a current prospectus relating to the common
stock issuable upon the exercise of the co-investment warrants
until these warrants expire. To the extent that the
co-investment warrants are exercised, we anticipate that the
proceeds will be used for working capital.
If holders of the co-investment warrants elect to exercise them
on a cashless basis, they would pay the exercise price by
surrendering his, her or its warrants for that number of shares
of common stock equal to the quotient obtained by dividing
(x) the product of the number of shares of common stock
underlying the warrants, multiplied by the difference between
the exercise price of the warrants and the fair market
value (defined below) by (y) the fair market value.
The fair market value shall mean the average
reported last sale price of the common stock for the 10 trading
days ending on the third trading day prior to the exercise date
of such warrants. The reason that we have agreed that these
warrants will be exercisable on a cashless basis so long as they
are held by our sponsors or their affiliates and permitted
transferees is because it is not known at this time whether they
will be affiliated with us following a business combination. If
they remain affiliated with us, their ability to sell our
securities in the open market will be significantly limited. We
expect to have policies in place that prohibit insiders from
selling our securities except during specific periods of time.
Even during such periods of time when insiders will be permitted
to sell our securities, an insider cannot trade in our
securities if he or she is in possession of material non-public
information. Accordingly, unlike public stockholders who could
exercise their warrants and sell the shares of common stock
received upon such exercise freely in the open market in order
to recoup the cost of such exercise, the insiders could be
significantly restricted from selling such securities. As a
result, we believe that allowing the holders to exercise such
warrants on a cashless basis is appropriate.
Dividends
Except for the
1-for-5
unit
dividend that was effected on December 6, 2007 (which is
after the date of our financial statements included in this
prospectus), we have not paid any dividends on our common stock
to date and we do not intend to pay cash dividends prior to the
consummation of a business combination. After we complete a
business combination, the payment of dividends will depend on
our revenues and earnings, if any, capital requirements and
general financial condition. The payment of dividends after a
business combination will be within the discretion of our
then-board of directors. Our board of directors currently
intends to retain any earnings for use in our business
operations and, accordingly, we do not anticipate the board
declaring any dividends in the foreseeable future.
Our
Transfer Agent and Warrant Agent
The transfer agent for our securities and warrant agent for our
warrants is Continental Stock Transfer &
Trust Company, 17 Battery Place, New York, New York 10004.
Certain
Anti-takeover Provisions of Delaware Law and our Amended and
Restated Certificate of Incorporation and By-Laws
Upon the closing of this offering, we will be governed by the
provisions of Section 203 of the Delaware General
Corporation Law, which generally has an anti-takeover effect for
transactions not approved in advance by our board of directors.
This may discourage takeover attempts that might result in
payment of a premium over the market price for the shares of
common stock held by stockholders. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in
a business combination with an interested
stockholder for a three-year period following the time
that such stockholder becomes an interested stockholder, unless
the business combination is approved in a prescribed manner. A
business combination includes, among other things, a
merger, asset or stock sale or other transaction resulting in a
financial benefit to the interested stockholder. An
interested stockholder is a person who, together
with affiliates and associates, owns, or did
101
own within three years prior to the determination of interested
stockholder status, 15% or more of the corporations voting
stock.
Under Section 203, a business combination between a
corporation and an interested stockholder is prohibited unless
it satisfies one of the following conditions:
|
|
|
|
|
before the stockholder became interested, the board of directors
approved either the business combination or the transaction
which resulted in the stockholder becoming an interested
stockholder; or
|
|
|
|
upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the voting stock
outstanding, shares owned by persons who are directors and also
officers, and employee stock plans, in some instances; or
|
|
|
|
at or after the time the stockholder became interested, the
business combination was approved by the board of directors of
the corporation and authorized at an annual or special meeting
of the stockholders by the affirmative vote of at least
two-thirds of the outstanding voting stock which is not owned by
the interested stockholder.
|
Stockholder
Action; Special Meeting of Stockholders
Our amended and restated certificate of incorporation provides
that our stockholders will not be able to take any action by
written consent subsequent to the consummation of this offering,
but will only be able to take action at duly called annual or
special meetings of stockholders. Our bylaws further provide
that special meetings of our stockholders may be only called by
our board of directors with a majority vote of our board of
directors, by our chief executive officer or our chairman.
Advance
Notice Requirements for Stockholder Proposals and Director
Nominations
Our bylaws provide that stockholders seeking to bring business
before our annual meeting of stockholders, or to nominate
candidates for election as directors at our annual meeting of
stockholders, must provide timely notice of their intent in
writing. To be timely, a stockholders notice will need to
be delivered to our principal executive offices not later than
the close of business on the 90th day nor earlier than the close
of business on the 120th day prior to the first anniversary of
the preceding years annual meeting of stockholders. For
the first annual meeting of stockholders after the closing of
this offering, a stockholders notice shall be timely if
delivered to our principal executive offices not later than the
90th day prior to the scheduled date of the annual meeting of
stockholders or the 10th day following the day on which public
announcement of the date of our annual meeting of stockholders
is first made or sent by us. Our bylaws also specify certain
requirements as to the form and content of a stockholders
meeting. These provisions may preclude our stockholders from
bringing matters before our annual meeting of stockholders or
from making nominations for directors at our annual meeting of
stockholders.
Authorized
but Unissued Shares
Our authorized but unissued shares of common stock and preferred
stock are available for future issuances without stockholder
approval and could be utilized for a variety of corporate
purposes, including future offerings to raise additional
capital, acquisitions and employee benefit plans. The existence
of authorized but unissued and unreserved common stock and
preferred stock could render more difficult or discourage an
attempt to obtain control of us by means of a proxy contest,
tender offer, merger or otherwise.
Limitation
on Liability and Indemnification of Directors and
Officers
Our amended and restated certificate of incorporation provides
that our directors and officers will be indemnified by us to the
fullest extent authorized by Delaware law as it now exists or
may in the future be
102
amended, against all expenses and liabilities reasonably
incurred in connection with their service for or on our behalf.
In addition, our amended and restated certificate of
incorporation provides that our directors will not be personally
liable for monetary damages to us for breaches of their
fiduciary duty as directors, unless they violated their duty of
loyalty to us or our stockholders, acted in bad faith, knowingly
or intentionally violated the law, authorized unlawful payments
of dividends, unlawful stock purchases or unlawful redemptions,
or derived an improper personal benefit from their actions as
directors.
We have entered into or will enter into agreements with
Mr. Berggruen and our other officer and directors to
provide contractual indemnification in addition to the
indemnification provided in our amended and restated certificate
of incorporation. We believe that these provisions and
agreements are necessary to attract qualified directors. Our
bylaws also will permit us to secure insurance on behalf of any
officer, director or employee for any liability arising out of
his or her actions, regardless of whether Delaware law would
permit indemnification. We intend to purchase a policy of
directors and officers liability insurance that
insures Mr. Berggruen and our other officer and directors
against the cost of defense, settlement or payment of a judgment
in some circumstances and insures us against our obligations to
indemnify Mr. Berggruen and our other officer and directors.
These provisions may discourage stockholders from bringing a
lawsuit against our directors for breach of their fiduciary
duty. These provisions also may have the effect of reducing the
likelihood of derivative litigation against directors and
officers, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a
stockholders investment may be adversely affected to the
extent we pay the costs of settlement and damage awards against
directors and officers pursuant to these indemnification
provisions. We believe that these provisions, the insurance and
the indemnity agreements are necessary to attract and retain
talented and experienced directors and officers.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
Securities
Eligible for Future Sale
Upon consummation of this offering (assuming no exercise of the
underwriters over-allotment option) we will have
112,500,000 shares of our common stock outstanding
(118,500,000 upon issuance of the co-investment common stock).
Of these shares, the 90,000,000 shares sold in this
offering will be freely tradable without restriction or further
registration under the Securities Act, except for any shares
purchased by one of our affiliates within the meaning of
Rule 144 under the Securities Act. All of the remaining
25,875,000 shares are restricted securities under
Rule 144, in that they were issued in private transactions
not involving a public offering. None of those shares will be
eligible for sale under Rule 144 prior to August 9,
2008.
Rule 144
In general, under Rule 144 as currently in effect, a person
who has beneficially owned restricted shares of our common stock
for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the
greater of either of the following:
|
|
|
|
|
1% of the total number of shares of common stock then
outstanding, which will equal 1,125,000 shares immediately
after this offering; or
|
|
|
|
the average weekly trading volume of the common stock during the
four calendar weeks preceding the filing of a notice on
Form 144 with respect to the sale.
|
Sales under Rule 144 are also limited by manner of sale
provisions and notice requirements and to the availability of
current public information about us.
103
Rule 144(k)
Under Rule 144(k), a person who is not deemed to have been
one of our affiliates at the time of or at any time during the
three months preceding a sale, and who has beneficially owned
the restricted shares proposed to be sold for at least two
years, including the holding period of any prior owner other
than an affiliate, is entitled to sell their shares without
complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
SEC
position on Rule 144 sales
The SEC has taken the position that promoters or affiliates of a
blank check company and their transferees, both before and after
a business combination, would act as underwriters
under the Securities Act when reselling the securities of a
blank check company. Based on that position, Rule 144 would
not be available for resale transactions despite technical
compliance with the requirements of Rule 144, and such
securities can be resold only through a registered offering.
Registration
Rights
Upon consummation of this offering, our founders will hold
25,875,000 issued and outstanding shares of our common stock
(including the escrowed founders units) (31,875,000 upon
issuance of the co-investment common stock and including the
escrowed founders units) and the right to purchase
12,937,500, 12,000,000 and 3,000,000 shares of common stock
underlying the founders warrants, the sponsors
warrants and the co-investment warrants, respectively. Pursuant
to a registration rights agreement between us and our founders,
our founders will be entitled to certain registration rights.
Specifically, each of (i) the sponsors warrants and
the underlying common stock, and the co-investment warrants and
the underlying common stock; (ii) the founders
warrants and the underlying common stock; and (iii) the
founders units, founders common stock, co-investment
units and co-investment common stock will be entitled to two
demand registration rights and two piggy-back
registration rights commencing one year after the consummation
of a business combination. We are only required to use our best
efforts to cause a registration statement relating to the resale
of such securities to be declared effective and, once effective,
only to use our best efforts to maintain the effectiveness of
the registration statement. The holders of warrants do not have
the rights or privileges of holders of our common stock or any
voting rights until such holders exercise their respective
warrants and receive shares of our common stock. Certain persons
and entities that receive any of the above described securities
from our founders will, under certain circumstances, be entitled
to the registration rights described herein. We will bear the
expenses incurred in connection with the filing of any such
registration statements.
Listing
Our units have been approved for listing upon consummation of
this offering on the American Stock Exchange under the symbol
LIA.U and, once the common stock and warrants begin
separate trading, our common stock and warrants will be listed
on the American Stock Exchange under the symbols LIA
and LIA.WS, respectively. Although after giving
effect to this offering we expect to meet on a pro forma basis
the minimum initial listing standards set forth in
Section 101(c) of the AMEX Company Guide, which only
requires that we meet certain requirements relating to
stockholders equity, market capitalization, aggregate
market value of publicly held shares and distribution
requirements, we cannot assure you that our securities will
continue to be listed on the American Stock Exchange as we might
not meet certain continued listing standards such as income from
continuing operations.
104
MATERIAL
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the material
U.S. federal income tax consequences of the acquisition,
ownership and disposition of our units by beneficial owners of
our units that acquire our units pursuant to this offering and
that hold such units as capital assets (generally, for
investment). This discussion is not a complete analysis or
listing of all of the possible tax consequences of such
transactions and does not address all tax considerations that
might be relevant to particular holders in light of their
personal circumstances or to persons that are subject to special
tax rules. In addition, this description of the material
U.S. federal income tax consequences does not address the
tax treatment of special classes of holders, such as:
|
|
|
|
|
financial institutions
|
|
|
|
regulated investment companies
|
|
|
|
real estate investment trusts
|
|
|
|
tax-exempt entities
|
|
|
|
insurance companies
|
|
|
|
persons holding the shares as part of a hedging, integrated or
conversion transaction, constructive sale or
straddle,
|
|
|
|
persons who acquired our units through the exercise or
cancellation of employee stock options or otherwise as
compensation for their services
|
|
|
|
U.S. expatriates or former long-term residents
|
|
|
|
persons subject to the alternative minimum tax
|
|
|
|
dealers or traders in securities or currencies
|
|
|
|
taxpayers who have elected mark-to-market accounting
|
|
|
|
holders whose functional currency is not the U.S. dollar
|
|
|
|
controlled foreign corporation
|
|
|
|
passive foreign investment company.
|
This summary does not address gift tax consequences or tax
consequences under any foreign, state or local laws.
As used in this section, the term U.S. person
means: (i) an individual citizen or resident of the U.S.;
(ii) a corporation (or other entity treated as a
corporation for U.S. federal income tax purposes) created
or organized under the laws of the U.S. or any state
thereof or the District of Columbia; (iii) an estate the
income of which is subject to U.S. federal income taxation
regardless of its source; and (iv) a trust if (A) a
court within the U.S. is able to exercise primary
supervision over its administration and one or more
U.S. persons have authority to control all substantial
decisions of the trust or (B) it has a in effect a valid
election to be treated as a U.S. person for
U.S. federal income tax purposes.
As used in this section, the term U.S. holder
means a beneficial owner of our units that is a U.S. person.
If you are an individual, you may be treated as a resident alien
of the U.S., as opposed to a non-resident alien, for
U.S. federal income tax purposes if you are present in the
U.S. for at least 31 days in a calendar year and for
an aggregate of at least 183 days during a three-year
period ending in such calendar year. For purposes of this
calculation, you would count all of the days that you were
present in the then-current year, one-third of the days that you
were present in the immediately preceding year and one-sixth of
the days that you were present in the second preceding year.
Resident aliens are subject to U.S. federal
105
income tax as if they were U.S. citizens, and thus would
constitute U.S. holders for purposes of the
discussion below.
The term
Non-U.S. holder
means a beneficial owner of our units that is neither a
U.S. person nor a partnership (including for this purpose
any entity that is treated as a partnership for
U.S. federal income tax purposes).
If a partnership holds our units, the tax treatment of a partner
will generally depend on the status of the partner and the
activities of the partnership. If you are a partner of a
partnership holding our units, you should consult your tax
advisor.
The following discussion is based upon the Internal Revenue Code
of 1986, as amended (the Code), U.S. judicial
decisions, administrative pronouncements and existing and
proposed Treasury regulations, all as in effect as of the date
hereof. All of the preceding authorities are subject to change,
possibly with retroactive effect, so as to result in
U.S. federal income tax consequences different from those
discussed below. We have not requested, and will not request, a
ruling from the U.S. Internal Revenue Service
(IRS) with respect to any of the U.S. federal
income tax consequences described below, and as a result there
can be no assurance that the IRS will not disagree with or
challenge any of the conclusions we have reached and describe
herein.
The following discussion is for general information only and
is not intended to be, nor should it be construed to be, legal
or tax advice to any holder or prospective holder of our units
and no opinion or representation with respect to the
U.S. federal income tax consequences to any such holder or
prospective holder is made. Prospective purchasers are urged to
consult their tax advisors as to the particular consequences to
them under U.S. federal, state and local, and applicable
foreign tax laws of the acquisition, ownership and disposition
of our units.
General
There is no authority addressing the treatment, for
U.S. federal income tax purposes, of securities with terms
substantially the same as the units, and, therefore, such
treatment is not entirely clear. Each unit should be treated for
federal income tax purposes as an investment unit consisting of
one share of our common stock and one half
(
1
/
2
)
of one warrant to acquire one share of our common stock. Each
holder of a unit must allocate the purchase price paid by such
holder for such unit between the share of common stock and the
warrant based on their respective relative fair market values. A
holders initial tax basis in the common stock and the
warrant included in each unit should equal the portion of the
purchase price of the unit allocated thereto.
Our view of the characterization of the units described above
and a holders purchase price allocation are not, however,
binding on the IRS or the courts. Because there are no
authorities that directly address instruments that are similar
to the units, no assurance can be given that the IRS or the
courts will agree with the characterization described above or
the discussion below. Accordingly, prospective investors are
urged to consult their own tax advisors regarding the
U.S. federal tax consequences of an investment in a unit
(including alternative characterizations of a unit) and with
respect to any tax consequences arising under the laws of any
state, local or
non-U.S. taxing
jurisdiction. Unless otherwise stated, the following discussion
is based on the assumption that the characterization of the
units and the allocation described above are accepted for
U.S. federal tax purposes.
Tax
Consequences of an Investment in our Common Stock
Dividends
and Distributions
If we pay cash distributions to U.S. holders of shares of
our common stock, such distributions generally will constitute
dividends for U.S. federal income tax purposes to the
extent paid from our current or accumulated earnings and
profits, as determined under U.S. federal income tax
principles. Distributions in excess of current and accumulated
earnings and profits will constitute a return of capital that
will be applied against and reduce (but not below zero) the
holders adjusted tax basis in our common stock. Any
106
remaining excess will be treated as gain realized on the sale or
other disposition of the common stock and will be treated as
described under Sale or Other Taxable
Disposition of Common Stock below.
Any dividends we pay to a U.S. holder that is a taxable
corporation generally will qualify for the dividends-received
deduction if the requisite holding period is satisfied.
With certain exceptions (including but not limited to dividends
treated as investment income for purposes of investment interest
deduction limitations), and provided certain holding period
requirements are met, qualified dividends received by a
non-corporate U.S. holder generally will be subject to tax
at the maximum tax rate accorded to capital gains for taxable
years beginning on or before December 31, 2010, after which
the rate applicable to dividends is scheduled to return to the
tax rate generally applicable to ordinary income.
It is possible that the conversion rights with respect to the
common stock that are described below may suspend the running of
the applicable holding period for purposes of the
dividends-received deduction or the capital gains tax rate, as
the case may be.
In general, any distributions we make to a non-U.S. holder that
constitute dividends for United States federal income tax
purposes will be subject to United States withholding tax at a
rate of 30% of the gross amount, unless the non-U.S. holder is
eligible for a reduced rate of withholding tax under an
applicable income tax treaty and you provide proper
certification of your eligibility for such reduced rate (usually
on an IRS
Form W-8BEN).
A distribution will constitute a dividend for United States
federal income tax purposes to the extent of our current or
accumulated earnings and profits, as determined under the Code.
Any distribution not constituting a dividend will be treated
first as reducing your basis in your shares of common stock and,
to the extent it exceeds your basis, as gain from the
disposition of your shares of common stock.
Dividends we pay to a non-U.S. holder that are effectively
connected with such non-U.S. holders conduct of a trade or
business within the United States (and, if certain income tax
treaties apply, are attributable to a United States permanent
establishment maintained by you) generally will not be subject
to United States withholding tax if such non-U.S. holder
complies with applicable certification and disclosure
requirements. Instead, such dividends generally will be subject
to United States federal income tax, net of certain deductions,
at the same graduated individual or corporate rates applicable
to United States persons. If a non-U.S. holder is a corporation,
effectively connected income may also be subject to a
branch profits tax at a rate of 30% (or such lower
rate as may be specified by an applicable income tax treaty).
A
non-U.S. holder
eligible for a reduced rate of U.S. withholding tax
pursuant to an income tax treaty may obtain a refund of any
excess amounts withheld by timely filing an appropriate claim
for refund with the IRS.
Sale or
Other Taxable Disposition of Common Stock
In general, a U.S. holder must treat any gain or loss
recognized upon a sale, exchange, or other taxable disposition
of a share of our common stock (which would include a
liquidation in the event we do not consummate a business
combination within the required time period) as capital gain or
loss. Any such capital gain or loss will be long-term capital
gain or loss if the U.S. holders holding period for
the disposed of common stock exceeds one year. It is possible
that the conversion rights with respect to the common stock that
are described below may suspend the running of the applicable
holding period for this purpose. In general, a U.S. holder
will recognize gain or loss in an amount equal to the difference
between the sum of the amount of cash and the fair market value
of any property received in such disposition (or, if the common
stock is held as part of a unit at the time of disposition of
the unit, the portion of the amount realized on such disposition
that is allocated to the common stock based upon the then fair
market value of such common stock) and the
U.S. holders adjusted tax basis in the share of
common stock. A U.S. holders adjusted tax basis in
the common stock generally will equal the
U.S. holders acquisition cost (that is, as discussed
above, the portion of the purchase price of a unit allocated to
that common stock) less any prior return of capital. Long-term
capital gain realized by a non-corporate U.S. holder
generally will be subject to
107
a maximum tax rate of 15 percent for tax years beginning on
or before December 31, 2010, after which the maximum
long-term capital gains tax rate is scheduled to increase to
20 percent. The deduction of capital losses is subject to
limitations. In addition, the deduction for losses realized upon
a taxable disposition by a U.S. holder of our common stock
(whether or not held as part of a unit) may be disallowed if,
within a period beginning 30 days before the date of such
disposition and ending 30 days after such date, such
U.S. holder has acquired (by purchase or by an exchange on
which the entire amount of gain or loss was recognized by law),
or has entered into a contract or option so to acquire,
substantially identical stock or securities.
A non-U.S. holder generally will not be subject to United States
federal income tax on any gain realized upon the sale or other
disposition of such non-U.S. holders units or their
component securities unless:
|
|
|
|
|
the gain is effectively connected with a non-U.S. holders
conduct of a trade or business within the United States (and,
under certain income tax treaties, is attributable to a United
States permanent establishment you maintain);
|
|
|
|
you are an individual, you hold your units, common stock or
warrants as capital assets, you are present in the United States
for 183 days or more in the taxable year of disposition and
you meet other conditions, and you are not eligible for relief
under an applicable income tax treaty; or
|
|
|
|
we are or have been a United States real property holding
corporation for United States federal income tax purposes
(which we believe we are not and have never been, and do not
anticipate we will become) and you hold or have held, directly
or indirectly, more than 5% of our common stock at any time
within the shorter of (i) the period during which you hold
units (or their component securities) or (ii) the five year
period preceding disposition of the units (or component
security).
|
Gain that is effectively connected with a non-U.S. holders
conduct of a trade or business within the United States
generally will be subject to United States federal income tax,
net of certain deductions, at the same rates applicable to
United States persons. If you are a corporation, the branch
profits tax also may apply to such effectively connected gain.
If the gain from the sale or disposition of your shares is
effectively connected with your conduct of a trade or business
in the United States but under an applicable income tax treaty
is not attributable to a permanent establishment you maintain in
the United States, your gain may be exempt from United States
tax under the treaty. If you are described in the second bullet
point above, you generally will be subject to United States
federal income tax at a rate of 30% on the gain realized,
although the gain may be offset by some United States source
capital losses realized during the same taxable year.
We currently are not a U.S. real property holding
corporation. However, we cannot yet determine whether we
will be a U.S. real property holding
corporation for U.S. federal income tax purposes, and
will be unable to do so until we effect a business combination.
A corporation is a U.S. real property holding
corporation if the fair market value of its U.S. real
property interests equals or exceeds 50% of the sum of the fair
market value of its worldwide real property interests plus its
other assets used or held for use in a trade or business.
Conversion of Common Stock
In the event that a holder converts common stock into a right to
receive cash pursuant to the exercise of a conversion right, the
transaction will be treated for U.S. federal income tax
purposes as a redemption of the common stock. If the conversion
qualifies as a sale of common stock by a holder under
Section 302 of the Code, the holder will be treated as
described under Sale or Other Taxable
Disposition of Common Stock above. If the conversion does
not qualify as a sale of common stock under Section 302, a
holder will be treated as receiving a corporate distribution
with the tax consequences described under
Dividends and Distributions above. Whether the
conversion qualifies for sale treatment will depend largely on
the total number of shares of our common stock treated as held
by the holder (including any common stock constructively owned
by the holder as a result of, among other things, owning
warrants). The conversion of common stock generally will be
treated as a sale or exchange of the common stock (rather than
as a corporate distribution) if the receipt of cash upon the
conversion (i) is substantially
108
disproportionate with respect to the holder,
(ii) results in a complete termination of the
holders interest in us or (iii) is not
essentially equivalent to a dividend with respect to the
holder. These tests are explained more fully below.
In determining whether any of the foregoing tests are satisfied,
a holder takes into account not only stock actually owned by the
holder, but also shares of our stock that are constructively
owned by it. A holder may constructively own, in addition to
stock owned directly, stock owned by certain related individuals
and entities in which the holder has an interest or that have an
interest in such holder, as well as any stock the holder has a
right to acquire by exercise of an option, which would generally
include common stock which could be acquired pursuant to the
exercise of the warrants. In order to meet the substantially
disproportionate test, the percentage of our outstanding stock
actually and constructively owned by the holder immediately
following the conversion of common stock must, among other
requirements, be less than 80 percent of the percentage of
our outstanding stock actually and constructively owned by the
holder immediately before the conversion. There will be a
complete termination of a holders interest if either
(i) all of the shares of our stock actually and
constructively owned by the holder are converted or
(ii) all of the shares of our stock actually owned by the
holder are converted and the holder is eligible to waive, and
effectively waives in accordance with specific rules, the
attribution of stock owned by certain family members and the
holder does not constructively own any other stock. The
conversion of the common stock will be not essentially
equivalent to a dividend if a holders conversion
results in a meaningful reduction of the
holders proportionate interest in us. Whether the
conversion will result in a meaningful reduction in a
holders proportionate interest will depend on the
particular facts and circumstances. However, the IRS has
indicated in a published ruling that even a small reduction in
the proportionate interest of a small minority stockholder in a
publicly held corporation who exercises no control over
corporate affairs may constitute such a meaningful
reduction. A holder should consult with its own tax
advisors in order to determine the appropriate tax treatment to
it of exercising a conversion right.
If none of the foregoing tests is satisfied, then the conversion
will be treated as a corporate distribution and the tax effects
will be as described above under Dividends
and Distributions. After the application of those rules,
any remaining tax basis of the holder in the converted common
stock will be added to the holders adjusted tax basis in
his remaining common stock, or, if it has none, to the
holders adjusted tax basis in its warrants or possibly to
the adjusted basis of stock held by related persons whose stock
is constructively owned by the holder.
Persons who actually or constructively own 5% or more of our
stock (by vote or value) may be subject to special reporting
requirements with respect to a conversion of common stock, and
such persons should consult their own tax advisors in that
regard.
Tax
Consequences of an Investment in the Warrants
Exercise
of a Warrant
Except as otherwise provided below in the case of the
holders cashless exercise of a warrant, upon a
holders exercise of a warrant, a holder will not be
required to recognize taxable gain or loss with respect to the
warrant. The holders tax basis in the share of our common
stock received by such holder will be an amount equal to the sum
of the holders initial investment in the warrant (i.e.,
the portion of the holders purchase price for a unit that
is allocated to the warrant, as described above under
General) and the exercise price (i.e.,
initially, $5.50 per share of our common stock). The
holders holding period for the share of our common stock
received upon exercise of the warrant will begin on the date
following the date of exercise (or possibly on the date of
exercise) of the warrant and will not include the period during
which the holder held the warrant.
The tax consequences of a cashless exercise of a warrant are not
clear under current tax law. A cashless exercise may be
tax-free, either because the exercise is not a gain realization
event or because the exercise is treated as a recapitalization
for U.S. federal income tax purposes. In either tax-free
situation, a U.S. holders basis in the common stock
received would equal the holders basis in the warrant. If
the cashless exercise were treated as not being a gain
realization event, a U.S. holders holding period in
the
109
common stock would be treated as commencing on the date
following the date of exercise of the warrant. If the cashless
exercise were treated as a recapitalization, the holding period
of the common stock would include the holding period of the
warrant.
It is also possible that a cashless exercise could be treated as
a taxable exchange in which gain or loss would be recognized. In
such event, a U.S. holder could be deemed to have
surrendered warrants equal to the number of common shares having
a value equal to the exercise price for the total number of
warrants to be exercised. The U.S. holder would recognize
capital gain or loss in an amount equal to the difference
between the fair market value of the common stock represented by
the warrants deemed surrendered and the U.S. holders
tax basis in the warrants deemed surrendered. In this case, a
U.S. holders tax basis in the common stock received
would equal the sum of the fair market value of the common stock
represented by the warrants deemed surrendered and the
U.S. holders tax basis in the warrants exercised. A
U.S. holders holding period for the common stock
would commence on the date following the date of exercise of the
warrant.
Due to the absence of authority on the U.S. federal income
tax treatment of a cashless exercise, there can be no assurance
which, if any, of the alternative tax consequences and holding
periods described above would be adopted by the IRS or a court
of law. Accordingly, U.S. holders should consult their tax
advisors regarding the tax consequences of a cashless exercise.
Sale,
Exchange, Redemption, or Expiration of a Warrant
Upon a sale, exchange (other than by exercise), redemption,
expiration, or other taxable disposition of a warrant, a
U.S. holder will be required to recognize taxable gain or
loss in an amount equal to the difference between (i) the
amount , if any, realized upon such disposition (or, if the
warrant is held as part of a unit at the time of the disposition
of the unit, the portion of the amount realized on such
disposition that is allocated to the warrant based on the then
fair market value of the warrant) and the
U.S. holders tax basis in the warrant (that is, as
discussed above, the portion of the U.S. holders
purchase price for a unit that is allocated to the warrant, as
described above under General). Such
gain or loss will generally be treated as long-term capital gain
or loss if the warrant was held by the U.S. holder for more
than one year at the time of such disposition. As discussed
above, the deductibility of capital losses is subject to certain
limitations, and the deduction for losses upon a taxable
disposition by a U.S. holder of a warrant (whether or not
held as part of a unit) may be disallowed if, within a period
beginning 30 days before the date of such disposition and
ending 30 days after such date, such U.S. holder has
acquired (by purchase or by an exchange on which the entire
amount of gain or loss was recognized by law), or has entered
into a contract or option so to acquire, substantially identical
stock or securities.
The federal income tax treatment of a
non-U.S. holders
gains recognized on a sale, exchange, redemption or expiration
of a warrant will generally correspond to the federal income tax
treatment of a
non-U.S. holders
gains recognized on a taxable disposition of our common stock,
as described under Sale or Other Taxable
Disposition of Common Stock above.
Information
Reporting and Backup Withholding
We must report annually to the IRS the amount of dividends or
other distributions we pay to you on your shares of common stock
and the amount of tax we withhold on these distributions
regardless of whether withholding is required. The IRS may make
copies of the information returns reporting those dividends and
amounts withheld available to the tax authorities in the country
in which you reside pursuant to the provisions of an applicable
income tax treaty or exchange of information treaty.
The United States imposes a backup withholding tax on dividends
and certain other types of payments to United States persons.
You will not be subject to backup withholding tax on dividends
you receive on your shares of common stock if you provide proper
certification (usually on an IRS
Form W-8BEN)
of your status as a
non-United
States person or you are a corporation or one of several types
of entities and organizations that qualify for exemption (an
exempt recipient). The gross amount of dividends
paid to a holder that fails to provide the appropriate
certification in accordance with applicable U.S. Treasury
Regulations generally will be reduced by backup withholding at
the applicable rate (currently 28%).
110
Information reporting and backup withholding generally are not
required with respect to the amount of any proceeds from the
sale of your units, common stock or warrants outside the United
States through a foreign office of a foreign broker that does
not have certain specified connections to the United States.
However, if you sell your units, common stock or warrants
through a United States broker or the United States office
of a foreign broker, the broker will be required to report to
the IRS the amount of proceeds paid to you unless you provide
appropriate certification (usually on an IRS
Form W-8BEN)
to the broker of your status as a
non-United
States person or you are an exempt recipient. Information
reporting also would apply if you sell your units, common stock
or warrants through a foreign broker deriving more than a
specified percentage of its income from United States sources or
having certain other connections to the United States.
Backup withholding is not an additional tax. Any amounts
withheld with respect to your securities under the backup
withholding rules will be refunded to you or credited against
your United States federal income tax liability, if any, by the
IRS if the required information is furnished in a timely manner.
Holders should consult their own tax advisors regarding
application of backup withholding in their particular
circumstances and the availability of and procedure for
obtaining an exemption from backup withholding under current
U.S. Treasury Regulations.
Estate
Tax
Securities owned or treated as owned by an individual who is not
a citizen or resident (as defined for United States federal
estate tax purposes) of the United States at the time of his or
her death will be included in the individuals gross estate
for United States federal estate tax purposes and therefore may
be subject to United States federal estate tax unless an
applicable estate tax treaty provides otherwise. Legislation
enacted in 2001 reduces the maximum federal estate tax rate over
an
8-year
period beginning in 2002 and eliminates the tax for estates of
decedents dying after December 31, 2009. In the absence of
renewal legislation, these amendments will expire and the
federal estate tax provisions in effect immediately prior to
2002 will be restored for estates of decedents dying after
December 31, 2010.
111
Citigroup Global Markets Inc. is acting as sole bookrunning
manager of this offering and representative of the underwriters
named below. Subject to the terms and conditions stated in the
underwriting agreement, each underwriter named below has agreed
to purchase and we have agreed to sell to that underwriter, the
number of units set forth opposite the underwriters name.
|
|
|
|
|
|
|
Number of
|
|
Underwriters
|
|
Units
|
|
|
Citigroup Global Markets Inc.
|
|
|
58,500,000
|
|
Lehman Brothers Inc.
|
|
|
31,500,000
|
|
|
|
|
|
|
Total
|
|
|
90,000,000
|
|
|
|
|
|
|
The underwriting agreement provides that the obligations of the
underwriters to purchase the units included in this offering are
subject to the approval of legal matters by counsel and to other
conditions. The underwriters are obligated to purchase all of
the units if they purchase any of the units.
The underwriters propose to offer some of the units directly to
the public at the public offering price set forth on the cover
page of this prospectus and some of the units to dealers at the
public offering price less a concession not to exceed $0.1710
per unit. If all of the units are not sold at the initial
offering price, the representatives may change the public
offering price and the other selling terms. Citigroup Global
Markets Inc. has advised us that the underwriters do not intend
sales to discretionary accounts to exceed five percent of the
total number of units offered by them.
We have granted to the underwriters an option, exercisable for
30 days from the date of this prospectus, to purchase up to
13,500,000 additional units at the public offering price less
the underwriting discount. The underwriters may exercise this
option solely for the purpose of covering over-allotments, if
any, in connection with this offering. To the extent the option
is exercised, each underwriter must purchase a number of
additional units approximately proportionate to that of the
underwriters initial purchase commitment.
We have agreed that, for a period of 180 days from the date
of this prospectus, we will not, without the prior written
consent of Citigroup Global Markets Inc., dispose of or hedge
any units, shares of our common stock or any securities
convertible into or exchangeable for our common stock. Citigroup
Global Markets Inc. in its sole discretion may release any of
the securities subject to these
lock-up
agreements at any time without notice.
In addition, our sponsors and directors have agreed, subject to
certain exceptions, not to sell or otherwise transfer any of the
their rights as stockholders until one year from the date we
complete a business combination.
At our request, the underwriters have reserved up to 5% of the
units for sale at the initial public offering price to persons
who may be associated with our founders or otherwise known by
them through a directed unit program on the same basis as all
other units offered. The number of units for sale to the general
public will be reduced by the number of directed units purchased
by participants in the program. Any directed units not purchased
will be offered by the underwriters to the general public on the
same basis as all other units offered. We have agreed to
indemnify Citigroup Global Markets Inc. against certain
liabilities and expenses, including liabilities under the
Securities Act, in connection with the sales of the directed
units.
In relation to each member state of the European Economic Area
that has implemented the Prospectus Directive (each, a relevant
member state), with effect from and including the date on which
the Prospectus Directive is implemented in that relevant member
state (the relevant implementation date), an offer of our units
described in this prospectus may not be made to the public in
that relevant member state prior to the publication of a
prospectus in relation to the units that has been approved by
the competent authority in that relevant member state or, where
appropriate, approved in another relevant member state and
notified
112
to the competent authority in that relevant member state, all in
accordance with the Prospectus Directive, except that, with
effect from and including the relevant implementation date, an
offer of securities may be offered to the public in that
relevant member state at any time:
|
|
|
|
|
to any legal entity that is authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities or
|
|
|
|
to any legal entity that has two or more of (1) an average
of at least 250 employees during the last financial year;
(2) a total balance sheet of more than 43,000,000 and
(3) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts or
|
|
|
|
in any other circumstances that do not require the publication
of a prospectus pursuant to Article 3 of the Prospectus
Directive.
|
Each purchaser of units described in this prospectus located
within a relevant member state will be deemed to have
represented, acknowledged and agreed that it is a
qualified investor within the meaning of
Article 2(1)(e) of the Prospectus Directive.
For purposes of this provision, the expression an offer to
the public in any relevant member state means the
communication in any form and by any means of sufficient
information on the terms of the offer and the securities to be
offered so as to enable an investor to decide to purchase or
subscribe the securities, as the expression may be varied in
that member state by any measure implementing the Prospectus
Directive in that member state, and the expression
Prospectus Directive means Directive 2003/71/EC and
includes any relevant implementing measure in each relevant
member state.
We have not authorized and do not authorize the making of any
offer of units through any financial intermediary on our behalf,
other than offers made by the underwriters with a view to the
final placement of the units as contemplated in this prospectus.
Accordingly, no purchaser of the units, other than the
underwriters, is authorized to make any further offer of the
units on behalf of the underwriters or us.
This prospectus is only being distributed to, and is only
directed at, persons in the United Kingdom that are qualified
investors within the meaning of Article 2(1)(e) of the
Prospectus Directive (Qualified Investors) that are
also (i) investment professionals falling within
Article 19(5) of the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005 (the Order) or
(ii) high net worth entities, and other persons to whom it
may lawfully be communicated, falling within
Article 49(2)(a) to (d) of the Order (all such persons
together being referred to as relevant persons).
This prospectus and its contents are confidential and should not
be distributed, published or reproduced (in whole or in part) or
disclosed by recipients to any other persons in the United
Kingdom. Any person in the United Kingdom that is not a relevant
persons should not act or rely on this document or any of its
contents.
Neither this prospectus nor any other offering material relating
to the units described in this prospectus has been submitted to
the clearance procedures of the Autorité des Marchés
Financiers or by the competent authority of another member state
of the European Economic Area and notified to the Autorité
des Marchés Financiers. The units have not been offered or
sold and will not be offered or sold, directly or indirectly, to
the public in France. Neither this prospectus nor any other
offering material relating to the units has been or will be
|
|
|
|
|
released, issued, distributed or caused to be released, issued
or distributed to the public in France or
|
|
|
|
used in connection with any offer for subscription or sale of
the units to the public in France.
|
Such offers, sales and distributions will be made in France only
|
|
|
|
|
to qualified investors
(investisseurs qualifiés)
and/or to a restricted circle of investors
(cercle restreint
dinvestisseurs)
, in each case investing for their own
account, all as defined in, and in accordance with,
Article L.411-2,
D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the
French
Code monétaire et financier
or
|
113
|
|
|
|
|
to investment services providers authorized to engage in
portfolio management on behalf of third parties or
|
|
|
|
in a transaction that, in accordance with article
L.411-2-II-1°-or-2°-or 3° of the French
Code
monétaire et financier
and
article 211-2
of the General Regulations
(Règlement
Général)
of the Autorité des Marchés
Financiers, does not constitute a public offer
(appel public
à lépargne)
.
|
The units may be resold directly or indirectly, only in
compliance with
Articles L.411-1,
L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French
Code monétaire et financier.
Prior to this offering, there has been no public market for our
units. Consequently, the initial public offering price for the
units was determined by negotiations among us and the
underwriters. Among the factors considered in determining the
initial public offering price were our future prospects, our
markets, our management, and currently prevailing general
conditions in the equity securities markets, including current
market valuations of publicly traded companies considered
comparable to our company. We cannot assure you, however, that
the prices at which the units will sell in the public market
after this offering will not be lower than the initial public
offering price or that an active trading market in our units,
common stock or warrants will develop and continue after this
offering.
Our units have been approved for listing upon consummation of
this offering on the American Stock Exchange under the symbol
LIA.U and, once the common stock and warrants begin
separate trading, our common stock and warrants will be listed
on the American Stock Exchange under the symbols LIA
and LIA.WS, respectively. Although after giving
effect to this offering we expect to meet on a pro forma basis
the minimum initial listing standards set forth in
Section 101(c) of the AMEX Company Guide, which only
requires that we meet certain requirements relating to
stockholders equity, market capitalization, aggregate
market value of publicly held shares and distribution
requirements, we cannot assure you that our securities will
continue to be listed on the American Stock Exchange as we might
not meet certain continued listing standards such as income from
continuing operations.
The following table shows the underwriting discounts and
commissions that we are to pay to the underwriters in connection
with this offering. These amounts are shown assuming both no
exercise and full exercise of the underwriters option to
purchase additional units.
|
|
|
|
|
|
|
|
|
|
|
Paid by
|
|
|
|
Liberty Acquisition
|
|
|
|
Holdings Corp.
|
|
|
|
No Exercise
|
|
|
Full Exercise
|
|
|
Per Unit
|
|
$
|
0.55
|
|
|
$
|
0.55
|
|
Total
|
|
$
|
49,500,000
|
|
|
$
|
56,925,000
|
|
The amounts paid by us in the table above include
$23.85 million in deferred underwriting discounts and
commissions ($27.43 million if the underwriters
over-allotment option is exercised in full), an amount equal to
2.65% of the gross proceeds of this offering, which will be
placed in trust until our consummation of an initial business
combination as described in this prospectus. At that time, the
deferred underwriting discounts and commissions will be released
to the underwriters out of the balance held in the trust
account. If we do not complete an initial business combination
and the trustee must distribute the balance of the trust
account, the underwriters have agreed that (i) on our
liquidation they will forfeit any rights or claims to their
deferred underwriting discounts and commissions, including any
accrued interest thereon, then in the trust account and
(ii) the deferred underwriting discounts and commissions
will be distributed on a
pro rata
basis among the public
stockholders, together with any accrued interest thereon and net
of income taxes payable on such interest.
In connection with this offering, Citigroup Global Markets Inc.
on behalf of the underwriters, may purchase and sell units in
the open market. These transactions may include short sales,
syndicate covering transactions and stabilizing transactions.
Short sales involve syndicate sales of units in excess of the
number of units to be purchased by the underwriters in this
offering, which creates a syndicate short position.
Covered short sales are sales of units made in an
amount up to the number of units represented by the
114
underwriters over-allotment option. In determining the
source of units to close out the covered syndicate short
position, the underwriters will consider, among other things,
the price of units available for purchase in the open market as
compared to the price at which they may purchase units through
the underwriters over-allotment option. Transactions to
close out the covered syndicate short position involve either
purchases of the units in the open market after the distribution
has been completed or the exercise of the underwriters
over-allotment option. The underwriters may also make
naked short sales of units in excess of the
underwriters over-allotment option. The underwriters must
close out any naked short position by purchasing units in the
open market. A naked short position is more likely to be created
if the underwriters are concerned that there may be downward
pressure on the price of the units in the open market after
pricing that could adversely affect investors who purchase in
this offering. Stabilizing transactions consist of bids for or
purchases of units in the open market while this offering is in
progress.
The underwriters may impose a penalty bid. Penalty bids permit
the underwriters to reclaim a selling concession from a
syndicate member when Citigroup Global Markets Inc. repurchases
units originally sold by that syndicate member in order to cover
syndicate short positions or make stabilizing purchases.
Any of these activities may have the effect of preventing or
retarding a decline in the market price of the units. They may
also cause the price of the units to be higher than the price
that would otherwise exist in the open market in the absence of
these transactions. The underwriters may conduct these
transactions on the American Stock Exchange or in the
over-the-counter market, or otherwise. If the underwriters
commence any of these transactions, they may discontinue them at
any time.
Pursuant to Regulation M promulgated under the Exchange
Act, the distribution will end and this offering will be
completed when all of the units, including any over-allotted
units, have been distributed. Since the underwriters have agreed
that Citigroup Global Markets Inc. may only exercise the
over-allotment option on their behalf to cover any short
position that they may have, exercise of the over-allotment
option by the underwriters will not affect the completion of the
distribution.
We estimate that our portion of the total expenses of this
offering payable by us will be $700,000, exclusive of
underwriting discounts and commissions.
The underwriters may, from time to time, engage in transactions
with and perform services for us in the ordinary course of their
business.
A prospectus in electronic format may be made available by one
or more of the underwriters on a website maintained by one or
more of the underwriters. Citigroup Global Markets Inc. may
agree to allocate a number of units to underwriters for sale to
their online brokerage account holders. Citigroup Global Markets
Inc. will allocate units to underwriters that may make Internet
distributions on the same basis as other allocations. In
addition, units may be sold by the underwriters to securities
dealers who resell units to online brokerage account holders.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act or
to contribute to payments the underwriters may be required to
make because of any of those liabilities.
115
The validity of the securities offered by this prospectus will
be passed upon by Greenberg Traurig, LLP, New York, New York. In
connection with this offering, Cleary Gottlieb Steen &
Hamilton LLP, New York, New York, is acting as counsel to the
underwriters.
Our financial statements at August 9, 2007 and for the
period from June 27, 2007 (date of inception) through
August 9, 2007 appearing in this prospectus and in the
registration statement have been included herein in reliance
upon the report of Rothstein, Kass & Company, P.C.,
independent registered public accounting firm, given on the
authority of such firm as experts in accounting and auditing.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on
Form S-1
under the Securities Act with respect to the securities we are
offering by this prospectus. This prospectus does not contain
all of the information included in the registration statement.
For further information about us and our securities, you should
refer to the registration statement and the exhibits and
schedules filed with the registration statement. Whenever we
make reference in this prospectus to any of our contracts,
agreements or other documents, the references are materially
complete but may not include a description of all aspects of
such contracts, agreements or other documents, and you should
refer to the exhibits attached to the registration statement for
copies of the actual contract, agreement or other document.
Upon consummation of this offering, we will be subject to the
information requirements of the Exchange Act and will file
annual, quarterly and current event reports, proxy statements
and other information with the SEC. You can read our SEC
filings, including the registration statement, over the Internet
at the SECs website at www.sec.gov. You may also read and
copy any document we file with the SEC at its public reference
facility at 100 F Street, N.E., Washington, D.C. 20549.
You may also obtain copies of the documents at prescribed rates
by writing to the Public Reference Section of the SEC at 100 F
Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
facilities.
116
INDEX
TO FINANCIAL STATEMENTS
LIBERTY ACQUISITION HOLDINGS Corp.
(a corporation in the development stage)
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
F-2
|
|
Financial Statements:
|
|
|
|
|
Balance Sheet
|
|
|
F-3
|
|
Statement of Operations
|
|
|
F-4
|
|
Statement of Stockholders Equity
|
|
|
F-5
|
|
Statement of Cash Flows
|
|
|
F-6
|
|
Notes to Financial Statements
|
|
|
F-7
|
|
F-1
Report of
Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Liberty Acquisition Holdings Corp.
We have audited the accompanying balance sheet of Liberty
Acquisition Holdings Corp. (a corporation in the development
stage) (the Company) as of August 9, 2007 and
the related statements of operations, stockholders equity
and cash flows for the period from June 27, 2007 (date of
inception) to August 9, 2007. These financial statements
are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Liberty Acquisition Holdings Corp. (a corporation in the
development stage) as of August 9, 2007, and the results of
its operations and its cash flows for the period from
June 27, 2007 (date of inception) to August 9, 2007,
in conformity with accounting principles generally accepted in
the United States of America.
/s/ ROTHSTEIN, KASS & COMPANY, P.C.
Roseland, New Jersey
August 13, 2007
F-2
LIBERTY
ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
BALANCE SHEET
August 9, 2007
|
|
|
|
|
ASSETS
|
|
|
|
|
Current asset
, cash
|
|
$
|
275,507
|
|
Other assets,
deferred offering costs
|
|
|
320,000
|
|
|
|
|
|
|
Total assets
|
|
$
|
595,507
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
Current liabilities
Accrued expenses
|
|
$
|
250
|
|
Accrued offering costs
|
|
|
320,000
|
|
Notes payable, stockholders
|
|
|
250,000
|
|
|
|
|
|
|
Total current liabilities
|
|
|
570,250
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
Stockholders equity
|
|
|
|
|
Preferred stock, $.0001 par value; 1,000,000 shares
authorized; none issued.
|
|
|
|
|
Common stock, $.0001 par value, authorized
200,000,000 shares; 21,562,500 shares issued and
outstanding
|
|
|
2,156
|
|
Additional paid-in capital
|
|
|
22,844
|
|
Earnings accumulated during the development stage
|
|
|
257
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
25,257
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
595,507
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-3
LIBERTY
ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
STATEMENT OF OPERATIONS
|
|
|
|
|
|
|
For the Period
|
|
|
|
from June 27, 2007
|
|
|
|
(date of inception)
|
|
|
|
to August 9, 2007
|
|
|
Interest income
|
|
$
|
507
|
|
|
|
|
|
|
Formation and operating costs
|
|
$
|
250
|
|
|
|
|
|
|
Net income
|
|
$
|
257
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic and
diluted
|
|
|
21,562,500
|
|
|
|
|
|
|
Net income per common share, basic and diluted
|
|
$
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-4
LIBERTY
ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
STATEMENT
OF STOCKHOLDERS EQUITY
For the period from June 27, 2007 (date of inception) to
August 9, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Paid-in
|
|
|
Development
|
|
|
Stockholders
|
|
|
|
Common Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Equity
|
|
|
Common shares issued
|
|
|
21,562,500
|
|
|
$
|
2,156
|
|
|
$
|
22,844
|
|
|
$
|
|
|
|
$
|
25,000
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
257
|
|
|
|
257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, at August 9, 2007
|
|
|
21,562,500
|
|
|
$
|
2,156
|
|
|
$
|
22,844
|
|
|
$
|
257
|
|
|
$
|
25,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-5
LIBERTY
ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
STATEMENT
OF CASH FLOWS
|
|
|
|
|
|
|
For the Period
|
|
|
|
from June 27, 2007
|
|
|
|
(date of inception)
|
|
|
|
to August 9, 2007
|
|
|
Cash flows from operating activities
|
|
|
|
|
Net income
|
|
$
|
257
|
|
Adjustment to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
Accrued expenses
|
|
|
250
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
507
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Proceeds from notes payable, stockholders
|
|
|
250,000
|
|
Proceeds from issuance of common stock to founding stockholders
|
|
|
25,000
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
275,000
|
|
|
|
|
|
|
Net increase in cash
|
|
|
275,507
|
|
Cash
, beginning of period
|
|
|
|
|
|
|
|
|
|
Cash
, end of period
|
|
$
|
275,507
|
|
|
|
|
|
|
Supplemental schedule of non-cash financing activities:
|
|
|
|
|
Accrual of deferred offering costs
|
|
$
|
320,000
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-6
LIBERTY
ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
|
|
NOTE A
|
DESCRIPTION
OF ORGANIZATION AND BUSINESS OPERATIONS
|
Liberty Acquisition Holdings Corp. (a corporation in the
development stage) (the Company) was incorporated in
Delaware on June 27, 2007. The Company was formed to
acquire one or more operating businesses through a merger, stock
exchange, asset acquisition, reorganization or similar business
combination (a Business Combination). The Company
has neither engaged in any operations nor generated revenue to
date. The Company is considered to be in the development stage
as defined in Statement of Financial Accounting Standards
(SFAS) No. 7,
Accounting and Reporting
By Development Stage Enterprises
, and is subject to
the risks associated with activities of development stage
companies. All activity from the date of inception
(June 27, 2007) through August 9, 2007 was related to
the Companys formation and capital raising activities. The
Company has selected December 31st as its calendar
year end.
The Companys management has broad discretion with respect
to the specific application of the net proceeds of a proposed
offering of Units (as defined in Note C below) (the
Proposed Offering), although substantially all of
the net proceeds of the Proposed Offering are intended to be
generally applied toward consummating a Business Combination.
Furthermore, there is no assurance that the Company will be able
to successfully effect a Business Combination. Upon the closing
of the Proposed Offering, at least 96% of the gross proceeds,
after payment of certain amounts to the underwriters, will be
held in a trust account (Trust Account) and
invested either one or more money market funds which invest
principally in short-term securities issued or guaranteed by the
United States having a rating in the highest investment category
granted thereby by a recognized credit rating agency at the time
of acquisition or short-term tax exempt municipal bonds issued
by governmental entities located within the United States and
otherwise meeting the condition under
Rule 2a-7
promulgated under the Investment Company Act of 1940, until the
earlier of (i) the consummation of its first Business
Combination or (ii) the distribution of the
Trust Account as described below. The remaining proceeds
may be used to pay for business, legal and accounting due
diligence on a prospective Business Combination and continuing
general and administrative expenses. The Company, after signing
a definitive agreement for the Business Combination, will submit
such transaction for stockholder approval. In the event that 30%
or more of the outstanding stock (excluding, for this purpose,
those shares of the Companys common stock,
$0.0001 par value (Common Stock) issued prior
to the Proposed Offering) vote against the Business Combination
and exercise their redemption rights described below, the
Business Combination will not be consummated. Stockholders that
purchase the Common Stock in the Proposed Offering voting
against a Business Combination will be entitled to cause the
Company to redeem their stock for a pro rata share of the
Trust Account (including the additional 2.5% fee of the
gross proceeds payable to the underwriters upon the
Companys consummation of a Business Combination),
including any interest earned (net of taxes payable and the
amount distributed to the Company to fund its working capital
requirements) on their pro rata share, if the Business
Combination is approved and consummated. However, voting against
the Business Combination alone will not result in an election to
exercise a stockholders redemption rights. A stockholder
must also affirmatively exercise such redemption rights at or
prior to the time the Business Combination is voted upon by the
stockholders. All of the Companys stockholders prior to
the Proposed Offering (collectively, the Founders)
have agreed to vote all of the shares of the Common Stock held
by them in accordance with the vote of the majority in interest
of all other stockholders of the Company.
In the event that the Company does not consummate a Business
Combination within 30 months from the date of the
consummation of the Proposed Offering, or 36 months from
the consummation of the Proposed Offering if certain extension
criteria have been satisfied, the proceeds held in the
Trust Account will be distributed to the Companys
public stockholders, excluding the Founders to the extent of
their initial stock holdings. In the event of such distribution,
it is likely that the per share value of the residual assets
remaining available for distribution (including
Trust Account assets) will be less than the initial
F-7
LIBERTY
ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (CONTINUED)
public offering price per Unit in the Proposed Offering
(assuming no value is attributed to the Warrants contained in
the Units to be offered in the Proposed Offering discussed in
Note C).
|
|
NOTE
B
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis
of presentation:
The accompanying financial statements are presented in
U.S. dollars and have been prepared in accordance with
accounting principles generally accepted in the United States of
America (US GAAP) and pursuant to the rules and
regulations of the Securities Exchange Commission ( the
SEC).
Development
Stage Company:
The Company complies with the reporting requirements of
SFAS No. 7,
Accounting and Reporting by
Development Stage Enterprises
.
Net
income per common share:
The Company complies with SFAS No. 128,
Earnings Per Share
, which requires dual
presentation of basic and diluted earnings per share on the face
of the statement of operations. Basic net income per share is
computed by dividing net income by the weighted average common
shares outstanding for the period. Diluted net income per share
reflects the potential dilution that could occur if warrants
were to be exercised or converted or otherwise resulted in the
issuance of Common Stock that then shared in the earnings of the
entity. As of August 9, 2007, the Company did not have any
of these potentially dilutive securities. As a result, diluted
income per share is the same as basic.
Concentration
of credit risk:
Financial instruments that potentially subject the Company to
concentrations of credit risk consist of a cash account in a
financial institution, which at times, exceeds the Federal
depository insurance coverage of $100,000. The Company has not
experienced losses on this account and management believes the
Company is not exposed to significant risks on this account.
Fair
value of financial instruments:
The fair value of the Companys assets and liabilities,
which qualify as financial instruments under
SFAS No. 107,
Disclosure About Fair Value of
Financial Instruments
, approximates the carrying
amounts represented in the balance sheet.
Use of
estimates:
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
Deferred
offering costs:
The Company complies with the requirements of the SEC Staff
Accounting Bulletin (SAB) Topic 5A
Expenses of
Offering
. Deferred offering costs consist principally
of legal costs of $300,000, accounting costs of $10,000 and
other offering costs of $10,000 incurred through the balance
sheet date that are related
F-8
LIBERTY
ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (CONTINUED)
to the Proposed Offering and that will be charged to capital
upon the completion of the Proposed Offering or charged to
expense if the Proposed Offering is not completed.
Income
tax:
The Company complies with SFAS 109,
Accounting for
Income Taxes
, which requires an asset and liability
approach to financial accounting and reporting for income taxes.
Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax bases of
assets and liabilities that will result in future taxable or
deductible amounts, based on enacted tax laws and rates
applicable to the periods in which the differences are expected
to affect taxable income. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount
expected to be realized.
Effective June 27, 2007, the Company adopted the provisions
of the Financial Accounting Standards Board (FASB)
Interpretation No. 48,
Accounting for Uncertainty
in Income Taxes an interpretation of FASB Statement
No. 109
(FIN 48). There were no
unrecognized tax benefits as of August 9, 2007. FIN 48
prescribes a recognition threshold and a measurement attribute
for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For
those benefits to be recognized, a tax position must be
more-likely-than-not to be sustained upon examination by taxing
authorities. The Company recognizes accrued interest and
penalties related to unrecognized tax benefits as income tax
expense. No amounts were accrued for the payment of interest and
penalties at August 9, 2007. The Company is currently
unaware of any issues under review that could result in
significant payments, accruals or material deviation from its
position. The adoption of the provisions of FIN 48 did not
have a material impact on the Companys financial position
and results of operation and cash flows as of and for the period
ended August 9, 2007.
Recently
issued accounting pronouncements:
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements. This Statement defines fair
value, establishes a framework for measuring fair value in
generally accepted accounting principles, expands disclosure
about fair value measurements, and applies under other
accounting pronouncements that require or permit fair value
measurements, SFAS No. 157 does not require any new
fair value measurements. However, the FASB anticipates that for
some entities, the application of SFAS No. 157 will
change current practice. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after
November 15, 2007, which for the Company would be its
fiscal year beginning January 1, 2008. The Company is
currently evaluating the impact of SFAS No. 157 but
does not expect that it will have a material impact on the
Companys financial position and results of operations and
cash flows.
In February 2007, the FASB issued SFAS No. 159,
The Fair Value Option for Financial Assets and Financial
Liabilities. This Statement permits entities to choose to
measure many financial instruments at fair value. Unrealized
gains and losses on items for which option has been elected are
reported in earnings. SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007. The Company
is currently evaluating the impact of SFAS 159 but does not
expect that it will have a material impact on the Companys
financial position and results of operations and cash flows.
|
|
NOTE C
|
PROPOSED
OFFERING
|
The Proposed Offering calls for the Company to offer for public
sale up to 75,000,000 units (Units). Each Unit
consists of one share of the Companys Common Stock and one
half (1/2) of one redeemable Common Stock purchase warrant
(Warrant). Because each unit includes one half (1/2)
of one warrant, holders will need to have two units in order to
have one warrant. Warrants may be exercised only in increments
of one whole warrant. The expected public offering price is
$10.00 per Unit. Each Warrant
F-9
LIBERTY
ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (CONTINUED)
entitles the holder to purchase from the Company one share of
Common Stock at an exercise price of $7.00 commencing on the
later of (i) the consummation of the Companys initial
Business Combination or (ii) one year from the date of the
final prospectus for the Proposed Offering, provided in each
case that there is an effective registration statement covering
the shares of Common Stock underlying the Warrants in effect.
The Warrants will expire five years from the date of such
prospectus, unless earlier redeemed. The Warrants will be
redeemable at a price of $0.01 per Warrant upon 30 days
prior notice after the Warrants become exercisable, only in the
event that the last sale price of the Common Stock is at least
$15.00 per share for any 20 trading days within a 30 trading day
period ending on the third business day prior to the date on
which notice of redemption is given.
No warrants will be exercisable and the Company will not be
obligated to issue shares of common stock unless at the time a
holder seeks to exercise such warrant, a prospectus relating to
the common stock issuable upon exercise of the warrants is
current and the common stock has been registered or qualified or
deemed to be exempt under the securities laws of the state of
residence of the holder of the warrants. Under the terms of the
warrant agreement, the Company has agreed to use its best
efforts to meet these conditions and to maintain a current
prospectus relating to the common stock issuable upon exercise
of the warrants until the expiration of the warrants. However,
if the Company does not maintain a current prospectus relating
to the common stock issuable upon exercise of the warrants,
holders will be unable to exercise their warrants. In no
circumstance will the Company be required to settle any such
warrant exercise for cash. If the prospectus relating to the
common stock issuable upon the exercise of the warrants is not
current or if the common stock is not qualified or exempt from
qualification in the jurisdiction in which the holders of the
warrants reside, the warrants may have no value, the market for
the warrants may be limited and the warrants may expire
worthless.
Proceeds held in the trust account will not be available for the
Companys use for any purpose, except to pay any income
taxes and up to $12.0 million can be taken from the
interest earned on the trust account to fund the Companys
working capital.
|
|
NOTE D
|
RELATED
PARTY TRANSACTIONS
|
The Founders have purchased an aggregate of 21,562,500 of the
Companys founders units (the Founders
Units) for an aggregate price of $25,000 in a private
placement. The Founders Units are identical to those sold
in the Proposed Offering, except that each of the Founders has
agreed to vote the Common Stock included in the Founders
Units in the same manner as a majority of the public
stockholders who vote at the special or annual meeting called
for the purpose of approving the initial Business Combination.
As a result, the Founders will not be able to exercise
redemption rights with respect to the Founders Common
Stock if the initial Business Combination is approved by a
majority of the Companys public stockholders. The
Founders Common Stock included in the Founders Units
will not participate with the Common Stock included in the Units
sold in the Proposed Offering in any liquidating distribution.
The Warrants included in the Founders Units will become
exercisable after the consummation of a Business Combination, if
and when the last sales price of the Common Stock exceeds $15.00
per share for any 20 trading days within a 30 trading day period
beginning 90 days after such Business Combination, will be
non-redeemable so long as they are held by the Founders or their
permitted transferees and may be exercised by the holder on a
cashless basis. In no circumstance will the Company be required
to settle any such warrant exercise for cash. If the prospectus
relating to the common stock issuable upon the exercise of the
warrants is not current or if the common stock is not qualified
or exempt from qualification in the jurisdiction in which the
holders of the warrants reside, the warrants may have no value,
the market for the warrants may be limited and the warrants may
expire worthless.
F-10
LIBERTY
ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (CONTINUED)
The Founders have agreed to place 2,812,500 Founders Units
in escrow until the earlier of the time that the
underwriters over-allotment option is exercised or
expires. If the underwriters exercise their over-allotment
option in full, all 2,812,500 of these escrowed Founders
Units will be released to the Founders upon the closing of the
underwriters over-allotment option exercise. If the
underwriters exercise their over-allotment option in part, a
pro rata
amount of these escrowed Founders Units
will be released to the Founders upon the closing of the
underwriters over-allotment option exercise such that the
number of Founders Units they hold will be equal to 20% of
the total number of Units outstanding after the Proposed
Offering, and the remainder of the escrowed Founders Units
will be forfeited by the Founders and returned to the Company.
Accordingly, the number of Founders Units and shares of
Founders Common Stock may be reduced by up to 2,812,500,
and the number of Founders Warrants may be reduced by up
to 1,406,250, if the underwriters over-allotment option is
not exercised in full by the underwriters.
The Company issued two $125,000 unsecured promissory notes, one
each, to Berggruen Acquisition Holdings Ltd (Berggruen
Holdings) and Marlin Equities II, LLC (Marlin
Equities). These advances are non-interest bearing,
unsecured and are due within 60 days following the
consummation of the Proposed Offering. The loans will be repaid
out of the interest the Company receives on the balance of the
Trust Account.
The Company presently occupies office space provided by
Berggruen Holdings, Inc., an affiliate of Berggruen Holdings and
the Companys Chief Executive Officer. Upon the
consummation of the Proposed Offering, the Company has agreed to
pay Berggruen Holdings, Inc. a total of $10,000 per month for
office space, administrative services and secretarial support
until the earlier of the Companys consummation of a
Business Combination or its liquidation. Upon consummation of a
Business Combination or its liquidation, the Company will cease
paying these monthly fees.
Each of Berggruen Holdings and Marlin Equities have agreed to
invest $6.0 million in the Company ($12.0 million in
the aggregate) in the form of sponsors warrants
(Sponsors Warrants) to purchase
6,000,000 shares of Common Stock (12,000,000 in the
aggregate) at a price of $1.00 per Sponsors Warrant. Each
of Berggruen Holdings and Marlin Equities is obligated to
purchase such Sponsors Warrants from the Company
immediately prior to the consummation of the Proposed Offering.
Each of Berggruen Holdings and Marlin Equities has agreed not to
transfer, assign or sell any of the Sponsors Warrants
(including the Common Stock to be issued upon exercise of the
Sponsors Warrants) until one year after the Company
consummates a Business Combination. In no circumstance will the
Company be required to settle any such warrant exercise for
cash. If the prospectus relating to the common stock issuable
upon the exercise of the warrants is not current or if the
common stock is not qualified or exempt from qualification in
the jurisdiction in which the holders of the warrants reside,
the warrants may have no value, the market for the warrants may
be limited and the warrants may expire worthless.
Each of Berggruen Holdings and Marlin Equities agreed to invest
$25.0 million in the Company ($50.0 million in the
aggregate) in the form of co-investment units
(Co-Investment Units) at a price of $10.00 per Unit.
Each of Berggruen Holdings and Marlin Equities is obligated to
purchase such Co-Investment Units from the Company immediately
prior to the consummation of a Business Combination.
The Co-Investment Units will be identical to the Units sold in
the Proposed Offering. Each of Berggruen Holdings and Marlin
Equities has agreed not to transfer, assign or sell any of the
Co-Investment Units or the Common Stock or Warrants included in
the Co-Investment Units (including the Common Stock to be issued
upon exercise of the Warrants), until one year after the Company
consummates a Business Combination.
F-11
LIBERTY
ACQUISITION HOLDINGS CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (CONTINUED)
The Company is committed to pay an underwriting discount of 5.5%
of the public Unit offering price to the underwriters at the
closing of the Proposed Offering, of which 2.5% be payable upon
the Companys consummation of a Business Combination.
The Company expects to grant the underwriters a
30-day
option to purchase up to 11,250,000 additional Units to cover
the over-allotment. The over-allotment option will be used only
to cover a net short position resulting from the initial
distribution.
The Company is authorized to issue 1,000,000 shares of
preferred stock with such designations, voting and other rights
and preferences as may be determined from time to time by the
Board of Directors.
F-12
$900,000,000
Liberty Acquisition Holdings
Corp.
90,000,000 Units
PROSPECTUS
December 6, 2007
Citi
Lehman Brothers
Until December 31, 2007, (25 days after the date of
this prospectus) federal securities law may require all dealers
selling our securities, whether or not participating in this
offering, to deliver a prospectus. This delivery requirement is
in addition to the obligation of dealers to deliver a prospectus
when acting as an underwriter and with respect to unsold
allotments or subscriptions.
No dealer, salesperson or any other person is authorized to give
any information or make any representations in connection with
this offering other than those contained in this prospectus and,
if given or made, the information or representations must not be
relied upon as having been authorized by us. This prospectus
does not constitute an offer to sell or a solicitation of an
offer to buy any security other than the securities offered by
this prospectus, or an offer to sell or a solicitation of an
offer to buy any securities by anyone in any jurisdiction in
which the offer or solicitation is not authorized or is unlawful.
Liberty Acq Hdg Uts (AMEX:LIA.U)
過去 株価チャート
から 5 2024 まで 6 2024
Liberty Acq Hdg Uts (AMEX:LIA.U)
過去 株価チャート
から 6 2023 まで 6 2024