See accompanying notes to the unaudited condensed interim financial statements.
See accompanying notes to the unaudited condensed interim financial statements.
See accompanying notes to the unaudited condensed interim financial statements.
See accompanying notes to the unaudited condensed interim financial statements.
Notes to Unaudited Condensed Interim Financial Statements
Note 1Description of Organization and Business Operations
Organization and General:
Saban Capital Acquisition Corp. (the Company) was incorporated in the Cayman Islands on March 15, 2016. The Company was formed
for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the Business Combination). The Company is an emerging growth
company, as defined in Section 2(a) of the Securities Act of 1933, as amended (the Securities Act), as modified by the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). The Companys sponsor is Saban
Sponsor LLC, a Delaware limited liability company (the Sponsor).
At March 31, 2017, the Company had not commenced any
significant operations. All activity for the period from March 15, 2016 (Inception) through March 31, 2017 relates to the Companys formation and activities related to the initial public offering of units, each consisting
of one of the Companys Class A ordinary shares and one half of one warrant where each whole warrant entitles the holder to purchase one Class A ordinary share (the Public Offering). The Company will not generate any
operating revenues until after completion of the Business Combination, at the earliest. The Company will generate
non-operating
income in the form of interest income on cash and investments from the proceeds
derived from the Public Offering and the Private Placement (as defined below). The Company has selected December 31st as its fiscal year end.
Cash
Cash consisted of
cash held at one U.S. financial institution, and is subject to credit risk to the extent that the balance exceeds federal deposit insurance limits.
Financing:
The
registration statement for the Companys Public Offering was declared effective by the United States Securities and Exchange Commission (the SEC) on September 15, 2016. The Public Offering closed on September 21, 2016 (the
Close Date). The Companys Sponsor purchased an aggregate of 7,000,000 warrants at a purchase price of $1.00 per warrant, or $7,000,000 in the aggregate, in a private placement at the Close Date (the Private Placement).
The warrants are included in additional
paid-in
capital at the balance sheet.
The Company intends
to finance a Business Combination with a portion of proceeds from its $250,000,000 Public Offering and $7,000,000 Private Placement (see Note 3). At the Close Date, proceeds from the Public Offering of $250,000,000, net of underwriting discounts of
$5,000,000, and $5,000,000 of the Private Placement proceeds, were deposited in a trust account with Continental Stock Transfer and Trust Company acting as trustee (the Trust Account) as described below.
The Trust Account:
As of
September 21, 2016, the net proceeds from the Public Offering and a portion of the Private Placement Proceeds were deposited in the Trust Account. The Trust Account may be invested only in U.S. government treasury bills with a maturity of
180 days or less or in money market funds investing solely in United States Treasuries and meeting certain conditions under Rule
2a-7
under the Investment Company Act of 1940, as amended (the
Investment Company Act), which invest only in direct U.S. government obligations. Because the investment of the proceeds will be restricted to these instruments, the Company expects to meet the requirements for the exemption
provided in Rule
3a-1
promulgated under the Investment Company Act. At March 31, 2017, the funds were invested only in money market funds meeting those certain conditions under Rule
2a-7.
Funds will remain in the Trust Account except for the withdrawal of interest to pay taxes, if
any, until the earliest of (i) the completion of the Business Combination, (ii) the redemption of any Public Shares (as defined below) properly tendered in connection with a shareholder vote to amend the amended and restated memorandum and
articles of association to modify the substance and timing of the Companys obligation to
7
redeem 100% of the Public Shares if the Company does not complete its Business Combination within 24 months from the closing of this offering, or (iii) the redemption of all of the
Companys Public Shares if it is unable to complete the Business Combination within 24 months from the closing of this offering, subject to applicable law. The remaining proceeds outside the Trust Account may be used to pay for business, legal
and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.
Business Combination:
The Companys management has broad discretion with respect to the specific application of the net proceeds of the Public
Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating a Business Combination with (or acquisition of) a Target Business. As used herein, the Target
Business must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account, net of any deferred underwriting commissions and taxes payable on interest earned, at the
time of the Company signing a definitive agreement to proceed with a Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect a Business Combination.
The Company, after signing a definitive agreement for a Business Combination, will either (i) seek shareholder approval of the Business
Combination at a meeting called for such purpose in connection with which shareholders may seek to redeem their shares, regardless of whether they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate
amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest but less taxes payable, or (ii) provide shareholders with the opportunity to sell their shares to the
Company by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to commencement of
the tender offer, including interest but less taxes payable. The decision as to whether the Company will seek shareholder approval of the Business Combination or will allow shareholders to sell their shares in a tender offer will be made by the
Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek shareholder approval, unless a vote is required
by NASDAQ rules. If the Company seeks shareholder approval, it will complete its Business Combination only if a majority of the issued and outstanding ordinary shares voted are voted in favor of the Business Combination. However, in no event will
the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Business Combination, and
instead may search for an alternate Business Combination.
If the Company holds a shareholder vote or there is a tender offer for its
Public Shares in connection with a Business Combination, a public shareholder will have the right to redeem its Public Shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two
business days prior to the consummation of the Business Combination, including interest but less taxes payable. As a result, such Public Shares are recorded at their redemption amount and classified as temporary equity in accordance with Accounting
Standards Codification (ASC) 480, Distinguishing Liabilities from Equity (ASC 480) except for the portion of Public Shares required to maintain net tangible assets at least $5,000,001. That portion of Public
Shares is classified as permanent shareholders equity.
The Company has 24 months after the Close Date to complete a Business
Combination. If the Company does not complete a Business Combination within this time period, it shall (i) cease all operations except for the purposes of winding up, (ii) as promptly as reasonably possible, but not more than ten business
days thereafter, redeem the Public Shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest, net of taxes payable (less up to $50,000 of such net interest to pay
dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish the public shareholders rights as owners of Class A ordinary shares (including the right to receive further
liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the Companys board of directors, dissolve and
liquidate, subject in each case to the Companys obligations under Cayman Islands law to provide for claims of creditors and the requirements of
8
other applicable law. The Initial Shareholders (as defined below) have entered into a letter agreement with the Company, pursuant to which they have waived their rights to liquidating
distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete a Business Combination within 24 months after the Close Date. However, if the Initial Shareholders acquire Public Shares after the Public
Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete the Business Combination within 24 months after the Close Date.
If the Company fails to complete a Business Combination within 24 months after the Close Date, the resulting redemption of the Companys
Class A ordinary shares will reduce the book value per share for the Founder Shares held by the Initial Shareholders, who would be the only remaining shareholders after such a redemption.
If the Company completes a Business Combination within 24 months after the Close Date, the funds in the Trust Account will be used to pay for
the Business Combination, redemptions of Class A ordinary shares, if any, the deferred underwriting commission of $8,750,000 and accrued expenses related to the Business Combination. Any funds remaining will be made available to the Company to
provide working capital to finance the Companys business operations.
Note 2Summary of Significant Accounting Policies
Basis of Presentation:
The accompanying interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (U.S. GAAP) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (SEC), and reflect all adjustments, consisting only of normal recurring
adjustments, which are, in the opinion of management, necessary for a fair presentation of the Companys financial position at March 31, 2017 and the results of operations and cash flows for the period presented. Certain information and
disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. Interim results are not necessarily indicative of results for the full year or any future
periods. The accompanying unaudited interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Companys Annual Report on Form
10-K
filed with the SEC on March 29, 2017.
Emerging Growth Company:
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to
non-emerging
growth companies but any
such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the
Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
Concentration of Credit Risk:
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in financial institutions
which, at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
9
Financial Instruments:
The fair values of the Companys assets and liabilities which qualify as financial instruments under ASC 820, Fair Value
Measurements and Disclosures, approximate the carrying amounts represented on the balance sheet.
Redeemable Ordinary Shares:
All 25,000,000 Class A ordinary shares sold as part of the Units in the Public Offering contain a redemption feature as discussed
in Note 1. In accordance with ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of
all of the entitys equity instruments, are excluded from the provisions of ASC 480. Although the Company did not specify a maximum redemption threshold, its charter provides that in no event will it redeem its Class A ordinary shares in
an amount that would cause its net tangible assets to fall below $5,000,001. Accordingly, at March 31, 2017, 23,719,898 of the Companys 25,000,000 Class A ordinary shares were classified outside of permanent equity at their
redemption value.
Net Loss per Ordinary Share:
The Company has two classes of ordinary shares, which are referred to as Class A ordinary shares and Class F ordinary shares. The
Companys public shareholders have the opportunity to redeem their shares upon the completion of the Business Combination at a per share price that is equal to the aggregate amount then on deposit in the Trust Account including interest,
divided by the number of then outstanding public shares, subject to certain limitations. Accordingly, the Company uses the
two-class
method to compute the earnings per ordinary share. The
two-class
method is an earnings allocation formula that determines earnings per share separately for each class of ordinary shares based on an allocation of undistributed earnings per the rights of each class. At
March 31, 2017, the Company had outstanding warrants for the purchase of up to 19,500,000 Class A ordinary shares. For all periods presented, the weighted average of these shares was excluded from the calculation of diluted net loss per
ordinary share because its inclusion would have been anti-dilutive. As a result, diluted net loss per ordinary share is equal to basic net loss per ordinary share. The table below presents for the periods indicated a reconciliation of the numerators
and denominators used to compute basic and diluted net loss per share for each class of the ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2017
|
|
|
|
Class A
|
|
|
Class F
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
210,968
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Professional fees and other expenses
|
|
$
|
178,010
|
|
|
$
|
44,502
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Allocation of net loss
|
|
$
|
32,958
|
|
|
$
|
(44,502
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding
|
|
|
25,000,000
|
|
|
|
6,250,000
|
|
Basic and diluted net loss per share
|
|
$
|
0.00
|
|
|
$
|
(0.01
|
)
|
10
Use of Estimates:
The preparation of the Companys balance sheet in conformity with U.S. GAAP requires the Companys 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 revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Offering Costs:
The Company complies with the requirements of ASC
340-10-S99-1
and SEC Staff Accounting Bulletin Topic 5A, Expenses of Offering. The Company incurred offering costs in connection with its Public Offering of $802,818, primarily consisting
of accounting and legal services, securities registration expenses and exchange listing fees. These costs, along with paid and deferred underwriter discounts totaling $13,750,000, were charged to additional
paid-in
capital at the Close Date.
Income Taxes:
The Company follows the asset and liability method of accounting for income taxes under ASC 740, Income Taxes (ASC
740). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 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 March 31, 2017. The Company is currently not aware of any issues under
review that could result in significant payments, accruals or material deviation from its position.
Exempted companies are Cayman Islands
companies wishing to conduct business outside the Cayman Islands and, as such, are exempted from complying with certain provisions of the Companies Law. As an exempted company, the Company has applied for and received a tax exemption undertaking
from the Cayman Islands government that, in accordance with Section 6 of the Tax Concessions Law (2011 Revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands
imposing any tax to be levied on profits, income, gains or appreciations shall apply to the Company or its operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or
inheritance tax shall be payable (i) on or in respect of the shares or other obligations of us or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by us to the Company
shareholders or a payment of principal or interest or other sums due under a debenture or other obligation of us. Consequently, income taxes have not been reflected in the Financial Statements.
There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations, income
taxes are not levied on the Company. Consequently, income taxes are not reflected in the Companys financial statements.
Recent
Accounting Pronouncements:
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if
currently adopted, would have a material effect on the Companys financial statements.
11
Note 3Public Offering
In its Public Offering, the Company sold 25,000,000 units at a price of $10.00 per unit (the Units). Each unit consists of one of
the Companys Class A ordinary shares, $0.0001 par value per share (each, a Public Share), and one half of one warrant (Warrant). Each whole warrant entitles the holder thereof to purchase one Class A ordinary
share at a price of $11.50 per share. Warrants may be exercised only for a whole number of Class A ordinary shares; no fractional shares will be issued upon exercise of the Warrants. Each Warrant will become exercisable on the later of 30 days
after the completion of the initial Business Combination or 12 months after the Close Date, and will expire after the earlier of five years after the completion of the initial Business Combination, or upon redemption or liquidation. Alternatively,
if the Company does not complete a Business Combination within 24 months after the Close Date, the Warrants will expire worthless at the end of such period. If the Company is unable to deliver registered Class A ordinary shares to the holder
upon exercise of Warrants issued in connection with the 25,000,000 Units during the exercise period, the Warrants will expire worthless, except to the extent that they may be exercised on a cashless basis in the circumstances described in the
Warrant agreement. Once the Warrants become exercisable, the Company 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 only in the
event that the last sale price of the Companys Public Shares equals or exceeds $18.00 (subject to adjustments) per share for any 20 trading days within the
30-trading
day period ending on the third
trading day before the Company sends the notice of redemption to the Warrant holders. The Company has agreed to use its best efforts to file a registration statement for the Class A ordinary shares issuable upon exercise of the Warrants under
the Securities Act as soon as practicable, but in no event later than 15 business days following the completion of the initial Business Combination.
The
Company paid an underwriting discount of 2.00% of the gross proceeds of the Public Offering, or $5,000,000, to the underwriters at the Close Date, with an additional fee (the Deferred Discount) of 3.50% of the gross proceeds of the
Public Offering, or $8,750,000, payable upon the Companys completion of a Business Combination. The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes
a Business Combination. The underwriters are not entitled to receive any of the interest earned on Trust Account funds that would be used to pay the Deferred Discount. The Deferred Discount is recorded as deferred underwriter compensation at the
Companys balance sheet.
Note 4Related Party Transactions
Founder Shares
On
April 11, 2016, the Companys Sponsor purchased 5,750,000 Class F ordinary shares (Founder Shares) for $25,000, or approximately $0.004 per share. In August 2016, the Company repurchased 99,000 Founder Shares from the
Sponsor at their original per share issuance price and subsequently issued such number of Founder Shares pursuant to The 2016 Share Award Plan of the Company for the same per share price to certain individuals who will assist in the evaluation of
investment opportunities. In September 2016, the Companys Sponsor transferred 30,000 Founder Shares to each of the Companys independent director nominees at their original per share issue price (together with the Sponsor and the other
individuals that received founder shares, the Initial Shareholders). On September 15, 2016, the Company effected a pro rata share capitalization resulting in an increase in the total number of Founder Shares outstanding from
5,750,000 to 6,250,000 in order to maintain the ownership of Founder Shares by the Initial Shareholders at 20% of the Companys issued and outstanding shares upon consummation of the Public Offering. Following the Public Offering and the pro
rata share capitalization, the Sponsor held 6,044,570 Founder Shares, each of the Companys three independent directors owned 32,610 Founder Shares, and the other individuals, including the Companys executive officers, held 107,600
Founder Shares. On March 16, 2017, concurrent with Mr. Bruce Rosenblums resignation from the Companys board of directors, the Company acquired 25,110 Founders Shares from Mr. Rosenblum and concurrent therewith, in
connection with Mr. Casey Wassermans appointment to the board of directors, the Company
re-issued
such 25,110 Founders Shares to Mr. Casey Wasserman, and the Sponsor sold to Mr. Wasserman
an additional 7,500 Founders Shares and the Sponsor thereafter held 6,037,070 Founders Shares.
12
Private Placement Warrants
Simultaneously with the consummation of the Public Offering, the Sponsor purchased 7,000,000 warrants at a price of $1.00 per warrant, or
$7,000,000 in the aggregate, in a Private Placement (the Private Placement Warrants). Each Private Placement Warrant entitles the holder to purchase one Class A ordinary share for $11.50 per share. A portion of the proceeds from the
sale of the Private Placement Warrants were placed in the Trust Account. The Private Placement Warrants may not be redeemed by the Company so long as they are held by the Sponsor. If any Private Placement Warrants are held by holders other than the
Sponsor or certain permitted transferees, such Private Placement Warrants will be redeemable and exercisable by the holders on the same basis as the Warrants included in the Units sold under the Public Offering. The Sponsor has the option to
exercise the Private Placement Warrants on a cashless basis.
If the Company does not complete a Business Combination within 24 months
after the Close Date, the proceeds of the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Companys Public Shares (subject to the requirements of applicable law), and the Private
Placement Warrants will expire worthless.
Registration Rights
Holders of the Founder Shares and Private Placement Warrants, have registration rights pursuant to a registration rights agreement. The holders
of these securities are entitled to make up to three demands that the Company register the Private Placement Warrants, Class A ordinary shares underlying the Private Placement Warrants and Class F ordinary shares. In addition, the holders
have certain piggy-back registration rights with respect to registration statements filed by the Company subsequent to its completion of a Business Combination and rights to require the Company to register for resale such securities
pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable
lock up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Related
Party Notes
Between Inception and the Close Date, the Sponsor loaned the Company $250,000 in unsecured promissory notes. The funds
were used to pay
up-front
expenses associated with the Public Offering. These notes were
non-interest
bearing and were repaid by netting against proceeds received from
the Sponsor at the Close Date.
Due to Related Party
Saban Capital Group, Inc. is an affiliate of the Sponsor which advanced various costs on behalf of the Company. Total related party advances
amounted to $6,013 for the period January 1, 2017 through March 31, 2017 and were reported as general and administrative expenses. As of March 31, 2017, the amount due to related party was $4,600.
Administrative Service Agreement
Effective September 15, 2016, the Company entered into an agreement to pay monthly expenses of $10,000 for office space, administrative
services and support services to an affiliate of the Companys Sponsor. The agreement terminates upon the earlier of the completion of a Business Combination or the liquidation of the Company. For the period from January 1, 2017 to
March 31, 2017, the Company incurred expenses of $30,000 under this agreement.
13
Other Related Party Transactions
The Companys Sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any
out-of-pocket
expenses incurred in connection with activities on the Companys behalf such as identifying potential target businesses and performing due diligence on
suitable business combinations.
The Companys audit committee will review on a quarterly basis all payments that were made to its
Sponsor, officers, directors or the Companys or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of
out-of-pocket
expenses incurred by such persons in connection with activities on the Companys behalf, although no such reimbursements will be made from the proceeds of the Public Offering held in the
Trust Account prior to the completion of the Business Combination.
In addition, in order to finance transaction costs in connection with
the Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Companys officers and directors may, but are not obligated to, loan the Company funds as may be required. If the Company complete a Business Combination, it
would repay such loaned amounts. In the event that the Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would
be used for such repayment. Up to $1,000,000 of such loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement
Warrants, including as to exercise price, exercisability and exercise period. The terms of such loans by the Companys officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. The
Company does not expect to seek loans from parties other than the Sponsor or an affiliate of the Sponsor as it does not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds
in the Trust Account.
The Company is not prohibited from pursuing a Business Combination with a company that is affiliated with its
Sponsor, officers or directors or making the acquisition through a joint venture or other form of shared ownership with its Sponsor, officers or directors. In the event the Company seeks to complete a Business Combination with a target that is
affiliated with its Sponsor, officers or directors, the Company, or a committee of independent and disinterested directors, would obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent
accounting firm, that such an initial Business Combination is fair to the Company from a financial point of view. The Company is not required to obtain an opinion with respect to the fairness of the Business Combination in any other context.
After the Business Combination, directors or members of the Companys management team who remain with the Company may be paid consulting,
management or other compensation from the combined company. All of this compensation will be fully disclosed to shareholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to the Companys
shareholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time, because the directors of the post-combination business will be responsible for determining executive officer
and director compensation. Any compensation to be paid to the Companys executive officers after the completion of its initial business combination will be determined by a compensation committee constituted solely by independent directors.
Note 5Investments Held in Trust
Gross proceeds of $250,000,000 and $5,000,000 from the Public Offering and Private Placement, respectively, less underwriting discounts of
$5,000,000 were placed in the Trust Account at the Close Date. At March 31, 2017, funds in the Trust Account totaled $250,306,920 and were held in money market funds.
14
Note 6Deferred Underwriting Compensation
The Company is committed to pay the Deferred Discount of 3.50% of the gross proceeds of the Public Offering, or $8,750,000, to the underwriters
upon the Companys completion of a Business Combination. The underwriters are not entitled to receive any of the interest earned on Trust Account funds that would be used to pay the Deferred Discount, and no Deferred Discount is payable to the
underwriters if a Business Combination is not completed within 24 months after the Close Date.
Note 7Shareholders Equity
Class A Ordinary Shares
The
Company is authorized to issue 500,000,000 Class A ordinary shares. Depending on the terms of a potential Business Combination, the Company may be required to increase the number of authorized Class A ordinary shares at the same time as
its shareholders vote on the Business Combination to the extent the Company seeks shareholder approval in connection with its Business Combination. Holders of Class A ordinary shares are entitled to one vote for each held on all matters to be
voted on by shareholders. At March 31, 2017, there were 25,000,000 Class A ordinary shares issued and outstanding (Public Shares), of which 23,719,898 shares were subject to possible redemption and are classified outside of
shareholders equity on the balance sheet.
Class F Ordinary Shares
The Company is authorized to issue 20,000,000 Class F ordinary shares. Holders of the Companys Class F ordinary shares are
entitled to one vote for each ordinary share. Class F ordinary shares are automatically converted to Class A common shares on a
one-for-one
basis at the time
of a Business Combination, subject to certain adjustments. The Initial Shareholders, the sole holders of Class F ordinary shares have agreed not to transfer, assign or sell any Class F ordinary shares during the lock up period, subject to
certain exceptions. At March 31, 2017, there were 6,250,000 Class F ordinary shares issued and outstanding.
Preferred Shares
The Company is authorized to issue 5,000,000 preferred shares. The Companys board of directors has the authority to determine
the voting rights, if any, designations, powers, preferences, and the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the preferred shares of each series. The
board of directors may, without shareholder approval, issue preferred shares with voting and other rights that could adversely affect the voting power and other rights of the holders of Public Shares, and which could have anti-takeover effects. At
March 31, 2017, there were no preferred shares issued or outstanding.
Note 8Fair Value Measurement
The Company complies with FASB ASC 820, Fair Value Measurements, for its financial assets and liabilities that are re-measured and reported at
fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. ASC 820 determines fair value to be the price that would be received to sell an asset or would be paid
to transfer a liability (i.e. the exit price) in an orderly transaction between market participants at the measurement date.
The
following table presents information about the Companys assets that are measured at fair value on a recurring basis as of March 31, 2017, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value. In general, fair values determined by Level 1 inputs utilized quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize date points that are observable such as
quoted prices, interest rates, and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.
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Description
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March 31, 2017
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Quoted Prices
in Active
Markets
(Level 1)
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significant
Other
Observable
Inputs
(Level 2)
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Significant
Other
Unobservable
Inputs
(Level 3)
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Investments and cash held in Trust Account
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$
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250,306,920
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|
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$
|
250,306,920
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|
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Total
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$
|
250,306,920
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|
|
$
|
250,306,920
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Note 9Subsequent Events
Subsequent Events:
Management has performed an evaluation of subsequent events through the date of issuance of the financial statements, noting no other
items which require adjustment or disclosure.
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