TIDMEVRA
RNS Number : 5209G
EverArc Holdings Limited
26 July 2021
EverArc Holdings Limited
Interim Condensed Financial Information
for the Period ended 30 April 2021 (Unaudited)
Interim Management Report and Co-Chairmens' Statement
We are pleased to present to the shareholders the Company's
half-yearly unaudited financial report for the period ended 30
April 2021.
The Company
The Company raised gross proceeds of US$340 million on its
initial public offering ("IPO") through the placing of Ordinary
Shares (with matching warrants) at a placing price of US$10 per
Ordinary Share and a further US$71 million (with no matching
warrants) on a subsequent placing at a price of US$10.50 per
Ordinary Share. The Company was admitted to trading on the basis of
a standard listing on the main market of the London Stock Exchange
on 17 December 2019 with the further placing shares completed on 20
January 2020. As at 30 April 2020, there were 40,832,500 Ordinary
Shares in issue.
As described in the prospectus dated 12 December 2019 and
published by the Company in connection with the IPO (the
"Prospectus"), the Company was formed to undertake an acquisition
of a target company or business (the "Acquisition"). The Company is
working towards the completion of an acquisition as outlined below.
The Company expects that funds not used for the Acquisition, if
any, will be used for future acquisitions, internal or external
growth and expansion, purchase of outstanding debt and/or working
capital in relation to the acquired company or business. Following
completion of the Acquisition, the objective of the Company is
expected to be to operate the acquired business and implement an
operating strategy with a view to generating value for Shareholders
through operational improvements as well as potentially through
additional complementary acquisitions following the
Acquisition.
Acquisition activity
On 16 June 2021, the Company announced that it had entered into
a definitive agreement with SK Invictus Holdings S.à.r.l. ("SK"),
an affiliate of funds advised by SK Capital Partners, to acquire
100% of SK Invictus Intermediate S.à.r.l., the ultimate parent
company of Perimeter Solutions ("Perimeter Solutions"), a leading
global manufacturer of high-quality firefighting products and
lubricant additives, in a transaction valued at approximately $2
billion, consisting of cash and preferred shares, subject to
customary closing conditions.
The purchase consideration payable in connection with the
Acquisition is expected to be funded from a combination of: (i) the
Company's existing cash balances raised at the time of its IPO and
in a subsequent placing of approximately US$400 million; (ii)
additional proceeds of US$1.15 billion which the Company has raised
from an equity issuance to a limited group of institutional
shareholders, which is conditional upon the closing of the
acquisition; (iii) committed loan facilities in an aggregate amount
of US$600 million; and (iv) the issuance of US$100 million of
preferred equity to SK.
The Boards of Directors of the Company and Perimeter Solutions
have each approved the proposed Acquisition. Closing of the
Acquisition, which is expected to take place in Q4 2021, is subject
to customary conditions.
Upon closing, the Company will undertake a reorganisation
pursuant to which it and Perimeter Solutions will become the wholly
owned subsidiaries of a newly formed Luxembourg company, Perimeter
Solutions S.A.. Prior to closing of the Acquisition, Perimeter
Solutions S.A. will file a registration statement with the SEC and
apply for listing of its ordinary shares and warrants on a U.S.
based stock exchange. It is anticipated that in connection with the
closing of the Acquisition, the Company will request the
cancellation of the listing of its ordinary shares and warrants on
the Official List of the Financial Conduct Authority and trading on
the London Stock Exchange.
Financial Results
During the period commenced 1 November 2020 and ended 30 April
2021, the Company has incurred operating costs of US$1.029 million.
These expenses were partially offset by net income from investments
totalling US$0.075 million.
Principal Risks and Uncertainties
The Company set out in the Prospectus the principal risks and
uncertainties that could impact its performance; these principal
risks and uncertainties remain unchanged since that document was
published and are expected to apply in the remaining period to 31
October 2021. Your attention is drawn to that Prospectus for the
detailed assessment.
A copy of the Prospectus is available on the Company's website
(www.everarcholdings.com).
Related Parties
Related party disclosures are given in note 12 to these
condensed interim financial statements.
Statement of Directors' Responsibility
The Directors confirm that, to the best of their knowledge,
these condensed interim financial statements for the period have
been prepared in accordance with IAS 34 Interim Financial Reporting
and the requirements of the Disclosure and Transparency Rules of
the Financial Conduct Authority. The interim management report
includes a fair review of the information required by the
Disclosure and Transparency Rules DTR 4.2.7R and DTR 4.2.8R,
namely:
(a) an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed financial statements, and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
(b) material related party transactions that have taken place in
the first six months of the current financial year that have
materially affected the financial position or performance of the
Company during that period.
By order of the Board:
W.Nicholas Howley
William Nicholas Thorndike, Jr
Co-Chairmen
26 July 2021
Independent review report to EverArc Holdings Limited
Introduction
We have reviewed the condensed set of financial statements in
the half-yearly financial report of EverArc Holdings Limited (the
'company') for the six months ended 30 April 2021 which comprises
Condensed Statement of Comprehensive Loss, Condensed Statement of
Financial Position, Condensed Statement of Changes in Equity and
Condensed Statement of Cash Flows. We have read the other
information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2.1, the annual financial statements of the
company are prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with
International Accounting Standard (IAS) 34 "Interim Financial
Reporting". The condensed set of financial statements included in
this half-yearly financial report has been prepared in accordance
with the basis of preparation in Note 2.1.
Our responsibility
Our responsibility is to express a conclusion to the company on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
The impact of uncertainties arising from the UK exiting the
European Union on our review
Our review of the condensed set of financial statements in the
half-yearly financial report requires us to obtain an understanding
of all relevant uncertainties, including those arising as a
consequence of the effects of Brexit. Such reviews assess and
challenge the reasonableness of estimates made by the directors and
the related disclosures and the appropriateness of the going
concern basis of preparation of the financial statements. All of
these depend on assessments of the future economic environment and
the company's future prospects and performance.
Brexit is one of the most significant economic events for the
UK, and at the date of this report its effects are subject to
unprecedented levels of uncertainty, with the full range of
possible outcomes and their impacts unknown. We applied a
standardised firm-wide approach in response to these uncertainties
when assessing the company's future prospects and performance.
However, no review of interim financial information should be
expected to predict the unknowable factors or all possible future
implications for a company associated with a course of action such
as Brexit.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
April 2021 is not prepared, in all material respects, in accordance
with International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority.
Use of our report
This report is made solely to the company, as a body, in
accordance with International Standard on Review Engagements (UK
and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'. Our review
work has been undertaken so that we might state to the company
those matters we are required to state to it in an independent
review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company as a body, for our review work, for
this report, or for the conclusion we have formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
26 July 2021
Condensed Statement of Comprehensive Loss for the period ended
30 April 2021
For the period For the period
from 1 November from 8 November
2020 to 30 2019 to 30
April 2021 April 2020
Note US$ US$
Unrealised (loss)/gain on investments (9,381) 244,232
Investment income 84,098 1,331,296
Other income - 6
Expenses 3 (1,028,961) (1,736,075)
Non cash charge related to warrant
redemption liability - (340,200)
________ ________
Operating loss (954,244) (500,741)
________ ________
Loss and total comprehensive loss for
the period (954,244) (500,741)
Basic and diluted loss per Ordinary
and Founder share 8 (0.02) (0.02)
The notes form an integral part of these financial
statements.
Condensed Statement of Financial Position as at 30 April
2021
30 April 31 October
2021 2020
Note US$ US$
Assets
Current assets
Cash and cash equivalents 803 19,997
Short-term investments 7 398,872,620 399,986,263
Prepayments and other assets 9 692,827 490,051
___________ ___________
Total assets 399,566,250 400,496,311
___________ ___________
Liabilities
Current liabilities
Payables 10 (111,782) (87,599)
___________ ___________
Total current liabilities (111,782) (87,599)
Net assets 399,454,468 400,408,712
Equity
Ordinary Share Capital - nominal - -
value
Ordinary Share Capital - share premium
and warrants 11 401,356,544 401,356,544
Accumulated losses (1,902,076) (947,832)
___________ ___________
Total equity 399,454,468 400,408,712
Net asset value per share 8 US$9.78 US$9.80
The notes form an integral part of these financial
statements.
Condensed Statement of Changes in Equity for the period ended 30
April 2021
Ordinary Ordinary Retained
Share Capital Share Capital losses
- nominal - share Total
value premium
US$ US$ US$ US$
At inception, 8 November - - - -
2019
Issue of shares - 411,730,000 - 411,730,000
Issue costs - (10,427,561) - (10,427,561)
Loss and total comprehensive
loss for period - - (500,741) (500,741)
________ _________ _________ _________
Balance as at 30 April
2020 - 401,302,439 (500,741) 400,801,698
________ _________ _________ _________
Ordinary Ordinary Retained
Share Capital Share Capital losses
- nominal - share
value premium Total
US$ US$ US$ US$
Balance as at 1 November
2020 - 401,356,544 (947,832) 400,408,712
Loss and total comprehensive
loss for period - - (954,244) (954,244)
________ _________ _________ _________
Balance as at 30 April
2021 - 401,356,544 (1,902,076) 399,454,468
________ _________ _________ _________
There is no Other Comprehensive Income during the period.
The notes form an integral part of these financial
statements.
Statement of Cash Flows for the period ended 30 April 2021
As restated
For the period For the period
from 1 November from 8 November
2020 to 30 2019 to 30
April 2021 April 2020
Note US$ US$
Cash flows from operating activities
Loss and total comprehensive loss
for the year (954,244) (500,741)
Adjustments for:
Unrealised (loss)/gain on short-term
investments 9,381 (244,232)
Realised gain on short-term investments (70,537) (245,357)
Charge related to warrant redemption
liability - 340,200
Movements in working capital:
Increase in debtors and prepayments (202,776) (778,210)
(Decrease)/increase in payables (3,099) 22,702
___________ ___________
Net cash used in operating activities (1,221,275) (1,405,638)
___________ ___________
Investing activities
Purchase of short-term investments (340,846,644) (1,111,355,754)
Sale of short-term investments 342,021,443 711,458,105
___________ ___________
Net cash generated from/(used
in) investing activities 1,174,799 (399,897,649)
___________ ___________
Financing activities
Issue of Ordinary Shares and warrants 11 - 411,730,000
Share issue expenses 11 - (10,427,561)
___________ ___________
Net cash provided by financing
activities - 401,302,439
___________ ___________
Decrease in cash and cash equivalents (46,476) (848)
Cash and cash equivalents at start 19,997 -
of period
___________ ___________
*Cash and cash equivalents at
end of period (26,479) (848)
*Stated net of bank overdraft of $27,282 (30 April
2020: $848).
The notes form an integral part of these financial
statements.
Notes to the financial statements
1. General information
The Company was incorporated with limited liability under the
laws of the British Virgin Islands under the BVI Companies Act on 8
November 2019. The address of the Company's registered office is
Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin
Islands. The Company's Ordinary Shares and Warrants were admitted
for trading on the Main Market of the London Stock Exchange on 17
December 2019, after raising gross proceeds of US$340,000,000 on
its initial public offering ("IPO") from the placing of Ordinary
Shares (with matching Warrants) at a placing price of US$10 per
Ordinary Share. Further gross proceeds of US$71,400,000 were raised
in January 2020 from a placing of Ordinary Shares at a placing
price of US$10.50 per Ordinary Share.
This condensed interim financial information were approved and
authorised for issue in accordance with a resolution of the
Directors on 26 July 2021.
2. Summary of significant accounting policies and basis of preparation of half year report
2.1 Basis of preparation
The condensed interim financial information for the half year
ended 30 April 2021 has been prepared in accordance with
International Accounting Standard (IAS) 34 "Interim Financial
Reporting" and in conformity with the requirements of the Companies
Act 2006 and the requirements of the Disclosure and Transparency
Rules of the Financial Conduct Authority. The interim financial
statements should be read in conjunction with the Company's
financial statements as at and for the period ended 31 October
2020. This condensed interim financial information has been
prepared under the historical cost convention, as modified by the
revaluation of financial assets at fair value through profit or
loss.
The preparation of interim financial statements in conformity
with IFRS requires the use of certain critical accounting
estimates. It also requires the Directors to exercise judgement in
the process of applying the Company's accounting policies. Changes
in assumptions may have a significant impact on the financial
statements in the period the assumptions changed. The Directors
believe that the underlying assumptions are appropriate and that
the Company's financial statements therefore present the financial
position and results fairly. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements, are disclosed in note
2.12.
2.2 Going concern
The Directors have a reasonable expectation and belief that the
Company has adequate resources to continue in operational existence
for the foreseeable future given the available cash and forecast
cash outflows. Thus, the financial statements are prepared on a
going concern basis.
2.3 Foreign currency translation
Functional and presentation currency
The Company is listed on the Main Market of the London Stock
Exchange, the capital raised in the IPO and the subscription of
Founder Shares is denominated in US dollars and it is intended that
any dividends and distributions to be paid to shareholders are to
be denominated in US dollars. The performance of the Company is
measured and reported to the shareholders in US dollars, which is
the Company's functional currency. The Directors consider the US
dollar as the currency of the primary economic environment in which
the Company operates and the one that most faithfully represents
the economic effects of the underlying transactions, events and
conditions.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign currency assets and liabilities are
translated into the functional currency using the exchange rate
prevailing at the balance sheet date.
Foreign exchange gains and losses arising from translation are
included in the statement of comprehensive income.
2.4 Financial assets at fair value through profit or loss
Classification
The Company classifies its investment in US Treasury Bills as a
financial asset at fair value through profit or loss.
Financial assets classified at fair value through profit or loss
are financial instruments that are managed, and their performance
is evaluated on a fair value basis in accordance with the Company's
documented investment strategy.
The Company's policy requires the Directors to evaluate the
information about these financial assets on a fair value basis
together with other related financial information. Assets in this
category are classified as current assets if they are expected to
be realised within 12 months of the balance sheet date. Those not
expected to be realised within 12 months of the balance sheet date
will be classified as non-current.
Recognition, derecognition and measurement
Regular purchases and sales of investments are recognised on the
trade date - the date on which the Company commits to purchase or
sell the investment. Financial assets at fair value through profit
or loss are initially recognised at fair value. Transaction costs
are expensed as incurred in the statement of comprehensive income.
Financial assets are derecognised when the rights to receive cash
flows from the investments have expired or the Company has
transferred substantially all risks and rewards of ownership.
Subsequent to initial recognition, all financial assets at fair
value through profit or loss are measured at fair value. Gains and
losses arising from changes in the fair value of the 'financial
assets at fair value through profit or loss' category are presented
in the statement of comprehensive loss within net changes in fair
value of financial assets at fair value through profit or loss in
the period in which they arise.
Dividend income or distributions of a revenue nature from
financial assets at fair value through profit or loss are
recognised in the statement of comprehensive loss within dividend
income when the Company's right to receive payments is
established.
2.5 Offsetting financial instruments
Financial instruments are offset and the net amount reported in
the balance sheet only when there is legally enforceable right to
offset the recognised amounts and there is an intention to settle
on a net basis, or realise the asset and settle the liability
simultaneously.
2.6 Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits,
other short-term highly liquid investments with original maturities
of three months or less, and bank overdrafts.
2.7 Payables and accrued expenses
Payables and accrued expenses are recognised initially at fair
value and subsequently measured at amortised cost using the
effective interest method.
2.8 New accounting standards
The Company applied all applicable standards and applicable
interpretations published by the IASB for the periods presented.
The Company did not adopt any standard or interpretation published
by the IASB for which the mandatory application date is on or after
1 May 2021.
Based on the Company's existing activity, there are no new
interpretations, amendments or full standards that have been issued
but not effective or adopted for the period ended 30 April 2021
that will have a material impact on the Company.
2.9 Share-based payments
Directors' remuneration settled by the issue of Ordinary Shares
is recognised in the statement of comprehensive income based on the
issue price over the period of service to which the issue
relates,
2.10 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors as it is
the body that makes strategic decisions. The Directors are of the
opinion that there is only a single operational segment. As a
result no segment information has been provided as the Company only
accumulates its funds raised for investment in US Treasury Bills
and liquidity funds.
2.11 Share capital
Founder Shares, Ordinary Shares, and Warrants are classified as
equity. Incremental costs directly attributable to the issue of new
ordinary shares are shown in equity as a deduction, net of tax,
from the proceeds. Consideration in excess of the par value and the
fair value of the warrants is included in share premium and
warrants.
2.12 Critical accounting judgements and key sources of estimation uncertainty
Management have considered the terms of the Founder Advisory
Agreement and concluded that, due to the terms of the agreement,
particularly the fact that the Company has the ability to decide
whether to accept an acquisition presented under the Agreement and
there is no penalty for the advisors specified in the contract in
the event of no work being performed, the substance of the service
provided is the Acquisition. As no Acquisition has occurred,
management have concluded that the services under the Agreement
have not yet been performed and no share based payment charge is
therefore recognised.
3. Expenses
For the period For the period
from 1 November from 8 November
2020 to 30 2019 to 30
April 2021 April 2020
US$ US$
Listing expenses - 410,622
Legal and professional fees 360,727 900,991
Insurance 293,355 183,082
Directors' remuneration 144,862 115,890
Administration fees 16,406 74,102
Audit fee 49,615 -
General expenses 163,996 51,388
________ ________
1,028,961 1,736,075
4. Taxation
The Company is not subject to income tax or corporation tax in
the British Virgin Islands.
5. Fair value
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. In determining fair
value, the Company may use various methods including market, income
and cost approaches.
Based on these approaches, the Company often utilises certain
assumptions that market participants would use in pricing the asset
or liability, including assumptions about risk and the risks
inherent in the inputs to the valuation technique. These inputs can
be readily observable, market corroborated, or generally
unobservable inputs. The Company utilises valuation techniques that
maximise the use of observable inputs and minimise the use of
unobservable inputs. Based on the observability of the inputs used
in the valuation techniques the Company is required to provide the
following information according to the fair value hierarchy. The
fair value hierarchy ranks the quality and reliability of the
information used to determine fair values.
Financial assets and liabilities carried at fair value will be
classified and disclosed in one of the following three
categories:
Level 1 - Quoted prices for identical assets and liabilities
traded in active exchange markets, such as the New York Stock
Exchange.
Level 2 - Observable inputs other than Level 1 including quoted
prices for similar assets or liabilities, quoted prices in less
active markets, or other observable inputs that can be corroborated
by observable market data. Level 2 also includes derivative
contracts whose value is determined using a pricing model with
observable market inputs or can be derived principally from or
corroborated by observable market data.
Level 3 - Unobservable inputs supported by little or no market
activity for financial instruments whose value is determined using
pricing models, discounted cash flow methodologies, or similar
techniques, as well as instruments for which the determination of
fair value requires significant management judgment or estimation;
also includes observable inputs for nonbinding single dealer quotes
not corroborated by observable market data.
The Company has various processes and controls in place to
ensure that fair value is reasonably estimated. A model validation
policy governs the use and control of valuation models used to
estimate fair value. The Company performs due diligence procedures
over third-party pricing service providers in order to support
their use in the valuation process. Where market information is not
available to support internal valuations, independent reviews of
the valuations are performed and any material exposures are
escalated through a management review process.
While the Company believes its valuation methods are appropriate
and consistent with other market participants, the use of different
methodologies or assumptions to determine the fair value of certain
financial instruments could result in a different estimate of fair
value at the reporting date.
As at 30 April 2021 financial assets at fair value through
profit or loss of US$398,872,620 (31 October 2020: US$399,986,263)
were categorised as level 2 securities. There were no transfers
between levels during the year.
6. Founder Advisory Agreement
The Company has entered into the Founder Advisory Agreement with
EverArc Founders LLC (the "Founder Entity"), which is owned and
operated by the Founders; it is intended to have the effect of
incentivising the Founders to achieve the Company's objectives. The
Founder Advisory Agreement is structured to provide a return linked
to the market value of the Ordinary Shares thus aligning the
interests of the Founders with those of the Company's shareholders
on a long-term basis.
Subject to the terms of the Founder Advisory Agreement, the
Founder Entity will, at the request of the Company: (i) prior to
consummation of the Acquisition, assist with identifying target
opportunities, due diligence, negotiation, documentation and
investor relations with respect to the Acquisition; and (ii)
following the Acquisition, provide strategic and capital allocation
advice and such other services as may from time to time be
agreed.
Commencing from consummation of the Acquisition, and provided
that the Payment Price per Ordinary Share is at least $10, for the
financial year in which the Acquisition completes and for a further
ten full financial years, the Founder Entity will be entitled to
receive the Variable Annual Advisory Amount. In the first Payment
Year in which such amount becomes payable, such amount will be
equal in value to (i) 18 per cent. of the increase in the market
value of one Ordinary Share, being the difference between $10 and
the Payment Price, multiplied by (ii) such number of Ordinary
Shares equal to the Founder Advisory Agreement Calculation
Number.
Thereafter, the Variable Annual Advisory Amount will only become
payable if the Payment Price during any subsequent Payment Year is
greater than the highest Payment Price in any preceding Payment
Year in which an amount was paid in respect of the Founder Advisory
Agreement. Such Variable Annual Advisory Amount will be equal in
value to 18 per cent. of the increase in the Payment Price over the
highest Payment Price in any preceding Payment Year multiplied by
the Founder Advisory Agreement Calculation Number.
The Variable Annual Advisory Amount, if any, will be paid on the
relevant Payment Date by the issue to the Founder Entity of such
number of Ordinary Shares as is equal to the Variable Annual
Advisory Amount to which it is entitled divided by the Payment
Price or partly in cash, at the election of the Founder Entity
provided that at least 50 per cent. of the amount payable is paid
in Ordinary Shares.
In addition, commencing from consummation of the Acquisition,
for the financial year in which the Acquisition completes and for a
further six full financial years, the Founder Entity shall be
entitled to the Fixed Annual Advisory Amount. Such amount will be
equal to such number of Ordinary Shares as is equal to 1.5 per
cent. of the Founder Advisory Agreement Calculation Number payable
on the relevant Payment Date in Ordinary Shares or partly in cash,
at the election of the Founder Entity provided that at least 50 per
cent. of the amount payable is paid in Ordinary Shares. Any cash
element will be calculated using the Payment Price.
The Founders have advised the Company that their intention is to
elect, via the Founder Entity, to receive any amounts due in
respect of either the Fixed Annual Advisory Amount or the Variable
Annual Advisory Amount in Ordinary Shares and for any cash element
to only be such amount as is required to meet any related
taxes.
The amounts used for the purposes of calculating the Variable
Annual Advisory Amount or the Fixed Annual Advisory Amount and the
relevant numbers of Ordinary Shares are subject to adjustment to
reflect any split or reverse split of the Ordinary Shares in issue
after the date of Admission.
Pursuant to the terms of the Founder Advisory Agreement, the
Founder Entity has the right to appoint up to six directors to the
Board.
The Founder Advisory Agreement continues until the end of the
tenth full financial year following the closing of the Acquisition
unless terminated earlier in accordance with its terms. The Founder
Advisory Agreement may be terminated by the Company at any time if
the Founder Entity engages in any criminal conduct or in wilful
misconduct which is harmful to the Company (as determined by a
court of competent jurisdiction in the State of New York). In
addition, the agreement can be terminated at any time following
consummation of the Acquisition (i) by the Founder Entity if the
Company ceases to be traded on the London Stock Exchange, New York
Stock Exchange or NASDAQ; or (ii) by the Founder Entity or the
Company if there is (A) a Sale of the Company or (B) a liquidation
of the Company.
If the Founder Advisory Agreement is terminated under (i) or
(ii)(A), the Company will pay the Founder Entity an amount in cash
equal to:
(a) the Fixed Annual Advisory Amount for the year in which
termination occurs and for each remaining year of the term of the
agreement, in each case at the Payment Price; and
(b) the Variable Annual Advisory Amount that would have been
payable for the year of termination and for each remaining year of
the term of the agreement.
In each case the Payment Price in the year of termination will
be calculated on the basis of the Payment Year ending on the
Trading Day immediately prior to the date of termination, save that
in the event of a Sale of the Company, the Payment Price will be
the price per Ordinary Share paid by the relevant third party. For
each remaining year of the term of the agreement the Payment Price
in each case will increase by 15% each year. No account shall be
taken of any Payment Price in any year preceding the termination
when calculating amounts due on termination.
On the entry into liquidation of the Company, a Variable Annual
Advisory Amount and a Fixed Annual Advisory Amount shall be payable
in respect of a shortened Payment Year which shall end on the
Trading Day immediately prior to the date of commencement of
liquidation.
The Founder Entity must provide the services of at least one
Founder at all times.
If, following the Acquisition, the Company is not the publicly
traded entity (i.e. the Company's parent company or affiliate is
publicly traded), the Company shall cause the rights and
obligations of the Company under the Agreement to be assigned to
and assumed by (on consummation of the Acquisition) such publicly
traded parent company or affiliate.
Fees will be recognised when they become due and the amount can
be calculated with reliability. There are no fees charged or
recognised under the Founder Advisory Agreement in the period.
7. Short-term investments
The Company holds zero coupon US Treasury Bills and investments
in US Treasury Liquidity Funds which at 30 April 2021 had a cost of
US$398,855,293 (31 October 2020: US$399,959,555) and a market value
of US$398,872,620 (31 October 2020: US$399,986,263).
8. Loss per share and net asset value per share
The loss per share calculation for the period ended 30 April
2021 is based on loss for the period of US$954,244 (period ended 30
April 2020: Loss of US$500,741) and the weighted average number of
Ordinary Shares of 40,832,500 (period ended 30 April 2020:
31,537,529).
Net asset value per share is based on net assets of US$
399,454,468 (31 October 2020: 400,408,712) divided by the
40,832,500 Ordinary Shares in issue at 30 April 2021 and 31 October
2020.
The Warrants are considered non-dilutive at 30 April 2021.
9. Prepayments and other assets
2021 2020
US$ US$
Other prepayments 690,904 488,064
Investment income receivable 1,923 1,987
_________ _________
692,827 490,051
10. Payables
2021 2020
US$ US$
Audit fee accrual 49,842 77,599
Directors' fees accrued 24,658 -
Bank overdraft 27,282 -
Other payables 10,000 10,000
_________ _________
111,782 87,599
11. Share capital
The authorised shares of the Company are as follows:
2021 and 2020
US$
Authorised
Unlimited number of Ordinary Shares of -
no par value
2021 2020
Founder Shares Number Number
Balance at beginning of 100 -
period
Issued during the period - 100
_________ _________
Balance at end of period 100 100
Founder Shares US$ US$
Balance at beginning of 1,000 -
period
Issued during the period - 1,000
_________ _________
Balance at end of period 1,000 1,000
Ordinary Shares Number Number
Balance at beginning of 40,832,500 -
period
Issued during the period - 40,832,500
_________ _________
Balance at end of period 40,832,500 40,832,500
Ordinary Share Capital US$ US$
Balance at beginning of 411,730,000 -
period
Issued during the period - 411,730,000
__________ __________
Balance at end of period 411,730,000 411,730,000
100 Founder Shares were issued to the Founder Entity on 14
November 2019 at US$10 per share.
34,030,000 Ordinary Shares were issued on 12 December 2019 at
US$10 per share (34,000,000 were issued in the IPO and a further
30,000 were issued to the Non-Founder Directors in conjunction with
the IPO). Each Ordinary Share was issued with a matching Warrant as
described below. A further 6,800,000 Ordinary Shares (with no
matching Warrants) were issued on 15 January 2020 at US$10.50 per
share. On 15 April 2020, 2,500
Ordinary Shares were issued on the exercise of 10,000 Warrants
held by an investor at an exercise price of US$12 per share.
Issue costs of US$10,373,456 were deducted from the proceeds of
issue.
Ordinary Shares
Ordinary Shares confer upon the holders (in accordance with the
Articles):
(a) Subject to the BVI Companies Act, on a winding-up of the
Company the assets of the Company available for distribution shall
be distributed, provided there are sufficient assets available, to
the holders of Ordinary Shares and Founder Shares pro rata to the
number of such fully paid up shares held by each holder relative to
the total number of issued and fully paid up Ordinary Shares as if
such fully paid up Founder Shares had been converted into Ordinary
Shares immediately prior to the winding up;
(b) the right to receive all amounts available for distribution
and from time to time to be distributed by way of dividend or
otherwise at such time as the Directors shall determine; and
(c) the right to receive notice of, attend and vote as a member
at any meeting of members except in relation to any Resolution of
Members that the Directors, in their absolute discretion (acting in
good faith) determine is: (i) necessary or desirable in connection
with a merger or consolidation in relation to, in connection with
or resulting from the Acquisition (including at any time after the
Acquisition has been made); or (ii) to approve matters in relation
to, in connection with or resulting from the Acquisition (whether
before or after the Acquisition has been made).
Founder Shares
The Founder Shares will automatically convert into Ordinary
Shares on a one for one basis (subject to such adjustments as the
Directors in their absolute discretion determine to be fair and
reasonable in the event of a consolidation or sub-division of the
Ordinary Shares in issue after the date of Admission or otherwise
as determined in accordance with the Articles) immediately
following completion of the Acquisition (or if any such date is not
a Trading Day, the first Trading Day immediately following such
date).
The Founder Shares alone carry the right to vote on any
Resolution of Members required, pursuant to BVI law, to approve any
matter in connection with an Acquisition, or a merger or
consolidation in connection with an Acquisition but otherwise have
no right to receive notice of and to attend and vote at any
meetings of members.
The Founder Shares do not carry any right to participate in any
dividends or other distributions.
Warrants
The Company has issued an aggregate of 34,030,000 Warrants to
the purchasers of Ordinary Shares and the non-Founder Directors in
connection with the IPO. As at 30 April 2020, there were 34,020,000
Warrants in issue. Each Warrant, during the subscription period,
entitles a Warrant holder to subscribe for one-fourth of an
Ordinary Share upon exercise. Warrants will be exercisable in
multiples of four for one Ordinary Share at a price of US$12 per
whole Ordinary Share.
The subscription period commenced on the date of admission (17
December 2019) and ends on the earlier of the third anniversary of
the completion of the Acquisition and such earlier date as
determined by the Warrant Instrument.
The Warrants are also subject to mandatory redemption at US$0.01
per Warrant if at any time the Average Price per Ordinary Share
equals or exceeds US$18.00 for a period of ten consecutive trading
days (subject to any prior adjustment in accordance with the terms
of the Warrant Instrument).
12. Related party and material transactions
During the six months ended 30 April 2021, the Company did not
issue any shares, warrants or options to the directors of the
Company.
During the comparative period the Company issued the following
shares and options to Directors of the Company:
Ordinary Percentage
Shares of Ordinary Warrants
Shares in
issue
2020 2020 2020
Number % Number
W. Nicholas Howley 595,239 1.46 500,000
William Nicholas Thorndike,
Jr 500,000 1.22 500,000
Tracy Britt Cool 30,000 0.07 30,000
Michael Tobin OBE 7,500 0.02 7,500
Bram Belzberg 7,500 0.02 7,500
Adam Luke Hall 7,500 0.02 7,500
John Staer 7,500 0.02 7,500
Directors' remuneration
The fees to directors during the period to 30 April 2021 were as
follows:
2021 2020
US$ US$
Michael Tobin OBE 36,215 28,972
Bram Belzberg 36,215 28,972
Adam Luke Hall 36,215 28,972
John Staer 36,215 28,972
The Non-Founder Directors opted to have their first year's
annual remuneration settled by the issue of 7,500 Ordinary Shares
each at US$10 per Ordinary Share.
1,500,000 Ordinary Shares and matching Warrants were issued to
Founders on the IPO in December 2019 and a further 95,239 Ordinary
Shares were issued to Mr Howley in January 2020. This includes the
Ordinary Shares held by the Founder Directors as listed above.
In addition, the Founder Entity holds 100 Founder Shares. The
Founder Entity is owned and operated by the Founders, including Mr.
Howley, Mr. Thorndike and Ms. Britt Cool. The Founder Entity
received reimbursements of expenses of US$94,613 (period ended 30
April 2020: US$148,779) of which US$nil is outstanding at the
period end.
In the period ended 31 October 2020, the Company incurred total
issuance costs of US$10.373 million. The details of these costs are
as follows:
2020
US$
Placement fees 9,578,337
Legal fees 554,316
Other expenses 240,803
________
10,373,456
13. Financial risk management
The Company's policies with regard to financial risk management
are clearly defined and consistently applied. They are a
fundamental part of the Company's long term strategy covering areas
such as foreign exchange risk, interest rate risk, credit risk,
liquidity risk and capital management.
Financial risk management is under the direct supervision of the
Board of Directors which follows policies covering specific areas,
such as foreign exchange risk, interest rate risk, credit risk, use
of derivative and non derivative financial instruments and
investment of excess liquidity.
The Company does not intend to acquire or issue derivative
financial instruments for trading or speculative purposes and has
yet to enter into a derivative transaction.
Currency risk
The majority of the Company's financial cash flows are
denominated in United States Dollars. Currently the Company does
not carry out any significant operations in currencies outside the
above. Foreign exchange risk arises from recognised monetary assets
and liabilities. The Company does not hedge systematically its
foreign exchange risk.
Credit risk
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Company is exposed to credit risk
from its financing activities, including deposits with banks and
financial institutions. Credit risk from balances with banks and
financial institutions is managed by the Board. Surplus funds are
invested in US treasury bills or such money market fund instruments
as approved by the Non-Founder Directors.
Liquidity risk
The Company monitors liquidity requirements to ensure it has
sufficient cash to meet operational needs while maintaining
sufficient headroom. Such forecasting takes into consideration the
Company's debt financing plans (when applicable), compliance with
internal balance sheet ratio targets and external regulatory or
legal requirements if appropriate.
Cash flow interest rate risk
The Company has no long term borrowings and as such is not
currently exposed to interest rate risk. To mitigate against the
risk of default by one or more of its counterparties, the Company
currently holds its assets in U.S. treasuries (directly and
indirectly). As of 30 April 2021, US$398.855 million (31 October
2020 - US$399.99 million) was held in U.S. treasury bills. The
Company anticipates that it will continue to hold the bulk of its
assets in U.S. treasury bills until an Acquisition is consummated.
The Board regularly monitors interest rates offered by, and the
credit ratings of, current and potential counterparties, to ensure
that the Company remains in compliance with its stated investment
policy for its cash balances. The Company does not currently use
financial instruments to hedge its interest rate exposure.
Capital risk management
The Company's objectives when managing capital (currently
consisting of share capital and share premium) are to safeguard the
Company's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. In order to maintain or adjust the capital
structure, the Company may adjust the amount of dividends paid to
shareholders, return capital to shareholders or issue new
shares.
14. Events after the end of the reporting period
On 16 June 2021, the Company announced that it had entered into
a definitive agreement with SK Invictus Holdings S.à.r.l. ("SK"),
an affiliate of funds advised by SK Capital Partners, to acquire
100% of SK Invictus Intermediate S.à.r.l., the ultimate parent
company of Perimeter Solutions ("Perimeter Solutions"), a leading
global manufacturer of high-quality firefighting products and
lubricant additives, in an Acquisition valued at approximately $2
billion, consisting of cash and preferred shares, subject to
customary closing conditions.
The purchase consideration payable in connection with the
Acquisition is expected to be funded from a combination of: (i) the
Company's existing cash balances raised at the time of its IPO and
in a subsequent placing of approximately US$400 million; (ii)
additional proceeds of US$1.15 billion which the Company has raised
from an equity issuance to a limited group of institutional
shareholders, which is conditional upon the closing of the
acquisition; (iii) committed loan facilities in an aggregate amount
of US$600 million; and (iv) the issuance of US$100 million of
preferred equity to SK.
The Boards of Directors of the Company and Perimeter Solutions
have each approved the proposed Acquisition. Closing of the
Acquisition, which is expected to take place in Q4 2021, is subject
to customary conditions.
Upon closing, the Company will undertake a reorganisation
pursuant to which it and Perimeter Solutions will become the wholly
owned subsidiaries of a newly formed Luxembourg company, Perimeter
Solutions S.A.. Prior to closing of the Acquisition, Perimeter
Solutions S.A. will file a registration statement with the SEC and
apply for listing of its ordinary shares and warrants on a U.S.
based stock exchange. It is anticipated that in connection with the
closing of the Acquisition, the Company will request the
cancellation of the listing of its ordinary shares and warrants on
the Official List of the Financial Conduct Authority and trading on
the London Stock Exchange.
There have been no other circumstances or events subsequent to
the period end which require adjustment of or additional disclosure
in the financial statements or in the notes.
Corporate information
Directors Legal advisers to the Company
W. Nicholas Howley (English and US Law)
Tracy Britt Cool Greenberg Traurig, LLP
William Nicholas Thorndike, 8th Floor
Jr. The Shard
Michael Tobin OBE 32 London Bridge Street
Bram Belzberg London
Adam Luke Hall SE1 9SG
John Staer
Legal advisers to the Company
Registered office (BVI Law)
Kingston Chambers Maples and Calder
PO Box 173 200 Aldersgate Street
Road Town 11(th) Floor
Tortola London
British Virgin Islands EC1A 4HD
Administrator and secretary Depositary
Oak Fund Services (Guernsey) Computershare Investor Services
Limited PLC
Oak House The Pavilions
Hirzel Street Bridgewater Road
St Peter Port Bristol
Guernsey BS 13 8AE
GY1 2NP
Registrar
Computershare Investor Services
(BVI) Limited
Woodbourne Hall
PO Box 3162
Road Town
Tortola
British Virgin Islands
Independent auditors
Grant Thornton UK LLP
30 Finsbury Square
London
EC2A 1AG
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END
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