Easterly Announces PIPE Details and Amends Merger Agreement
by Kristi Marvin on 2018-08-30 at 3:05pm

It’s “Announce Your PIPE Day” Today…

People in finance love to make things super complicated.  Throw in some legal language and trying to make sense of the Easterly announcement and subscription agreement will make you feel like you belong in remedial reading.

However, what you need to know is that Easterly Acquisition Corp. has secured financing for $213 million with investors that include affiliated funds of Gallatin Point Capital, The Carlyle Group, Centerbridge Partners, L.P. and Bain Capital Credit.  The PIPE will include Series B preference shares and common shares and investors will also, receive 5-year warrants with a strike price equal to 125% of the Merger Price.

The problem is, we don’t yet know the Merger Price because Easterly has amended the merger agreement to move the date they are using for Sirus’s book value (used to calculate the Merger Price) to September 30th, rather than use June 30, 2018.

To be a little clearer:  First, the date on which the exchange ratio, used to calculate the number of Sirius common shares to be issued in the Merger, is being modified. Easterly’s common stock will be exchanged for Sirius’s common shares using a value equal to 1.05x Sirius’s diluted GAAP book value per share as of September 30, 2018 (the “Merger Price”), instead of June 30, 2018.

Second, there will be an adjustment post-closing if the estimated September 30th diluted book value (which was not provided) is different than the actual Sirius diluted GAAP book value per share on September 30, 2018.

If the diluted book value is different, the adjustment will result in either:

  • The issuance of new Sirius common shares or a payment of cash by Sirius to CM Bermuda
  • The surrender to Sirius of Sirius common shares owned by CM Bermuda or a payment of cash to Sirius from CM Bermuda

As for the Sponsor Shares that will be cancelled, the amount to be cancelled will be calculated assuming a total of $213 million in the private placement, regardless of whether an investor(s) backs out or fails to fund.  Additionally, the Sponsor will have to surrender 4,528,000 shares of Easterly common stock if the Merger Prices is less than $17.39.

Per the investor presentation filed in June, $17.47 represents 1.05x book value in a Sirius share equivalent or $10.31 in an Easterly share equivalent. However, that is using an older book value.

Hopefully a new presentation gets filed soon that lays this out in a clearer manner.



Recent Posts
by Nicholas Alan Clayton on 2024-02-26 at 1:45pm

News and Rumors PR: Medtech firm Agiliti (NYSE:AGTI) has agreed to be acquired by an affiliate of private equity firm Thomas H. Lee Partners (THL) at $10 per share and an enterprise value of $2.5 billion. This represents a 43% premium over the company’s 90-day VWAP and returns it to 100% ownership by THL five...

by Nicholas Alan Clayton on 2024-02-26 at 7:42am

At the SPAC of Dawn The last week of February is to host a moderate amount of SPAC votes and also the potential for some market-moving data releases. Shareholders for five SPACs are to consider extensions this week and seven more SPACs have scheduled completion votes. But, among the more interesting events on the agenda...

by Kristi Marvin on 2024-02-24 at 11:45am

Terms Tracker for the Week Ending February 23, 2024 Welcome to our weekly column where we discuss the findings from our IPO terms tracker based on the previous week’s pricings. As expected, new issuance filings were quiet this week.  But, deal announcements were surprisingly active.  Four more SPACs announced combinations in a shortened holiday week...

by Nicholas Alan Clayton on 2024-02-23 at 2:26pm

Pyrophyte (NYSE:PHYT) faced a major regulatory setback for its combination with mining firm Sio Silica this week, but a recent analogous SPAC deal could provide some encouragement for a path forward. Sio Silica is working to develop a high-grade silica mine in the Vivian Sands outside Winnipeg, Canada and it inked the $708 million combination...

by Nicholas Alan Clayton on 2024-02-23 at 1:37pm

News and Rumors JD Supra: Securities class action lawsuits against SPACs and de-SPACs increased only slightly in 2023 with 27 after 2022 saw 24 and 2021 – 33. Lawsuits concerning the de-SPACing process itself dropped precipitously, however, representing just 21% of cases as compared to 69% in the previous two years and 80% in 2020....


Copyright © 2023 SPACInsider, Inc. All Rights Reserved