S-4 1 d613041ds4.htm S-4 S-4
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As filed with the Securities and Exchange Commission on December 11, 2018

Registration No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Saban Capital Acquisition Corp.*

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Cayman Islands*  

7819

  98-1296434

(State or other jurisdiction of

incorporation or organization)

  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

10100 Santa Monica Boulevard, 26th Floor

Los Angeles, California 90067

(310) 557-5100

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

Niveen S. Tadros

Executive Vice President and General Counsel

Saban Capital Acquisition Corp.

10100 Santa Monica Boulevard, 26th Floor

Los Angeles, California 90067

(310) 557-5100

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Jeffrey H. Cohen, Esq.

David C. Eisman, Esq.

Skadden, Arps, Slate, Meagher
& Flom LLP

300 South Grand Avenue,
Suite 3400

Los Angeles, California 90071

(213) 687-5000

 

Jay Duffield, Esq.
Dentons Canada LLP

77 King Street West

Suite 400

Toronto, Ontario M5K 0A1

(416) 863-4511

 

Matthew Gardner

Michael Johns
Maples and Calder
PO Box 309, Ugland House
Grand Cayman

KY1-1104
Cayman Islands
(345) 949-8066

 

Douglas A. Ryder, Esq.

Christian O. Nagler, Esq.

Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

(212) 446-4800

 

Simon Romano, Esq.
Stikeman Elliott LLP

5300 Commerce Court West

199 Bay Street

Toronto, Ontario M5L 1B9

(416) 869-5500

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement is declared effective and all other conditions to the business combination described in the enclosed proxy statement/prospectus have been satisfied or waived.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-l(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of

securities to be registered

 

Amount
to be

Registered(1)

 

Proposed

maximum
offering price
per share

 

Proposed

maximum

aggregate
offering price

  Amount of
registration fee

Units, each consisting of one share of common stock, $0.0001 par value, and one-half of one redeemable warrant(2)

  347,741   $10.375(3)   $3,607,812.88(3)   $437.27

Common stock(4)(5)

  347,741   —     —     (6)

Redeemable Warrants(5)(7)

  347,741   —     —     (6)

Common stock(5)(8)

  20,810,035   $10.1175(9)   $210,545,529.12(9)   $25,518.12

Redeemable Warrants(5)(10)

 

12,152,259

  $0.73(11)   $8,871,149.07(11)   $1,075.18

Common stock(5)(12)

  24,187,196(13)   $0(13)   $0(13)   $0

Total

          $223,024,491.07   $27,030.57

 

 


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(1)

Immediately prior to the consummation of the Acquisitions described in the proxy statement/prospectus forming part of this registration statement (the “proxy statement/prospectus”), Saban Capital Acquisition Corp., a Cayman Islands exempted company (“SCAC”), intends to effect a deregistration under the Cayman Islands Companies Law (2018 Revision) and a domestication under Section 388 of the Delaware General Corporation Law, pursuant to which SCAC’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “domestication”). All securities being registered will be issued by SCAC (after the domestication), the continuing entity following the domestication, which will be renamed “Panavision Holdings Inc.” in connection with the Acquisitions, as further described in the proxy statement/prospectus. As used herein, “New Panavision” refers to SCAC after the domestication, including after its name change to Panavision Holdings Inc.

(2)

The number of units of New Panavision being registered (the “New Panavision units”) represents the number of units of SCAC (the “SCAC units”) that were registered pursuant to the Registration Statements on Form S-1 (333-213259 and 333-213652) (together, the “IPO registration statement”) and offered by SCAC in its initial public offering less the number of SCAC units that have been separated, upon the request of the holder thereof, into the underlying SCAC public shares (as defined below) and underlying SCAC public warrants (as defined below). Each New Panavision unit represents one New Panavision public share (as defined below) and one-half of one New Panavision public warrant (as defined below). The outstanding SCAC units automatically will be converted by operation of law into New Panavision units in the domestication.

(3)

Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the units of SCAC (the company to which New Panavision will succeed following the domestication) on the Nasdaq Capital Market (“Nasdaq”) on December 7, 2018 ($10.375 per unit). December 7, 2018 was the date for which the most recent reported high and low prices of the SCAC units is available as of December 7, 2018 (such date being within five business days of the date that this registration statement was first filed with the Securities and Exchange Commission (the “SEC”)). This calculation is in accordance with Rule 457(f)(1) of the Securities Act of 1933, as amended (the “Securities Act”).

(4)

The number of shares of common stock of New Panavision being registered represents the number of SCAC public shares that, as of the date of the first filing of this registration statement, remain represented by the SCAC units. See (2) above.

(5)

Pursuant to Rule 416(a) of the Securities Act, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.

(6)

Pursuant to Rule 457(g) of the Securities Act, no registration fee is payable.

(7)

The number of redeemable warrants to acquire shares of common stock of New Panavision being registered represents the number of SCAC public warrants that, as of the date of the first filing of this registration statement, remain represented by the SCAC units. See (2) above.

(8)

The number of shares of common stock of New Panavision being registered represents the number of Class A ordinary shares of SCAC that were registered pursuant to the IPO registration statement and offered by SCAC in its initial public offering (the “SCAC public shares”) less (i) the number of SCAC public shares redeemed by SCAC in connection with SCAC’s extraordinary general meeting held on September 18, 2018 and (ii) the number of SCAC public shares that are represented by the SCAC units. See (2) above. The SCAC public shares (including those that underlie the SCAC units) automatically will be converted by operation of law into shares of common stock of New Panavision in the domestication (“New Panavision public shares”).

(9)

Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the Class A ordinary shares of SCAC (the company to which New Panavision will succeed following the domestication) on Nasdaq on December 7, 2018 ($10.1175 per Class A ordinary share). December 7, 2018 was the date for which the most recent reported high and low prices of the Class A ordinary shares of SCAC was available as of December 7, 2018 (such date being within five business days of the date that this registration statement was first filed with the SEC). This calculation is in accordance with Rule 457(f)(1) of the Securities Act.

(10)

The number of redeemable warrants to acquire shares of common stock of New Panavision being registered represents the number of redeemable warrants to acquire Class A ordinary shares of SCAC that were registered pursuant to the IPO registration statement and offered by SCAC in its initial public offering (the “SCAC public warrants”) less the number of SCAC public warrants that are represented by the SCAC units. The SCAC public warrants (including those that underlie the SCAC units) automatically will be converted by operation of law into redeemable warrants to acquire shares of common stock of New Panavision in the domestication (“New Panavision public warrants”).

(11)

Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the warrants of SCAC (the company to which New Panavision will succeed following the domestication) on Nasdaq on December 7, 2018 ($0.73 per warrant). December 7, 2018 was the date for which the most recent reported high and low prices of the warrants of SCAC was available as of December 7, 2018 (such date being within five business days of the date that this registration statement was first filed with the SEC). This calculation is in accordance with Rule 457(f)(1) of the Securities Act.

(12)

The number of shares of common stock of New Panavision being registered represents the estimated maximum number of common stock of New Panavision that could be issued to the equityholders of Panavision Inc., a Delaware corporation (“Panavision”), and of Sim Video International Inc., a Canadian corporation (“Sim”), in connection with the Business Combination Agreement (as defined below) and the proposed business combination described in the proxy statement/prospectus. In accordance with the terms and subject to the conditions of the Business Combination Agreement, all of the non-cash consideration payable to Panavision’s and Sim’s stockholders will be in the form of newly-issued shares of common stock of New Panavision registered pursuant hereto. As the exact amount of the consideration is subject to adjustment at the closing of the proposed business combination, the estimated maximum number of shares listed above was based on SCAC’s good faith estimate of the number of shares of New Panavision that could be paid to such stockholders pursuant to the Business Combination Agreement (estimated as of the date of the first filing of this registration statement), based on a per share issue price of $10.00 per share, as further described in the proxy statement/prospectus.

(13)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f)(2) and (f)(3) of the Securities Act. Each of Panavision and Sim is a private company and no market exists for either of their equity interests. Calculated based on (1) $117,053,565, the book value as of September 30, 2018 (the latest practicable date prior to the filing of this proxy statement/prospectus) of the equity interests of Panavision that may be acquired by the Registrant in the Business Combination as described in the proxy statement/prospectus forming part of this registration statement, less $354.3 million, the estimated minimum cash consideration that may be paid to Panavision’s equityholders in the Business Combination pursuant to the terms and conditions of the Business Combination Agreement as described in the proxy statement/prospectus forming part of this registration statement plus (2) $35,950,586, the book value as of September 30, 2018 (the latest practicable date prior to the filing of this proxy statement/prospectus, converted into US dollars at C$1.305 to $1.00) of the equity interests of Sim that may be acquired by the Registrant in the Business Combination as described in the proxy statement/prospectus forming part of this registration statement, less $110.0 million, the estimated cash consideration that may be paid to Sim’s equityholders in the Business Combination Sim pursuant to the terms and conditions of the Business Combination Agreement as described in the proxy statement/prospectus forming part of this registration statement. As this results in a negative number for both Panavision and Sim, the proposed maximum aggregate offering price has been estimated at $0.

*

Immediately prior to the consummation of the acquisitions described herein, the Registrant intends to effect a deregistration under the Cayman Islands Companies Law (2018 Revision) and a domestication under Section 388 of the Delaware General Corporation Law, pursuant to which the Registrant’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. All securities being registered will be issued by Saban Capital Acquisition Corp. (after its domestication as a corporation incorporated in the State of Delaware), the continuing entity following the domestication (which will be renamed Panavision Holdings Inc. upon the consummation of the acquisitions referred to in the proxy statement/prospectus).

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this preliminary proxy statement/prospectus is not complete and may be changed. The registrant may not sell the securities described in this preliminary proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION, DATED                     ,

PROXY STATEMENT FOR

EXTRAORDINARY GENERAL MEETING OF SABAN CAPITAL ACQUISITION CORP.

PROSPECTUS FOR

347,741 UNITS (EACH UNIT COMPRISING ONE SHARE OF COMMON STOCK AND ONE-HALF OF A REDEEMABLE WARRANT), 45,344,972 SHARES OF COMMON STOCK (INCLUDING SHARES INCLUDED IN THE UNITS) AND 12,500,000 REDEEMABLE WARRANTS (INCLUDING WARRANTS INCLUDED IN THE UNITS) OF SABAN CAPITAL ACQUISITION CORP. (AFTER ITS DOMESTICATION AS A CORPORATION INCORPORATED IN THE STATE OF DELAWARE, WHICH WILL BE RENAMED PANAVISION HOLDINGS INC. IN CONNECTION WITH THE ACQUISITIONS DESCRIBED HEREIN)

The board of directors of Saban Capital Acquisition Corp., a Cayman Islands exempted company (“SCAC” and, after the Domestication as described below, “New Panavision”), has unanimously approved (i) the domestication of SCAC as a Delaware corporation (the “Domestication”); (ii) the merger of Panavision Acquisition Sub, Inc., a direct, wholly owned subsidiary of SCAC (“Panavision Acquisition Sub”), with and into Panavision Inc. (“Panavision”), with Panavision surviving the merger as a wholly owned subsidiary of New Panavision (the “Merger”); (iii) the purchase by Sim Acquisition Sub, Inc., a direct, wholly owned subsidiary of SCAC (“Sim Acquisition Sub”), of all of the issued and outstanding shares of capital stock of Sim Video International Inc. (“Sim”), with Sim becoming an indirect, wholly owned subsidiary of New Panavision (the “Purchase” and, together with the Merger, the “Acquisitions”); and (iv) the other transactions (collectively with the Domestication and Acquisition, the “Business Combination”) contemplated by the Business Combination Agreement, dated as of September 13, 2018 (as amended, the “Business Combination Agreement”), by and among SCAC, Panavision Acquisition Sub, Sim Acquisition Sub, Panavision, Sim and the other parties thereto, a copy of which is attached to this proxy statement/prospectus as Annex A. In connection with the Acquisitions, SCAC will change its name to “Panavision Holdings Inc.” As used in this proxy statement/prospectus, “New Panavision” refers to SCAC after the Domestication, including after its name change to Panavision Holdings Inc.

On the effective date of the Domestication, (1) the issued and outstanding Class A ordinary shares, par value $0.0001 per share, of SCAC will convert automatically, on a one-for-one basis, into shares of common stock, par value $0.0001 per share, of New Panavision (“New Panavision Common Stock”); (2) the issued and outstanding redeemable warrants of SCAC will become automatically redeemable warrants to acquire shares of New Panavision Common Stock; (3) the issued and outstanding units of SCAC (less the number of units that have been separated into the underlying Class A ordinary shares and underlying warrants upon the request of the holder thereof) will become automatically units of New Panavision, with each unit representing one share of New Panavision Common Stock and one-half of one redeemable warrant; and (4) each issued and outstanding Class F ordinary share, par value $0.0001 per share, of SCAC will convert automatically, on a one-for-one basis without giving effect to any rights of adjustment or other anti-dilution protections, into shares of New Panavision Common Stock.

In accordance with the terms and subject to the conditions of the Business Combination Agreement and subject to certain adjustments set forth therein, the aggregate consideration payable by SCAC to the equityholders of Panavision and Sim under the Business Combination Agreement will be $590.5 million (“Business Combination Consideration”), which consists of (a) cash in an aggregate amount equal to $464.2 million, of which (i) $354.3 million will be paid to the equityholders of Panavision and (ii) $110.0 million will be paid to the equityholders of Sim; and (b) 12.6 million shares of New Panavision Common Stock (at a deemed value of $10.00 per share), of which (i) 9.5 million shares of New Panavision Common Stock will be paid to the equityholders of Panavision and (ii) 3.1 million shares of New Panavision Common Stock will be paid to the equityholders of Sim. The Business Combination Consideration does not include an additional 2.75 million shares of New Panavision Common Stock, which will be issued to the equityholders of Panavision and will be subject to vesting and certain other restrictions as set forth in the Business Combination Agreement. The Business Combination Consideration above reflects a $14.2 million reduction in the cash consideration payable to equityholders of Panavision and a related increase in 1.42 million shares of New Panavision Common Stock (at a deemed value of $10.00 per share) as a result of the Extension Amendment Redemptions (as defined below). The cash consideration payable to the equityholders of Panavision is subject to adjustment and payable in part in shares of New Panavision Common Stock under certain circumstances as described herein.

Accordingly, this prospectus covers (1) 347,741 units of New Panavision (each unit representing one share of New Panavision Common Stock and one-half of one redeemable warrant), 21,157,776 shares of New Panavision Common Stock (including shares included in the units described above) and 12,500,000 redeemable warrants to acquire shares of New Panavision Common Stock (including redeemable included in the units described above) to be issued in the Domestication and (2) 24,187,196 shares of New Panavision Common Stock that could be paid to the equityholders of Panavision and Sim pursuant to the Business Combination Agreement. As the exact amount of the Business Combination Consideration is subject to adjustment at the closing of the proposed Business Combination, the number of shares referred to in clause (2) in the preceding sentence represents SCAC’s good faith estimate of the maximum number of shares of New Panavision Common Stock that could be paid to such equityholders in respect of the Business Combination Consideration in accordance with the Business Combination Agreement.

SCAC’s units, Class A ordinary shares and warrants are currently listed on the Nasdaq Capital Market (“Nasdaq”) under the symbols “SCACU”, “SCAC” and “SCACW”, respectively. SCAC will apply for listing, to be effective at the time of the Business Combination, of New Panavision’s units, common stock and warrants on Nasdaq under the proposed symbols                 ,                  and                  , respectively. It is a condition of the consummation of the Business Combination that SCAC receive confirmation from Nasdaq that the combined company has been conditionally approved for listing on Nasdaq but there can be no assurance such listing conditions will be met or that SCAC will obtain such confirmation from Nasdaq. If such listing conditions are not met or if such confirmation is not obtained, the Business Combination will not be consummated unless the Nasdaq condition set forth in the Business Combination Agreement is waived by the applicable parties.

 

 

This proxy statement/prospectus provides shareholders of SCAC with detailed information about the Business Combination and other matters to be considered at the extraordinary general meeting of SCAC. We encourage you to read this entire document, including the Annexes and other documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 47 of this proxy statement/prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

This proxy statement/prospectus is dated                 ,             , and

is first being mailed to SCAC’s shareholders on or about             ,            .


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LOGO

Panavision is leading content production services company for the episodic, feature film, and commercial production industries Panavision, through the combination with sim, provides mission critical services covering the full spectrum of needs required to turn a project from green light to finished product camera and Lens Rental Lighting Rental Studio Services Dailies Editing & Finishing Sound Leading Brand with Long-Term Industry Relationships 1 2017 combined projects starts 583 Features 459 Episodic 1,000+ Commercials Proprietary high-end asset base 150+ cameras 7,000+ lenses Growing penetration in post-production market Brand recognition among content creators further enhanced with Saban's industry relationships Expansive Sales Footprint, Global Distribution Network, and Deep Cast1 80 Combined global facilities 24/7 Ability to supply and service customers on a global basis Presence in 15 countries 1,700 employees 1 Below are metrics for combined company | 2 SNL Kagan Research | 3 FX Networks Research Strong Industry Tailwinds >$60bn Spent on content creation in 2017 and expected to reach >$80bn by 20202 ~ 2X Number of Episodic series in the last 6 years3 (half of combined business is being fueled by Episodic growth) 42%, 14 - 18E CAGR in content production spend by Internet and OTT providers2 Multiple Levers Fueling Growth Combined company has enhanced scope of services and ability to cross-sell to its extensive customer base +1,110 bps Panavision management has nearly doubled EBITDA margins since taking over the business 5 years ago Fragmented competitive landscape presents significant market opportunity for additional M&A


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SABAN CAPITAL ACQUISITION CORP.

A Cayman Islands Exempted Company

(Company Number 309628)

10100 Santa Monica Boulevard, 26th Floor

Los Angeles, CA 90067

Dear Saban Capital Acquisition Corp. Shareholders:

You are cordially invited to attend the extraordinary general meeting (the “extraordinary general meeting”) of Saban Capital Acquisition Corp., a Cayman Islands exempted company (“SCAC” and, after the Domestication as described below, “New Panavision”), at                Pacific Time, on                 ,                 , at                 , or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed.

At the extraordinary general meeting, SCAC shareholders will be asked to consider and vote upon a proposal, which is referred to herein as the “BCA Proposal”, to approve and adopt the Business Combination Agreement, dated as of September 13, 2018, by and among SCAC, Panavision Acquisition Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of SCAC (“Panavision Acquisition Sub”), Sim Acquisition Sub, Inc., an Ontario corporation and direct wholly owned subsidiary of SCAC (“Sim Acquisition Sub”), Panavision Inc., a Delaware corporation (“Panavision”), Sim Video International Inc., an Ontario corporation (“Sim”), and the other parties thereto, as amended on December 11, 2018 (as amended, the “Business Combination Agreement”), a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, and the transactions contemplated thereby. In accordance with the terms and subject to the conditions of the Business Combination Agreement, among other things, following the Domestication of SCAC to Delaware as described below, (1) Panavision Acquisition Sub will merge with and into Panavision, the separate corporate existence of Panavision Acquisition Sub will cease and Panavision will be the surviving corporation and a wholly owned subsidiary of New Panavision (the “Merger”) and (2) Sim Acquisition Sub will purchase all of the issued and outstanding shares of capital stock of Sim and Sim will be an indirect, wholly owned subsidiary of New Panavision (the “Purchase” and, together with the Merger, the “Acquisitions”).

As a condition to closing the Acquisitions, the board of directors of SCAC has unanimously approved a change of SCAC’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”, and together with the Acquisitions and other transactions contemplated by the Business Combination Agreement, the “Business Combination”). In connection with the Acquisitions, SCAC will change its name to “Panavision Holdings Inc.” As used herein, “New Panavision” refers to SCAC after the Domestication, including after its name change to Panavision Holdings Inc.

On the effective date of the Domestication, (1) the issued and outstanding Class A ordinary shares, par value $0.0001 per share (the “Class A ordinary shares”), of SCAC will convert automatically by operation of law, on a one-for-one basis, into shares of common stock, par value $0.0001 per share, of New Panavision (“New Panavision Common Stock”); (2) the issued and outstanding redeemable warrants of SCAC will become automatically redeemable warrants to acquire shares of New Panavision Common Stock (no other changes will be made to the terms of any issued and outstanding warrants as a result of the Domestication); (3) the issued and outstanding units of SCAC (less the number of units that have been separated into the underlying Class A ordinary shares and underlying warrants upon the request of the holder thereof) will become automatically units of New Panavision, with each unit representing one New Panavision Common Stock share and one-half of one redeemable warrant of New Panavision (no other changes will be made to the terms of any issued and outstanding units as a result of the Domestication); and (4) each issued and outstanding Class F ordinary share, par value $0.0001 per share (the “Class F ordinary shares” and, together with the Class A ordinary shares, the “ordinary shares”), of SCAC will convert automatically by operation of law, on a one-for-one basis without giving effect to any rights of adjustment or other anti-dilution protections, into shares of New Panavision Common Stock (as converted, the “Converted Founder Shares”). As used herein, “public shares” shall mean the Class A ordinary shares (including those that underlie the units) that were registered pursuant to the Registration


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Statements on Form S-1 (333-213259 and 333-213652) (together, the “IPO registration statement”) and the shares of New Panavision Common Stock (including those that underlie the units) issued as a matter of law upon the conversion thereof on the effective date of the Domestication. For further details, see “Proposal No. 2—The Domestication Proposal”.

You will also be asked to consider and vote upon (a) seven separate proposals to approve material differences between SCAC’s existing amended and restated memorandum and articles of association (as amended by a special resolution of shareholders on September 18, 2018 (the “Extension Amendment”), the “Existing Organizational Documents”) and the proposed new certificate of incorporation and bylaws of New Panavision upon the Domestication, which are referred to herein as the “Organizational Documents Proposals”, (b) a proposal to elect nine directors to serve as Class I, Class II and Class III directors to serve staggered terms on New Panavision’s board of directors until the                 ,                  and                  annual meeting of stockholders, respectively, and until their respective successors are duly elected and qualified, which is referred to herein as the “Director Election Proposal”, (c) a proposal to approve for purposes of complying with applicable provisions of Nasdaq Listing Rule 5635, the issuance New Panavision Common Stock to the equityholders of Panavision and of Sim and to participants in the PIPE Investment (as defined below), including an affiliate of Saban Sponsor LLC, SCAC’s sponsor (“Sponsor”), to the extent such issuance would require a shareholder vote under Nasdaq Listing Rule 5635, which is referred to herein as the “Stock Issuance Proposal”, (d) a proposal to approve and adopt the Panavision Holdings Inc. 2018 Equity Incentive Plan a copy of which is attached to the accompanying proxy statement/prospectus as Annex E, which is referred to herein as the “Incentive Award Plan Proposal”, and (e) a proposal to approve the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting, which is referred to herein as the “Adjournment Proposal”. The Business Combination will be consummated only if the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal and the Incentive Award Proposal (collectively, the “Condition Precedent Proposals”) are approved at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal. Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which each shareholder is encouraged to read carefully and in its entirety.

In accordance with the terms and subject to the conditions of the Business Combination Agreement and subject to certain adjustments set forth therein, the aggregate consideration payable by SCAC to the equityholders of Panavision and Sim under the Business Combination Agreement will be $590.5 million (“Business Combination Consideration”), which consists of (a) cash in an aggregate amount equal to $464.2 million, of which (i) $354.3 million will be paid to the equityholders of Panavision and (ii) $110.0 million will be paid to the equityholders of Sim; and (b) 12.6 million shares of New Panavision Common Stock (at a deemed value of $10.00 per share), of which (i) 9.5 million shares of New Panavision Common Stock will be paid to the equityholders of Panavision and (ii) 3.1 million shares of New Panavision Common Stock will be paid to the equityholders of Sim. The Business Combination Consideration does not include an additional 2.75 million shares of New Panavision Common Stock, which will be issued to the equityholders of Panavision and will be subject to vesting and certain other restrictions as set forth in the Business Combination Agreement. The Business Combination Consideration is expected to be financed through a combination of (i) shares of New Panavision Common Stock issued to the equityholders of Panavision and of Sim, (ii) cash held in SCAC’s trust account net of redemptions (as defined below) and deferred underwriting discounts, (iii) gross proceeds of the PIPE Investment and (iv) gross proceeds of the Debt Facilities (as defined below).

The Business Combination Consideration described above will change based upon certain adjustments to be calculated as of the date of the closing of the Business Combination (the “Closing Date”). The precise amount of such adjustments will depend upon, among other things, the total debt obligations and the cash and cash equivalents of Panavision and Sim on the Closing Date, each of which fluctuates in the ordinary course of business, as well as the net working capital, capital expenditures and unpaid transaction expenses of Panavision

 

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and Sim on the Closing Date. In addition, the Business Combination Consideration above reflects a $14.2 million reduction in the cash consideration payable to equityholders of Panavision and a related increase in 1.42 million shares of New Panavision Common Stock (at a deemed value of $10.00 per share) as a result of public shareholders redeeming approximately 3.8 million public shares in connection with the Extension Amendment for an aggregate redemption amount of $39.15 million (the “Extension Amendment Redemptions”). The remaining portion of the cash consideration otherwise payable to the equityholders of Panavision will be payable in part in additional shares of New Panavision Common Stock (at a deemed value of $10.00 per share) as provided in the Business Combination Agreement if (i) the holders of public shares (the “public shareholders”) exercise their rights to redeem (each a “redemption”) any additional public shares in connection with the approval of the Business Combination Agreement or otherwise pursuant to SCAC’s Existing Organizational Documents, or (ii) New Panavision would have less than $30.0 million in available cash and cash equivalents immediately following the Closing, on a pro forma basis taking into account the transactions contemplated by the Business Combination Agreement and any redemptions (including the Extension Amendment Redemptions), deferred underwriting discounts and other fees. The Business Combination Consideration is also subject to adjustment to appropriately reflect the effect of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change prior to consummation of the Business Combination. At the Closing, $3.0 million of the cash portion of the Business Combination Consideration payable to the equityholders of Panavision and $2.0 million of the cash portion of the Business Combination Consideration payable to the equityholders of Sim will be placed in escrow by SCAC to secure any downward post-closing adjustments to the Business Combination Consideration. Any such adjustments (whether positive or negative) will be limited to $3.0 million (in the case of Panavision) or $2.0 million (in the case of Sim).

In order to fund a portion of the cash consideration required to effect the Business Combination, among other things, SCAC entered into debt commitment letters concurrently with the execution of the Business Combination Agreement, pursuant to which the lenders thereunder have committed to provide credit facilities (the “Debt Facilities”) up to an aggregate amount of $350.0 million pursuant to the terms and conditions of the debt commitment letters as described in the accompanying proxy statement/prospectus. In addition, concurrently with the execution of the Business Combination Agreement, SCAC entered into subscription agreements with certain investors (collectively, the “PIPE Investors”) pursuant to which the PIPE Investors have collectively subscribed for 5.5 million shares of New Panavision Common Stock for an aggregate purchase price equal to $55.0 million (the “PIPE Investment”), $30.0 million of which will be funded by an affiliate of Sponsor (the “Sponsor PIPE Entity”). The PIPE Investment will be consummated substantially concurrently with the Closing and proceeds therefrom will be used to fund a portion of the cash consideration required to effect the Business Combination and up to $25.0 million of redemptions.

New Panavision and the holders of the Converted Founder Shares (including Sponsor) (the “Class F Shareholders”) will enter into a contribution and forfeiture agreement (the “Contribution Agreement”) at the Closing, pursuant to which, among other things, (i) the Class F Shareholders will contribute an aggregate of approximately 2.0 million Converted Founder Shares to New Panavision, pro rata, which Converted Founder Shares will be cancelled for no consideration, (ii) 3.25 million Converted Founder Shares will become subject to vesting and the restrictions set forth in the Business Combination Agreement, pro rata, and (iii) Sponsor and its affiliates will contribute all of the 7.0 million private placement warrants, which are held by Sponsor or its affiliates, to New Panavision (which warrants will be cancelled for no consideration) and will forfeit for no consideration any other rights to obtain warrants (including in respect of that certain unsecured convertible promissory note issued by SCAC to Sponsor on March 12, 2018), in each case, on the terms and subject to the conditions set forth in the Contribution Agreement. For further details, see “BCA Proposal—The Business Combination Agreement—Business Combination Consideration”.

In connection with the Business Combination, certain related agreements have been, or will be entered into on or prior to the Closing Date, including, the Director Composition and Standstill Agreement, Registration Rights Agreement, Lock-Up Agreement and Employments Agreements (each as defined in the accompanying

 

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proxy statement/prospectus). See “Business Combination Agreement—Related Agreements” in the accompanying proxy statement/prospectus for more information.

Pursuant to the Existing Organizational Documents, a public shareholder may request that SCAC redeem all or a portion of such shareholder’s public shares for cash if the Business Combination is consummated. Holders of units must elect to separate the units into the underlying public shares and warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct it to do so. Public shareholders may elect to redeem their public shares even if they vote “for” the BCA Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its shares to Continental Stock Transfer & Trust Company (“Continental”), SCAC’s transfer agent, New Panavision will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of our initial public offering, calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of September 30, 2018, this would have amounted to approximately $10.19 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and accordingly it is shares of New Panavision Common Stock that will be redeemed immediately after consummation of the Business Combination. See “Extraordinary General Meeting of SCAC—Redemption Rights” in the accompanying proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash.

The Class F Shareholders have agreed to vote all of their ordinary shares in favor of the proposals being presented at the extraordinary general meeting and waive their redemption rights with respect to such ordinary shares in connection with the consummation of the Business Combination. The Class F ordinary shares will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/prospectus, the Class F Shareholders own approximately 22.8% of the issued and outstanding ordinary shares.

The Business Combination Agreement provides that Panavision’s obligation to consummate the Business Combination is conditioned on, among other things, (i) the redemptions by the public shareholders (including the Extension Amendment Redemptions) not exceeding 50% of the Class A ordinary shares held by the shareholders of SCAC at any time prior to the effective time of the Merger, (ii) the PIPE Investment proceeds used for purposes of satisfying any redemptions by the public shareholders not exceeding $25.0 million, and (iii) there being at least $125.0 million remaining in the trust account after satisfying redemptions (including the Extension Amendment Redemptions) and deferred underwriting discounts. These conditions are for the sole benefit of Panavision and may be waived only by Panavision and the Panavision Holder Representative (as defined in the Business Combination Agreement). If any such condition is not met, and such condition is not waived by Panavision and the Panavision Holder Representative, then the Business Combination Agreement could terminate and the proposed Business Combination may not be consummated. The Business Combination Agreement is also subject to the satisfaction or waiver of certain other closing conditions as described in the accompanying proxy statement/prospectus. The amendment, modification or waiver of certain provisions of the

 

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Business Combination Agreement in any manner that would be materially adverse to the lenders under the Debt Facilities also requires the prior written consent of the lenders party to the ABL Commitment Letter and Second Lien Commitment Letter. There can be no assurance that the parties to the Business Combination Agreement would waive any such provision of the Business Combination Agreement, or that the lenders under the Debt Facilities would provide any required consents to such amendments, modifications or waivers. In addition, in no event will SCAC redeem public shares in an amount that would cause New Panavision’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001.

SCAC is providing the accompanying proxy statement/prospectus and accompanying proxy card to SCAC’s shareholders in connection with the solicitation of proxies to be voted at the extraordinary general meeting and at any adjournments or postponements of the extraordinary general meeting. Information about the extraordinary general meeting, the Business Combination and other related business to be considered by SCAC’s shareholders at the extraordinary general meeting is included in the accompanying proxy statement/prospectus. Whether or not you plan to attend the extraordinary general meeting, all of SCAC’s shareholders are urged to read the accompanying proxy statement/prospectus, including the Annexes and other documents referred to therein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 47 of this proxy statement/prospectus.

After careful consideration, the board of directors of SCAC has unanimously approved the Business Combination and unanimously recommends that shareholders vote “FOR” adoption of the Business Combination Agreement and approval of the transactions contemplated thereby, including the Business Combination, and “FOR” all other proposals presented to SCAC’s shareholders in the accompanying proxy statement/prospectus. When you consider the recommendation of these proposals by the board of directors of SCAC, you should keep in mind that SCAC’s directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of SCAC’s Directors and Executive Officers in the Business Combination” in the accompanying proxy statement/prospectus for a further discussion of these considerations.

The approval of each of the Domestication Proposal and Organizational Documents Proposals requires the affirmative vote of holders of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. The BCA Proposal, the Director Election Proposal, the Stock Issuance Proposal, the Incentive Award Plan Proposal and the Adjournment proposal require the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

Your vote is very important. Whether or not you plan to attend the extraordinary general meeting, please vote as soon as possible by following the instructions in the accompanying proxy statement/prospectus to make sure that your shares are represented at the extraordinary general meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. The transactions contemplated by the Business Combination Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in the accompanying proxy statement/prospectus.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the extraordinary general meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the extraordinary general meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the extraordinary general meeting. If you are a shareholder of record and you attend the extraordinary general meeting and wish to vote in person, you may withdraw your proxy and vote in person.

 

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TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES ARE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO SCAC’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE GENERAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

On behalf of SCAC’s board of directors, I would like to thank you for your support and look forward to the successful completion of the Business Combination.

Sincerely,

Adam Chesnoff

Chief Executive Officer, President and Director

                ,

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

The accompanying proxy statement/prospectus is dated                 ,                  and is first being mailed to shareholders on or about                 ,                 .

 

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SABAN CAPITAL ACQUISITION CORP.

A Cayman Islands Exempted Company

(Company Number 309628)

10100 Santa Monica Boulevard, 26th Floor

Los Angeles, CA 90067

NOTICE OF EXTRAORDINARY GENERAL MEETING

TO BE HELD ON                 ,

TO THE SHAREHOLDERS OF SABAN CAPITAL ACQUISITION CORP.:

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of the shareholders (the “extraordinary general meeting”) of Saban Capital Acquisition Corp., a Cayman Islands exempted company (“SCAC” and, after the Domestication as described below, “New Panavision”), will be held at                Pacific Time, on                 ,                 , at                . You are cordially invited to attend the extraordinary general meeting, which will be held for the following purposes:

 

   

Proposal No. 1—The BCA Proposal—to consider and vote upon a proposal to approve by ordinary resolution and adopt the Business Combination Agreement, dated as of September 13, 2018, by and among SCAC, Panavision Acquisition Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of SCAC (“Panavision Acquisition Sub”), Sim Acquisition Sub, Inc., an Ontario corporation and direct wholly owned subsidiary of SCAC (“Sim Acquisition Sub”), Panavision Inc., a Delaware corporation (“Panavision”), Sim Video International Inc., an Ontario corporation (“Sim”), and the other parties thereto, as amended on December 11, 2018 (as amended, the “Business Combination Agreement”), (a copy of which is attached to this proxy statement/prospectus as Annex A), pursuant to which, among other things, following the Domestication of SCAC to Delaware as described below, (1) Panavision Acquisition Sub will merge with and into Panavision, the separate corporate existence of Panavision Acquisition Sub will cease and Panavision will be the surviving corporation and a wholly owned subsidiary of New Panavision (the “Merger”) and (2) Sim Acquisition Sub will purchase all of the issued and outstanding shares of capital stock of Sim and Sim will be an indirect, wholly owned subsidiary of New Panavision (the “Purchase” and, together with the Merger, the “Acquisitions”) (this proposal is referred to herein as the “BCA Proposal”);

 

   

Proposal No. 2—The Domestication Proposal—to consider and vote upon a proposal to approve by special resolution, assuming the BCA Proposal is approved and adopted, the change of SCAC’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”, and together with the Acquisitions and other transactions contemplated by the Business Combination Agreement, the “Business Combination”) (this proposal is referred to herein as the “Domestication Proposal”);

 

   

Organizational Documents Proposals—to consider and vote upon the following seven separate proposals (collectively, the “Organizational Documents Proposals”) to approve by special resolution, assuming the BCA Proposal and the Domestication Proposal is approved and adopted, the following material differences between the current amended and restated memorandum and articles of association of SCAC (as amended by a special resolution of shareholders passed on September 18, 2018 (the “Extension Amendment”), the “Existing Organizational Documents”) and the proposed new certificate of incorporation (“Proposed Certificate of Incorporation”) and the proposed new bylaws (“Proposed Bylaws”) of Saban Capital Acquisition Corp. (a corporation incorporated in the State of Delaware, assuming the Domestication Proposal is approved and adopted, and the filing with and acceptance by the Secretary of State of Delaware of the certificate of domestication in accordance with Section 388 of the Delaware General Corporation Law (the “DGCL”)), which will be renamed “Panavision Holdings Inc.” in connection with the Acquisitions

 

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(SCAC after the Domestication, including after its name change to Panavision Holdings Inc. is referred to herein as “New Panavision”):

 

  (A)

Proposal No. 3—Organizational Documents Proposal A—to authorize the change in the authorized capital stock of SCAC from (i) 500,000,000 Class A ordinary shares, par value $0.0001 per share (the “Class A ordinary shares”), 20,000,000 Class F ordinary shares, par value $0.0001 per share (the “Class F ordinary shares” and, together with the Class A ordinary shares, the “ordinary shares”) and 5,000,000 preferred shares, par value $0.0001 per share, to (ii) 500,000,000 shares of common stock, par value $0.0001 per share, of New Panavision (“New Panavision Common Stock”) and 100,000,000 shares of preferred stock, par value $0.0001 per share, of New Panavision (“New Panavision Preferred Stock”) (this proposal is referred to herein as “Organizational Documents Proposal A”);

 

  (B)

Proposal No. 4—Organizational Documents Proposal B—to authorize the board of directors of New Panavision to issue any or all shares of New Panavision Preferred Stock in one or more classes or series, with such terms and conditions as may be expressly determined by New Panavision’s board of directors and as may be permitted by the DGCL (this proposal is referred to herein as “Organizational Documents Proposal B”);

 

  (C)

Proposal No. 5—Organizational Documents Proposal C—to authorize that directors of New Panavision designated by Saban Sponsor LLC (“Sponsor”) or by the Panavision Holder Representative (as defined in the Business Combination Agreement), in each case pursuant to the Director Composition and Standstill Agreement, dated as of September 13, 2018 (as may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Director Composition and Standstill Agreement”), by and among SCAC, Sponsor, the Key Panavision Stockholders (as defined therein) and Cerberus PV Representative, LLC, solely in its capacity as the initial Panavision Holder Representative (as defined in the Business Combination Agreement) (the “Panavision Holder Representative”), may only be removed for cause (this proposal is referred to herein as “Organizational Documents Proposal C”);

 

  (D)

Proposal No. 6—Organizational Documents Proposal D—to authorize that the board of directors of New Panavision will be divided into three classes, with each class generally serving for a term of three years (except for those directors appointed prior to the first annual meeting of the stockholders) and only one class of directors being elected in each year and to make certain related changes (this proposal is referred to herein as “Organizational Documents Proposal D”);

 

  (E)

Proposal No. 7—Organizational Documents Proposal E—to provide that certain provisions of the certificate of incorporation of New Panavision are subject to the Director Composition and Standstill Agreement (this proposal is referred to herein as “Organizational Documents Proposal E”);

 

  (F)

Proposal No. 8—Organizational Documents Proposal F—to authorize the removal of the ability of New Panavision stockholders to take action by written consent in lieu of a meeting (this proposal is referred to herein as “Organizational Documents Proposal F”); and

 

  (G)

Proposal No. 9—Organizational Documents Proposal G—to authorize all other changes in connection with the replacement of Existing Organizational Documents with the Proposed Certificate of Incorporation and Proposed Bylaws as part of the Domestication (copies of which are attached to this proxy statement/prospectus as Annex C and Annex D, respectively), including (1) changing the post-Business Combination corporate name from “Saban Capital Acquisition Corp.” to “Panavision Holdings Inc.” (which is expected to occur after the Domestication in connection with the Acquisitions), (2) making New Panavision’s corporate existence perpetual, (3) adopting Delaware as the exclusive forum for certain stockholder litigation, (4) electing to not be governed by Section 203 of the DGCL and limiting certain corporate takeovers by interested stockholders, (5) granting an explicit waiver regarding corporate opportunities to New Panavision and its directors and (6) removing certain provisions related to our status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which SCAC’s board of directors believes is

 

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  necessary to adequately address the needs of New Panavision after the Business Combination (this proposal is referred to herein as “Organizational Documents Proposal G”);

 

   

Proposal No. 10—Director Election Proposal—to consider and vote upon a proposal, assuming the BCA Proposal, the Domestication Proposal and the Organizational Documents Proposals are approved, to elect nine directors to serve as Class I, Class II and Class III directors to serve staggered terms on New Panavision’s board of directors until the                 ,                  and                  annual meeting of stockholders, respectively, and until their respective successors are duly elected and qualified (this proposal is referred to herein as the “Director Election Proposal”);

 

   

Proposal No. 11—The Stock Issuance Proposal—to consider and vote upon a proposal to approve by ordinary resolution, assuming the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposals and the Director Election Proposal are approved, for the purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635, the issuance of shares of New Panavision Common Stock to the equityholders of Panavision and of Sim and the participants in the PIPE Investment (as defined herein), including an affiliate of Sponsor, to the extent such issuance would require a shareholder vote under Nasdaq Listing Rule 5635 (this proposal is referred to herein as the “Stock Issuance Proposal”);

 

   

Proposal No. 12—The Incentive Award Plan Proposal—to consider and vote upon a proposal to approve by ordinary resolution, assuming the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal and the Stock Issuance Proposal are approved, the Panavision Holdings Inc. 2018 Equity Incentive Plan (the “2018 Plan”), a copy of which is attached to this proxy statement/prospectus as Annex E (this proposal is referred to herein as the “Incentive Award Plan Proposal” and, collectively with the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal and the Stock Issuance Proposal, the “Condition Precedent Proposals”); and

 

   

Proposal No. 13—The Adjournment Proposal—to consider and vote upon a proposal to approve the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting (this proposal is referred to herein as the “Adjournment Proposal”).

These items of business are described in this proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting.

Only holders of record of ordinary shares at the close of business on                 ,                are entitled to notice of and to vote and have their votes counted at the extraordinary general meeting and any adjournment of the extraordinary general meeting.

This proxy statement/prospectus and accompanying proxy card is being provided to SCAC’s shareholders in connection with the solicitation of proxies to be voted at the extraordinary general meeting and at any adjournment of the extraordinary general meeting. Whether or not you plan to attend the extraordinary general meeting, all of SCAC’s shareholders are urged to read this proxy statement/prospectus, including the Annexes and the documents referred to herein carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 47 of this proxy statement/prospectus.

After careful consideration, the board of directors of SCAC has unanimously approved the Business Combination and unanimously recommends that shareholders vote “FOR” adoption of the Business Combination Agreement and approval of the transactions contemplated thereby, including the Business Combination, and “FOR” all other proposals presented to SCAC’s shareholders in this proxy statement/prospectus. When you consider the recommendation of these proposals by the board of directors of SCAC, you should keep in mind that SCAC’s directors and officers have interests in the Business Combination

 

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that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of SCAC’s Directors and Executive Officers in the Business Combination” in this proxy statement/prospectus for a further discussion of these considerations.

Pursuant to the Existing Organizational Documents, a holder of public shares (as defined herein) (a “public shareholder”) may request of SCAC that New Panavision redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a holder of public shares, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and warrants prior to exercising your redemption rights with respect to the public shares;

 

  (ii)

submit a written request to Continental Stock Transfer & Trust Company (“Continental”), SCAC’s transfer agent, that New Panavision redeem all or a portion of your public shares for cash; and

 

  (iii)

deliver your public shares to Continental, SCAC’s transfer agent, physically or electronically through The Depository Trust Company (“DTC”).

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 p.m. Eastern Time on                 ,                (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

Holders of units must elect to separate the units into the underlying public shares and warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and warrants, or if a holder holds units registered in its own name, the holder must contact Continental, SCAC’s transfer agent, directly and instruct them to do so. Public shareholders may elect to redeem public shares regardless of if or how they vote in respect of the BCA Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its shares to Continental, SCAC’s transfer agent, New Panavision will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of our initial public offering (the “trust account”), calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of September 30, 2018, this would have amounted to approximately $10.19 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and accordingly it is shares of New Panavision Common Stock that will be redeemed immediately after consummation of the Business Combination. See “Extraordinary General Meeting of SCAC—Redemption Rights” in this proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash.

The holders of Class F ordinary shares (the “Class F Shareholders”) have agreed to vote all of their ordinary shares in favor of the proposals being presented at the extraordinary general meeting and waive their redemption rights with respect to such ordinary shares in connection with the consummation of the Business Combination.

 

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The Class F ordinary shares will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/prospectus, the Class F Shareholders own approximately 22.8% of the issued and outstanding ordinary shares.

The Business Combination Agreement provides that Panavision’s obligation to consummate the Business Combination is conditioned on, among other things, (i) the redemptions by the public shareholders (including the Extension Amendment Redemptions) not exceeding 50% of the Class A ordinary shares held by the shareholders of SCAC at any time prior to the effective time of the Merger, (ii) the PIPE Investment proceeds used for purposes of satisfying any redemptions by the public shareholders not exceeding $25.0 million, and (iii) there being at least $125.0 million remaining in the trust account after satisfying redemptions (including the Extension Amendment Redemptions) and deferred underwriting discounts. These conditions are for the sole benefit of Panavision and may be waived only by Panavision and the Panavision Holder Representative. If any such condition is not met, and such condition is not waived by Panavision and the Panavision Holder Representative, then the Business Combination Agreement could terminate and the proposed Business Combination may not be consummated. The Business Combination Agreement is also subject to the satisfaction or waiver of certain other closing conditions as described in the accompanying proxy statement/prospectus. The amendment, modification or waiver of the Business Combination Agreement in any manner that would be materially adverse to the lenders under the Debt Facilities requires the prior written consent of the lenders party to the ABL Commitment Letter and Second Lien Commitment Letter. There can be no assurance that the parties to the Business Combination Agreement would waive any such provision of the Business Combination Agreement, or that the lenders under the Debt Facilities would provide any required consents to such amendments, modifications or waivers. In addition, in no event will SCAC redeem public shares in an amount that would cause New Panavision’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001. The approval of each of the Domestication Proposal and Organizational Documents Proposals requires the affirmative vote of holders of at least two-thirds of the SCAC ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. The BCA Proposal, the Director Election Proposal, Stock Issuance Proposal, Incentive Award Plan Proposal and the Adjournment proposal require the affirmative vote of a majority of the SCAC ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

Your vote is very important. Whether or not you plan to attend the extraordinary general meeting, please vote as soon as possible by following the instructions in this proxy statement/prospectus to make sure that your shares are represented at the extraordinary general meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. The transactions contemplated by the Business Combination Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the extraordinary general meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the extraordinary general meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the extraordinary general meeting. If you are a shareholder of record and you attend the extraordinary general meeting and wish to vote in person, you may withdraw your proxy and vote in person.

Your attention is directed to the remainder of the proxy statement/prospectus following this notice (including the Annexes and other documents referred to herein) for a more complete description of the proposed Business Combination and related transactions and each of the proposals. You are encouraged to read this proxy

 

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statement/prospectus carefully and in its entirety, including the Annexes and other documents referred to herein. If you have any questions or need assistance voting your ordinary shares, please contact Morrow Sodali LLC (“Morrow”), our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing SCAC.info@morrowsodali.com.

Thank you for your participation. We look forward to your continued support.

By Order of the Board of Directors of

Saban Capital Acquisition Corp.,

                                             ,

 

/s/

Adam Chesnoff

Chief Executive Officer, President and Director

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES ARE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO SCAC’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE GENERAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

 

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TABLE OF CONTENTS

 

ADDITIONAL INFORMATION

     i  

CURRENCY OF PRESENTATION AND EXCHANGE RATES

     i  

TRADEMARKS

     ii  

SELECTED DEFINITIONS

     ii  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     v  

QUESTIONS AND ANSWERS FOR SHAREHOLDERS OF SCAC

     vii  

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

     1  

SELECTED HISTORICAL FINANCIAL INFORMATION OF SCAC

     35  

SELECTED HISTORICAL FINANCIAL INFORMATION OF PANAVISION

     36  

SELECTED HISTORICAL FINANCIAL INFORMATION OF SIM

     39  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     41  

COMPARATIVE PER SHARE DATA

     44  

MARKET PRICE AND DIVIDEND INFORMATION

     46  

RISK FACTORS

     47  

EXTRAORDINARY GENERAL MEETING OF SCAC

     78  

BCA PROPOSAL

     86  

DOMESTICATION PROPOSAL

     131  

ORGANIZATIONAL DOCUMENTS PROPOSALS

     134  

ORGANIZATIONAL DOCUMENTS PROPOSAL A—APPROVAL OF AUTHORIZATION OF CHANGE TO AUTHORIZED CAPITAL STOCK, AS SET FORTH IN THE PROPOSED ORGANIZATIONAL DOCUMENTS

     138  

ORGANIZATIONAL DOCUMENTS PROPOSAL B—APPROVAL OF PROPOSAL REGARDING ISSUANCE OF PREFERRED STOCK OF NEW PANAVISION AT THE BOARD OF DIRECTORS’ SOLE DISCRETION, AS SET FORTH IN THE PROPOSED ORGANIZATIONAL DOCUMENTS

     140  

ORGANIZATIONAL DOCUMENTS PROPOSAL C—APPROVAL OF STANDARD REQUIRED FOR CERTAIN DIRECTORS REMOVAL, AS SET FORTH IN THE PROPOSED ORGANIZATIONAL DOCUMENTS

     142  

ORGANIZATIONAL DOCUMENTS PROPOSAL D—APPROVAL OF PROPOSAL REGARDING THE CLASSIFICATION OF THE BOARD OF DIRECTORS

     144  

ORGANIZATIONAL DOCUMENTS PROPOSAL E—APPROVAL OF PROPOSAL REGARDING CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION BEING SUBJECT TO THE DIRECTOR COMPOSITION AND STANDSTILL AGREEMENT

     146  

ORGANIZATIONAL DOCUMENTS PROPOSAL F—APPROVAL OF PROPOSAL REGARDING THE ABILITY OF STOCKHOLDERS TO ACT BY WRITTEN CONSENT, AS SET FORTH IN THE PROPOSED ORGANIZATIONAL DOCUMENTS

     148  

ORGANIZATIONAL DOCUMENTS PROPOSAL G—APPROVAL OF OTHER CHANGES IN CONNECTION WITH ADOPTION OF THE PROPOSED ORGANIZATIONAL DOCUMENTS

     150  

DIRECTOR ELECTION PROPOSAL

     154  

STOCK ISSUANCE PROPOSAL

     156  

INCENTIVE AWARD PLAN PROPOSAL

     158  

ADJOURNMENT PROPOSAL

     166  

U.S. FEDERAL INCOME TAX CONSIDERATIONS

     167  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION (MINIMUM REDEMPTION SCENARIO)

     177  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION (MAXIMUM REDEMPTION SCENARIO)

     200  

INFORMATION ABOUT SCAC

     225  

SCAC’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     235  

INFORMATION ABOUT PANAVISION

     243  


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PANAVISION’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     263  

INFORMATION ABOUT SIM

     281  

SIM’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     300  

MANAGEMENT OF NEW PANAVISION FOLLOWING THE BUSINESS COMBINATION

     325  

BENEFICIAL OWNERSHIP OF SECURITIES

     334  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     338  

COMPARISON OF CORPORATE GOVERNANCE AND SHAREHOLDER RIGHTS

     343  

DESCRIPTION OF NEW PANAVISION SECURITIES

     345  

SECURITIES ACT RESTRICTIONS ON RESALE OF PANAVISION HOLDINGS INC. CLASS A COMMON STOCK

     349  

STOCKHOLDER PROPOSALS AND NOMINATIONS

     350  

SHAREHOLDER COMMUNICATIONS

     350  

LEGAL MATTERS

     351  

EXPERTS

     351  

DELIVERY OF DOCUMENTS TO SHAREHOLDERS

     352  

ENFORCEABILITY OF CIVIL LIABILITY

     352  

WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE

     353  

INDEX TO FINANCIAL STATEMENTS

     F-1  

ANNEXES

     A  


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ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information that is not included in or delivered with this proxy statement/prospectus. This information is available for you to review through the SEC’s website at www.sec.gov.

You may request copies of this proxy statement/prospectus and any of the documents incorporated by reference into this proxy statement/prospectus or other publicly available information concerning SCAC, without charge, by written request to our General Counsel at Saban Capital Acquisition Corp., 10100 Santa Monica Boulevard, 26th Floor, Los Angeles, CA 90067, or by telephone request at (310) 557-5100; or Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing SCAC.info@morrowsodali.com, or from the SEC through the SEC website at the address provided above.

In order for SCAC’s shareholders to receive timely delivery of the documents in advance of the extraordinary general meeting of SCAC to be held on                     ,                 , you must request the information no later than five business days prior to the date of the extraordinary general meeting, by                 ,                .

CURRENCY OF PRESENTATION AND EXCHANGE RATES

Unless otherwise specified, currency amounts referenced in this proxy statement/prospectus are in U.S. dollars, except in the sections entitled “Selected Historical Financial Information of Sim”, “Information about Sim”, and “Sim’s Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in which currency amounts referenced are in Canadian dollars. References to “$” or “US$” are to U.S. dollars and references to “C$” are to Canadian dollars.

The consolidated financial information of Sim including in this proxy statement/prospectus is presented in Canadian dollars, which is Sim’s reporting currency. The tables below set forth period end, average, high and low exchange rates of Canadian dollars per US dollar for each period indicated published by the Board of Governors of the Federal Reserve Bank expressed in Canadian dollars for US$1.00. The exchange rates below are provided solely for information and convenience. No representation is made that the US dollar could have been, or could be, converted into Canadian dollars at all or at the exchange rates stated. The exchange rates set forth below demonstrate trends in exchange rates, but the actual exchange rates used throughout this proxy statement/prospectus may vary.

 

     Year Ended December 31,      Nine Months
Ended

September 30,
2018
 
   2013      2014      2015      2016      2017  

High

   C$ 1.070      C$ 1.164      C$ 1.399      C$ 1.459      C$ 1.375      C$ 1.332  

Low

   C$ 0.984      C$ 1.061      C$ 1.160      C$ 1.254      C$ 1.213      C$ 1.228  

Rate at end of period

   C$ 1.064      C$ 1.160      C$ 1.384      C$ 1.343      C$ 1.252      C$ 1.292  

Average rate per period

   C$ 1.030      C$ 1.104      C$ 1.279      C$ 1.325      C$ 1.298      C$ 1.288  

On December 7, 2018, the exchange rate was C$1.3302 to US$1.00.

Fluctuations in exchange rates impact, and in the future may impact, our financial information as well as our key operating statistics. See Risk Factors—Risks Related to New Panavisions Business—New Panavision will be subject to the effects of foreign currency fluctuations, international tariffs and social, political and economic risks affecting foreign operations.

 

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TRADEMARKS

This document contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this proxy statement/prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

SELECTED DEFINITIONS

Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, references to:

 

   

“Acquisitions” are to the Merger and the Purchase, together;

 

   

“Business Combination” are to the Domestication together with the Acquisitions and other transactions contemplated by the Business Combination Agreement;

 

   

“Cayman Islands Companies Law” are to the Cayman Islands Companies Law (2018 Revision);

 

   

“Class A ordinary shares” are to the Class A ordinary shares, par value $0.0001 per share, of SCAC;

 

   

“Class F ordinary shares” or “founder shares” are to the Class F ordinary shares, par value $0.0001 per share, of SCAC;

 

   

“Class F Shareholders” are to Sponsor and our current and former directors, officers, and other individuals performing services that hold all of the Class F ordinary shares;

 

   

“Closing” are to the closing of the Business Combination;

 

   

“company”, “we”, “us” and “our” are to SCAC prior to its domestication as a corporation in the State of Delaware and to New Panavision upon and after SCAC’s domestication as a corporation incorporated in the State of Delaware, as well as after the subsequent change of its name to Panavision Holdings Inc.;

 

   

“Condition Precedent Proposals” are to the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal and the Incentive Award Proposal, collectively;

 

   

“Continental” are to Continental Stock Transfer & Trust Company;

 

   

“Converted Founder Shares” are to the shares of New Panavision Common Stock issued as a matter of law upon the conversion of the Class F ordinary shares at the time of the Domestication;

 

   

“Domestication” are to the domestication of Saban Capital Acquisition Corp. as a corporation incorporated in the State of Delaware;

 

   

“episodic” are to the market that includes productions comprised of serial episodes that may be distributed via any content viewing channel;

 

   

“Existing Organizational Documents” are to the amended and restated memorandum and articles of association of SCAC, as amended by a special resolution of shareholders passed on September 18, 2018;

 

   

“Extension Amendment” are to the amendment to the amended and restated memorandum and articles of association of SCAC adopted by a special resolutions of the shareholders passed on September 18, 2018, extending the date by which SCAC has to consummate a business combination to December 31, 2018 (or March 31, 2019 if the Company has executed a definitive agreement for an initial business

 

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combination by December 31, 2018 and all closing conditions contained in such definitive agreement (other than regulatory conditions, including, without limitation, those related to antitrust approval and the effectiveness of any related registration statement, and conditions that by their nature are to be satisfied at the closing of such business combination) have been satisfied or waived by December 31, 2018) (such date, the “Extension Date”);

 

   

“Extension Amendment Redemptions” are to the redemptions by the public shareholders of approximately 3.8 million public shares for an aggregate redemption amount of $39.15 million in connection with the Extension Amendment;

 

   

“initial public offering” are to SCAC’s initial public offering that was consummated on September 21, 2016;

 

   

“IPO registration statement” are to the Registration Statements on Form S-1 (333-213259 and 333-213652) filed by SCAC in connection with its initial public offering and declared effective by the SEC on September 15, 2016;

 

   

“Merger” are to the merger of Panavision Acquisition Sub with and into Panavision, pursuant to which the separate corporate existence of Panavision Acquisition Sub will cease and Panavision will be the surviving corporation and a wholly owned subsidiary of New Panavision;

 

   

“New Panavision” are to Saban Capital Acquisition Corp. upon and after the Domestication, including after its name change to Panavision Holdings Inc.;

 

   

“New Panavision Common Stock” are to the common stock, par value $0.0001 per share, of New Panavision;

 

   

“ordinary shares” are to the Class A ordinary shares and the Class F ordinary shares, collectively;

 

   

“OTT” are to “over-the-top”, or distribution of content over the internet (rather than through traditional broadcast or cable television outlets) via services provided by companies such as Netflix, Amazon and Hulu;

 

   

“Panavision” are to Panavision Inc., a Delaware corporation;

 

   

“PIPE Investment” are to the transactions contemplated by the Subscription Agreements, pursuant to which the PIPE Investors have collectively committed to subscribe for 5.5 million shares of New Panavision Common Stock for an aggregate purchase price equal to $55.0 million to be consummated substantially concurrently with the Closing;

 

   

“PIPE Investors” are to the qualified institutional buyers and accredited investors (including Sponsor PIPE Entity) that have committed to purchase New Panavision Common Stock in the PIPE Investment;

 

   

“private placement warrants” are to the 7.0 million private placement warrants outstanding as of the date of this proxy statement/prospectus, which will be automatically converted by operation of the law into warrants to acquire shares of New Panavision Common Stock in the Domestication and thereafter forfeited to New Panavision pursuant to the Contribution Agreement;

 

   

“pro forma” are to giving pro forma effect to the Business Combination;

 

   

“Proposed Bylaws” are to the proposed bylaws of New Panavision upon the effective date of the Domestication attached to this proxy statement/prospectus as Annex D;

 

   

“Proposed Certificate of Incorporation” are to the proposed certificate of incorporation of New Panavision upon the effective date of the Domestication attached to this proxy statement/prospectus as Annex C;

 

   

“Proposed Organizational Documents” are to the Proposed Certificate of Incorporation and the Proposed Bylaws;

 

   

“public shares” are to the Class A ordinary shares (including those that underlie the units) that were offered and sold by SCAC in its initial public offering and registered pursuant to the IPO registration

 

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statement and the shares of New Panavision Common Stock issued as a matter of law upon the conversion thereof at the time of the Domestication;

 

   

“public shareholders” are to holders of public shares, whether acquired in SCAC’s initial public offering or acquired in the secondary market;

 

   

“public warrants” are to the public warrants (including those that underlie the units) that were offered and sold by SCAC in its initial public offering and registered pursuant to the IPO registration statement and the warrants of New Panavision issued as a matter of law upon the conversion thereof at the time of the Domestication;

 

   

“Purchase” are to the purchase by Sim Acquisition Sub of all of the issued and outstanding shares of capital stock of Sim, pursuant to which Sim will be an indirect, wholly owned subsidiary of New Panavision;

 

   

“redemption” are to each redemption of public shares for cash pursuant to the Existing Organizational Documents, including the Extension Amendment Redemptions;

 

   

“Saban Capital” are to Saban Capital Group, Inc., a Delaware corporation;

 

   

“SCAC” are to Saban Capital Acquisition Corp. prior to its domestication as a corporation in the State of Delaware;

 

   

“Sim” are to Sim Video International Inc., a Canadian corporation.

 

   

“Sponsor” are to Saban Sponsor LLC, our sponsor, a Delaware limited liability company and an indirect subsidiary of Saban Capital;

 

   

“Sponsor PIPE Entity” are to Saban Sponsor II LLC, a Delaware limited liability company and an affiliate of Sponsor;

 

   

“subrent” are the practice of renting equipment from other suppliers in order to meet peak demand or to satisfy out of the ordinary equipment requirements of customers;

 

   

“Subscription Agreements” are to the subscription agreements, each dated as of September 13, 2018, by and between SCAC and each of the PIPE Investors in connection with the PIPE Investment;

 

   

“transfer agent” are to Continental, SCAC’s transfer agent;

 

   

“trust account” are to the trust account established at the consummation of SCAC’s initial public offering at JP Morgan Chase Bank, N.A. and maintained by Continental, acting as trustee;

 

   

“units” are to the units of SCAC, each unit representing one Class A ordinary share and one-half of one warrant to acquire one Class A ordinary share, that were offered and sold by SCAC in its initial public offering and registered pursuant to the IPO registration statement (less the number of units that have been separated into the underlying public shares and underlying warrants upon the request of the holder thereof), and the units of New Panavision issued as a matter of law upon the conversion thereof at the time of the Domestication, each unit of New Panavision representing one share of New Panavision Common Stock and one-half of one redeemable warrant to acquire one share of New Panavision Common Stock; and

 

   

“warrants” are to the public warrants and the private placement warrants.

Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, all references in this proxy statement/prospectus to Class A ordinary shares, shares of New Panavision Common Stock or warrants include such securities underlying the units.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this proxy statement/prospectus and in any document incorporated by reference in this proxy statement/prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, including those relating to the Business Combination. The information included in this proxy statement/prospectus in relation to Panavision and Sim have been provided by Panavision and Sim, respectively, and their respective management, and forward-looking statements include statements relating to our and their respective management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, including those relating to the Business Combination. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate”, “believe”, “contemplate”, “continue”, “could”, “estimate”, “expect”, “intends”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “will”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement/prospectus and in any document incorporated by reference in this proxy statement/prospectus may include, for example, statements about:

 

   

our ability to complete the Business Combination with Panavision and Sim or, if we do not consummate such business combination, any other initial business combination;

 

   

satisfaction or waiver of the conditions to the Acquisitions including, among other things, (1) the approval of the Condition Precedent Proposals; (2) the effectiveness of a registration statement on Form S-4 registering the shares of New Panavision Common Stock to be issued pursuant to the Business Combination Agreement; (3) the shares of New Panavision Common Stock to be issued in connection with the Business Combination Agreement will have been conditionally approved for listing on Nasdaq, subject to official notice from Nasdaq of such issuance with respect to New Panavision’s post-combination listing; (4) the receipt of the Investment Canada Act Approval (as defined in the Business Combination Agreement) and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) (the waiting period under the HSR Act was terminated on November 5, 2018); (5) the consummation of the PIPE Investment prior to or concurrently with the Closing and the Sponsor PIPE Entity committing at least $30.0 million thereof; (6) the consummation of the Debt Financing (as defined below) prior to or concurrently with the Closing; (7) no Sim Debt Exercise of Remedies (as defined in the Business Combination Agreement) having occurred; (8) the redemptions by the public shareholders (including the Extension Amendment Redemptions) not exceeding 50% of the ordinary shares held by the shareholders of SCAC at any time prior to the effective time of the Merger; (9) the PIPE Investment proceeds used for purposes of satisfying any redemptions by the public shareholders not exceeding $25.0 million; (10) there being at least $125.0 million remaining in the trust account after satisfying redemptions (including the Extension Amendment Redemptions) and deferred underwriting discounts; and (11) the net tangible assets of New Panavision (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) being at least $5,000,001;

 

   

the occurrence of any event, change or other circumstances that could give rise to the termination of the Business Combination Agreement;

 

   

the projected financial information, anticipated synergies and growth rate, and market opportunity of New Panavision;

 

   

the ability to obtain and/or maintain the listing of the New Panavision Common Stock and the warrants and units of New Panavision on Nasdaq, and the potential liquidity and trading of our securities;

 

   

our ability to raise financing in the future;

 

   

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the completion of the Business Combination;

 

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our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving the Business Combination;

 

   

the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;

 

   

factors relating to our business, operations and financial performance following the Business Combination, including:

 

   

New Panavision’s dependence on the feature film, episodic and commercial production markets;

 

   

New Panavision’s ability to respond to the rapid geographic shift of its customers;

 

   

New Panavision’s ability to compete in the markets in which it operates;

 

   

New Panavision’s ability to anticipate and adapt to technology changes in the industry in which it conducts its business;

 

   

New Panavision’s ability to protect and exploit new and existing intellectual property rights;

 

   

New Panavision’s ability to successfully implement its strategies for future growth;

 

   

New Panavision’s ability to attract and retain highly skilled personnel;

 

   

New Panavision’s ability to obtain capital to support business growth;

 

   

New Panavision’s dependency on its key suppliers;

 

   

New Panavision’s ability to address risks inherent in conducting international operations, including the effects of foreign currency fluctuations, international tariffs and social, political and economic risks affecting foreign companies; and

 

   

New Panavision’s ability to comply with modified or new legislation and governmental regulations affecting its business; and

 

   

other factors detailed under the section entitled “Risk Factors”.

The forward-looking statements contained in this proxy statement/prospectus and in any document incorporated by reference in this proxy statement/prospectus are based on current expectations and beliefs concerning future developments and their potential effects on us, Panavision and/or Sim. There can be no assurance that future developments affecting us, Panavision and/or Sim will be those that we, Panavision and/or Sim have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control or the control of Panavision and/or Sim) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” beginning on page 47 of this proxy statement/prospectus. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We, Panavision and Sim undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Before any shareholder grants its proxy or instructs how its vote should be cast or vote on the proposals to be put to the extraordinary general meeting, such stockholder should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect us.

 

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QUESTIONS AND ANSWERS FOR SHAREHOLDERS OF SCAC

The questions and answers below highlight only selected information from this document and only briefly address some commonly asked questions about the proposals to be presented at the extraordinary general meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to SCAC’s shareholders. We urge shareholders to read this proxy statement/prospectus, including the Annexes and the other documents referred to herein, carefully and in their entirety to fully understand the proposed Business Combination and the voting procedures for the extraordinary general meeting, which will be held at                 Pacific Time, on                 ,                 , at                 .

 

Q:

Why am I receiving this proxy statement/prospectus?

 

A:

SCAC shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Business Combination Agreement and approve the transactions contemplated thereby, including the Business Combination. In accordance with the terms and subject to the conditions of the Business Combination Agreement, among other things, following the Domestication, (1) Panavision Acquisition Sub will be merged with and into Panavision, whereupon the separate existence of Panavision Acquisition Sub will cease, and Panavision will continue as the surviving corporation and a direct, wholly owned subsidiary of New Panavision and (2) Sim Acquisition Sub will purchase all of the issued and outstanding shares of capital stock of Sim and Sim will be an indirect wholly owned subsidiary of New Panavision. Following the consummation of the Business Combination, we will be renamed “Panavision Holdings Inc.” See “BCA Proposal”.

A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A and you are encouraged to read the Business Combination Agreement in its entirety.

Consummation of the Business Combination requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting that is being called by SCAC, except that each of the Domestication Proposal and Organizational Documents Proposals requires a special resolution under the Cayman Islands Companies Law, being the affirmative vote of holders of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

Under the Business Combination Agreement, SCAC will domesticate as a Delaware corporation. On the effective date of the Domestication, (1) the issued and outstanding Class A ordinary shares will convert automatically by operation of law, on a one-for-one basis, into shares of New Panavision Common Stock, (2) the issued and outstanding warrants to purchase Class A ordinary shares will become automatically warrants to acquire shares of New Panavision Common Stock and no other changes will be made to the terms of any issued and outstanding warrants as a result of the Domestication, (3) the issued and outstanding units will become automatically units of New Panavision (each unit representing one public share and one-half of one public warrant) and no other changes will be made to the terms of any issued and outstanding units as a result of the Domestication and (4) the issued and outstanding Class F ordinary shares will convert automatically by operation of law, on a one-for-one basis without giving effect to any rights of adjustment or other anti-dilution protections, into shares of New Panavision Common Stock, which are referred to herein as the Converted Founder Shares. See “Domestication Proposal”.

The provisions of the Proposed Organizational Documents will differ materially from the Existing Organizational Documents. Please see “What amendments will be made to the current constitutional documents of SCAC?” below.

THE VOTE OF SHAREHOLDERS IS IMPORTANT. SHAREHOLDERS ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS.

 

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Q:

What proposals are shareholders of SCAC being asked to vote upon?

 

A:

At the extraordinary general meeting, SCAC is asking holders of ordinary shares to consider and vote upon:

 

   

a proposal to approve by ordinary resolution and adopt the Business Combination Agreement;

 

   

a proposal to approve by special resolution the Domestication;

 

   

the following seven separate proposals to approve by special resolution the following material differences between the Existing Organizational Documents and the Proposed Organizational Documents:

 

   

to authorize the change in the authorized capital stock of SCAC from (i) 500,000,000 Class A ordinary shares, par value $0.0001 per share, 20,000,000 Class F ordinary shares, par value $0.0001 per share and 5,000,000 preferred shares, par value $0.0001 per share, to (ii) 500,000,000 shares of common stock, par value $0.0001 per share, of New Panavision and 100,000,000 shares of preferred stock, par value $0.0001 per share, of New Panavision;

 

   

to authorize the board of directors of New Panavision to issue any or all shares of New Panavision Preferred Stock in one or more classes or series, with such terms and conditions as may be expressly determined by New Panavision’s board of directors and as may be permitted by the DGCL;

 

   

to authorize that directors of New Panavision designated by Sponsor or by the Panavision Holder Representative, in each case pursuant to the Director Composition and Standstill Agreement, may only be removed for cause;

 

   

to authorize that the board of directors of New Panavision will be divided into three classes, with each class generally serving for a term of three years (except for those directors appointed prior to the first annual meeting of the stockholders) and only one class of directors being elected in each year and to make certain related changes;

 

   

to provide that certain provisions of the certificate of incorporation of New Panavision are subject to the Director Composition and Standstill Agreement;

 

   

to authorize the removal of the ability of New Panavision stockholders to take action by written consent in lieu of a meeting; and

 

   

to authorize all other changes in connection with the replacement of Existing Organizational Documents with the Proposed Organization Documents as part of the Domestication;

 

   

a proposal to approve by ordinary resolution the election of nine directors to serve as Class I, Class II and Class III directors to serve staggered terms on New Panavision’s board of directors until the                 ,                  and                  annual meeting of stockholders, respectively, and until their respective successors are duly elected and qualified;

 

   

a proposal to approve by ordinary resolution, for the purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635, the issuance of shares of New Panavision Common Stock to the equityholders of Panavision and of Sim and to the PIPE Investors, including an affiliate of Sponsor, to the extent such issuance would require a shareholder vote under Nasdaq Listing Rule 5635;

 

   

a proposal to approve by ordinary resolution the 2018 Plan; and

 

   

a proposal to approve the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting.

If our shareholders do not approve each of the Condition Precedent Proposals, then unless certain conditions in the Business Combination Agreement are waived by the applicable parties to the Business Combination Agreement, the Business Combination Agreement could terminate and the Business Combination may not be consummated. In addition, the amendment, modification or waiver of certain provisions of the Business Combination Agreement in any manner that would be materially adverse to the lenders under the Debt

 

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Facilities requires the prior written consent of the lenders party to the ABL Commitment Letter and Second Lien Commitment Letter. There can be no assurance that the parties to the Business Combination Agreement would waive any such provision of the Business Combination Agreement, or that the lenders under the Debt Facilities would provide any required consents to such amendments, modifications or waivers. In addition to the foregoing proposals, the shareholders are also being asked to consider and vote upon the Adjournment Proposal. See “BCA Proposal”, “Domestication Proposal”, “Organizational Documents Proposals”, “Director Election Proposal”, “Stock Issuance Proposal”, “Incentive Award Plan Proposal” and “Adjournment Proposal”.

SCAC will hold the extraordinary general meeting to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the Business Combination and the other matters to be acted upon at the extraordinary general meeting. Shareholders of SCAC should read it carefully.

After careful consideration, SCAC’s board of directors has determined that the BCA Proposal, the Domestication Proposal, each of the Organizational Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal, the Incentive Award Proposal and the Adjournment Proposal are in the best interests of SCAC and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.

The existence of financial and personal interests of one or more of SCAC’s directors may result in a conflict of interest on the part of such director(s) between what he or they may believe is in the best interests of SCAC and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. In addition, SCAC’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of SCAC’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

Why is SCAC proposing the Business Combination?

 

A:

SCAC was organized to effect a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination, with one or more businesses or entities.

Panavision is a recognized global brand providing production and post-production services to the episodic, feature film and commercial segments on a worldwide basis.

Sim is a provider of production and post-production services to the episodic and feature film industries, offering a comprehensive suite of solutions for the creation of content.

Based on its due diligence investigations of Panavision and Sim and the industry in which they operate, including the financial and other information provided by Panavision and Sim in the course of SCAC’s due diligence investigations, the SCAC board of directors believes that the Business Combination with Panavision and Sim is in the best interests of SCAC and its shareholders and presents an opportunity to increase shareholder value. However, there is no assurance of this. See “BCA Proposal—SCAC’s Board of Directors’ Reasons for the Business Combination”.

Although SCAC’s board of directors believes that the Business Combination with Panavision and Sim presents a unique business combination opportunity and is in the best interests of SCAC and its shareholders, the board of directors did consider certain potentially material negative factors in arriving at that conclusion. These factors are discussed in greater detail in the section entitled “BCA Proposal—SCAC’s Board of Director’s Reasons for the Business Combination”, as well as in the sections entitled “Risk Factors—Risks Related to New Panavision’s Business”.

 

Q:

What will Panavision’s and Sim’s equityholders receive in return for the Business Combination of Panavision and Sim by SCAC?

 

A:

In accordance with the terms and subject to the conditions of the Business Combination Agreement and subject to certain adjustments set forth therein, the aggregate consideration payable by SCAC to the

 

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  equityholders of Panavision and Sim under the Business Combination Agreement will be $590.5 million (“Business Combination Consideration”), which consists of (a) cash in an aggregate amount equal to $464.2 million, of which (i) $354.3 million will be paid to the equityholders of Panavision and (ii) $110.0 million will be paid to the equityholders of Sim; and (b) 12.6 million shares of New Panavision Common Stock (at a deemed value of $10.00 per share), of which (i) 9.5 million shares of New Panavision Common Stock will be paid to the equityholders of Panavision and (ii) 3.1 million shares of New Panavision Common Stock will be paid to the equityholders of Sim. The Business Combination Consideration does not include an additional 2.75 million shares of New Panavision Common Stock, which will be issued to the equityholders of Panavision and will be subject to vesting and certain other restrictions as set forth in the Business Combination Agreement. The Business Combination Consideration is expected to be financed through a combination of (i) shares of New Panavision Common Stock issued to the equityholders of Panavision and of Sim, (ii) cash held in the trust account net of redemptions (including the Extension Amendment Redemptions) and deferred underwriting discounts, (iii) gross proceeds of the PIPE Investment and (iv) gross proceeds of the Debt Facilities.

The Business Combination Consideration described above will change based upon certain adjustments to be calculated as of the date of the closing of the Business Combination (the “Closing Date”). The precise amount of such adjustments will depend upon, among other things, the total debt obligations and the cash and cash equivalents of Panavision and Sim on the Closing Date, each of which fluctuates in the ordinary course of business, as well as the net working capital, capital expenditures and unpaid transaction expenses of Panavision and Sim on the Closing Date. In addition, the Business Combination Consideration above reflects a $14.2 million reduction in the cash consideration payable to equityholders of Panavision and a related increase in 1.42 million shares of New Panavision Common Stock (at a deemed value of $10.00 per share) as a result of the Extension Amendment Redemptions. The remaining portion of the cash consideration otherwise payable to the equityholders of Panavision will be payable in part in additional shares of New Panavision Common Stock (at a deemed value of $10.00 per share) as provided in the Business Combination Agreement if (i) the public shareholders exercise their rights to redeem any additional public shares in connection with the approval of the Business Combination Agreement or otherwise pursuant to SCAC’s Existing Organizational Documents, or (ii) New Panavision would have less than $30.0 million in available cash and cash equivalents immediately following the Closing, on a pro forma basis taking into account the transactions contemplated by the Business Combination Agreement and any redemptions (including the Extension Amendment Redemptions), deferred underwriting discounts and other fees. The Business Combination Consideration is also subject to adjustment to appropriately reflect the effect of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change prior to consummation of the Business Combination. At the Closing, $3.0 million of the cash portion of the Business Combination Consideration payable to the equityholders of Panavision and $2.0 million of the cash portion of the Business Combination Consideration payable to the equityholders of Sim will be placed in escrow by SCAC to secure any downward post-closing adjustments to the Business Combination Consideration. Any such adjustments (whether positive or negative) will be limited to $3.0 million (in the case of Panavision) or $2.0 million (in the case of Sim). For further details, see “BCA Proposal—The Business Combination Agreement—Business Combination Consideration”.

 

Q:

What equity stake will current SCAC shareholders and current Panavision and Sim equityholders hold in New Panavision immediately after the consummation of the Business Combination?

 

A:

As of the date of this proxy statement/prospectus, there are 27,401,256 ordinary shares issued and outstanding, which includes an aggregate of 6,243,480 Class F ordinary shares. As of the date of this proxy statement/prospectus, there is outstanding an aggregate of 19,500,000 warrants, which comprise the 7,000,000 private placement warrants held by Sponsor and the 12,500,000 public warrants. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share and, following the Domestication, will entitle the holder thereof to purchase one share of New Panavision Common Stock. Therefore, as of the

 

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  date of this proxy statement/prospectus (without giving effect to the Business Combination and assuming no redemptions other than the Extension Amendment Redemptions), if we assume that each outstanding warrant is exercised and one Class A ordinary share is issued as a result of such exercise, the SCAC fully-diluted share capital would be 46,901,256 ordinary shares. In connection with the closing of the Business Combination, Sponsor will contribute all 7,000,000 private placement warrants it holds to New Panavision, which private placement warrants will be cancelled for no consideration.

It is anticipated that, upon completion of the Business Combination, (1) SCAC’s public shareholders are expected to own approximately 52.5% of the outstanding New Panavision Common Stock, (2) the former equityholders of Panavision and Sim (without taking into account any public shares held by Panavision equityholders or Sim stockholders prior to the consummation of the Business Combination), are expected to own approximately 23.6% and 7.7%, respectively, of the outstanding New Panavision Common Stock, (3) the Class F Shareholders are expected to own approximately 2.5% of outstanding New Panavision Common Stock and (4) the PIPE Investors (including the Sponsor PIPE Entity) are expected to own approximately 13.7% of outstanding New Panavision Common Stock. These percentages exclude the Contingent Shares, reflect adjustments to the consideration payable to the equityholders of Panavision as a result of the Extension Amendment Redemptions and assume (i) no public shareholders exercise their redemption rights in connection with the Business Combination, (ii) that New Panavision will issue 12,265,132 shares of New Panavision Common Stock to the former equityholders of Panavision (including 2,750,000 Contingent Shares but which are excluded from such calculation) and 3,100,000 shares of New Panavision Common Stock to the former equityholders of Sim pursuant to the Business Combination Agreement, (iii) 1,993,480 Converted Founder Shares and 7,000,000 private placement warrants are forfeited pursuant to the Contribution Agreement and 3,250,000 Converted Founder Shares become Contingent Shares (which are excluded from such calculations), and (iv) 5,500,000 shares of New Panavision Common Stock are issued to the PIPE Investors upon the consummation of the PIPE Investment. These percentages also do not take into account public warrants to purchase New Panavision Common Stock that will be outstanding immediately following the completion of the Business Combination. If the actual facts are different than these assumptions, the percentage ownership retained by the Company’s existing stockholders in the combined company will be different.

The following table illustrates varying ownership levels in New Panavision immediately following the consummation of the Business Combination based on the assumptions above except for varying levels of redemptions by the public shareholders:

 

     Share Ownership in New Panavision  
     No additional redemptions     Maximum redemptions(1)  
     Number of
Shares
    Percentage of
Outstanding
Shares
    Number of
Shares
     Percentage of
Outstanding
Shares
 

Former equityholders of Panavision(2)

     9,515,132 (3)       23.6     18,337,196        45.3

Former equityholders of Sim

     3,100,000       7.7     3,100,000        7.7

SCAC’s public shareholders

     21,157,776       52.5     12,500,000        30.9

Class F Shareholders(4)

     1,000,000       2.5     1,000,000        2.5

PIPE Investors(5)

     5,500,000       13.7     5,500,000        13.6

 

  (1)

Assumes that 8,657,776 public shares (being our estimate of the maximum number of public shares that could be redeemed in connection with the Business Combination in order to satisfy the closing conditions contained in the Business Combination Agreement) are redeemed in connection with the Business Combination.

  (2)

Excludes 2.75 million Contingent Shares.

  (3)

Includes 1,415,132 shares of New Panavision Common Stock payable to the equityholders of New Panavision as a result of the Extension Amendment Redemptions and corresponding downward adjustment to the cash consideration payable to the equityholders of New Panavision of approximately $14.2 million.

 

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  (4)

Excludes 3.25 million Contingent Shares.

  (5)

Includes 3.0 million shares to be owned by Sponsor PIPE Entity.

In addition, the cash consideration described above that is payable to the equityholders of Panavision will be reduced according to the terms of the Business Combination Agreement and will be payable in part in an amount of additional shares of New Panavision Common Stock commensurate with the reduction in cash consideration (at a deemed value of $10.00 per share) if the public shareholders exercise their rights to redeem any additional public shares in connection with the approval of the Business Combination Agreement or otherwise pursuant to the Existing Organizational Documents. The Business Combination Consideration is also subject to adjustment to appropriately reflect the effect of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change prior to consummation of the Business Combination. As a result of the Extension Amendment Redemptions, the cash consideration payable to the equityholders of Panavision under the Business Combination Agreement will be adjusted downward pursuant to clause (i) of this paragraph by $14.2 million which amount will be payable in 1.42 million additional shares of New Panavision Common Stock, which adjustments are reflected above. For further details, see “BCA Proposal—The Business Combination Agreement—Business Combination Consideration”.

 

Q:

Why is SCAC proposing the Domestication?

 

A:

Our board of directors believes that there are significant advantages to us that will arise as a result of a change of our domicile to Delaware. Further, our board of directors believes that any direct benefit that the DGCL provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. The board of directors believes that there are several reasons why a reincorporation in Delaware is in the best interests of Company and its shareholders, including, (i) the prominence, predictability and flexibility of the DGCL, (ii) Delaware’s well-established principles of corporate governance and (iii) the increased ability for Delaware corporations to attract and retain qualified directors, each of the foregoing are discussed in greater detail in the section entitled “Domestication Proposal—Reasons for the Domestication”.

To effect the Domestication, we will file a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and file a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which we will be domesticated and continue as a Delaware corporation.

The approval of the Domestication Proposal is a condition to the closing the Acquisitions under the Business Combination Agreement. The approval of the Domestication Proposal requires a special resolution under the Cayman Islands Companies Law, being the affirmative vote of holders of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting.

 

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Q:

What amendments will be made to the current constitutional documents of SCAC?

 

A:

The consummation of the Business Combination is conditional, among other things, on the Domestication. Accordingly, in addition to voting on the Business Combination, SCAC’s shareholders also are being asked to consider and vote upon a proposal to (i) approve the Domestication, and replace our Existing Organizational Documents, in each case, under the Cayman Islands Companies Law with the Proposed Organizational Documents, in each case, under the DGCL, which differ materially from the Existing Organizational Documents in the following respects:

 

   

Existing Organizational Documents

 

Proposed Organizational Documents

Authorized Shares

(Organizational Documents
Proposal A)

 

The Existing Organizational Documents authorize 525,000,000 shares, consisting of 500,000,000 Class A ordinary shares, 20,000,000 Class F ordinary shares and 5,000,000 preferred shares.

 

See paragraph 5 of our Existing Organizational Documents.

 

The Proposed Organizational Documents authorize 600,000,000 shares, consisting of 500,000,000 shares of New Panavision Common Stock and 100,000,000 shares of New Panavision preferred stock.

 

See Article Fourth of the Proposed Certificate of Incorporation.

Authorize the Board of Directors to Issue Preferred Stock Without Stockholder Consent

(Organizational Documents
Proposal B)

  The Existing Organizational Documents authorize the issuance of 5,000,000 preferred shares with such designation, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board of directors is empowered under the Existing Organizational Documents, without shareholder approval, to issue preferred shares with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of ordinary shares.   The Proposed Organizational Documents authorize the board of directors to issue all or any shares of preferred stock in one or more series and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as the board of directors may determine.
  See paragraph 5 and Article 3 of our Existing Organizational Documents.   See Article Fourth subsection A of the Proposed Certificate of Incorporation.

Removal of Certain Directors Only For Cause

(Organizational Documents
Proposal C)

  Upon the first to occur of the consummation of any business combination and the distribution of the trust fund, the Existing Organizational Documents provide that the directors of SCAC may be removed by an ordinary resolution (being a resolution passed by a simple majority of the shareholders as, being entitled to do so, vote at a general meeting and includes an unanimous written resolution).   The Proposed Organizational Documents provide that the directors of New Panavision designated by Sponsor or by the Panavision Holder Representative, in each case pursuant to the Director Composition and Standstill Agreement, dated as of September 13, 2018 (as may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Director Composition and

 

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Existing Organizational Documents

 

Proposed Organizational Documents

    Standstill Agreement”), may only be removed for cause.
  See Article 29 of our Existing Organizational Documents.   See Article Fifth subsection D of the Proposed Certificate of Incorporation.

Classified Board of Directors

(Organizational Documents
Proposal D)

  The Existing Organizational Documents provide that the board of directors of SCAC will be divided into two classes.   The Proposed Organizational Documents provide that the board of directors of New Panavision will be divided into three classes, with each class generally serving for a term of three years (except for those directors appointed prior to the first annual meeting of the stockholders) and only one class of directors being elected in each year and to make certain related changes.
  See Article 49.10 of our Existing Organizational Documents.   See Article Fifth subsection C of the Proposed Certificate of Incorporation.

Director Composition and Standstill Agreement

(Organizational Documents
Proposal E)

  The Existing Organizational Documents are not subject to any director composition agreement.   The Proposed Organizational Documents provide that certain provisions therein are subject to the Director Composition and Standstill Agreement.
    See Article Fifth subsections B, C and D of the Proposed Certificate of Incorporation.

Shareholder/Stockholder Written Consent In Lieu of a Meeting

(Organizational Documents
Proposal F)

  The Existing Organizational Documents provide that resolutions may be passed by a vote in person, by proxy at a general meeting, or by unanimous written resolution.   The Proposed Organizational Documents allow stockholders to vote in person or by proxy at a meeting of stockholders, but prohibit the ability of stockholders to act by written consent in lieu of a meeting.
  See Article 22 of our Existing Organizational Documents.   See Article Fifth subsection G of the Proposed Certificate of Incorporation.

Corporate Name

(Organizational Documents
Proposal G)

  The Existing Organizational Documents provide the name of the company is “Saban Capital Acquisition Corp.”.   The Proposed Organizational Documents will be further amended immediately after the consummation of the Acquisitions to provide that the name of the corporation will be “Panavision Holdings Inc.”.

 

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Existing Organizational Documents

 

Proposed Organizational Documents

  See paragraph 1 of our Existing Organizational Documents.   As this name change will occur in connection with the Acquisitions, and therefore, after the Domestication and associated adoption of the Proposed Organizational Documents, the name of the corporation as it appears in the Proposed Organizational Documents attached as Annex C and Annex D to this proxy statement/prospectus and to be in effect as of the Domestication will be “Saban Capital Acquisition Corp.”

Perpetual Existence

(Organizational Documents
Proposal G)

  The Existing Organizational Documents provide that if we do not consummate a business combination (as defined in the Existing Organizational Documents) by the Extension Date, SCAC shall cease all operations except for the purposes of winding up and shall redeem the shares issued in our initial public offering and liquidate our trust account.   The Proposed Organizational Documents do not include any provisions relating to New Panavision’s ongoing existence; the default under the DGCL will make New Panavision’s existence perpetual.
  See Article 49 of our Existing Organizational Documents.   This is the default rule under the DGCL.

Exclusive Forum

(Organizational Documents
Proposal G)

  The Existing Organizational Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation.   The Proposed Organizational Documents adopt Delaware as the exclusive forum for certain stockholder litigation.
    See Section Seventh subsection A of the Proposed Certificate of Incorporation.

Takeovers by Interested Stockholders

(Organizational Documents
Proposal G)

  The Existing Organizational Documents do not provide restrictions on takeovers of SCAC by a related shareholder following a business combination.   The Proposed Organizational Documents will have New Panavision elect not to be governed by Section 203 of the DGCL relating to takeovers by interest stockholders but will provide other restrictions regarding takeovers by interested stockholders.
    See Section Eighth of the Proposed Certificate of Incorporation.

 

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Existing Organizational Documents

 

Proposed Organizational Documents

Waiver of Corporate Opportunities

(Organizational Documents
Proposal G)

  The Existing Organizational Documents do not provide an explicit waiver of corporate opportunities for SCAC or its directors.   The Proposed Organizational Documents will explicitly waive corporate opportunities to New Panavision and its directors.
    See Section Ninth of the Proposed Certificate of Incorporation.

Provisions Related to Status as Blank Check Company

(Organizational Documents
Proposal G)

  The Existing Organizational Documents set forth various provisions related to our status as a blank check company prior to the consummation of a business combination.   The Proposed Organizational Documents do not include such provisions related to our status as a blank check company, which no longer will apply upon consummation of the Business Combination, as we will cease to be a blank check company at such time.
  See Article 49 of our Existing Organizational Documents.  

 

Q:

How will the Domestication affect my ordinary shares, warrants and units?

 

A:

On the effective date of the Domestication, (1) the issued and outstanding Class A ordinary shares will convert automatically by operation of law, on a one-for-one basis, into shares of New Panavision Common Stock, (2) the issued and outstanding warrants to purchase Class A ordinary shares will become automatically warrants to acquire shares of New Panavision Common Stock and no other changes will be made to the terms of any issued and outstanding warrants as a result of the Domestication, (3) the issued and outstanding units will become automatically units of New Panavision (each unit representing one public share and one-half of one public warrant) and no other changes will be made to the terms of any issued and outstanding units as a result of the Domestication and (4) the issued and outstanding Class F ordinary shares will convert automatically by operation of law, on a one-for-one basis without giving effect to any rights of adjustment or other anti-dilution protections, into shares of New Panavision Common Stock. See “Domestication Proposal”.

 

Q:

What are the U.S. federal income tax consequences of the Domestication?

 

A:

As discussed more fully under “U.S. Federal Income Tax Considerations” (beginning on page 167 of this proxy statement/prospectus), it is intended that the Domestication will constitute a reorganization within the meaning of Section 368(a)(l)(F) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). Assuming that the Domestication so qualifies, U.S. Holders (as defined in “U.S. Federal Income Tax Considerations” below) will be subject to Section 367(b) of the Code and, as a result:

 

   

A U.S. Holder whose Class A ordinary shares have a fair market value of less than $50,000 on the date of the Domestication will not recognize any gain or loss and will not be required to include any part of SCAC’s earnings in income;

 

   

A U.S. Holder whose Class A ordinary shares have a fair market value of $50,000 or more and who, on the date of the Domestication, owns (actually or constructively) less than 10% of the total combined voting power of all classes of our stock entitled to vote and less than 10% of the total value of all classes of our stock will generally recognize gain (but not loss) on the exchange of Class A ordinary shares for New Panavision Common Stock pursuant to the Domestication. As an alternative to

 

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recognizing gain, such U.S. Holder may file an election to include in income as a deemed dividend the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to its Class A ordinary shares provided certain other requirements are satisfied

 

   

A U.S. Holder whose Class A ordinary shares have a fair market value of $50,000 or more and who, on the date of the Domestication, owns (actually or constructively) 10% or more of the total combined voting power of all classes of our stock entitled to vote or 10% or more of the total value of all classes of our stock will generally be required to include in income as a deemed dividend the all earnings and profits amount attributable to its Class A ordinary shares provided certain other requirements are satisfied.

SCAC does not expect to have significant cumulative earnings and profits, if any, on the date of the Domestication.

As discussed more fully under “U.S. Federal Income Tax Considerations” (beginning on page 167 of this proxy statement/prospectus), SCAC believes that it is likely classified as a “passive foreign investment company”, or PFIC, for U.S. federal income tax purposes. In such case, notwithstanding the foregoing U.S. federal income tax consequences of the Domestication, proposed Treasury Regulations under Section 1291(f) of the Code (which have a retroactive effective date), if finalized in their current form, generally would require a U.S. Holder to recognize gain on the exchange of Class A ordinary shares or warrants for New Panavision Common Stock or warrants pursuant to the Domestication. The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on a complex set of rules. However, it is difficult to predict whether, in what form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code will be adopted. Importantly, however, U.S. Holders that make or have made certain elections discussed further under “U.S. Federal Income Tax Considerations—QEF Election and Mark-to-Market Election” with respect to their Class A ordinary shares are generally not subject to the same gain recognition rules under the currently proposed Treasury Regulations under Section 1291(f) of the Code. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see “U.S. Federal Income Tax Considerations” (beginning on page 167 of this proxy statement/prospectus).

Additionally, the Domestication may cause non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations” beginning on page 167 of this proxy statement/prospectus) to become subject to U.S. federal income withholding taxes on any dividends paid in respect of such non-U.S. Holder’s New Panavision Common Stock after the Domestication.

The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are urged to consult their tax advisor on the tax consequences to them of the Domestication, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws. For a more complete discussion of the U.S. federal income tax considerations of the Domestication, see “U.S. Federal Income Tax Considerations” (beginning on page 167 of this proxy statement/prospectus).

 

Q:

Do I have redemption rights?

 

A:

If you are a holder of public shares, you have the right to request that we redeem all or a portion of your public shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the BCA Proposal. If you wish to exercise your redemption rights, please see the answer to the next question: “How do I exercise my redemption rights?

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to

 

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more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash.

The Class F Shareholders have agreed to waive their redemption rights with respect to all of their ordinary shares in connection with the consummation of the Business Combination. The Class F ordinary shares will be excluded from the pro rata calculation used to determine the per-share redemption price.

 

Q:

How do I exercise my redemption rights?

 

A:

If you are a public shareholder and wish to exercise your right to redeem the public shares, you must:

 

  (i)

(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares;

 

  (ii)

submit a written request to Continental, our transfer agent, that we redeem all or a portion of your public shares for cash; and

 

  (iii)

deliver your public shares to Continental, our transfer agent, physically or electronically through The Depository Trust Company (“DTC”).

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 p.m. Eastern Time on                 ,                (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

The address of Continental, our transfer agent, is listed under the question “Who can help answer my questions?” below.

Holders of units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact Continental, our transfer agent, directly and instruct them to do so.

Public shareholders will be entitled to request that their public shares be redeemed for a pro rata portion of the amount then on deposit in the trust account as of two business days prior to the consummation of the Business Combination including interest earned on the funds held in the trust account and not previously released to us (net of taxes payable). For illustrative purposes, as of September 30, 2018, this would have amounted to approximately $10.19 per issued and outstanding public share. However, the proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public shareholders, regardless of whether such public shareholders votes or, if they do vote, irrespective of if they vote for or against the BCA Proposal. Therefore, the per share distribution from the trust account in such a situation may be less than originally expected due to such claims. Whether you vote, and if you do vote irrespective of how you vote, on any proposal, including the BCA Proposal, will have no impact on the amount you will receive upon exercise of your redemption rights. It is expected that the funds to be distributed to public shareholders electing to redeem their public shares will be distributed promptly after the consummation of the Business Combination.

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the time the vote is taken with respect to the BCA Proposal at the extraordinary general meeting. If you deliver your shares for redemption to Continental, our transfer agent, and later decide prior to the extraordinary general meeting not to elect redemption, you may request that our transfer agent return the shares (physically or electronically) to you. You may make such request by contacting Continental, our transfer agent, at the phone number or address listed at the end of this section.

 

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Any corrected or changed written exercise of redemption rights must be received by Continental, our transfer agent, prior to the vote taken on the BCA Proposal at the extraordinary general meeting. No request for redemption will be honored unless the holder’s public shares have been delivered (either physically or electronically) to Continental, our agent, at least two business days prior to the vote at the extraordinary general meeting.

If a holder of public shares properly makes a request for redemption and the public shares are delivered as described above, then, if the Business Combination is consummated, we will redeem the public shares for a pro rata portion of funds deposited in the trust account, calculated as of two business days prior to the consummation of the Business Combination. The redemption takes place following the Domestication and accordingly it is shares of New Panavision Common Stock of that will be redeemed immediately after consummation of the Business Combination.

If you are a holder of public shares and you exercise your redemption rights, such exercise will not result in the loss of any warrants that you may hold.

 

Q:

If I am a holder of units, can I exercise redemption rights with respect to my units?

 

A:

No. Holders of issued and outstanding units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If you hold your units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact Continental, our transfer agent, directly and instruct them to do so. You are requested to cause your public shares to be separated and delivered to Continental, our transfer agent, by 5:00 p.m., Eastern Time, on                 ,                (two business days before the extraordinary general meeting) in order to exercise your redemption rights with respect to your public shares.

 

Q:

What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A:

We expect that a U.S. Holder (as defined in “U.S. Federal Income Tax Considerations” beginning on page 167 of this proxy statement/prospectus) that exercises its redemption rights to receive cash from the trust account in exchange for its New Panavision Common Stock will generally be treated as selling such New Panavision Common Stock resulting in the recognition of capital gain or capital loss. There may be certain circumstances in which the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of New Panavision Common Stock that such U.S. Holder owns or is deemed to own (including through the ownership of warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, see “U.S. Federal Income Tax Considerations” (beginning on page 167 of this proxy statement/prospectus).

Additionally, because the Domestication will occur immediately prior to the redemption of any public shareholder, U.S. Holders exercising redemption rights will be subject to the potential tax consequences of Section 367 of the Code as well as potential tax consequences of the U.S. federal income tax rules relating to “passive foreign investment companies” (“PFIC”). The tax consequences of Section 367 of the Code and the PFIC rules are discussed more fully below under “U.S. Federal Income Tax Considerations” (beginning on page 167 of this proxy statement/prospectus).

All holders of our shares considering exercising their redemption rights are urged to consult their tax advisor on the tax consequences to them of an exercise of redemption rights, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws.

 

Q:

What happens to the funds deposited in the trust account after consummation of the Business Combination?

 

A:

Following the closing of our initial public offering, an amount equal to $250,000,000 ($10.00 per unit) of the net proceeds from our initial public offering and the sale of the private placement warrants was placed in

 

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  the trust account. In connection with the Extension Amendment on September 18, 2018, $39.15 million was released from the trust account to satisfy the Extension Amendment Redemptions. As of September 30, 2018, funds in the trust account totaled $215,371,398 and were held in money market funds. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (1) the completion of a business combination (including the closing of the Business Combination), (2) the redemption of any public shares properly tendered in connection with a shareholder vote to amend the Existing Organizational Documents to modify the substance and timing of our obligation to redeem 100% of the public shares if we do not complete a business combination by the Extension Date, or (3) the redemption of all of the public shares if we are unable to complete a business combination by the Extension Date, subject to applicable law.

If our initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemptions or purchases of the public shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of New Panavision, the payment of principal or interest due on indebtedness incurred in completing our Business Combination, to fund the purchase of other companies or for working capital. See “Summary of the Proxy Statement/Prospectus—Sources and Uses of Funds for the Business Combination”.

 

Q:

What happens if a substantial number of the public shareholders vote in favor of the BCA Proposal and exercise their redemption rights?

 

A:

Our public shareholders are not required to vote in respect of the Business Combination in order to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders.

The Business Combination Agreement provides that Panavision’s obligation to consummate the Business Combination is conditioned on, among other things, (1) the redemptions by the public shareholders (including the Extension Amendment Redemptions) not exceeding 50% of the Class A ordinary shares held by the shareholders of SCAC at any time prior to the effective time of the Merger, (2) the PIPE Investment proceeds used for purposes of satisfying any redemptions by the public shareholders not exceeding $25.0 million, and (3) there being at least $125.0 million remaining in the trust account after satisfying redemptions (including the Extension Amendment Redemptions) and deferred underwriting discounts (collectively, the “Redemption Conditions”). These conditions are for the sole benefit of Panavision and may be waived only by Panavision and the Panavision Holder Representative. If any such condition is not met, and such condition is not waived by Panavision and the Panavision Holder Representative, then the Business Combination Agreement could terminate and the Business Combination may not be consummated. In addition, the amendment, modification or waiver of certain provisions of the Business Combination Agreement in any manner that would be materially adverse to the lenders under the Debt Facilities also requires the prior written consent of the lenders party to the ABL Commitment Letter and Second Lien Commitment Letter. There can be no assurance that the parties to the Business Combination Agreement would waive any such provision of the Business Combination Agreement, or that the lenders under the Debt Facilities would provide any required consents to such amendments, modifications or waivers. In addition, in no event will SCAC redeem public shares in an amount that would cause our net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001.

In addition, the cash consideration that is payable to the equityholders of Panavision as part of the Business Combination Consideration will be reduced according to the terms of the Business Combination Agreement and will be payable in part in an amount of additional shares of New Panavision Common Stock commensurate with the reduction in cash consideration (at a deemed value of $10.00 per share) if the public shareholders exercise their rights to redeem any additional public shares in connection with the approval of the Business Combination Agreement or otherwise pursuant to the Existing Organizational Documents.

 

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Additionally, as a result of redemptions, the trading market for the New Panavision Common Stock may be less liquid than the market for the public shares was prior to consummation of the Business Combination and we may not be able to meet the listing standards for Nasdaq or another national securities exchange. In addition, with less funds available from the trust account, the working capital infusion from the trust account into Panavision and Sim’s business will be reduced.

 

Q:

What conditions must be satisfied to complete the Business Combination?

 

A:

The consummation of the Business Combination is conditioned upon, among other things, (1) the approval of the Condition Precedent Proposals; (2) the effectiveness of a registration statement on Form S-4 registering the shares of New Panavision Common Stock to be issued pursuant to the Business Combination Agreement; (3) the shares of New Panavision Common Stock to be issued in connection with the Business Combination Agreement will have been conditionally approved for listing on Nasdaq, subject to official notice from Nasdaq of such issuance with respect to New Panavision’s post–combination listing; (4) the receipt of the Investment Canada Act Approval and the expiration or termination of the applicable waiting period under the HSR Act (the waiting period under the HSR Act was terminated on November 5, 2018); (5) the consummation of the PIPE Investment prior to or concurrently with the Closing and the Sponsor PIPE Entity committing at least $30.0 million thereof; (6) the consummation of the Debt Financing prior to or concurrently with the Closing; (7) no Sim Debt Exercise of Remedies (as defined in the Business Combination Agreement) having occurred; (8) the Redemption Conditions being satisfied; and (9) the net tangible assets of New Panavision (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) being at least $5,000,001. Therefore, unless these conditions are waived by the applicable parties to the Business Combination Agreement, the Business Combination Agreement could terminate and the proposed business combination may not be consummated. In addition, the amendment, modification or waiver of certain provisions of the Business Combination Agreement in any manner that would be materially adverse to the lenders under the Debt Facilities requires the prior written consent of the lenders party to the ABL Commitment Letter and Second Lien Commitment Letter. There can be no assurance that the parties to the Business Combination Agreement would waive any such provision of the Business Combination Agreement, or that the lenders under the Debt Facilities would provide any required consents to such amendments, modifications or waivers.

For more information about conditions to the consummation of the Business Combination see “BCA Proposal—The Business Combination Agreement—Closing Conditions”.

 

Q:

When do you expect the Business Combination to be completed?

 

A:

It is currently expected that the Business Combination will be consummated in the first quarter of 2019. This date depends, among other things, on the approval of the proposals to be put to SCAC shareholders at the extraordinary general meeting and the receipt of the Investment Canada Act Approval. However, such meeting could be adjourned if the Adjournment Proposal is adopted by our shareholders at the extraordinary general meeting and we elect to adjourn the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting. For a description of the conditions for the completion of the Business Combination see “BCA Proposal—The Business Combination Agreement—Closing Conditions”.

 

Q:

What happens if the Business Combination is not consummated?

 

A:

SCAC will not complete the Domestication to Delaware unless all other conditions to the consummation of the Business Combination have been satisfied or waived by the parties in accordance with the terms of the Business Combination Agreement. If we are not able to complete the Business Combination with Panavision and Sim by the Extension Date, nor able to complete another business combination by such

 

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  Extension Date, in each case, as such date may be extended pursuant to our Existing Organizational Documents we will (1) cease all operations except for the purpose of winding up, (2) 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 (which interest shall be net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

 

Q:

Do I have appraisal rights in connection with the proposed Business Combination and the proposed Domestication?

 

A:

Neither our shareholders nor our warrant holders have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Law or under the DGCL.

 

Q:

What do I need to do now?

 

A:

We urge you to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety and to consider how the Business Combination will affect you as a shareholder and/or warrant holder. Our shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

 

Q:

How do I vote?

 

A:

If you are a holder of record of ordinary shares on the record date for the extraordinary general meeting, you may vote in person at the extraordinary general meeting or by submitting a proxy for the extraordinary general meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name”, which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the extraordinary general meeting and vote in person, obtain a proxy from your broker, bank or nominee.

 

Q:

If my shares are held in “street name”, will my broker, bank or nominee automatically vote my shares for me?

 

A:

No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name”. If this is the case, this proxy statement/prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote”. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal except that they will have the same effect as a “no” vote on the Domestication Proposal and the Organizational Documents Proposals. If you decide to vote, you should provide instructions to your broker, bank or other nominee on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee.

 

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Q:

When and where will the extraordinary general meeting be held?

 

A:

The extraordinary general meeting will be held at                Pacific Time, on                 ,                 , at                 , unless the extraordinary general meeting is adjourned.

 

Q:

Who is entitled to vote at the extraordinary general meeting?

 

A:

We have fixed                 ,                as the record date for the extraordinary general meeting. If you were a shareholder of SCAC at the close of business on the record date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the extraordinary general meeting.

 

Q:

How many votes do I have?

 

A:

SCAC shareholders are entitled to one vote at the extraordinary general meeting for each ordinary share held of record as of the record date. As of the close of business on the record date for the extraordinary general meeting, there were 27,401,256 ordinary shares issued and outstanding, of which 21,157,776 were issued and outstanding public shares.

 

Q:

What constitutes a quorum?

 

A:

A quorum of SCAC shareholders is necessary to hold a valid meeting. A quorum will be present at the general meeting if the holders of a majority of the issued and outstanding ordinary shares entitled to vote at the extraordinary general meeting are represented in person or by proxy. As of the record date for the extraordinary general meeting, 13,700,629 ordinary shares would be required to achieve a quorum.

 

Q:

What vote is required to approve each proposal at the extraordinary general meeting?

 

A:

The following votes are required for each proposal at the extraordinary general meeting:

 

  (i)

BCA Proposal: The approval of the BCA Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (ii)

Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under Cayman Islands Companies Law, being the affirmative vote of holders of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (iii)

Organizational Documents Proposals: The separate approval of each of the Organizational Documents Proposals requires a special resolution under Cayman Islands Companies Law, being affirmative vote of holders of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (iv)

Director Election Proposal: The approval of the Director Election Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (v)

Stock Issuance Proposal: The approval of the Stock Issuance Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (vi)

Incentive Award Plan Proposal: The approval of the Incentive Award Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

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  (vii)

Adjournment proposal: The approval of the adjournment proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

Q:

What are the recommendations of SCAC’s board of directors?

 

A:

SCAC’s board of directors believes that the BCA Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of SCAC’s shareholders and unanimously recommends that its shareholders vote “FOR” the BCA Proposal, “FOR” the Domestication Proposal, “FOR” each of the separate Organizational Documents Proposals, “FOR” the Director Election Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Incentive Award Plan Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting.

The existence of financial and personal interests of one or more of SCAC’s directors may result in a conflict of interest on the part of such director(s) between what he or they may believe is in the best interests of SCAC and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. In addition, SCAC’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of SCAC’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

How do Sponsor and the other Class F Shareholders intend to vote their shares?

 

A:

Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, our Class F Shareholders have agreed to vote all their public shares and Class F ordinary shares in favor of all the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/prospectus, our Class F Shareholders own 22.8% of the issued and outstanding ordinary shares.

At any time at or prior to the Business Combination, during a period when they are not then aware of any material nonpublic information regarding us or our securities, our Class F Shareholders, Panavision or Sim and/or their directors, officers, advisors or respective affiliates may purchase public shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares or vote their public shares in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our Class F Shareholders, Panavision or Sim and/or their directors, officers, advisors or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that (1) holders of a majority of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the BCA Proposal, the Director Election Proposal, the Stock Issuance Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal, (2) holders of at least two-thirds of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the Domestication Proposal and the Organizational Documents Proposals, (3) each of the Redemption Conditions is satisfied, (4) otherwise limit the number of public shares electing to redeem and (5) New Panavision’s net tangible assets (as determined in accordance with Rule 3a51(g)(1) of the Exchange Act) being at least $5,000,001.

 

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Entering into any such arrangements may have a depressive effect on the ordinary shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he or she owns, either at or prior to the Business Combination.

If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved. We will file or submit a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the extraordinary general meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

Q:

What happens if I sell my SCAC ordinary shares before the extraordinary general meeting?

 

A:

The record date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your public shares after the applicable record date, but before the extraordinary general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at such general meeting.

 

Q:

May I change my vote after I have mailed my signed proxy card?

 

A:

Yes. Shareholders may send a later-dated, signed proxy card to our general counsel at our address set forth below so that it is received by our general counsel prior to the vote at the extraordinary general meeting (which is scheduled to take place on                 ,                ) or attend the extraordinary general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to our general counsel, which must be received by our general counsel prior to the vote at the extraordinary general meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.

 

Q:

What happens if I fail to take any action with respect to the extraordinary general meeting?

 

A:

If you fail to take any action with respect to the extraordinary general meeting and the Business Combination is approved by shareholders and the Business Combination is consummated, you will become a stockholder and/or warrant holder of New Panavision. If you fail to take any action with respect to the extraordinary general meeting and the Business Combination is not approved, you will remain a shareholder and/or warrant holder of SCAC. However, if you fail to take any action with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your public shares in connection with the Business Combination.

 

Q:

What should I do with my share certificates, warrant certificates and/or unit certificates?

 

A:

Our shareholders who exercise their redemption rights must deliver (either physically or electronically) their share certificates to Continental, our transfer agent, prior to the extraordinary general meeting.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 p.m. Eastern Time on                 ,                 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

Our warrant holders should not submit the certificates relating to their warrants. Public shareholders who do not elect to have their public shares redeemed for the pro rata share of the trust account should not submit the certificates relating to their public shares.

 

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Upon the Domestication, holders of SCAC’s units, Class A ordinary shares, Class F ordinary shares and warrants will receive New Panavision’s units, shares of New Panavision Common Stock and warrants, as the case may be, without needing to take any action and accordingly such holders should not submit any certificates relating to their units, Class A ordinary shares (unless such holder elects to redeem the public shares in accordance with the procedures set forth above), Class F ordinary shares or warrants.

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your ordinary shares.

 

Q:

Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting?

 

A:

SCAC will pay the cost of soliciting proxies for the extraordinary general meeting. SCAC has engaged Morrow Sodali LLC (“Morrow”) to assist in the solicitation of proxies for the extraordinary general meeting. SCAC has agreed to pay Morrow a fee of $25,000, plus disbursements, and will reimburse Morrow for its reasonable out-of-pocket expenses and indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages and expenses. SCAC will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of Class A ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of Class A ordinary shares and in obtaining voting instructions from those owners. SCAC’s directors and officers may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q:

Where can I find the voting results of the extraordinary general meeting?

 

A:

The preliminary voting results will be announced at the extraordinary general meeting. SCAC will publish final voting results of the extraordinary general meeting in a Current Report on Form 8-K within four business days after the extraordinary general meeting.

 

Q:

Who can help answer my questions?

 

A:

If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus, any document incorporated by reference in this proxy statement/prospectus or the enclosed proxy card you should contact:

Morrow Sodali LLC

470 West Avenue

Stamford CT 06902

Tel: (800) 662-5200

Banks and brokers call collect: (203) 658-9400

E-mail: SCAC.info@morrowsodali.com

You also may obtain additional information about SCAC from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information; Incorporation by Reference”. If you are a holder of public shares and you intend to seek redemption of your public shares,

 

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you will need to deliver your public shares (either physically or electronically) to Continental, SCAC’s transfer agent, at the address below prior to the extraordinary general meeting. Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 p.m. Eastern Time on                 ,                 (two business days before the extraordinary general meeting) in order for their shares to be redeemed. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

1 State Street 30th Floor

New York, New York 10004

Attention: Mark Zimkind

E-mail: mzimkind@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the extraordinary general meeting, including the Business Combination, you should read this proxy statement/prospectus, including the Annexes and other documents referred to herein, carefully and in their entirety. The Business Combination Agreement is the legal document that governs the Business Combination and the other transactions that will be undertaken in connection with the Business Combination. The Business Combination Agreement is also described in detail in this proxy statement/prospectus in the section entitled “BCA Proposal—The Business Combination Agreement”.

Unless otherwise specified, all share calculations (1) assume no exercise of redemption rights by the public shareholders in connection with the Business Combination and (2) do not include any shares issuable upon the exercise of the warrants.

Combined Business Summary

Unless otherwise indicated or the context otherwise requires, references in this Combined Business Summary to the combined company, “we”, “us”, “our” and other similar terms refer to New Panavision and its consolidated subsidiaries after giving effect to the Business Combination.

The strategic combination of Panavision and Sim creates a leading integrated content production services company for the episodic (serial TV programming for internet, broadcast, and cable), feature film (movies for theatrical, television, and internet distribution), and commercial production (short-form video for advertisement) industries. Our strategy is to provide a set of high-quality solutions central to content production and leverage proprietary equipment and workflows to offer customers a unique toolkit to achieve their creative goals. Our wide-ranging suite of services and international footprint provides content producers with a one-stop solution to produce content and capture the artistic vision of content creators. Digital image capture and new workflow processes have increased the complexity and interconnectedness of content production, and we believe that our customers increasingly depend on our end-to-end service offering. We will continue Panavision’s long history of technological innovation in partnership with producers, directors and cinematographers. Combining that history with our global service capabilities, end-to-end solutions and one of the industry’s largest equipment inventories will position us to be a preferred content production services partner to our clients, including OTT (or “over-the-top”) providers (e.g., Netflix, Amazon, and Hulu), large technology companies (e.g., Apple, Facebook, and Google) and traditional media companies (e.g., Disney, WarnerMedia, and CBS).

For the fiscal year ended December 31, 2017, we generated $393 million of pro forma revenue, $94 million of pro forma Adjusted EBITDA (excluding, among other things, the impact of anticipated cost savings as a result of synergies and anticipated expenses attributable to public company costs), and $14 million of pro forma net income. For the nine months ended September 30, 2018, we generated $281 million of pro forma revenue, $61 million of pro forma Adjusted EBITDA, and $22 million of pro forma net loss. In addition, for the fiscal year ended December 31, 2017, we generated $104 million of pro forma Adjusted EBITDA (after giving effect to anticipated cost savings as a result of synergies and anticipated expenses attributable to public company costs). See “Selected Unaudited Pro Forma Condensed Combined Financial Information—Non-GAAP Measures”.

The services we provide are mission critical and serve as the backbone to content production across the imaging chain. From providing production-critical equipment and related services required to produce and film a scene, to on- or near-set post-production solutions, to in-facility post-production digital finishing solutions, our capabilities cover the full spectrum of production needs required to turn a greenlit project into a finished product.



 

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Mission-Critical End-to-End Content Production  Solutions

 

 

 

LOGO

Project greetnlight production equipment & services post-production on/near-set post-production finishing finished product

Panavision is a leader in content production solutions and for more than 60 years has worked alongside award-winning creative talent on some of the most iconic films and television series. Panavision has a proven track record of delivering proprietary camera systems and gear to productions, regardless of scale, complexity, or geography. The combination with Sim will bolster our presence in post-production and increase our access to attractive market trends through our growing focus on episodic projects, while continuing to serve feature films. Our pro forma revenue by business segment and end segment for the fiscal year ended December 31, 2015 and estimated for the fiscal year ended December 31, 2018 can be broken down as follows:

 

LOGO Pro Forma Revenue by Business Segment Pro Forma Revenue by End Segment Episodic feature commercial other production post-production other

The combination of Panavision and Sim is highly strategic, and we believe we will differentiate ourselves from our peers through our (i) range of capabilities and end-to-end offering, (ii) technological innovation, (iii) technological expertise and creative support, and (iv) global scale and expansive rental inventory.



 

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Range of Capabilities and End-to-End Offering

We provide the following solutions to our customers:

 

  LOGO Production Post-Production    
  LOGO   LOGO    
   

Camera & Lens

Rental

 

Lighting & Grip

Rental

 

Studio

Services

 

Dailies

 

Editing, Coloring
& Finishing

 

Sound

     

Other Operations

Description   Production equipment rental (proprietary and third party) including cameras, lenses, tripods, and other accessories   Lighting and grip equipment rental, as well as generators, package trucks, dollies, and other accessories   Studio space for rent to production companies   Creation of a day’s film session and on-set data management and data archiving   Editorial system rentals, editing services, final color correction, and mastering   High quality sound mixing and editing services     Includes sale of ancillary products such as lighting & camera filters, accessories and branded merchandise

Production Services

The Production Services business is our largest reportable segment, with $303 million of pro forma revenues for the fiscal year ended December 31, 2017 and $214 million of pro forma revenues for the nine months ended September 30, 2018, representing 77% and 76% of our pro forma revenues, respectively. The Production Services business includes the following services:

Camera & Lens Rental: Rental of specialized cinema equipment, including digital and film cameras, lenses, and accessories to customers on a project-by-project basis for the production of episodic, feature film, and commercial content. Our inventory includes proprietary, state-of-the-art cameras and lenses, as well as third party cameras and lenses that are supplemented with proprietary accessories. Panavision is recognized for its extensive portfolio of award winning anamorphic and spherical lenses, operating a maintenance program which results in some of Panavision’s proprietary lenses remaining in service for more than 30 years. We do not sell our proprietary camera systems or lenses.

Lighting & Grip Rental: Rental of lighting, lighting grip, power generation, and distribution and transportation equipment used for the production of episodic, feature film, and commercial content. We possess a broad inventory of modern equipment which is serviced and supported by a team of highly skilled professionals and electricians.

Studio Services: Rental of studio space in several major production markets to production companies. Our studios are often retrofitted to house sets, carpenter shops, production offices and warehouse spaces, and provide additional equipment for rent such as props, accessories, and furniture. We own and operate 19 stages, totaling approximately 578,000 square feet, throughout Vancouver, London, Johannesburg, and Cape Town.

Post-Production Services

The Post-Production Services business generated $60 million of pro forma revenues for the fiscal year ended December 31, 2017 and generated $46 million of pro forma revenues for the nine months ended September 30, 2018, representing 15% and 17% of our pro forma revenues, respectively. The Post-Production Services segment provides a full suite of post-production services, including dailies, playback, editing of the digital image and soundtrack, addition of visual and sound effects, color grading and finishing, and the rental of editing suites. Our Post-Production Services solutions are divided into the following four categories:

Dailies: Services include cataloging the daily digital file from the camera and preparing it for the editing and finishing process, while also facilitating on-site customer access, review, and manipulation.



 

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Editing, Coloring & Finishing: Services include the digital manipulation of raw footage to ensure the media is color-balanced, enhance image quality, incorporate artistic effects, add computer generated imagery, and prepare files for delivery across all mainstream distribution platforms (e.g., theatrical, broadcast, OTT).

Sound: Services include creation of soundtracks by cutting and synchronizing picture and sound elements, recapturing of inferior quality dialogue and other general sound editing and mixing services.

Other Services: Rental of post-production edit suites and offline editing systems for customers who choose to edit their projects at our post-production facilities.

Other Operations

In addition to revenues from the two segments above, we also generated $30 million of revenues for the fiscal year ended December 31, 2017 and generated $20 million of revenues for the nine months ended September 30, 2018, representing 8% and 7% of our revenues, respectively, from sales of ancillary products. We manufacture and sell lighting filters and gels for motion picture lighting as well as resin and glass camera filters for still photographers. We also sell various prosumer camera and lighting equipment products in Australia, New Zealand and through an online store. We view these product sales as highly complementary to our camera and lighting rental business.

Technological Innovation

We believe that we possess unique technical capabilities deriving from our in-house research and development and manufacturing operations. As a pioneer in the area of anamorphic lenses and a leading producer of top-tier spherical lenses, Panavision has established a reputation in the industry based on the quality of Panavision lenses and their distinct cinematographic effects. In addition to proprietary optics, the Panavision team customizes (or “Panavizes”) third party products by designing and manufacturing proprietary accessories to improve performance and deliver a superior user experience. “Panavising” camera systems allows Panavision to create solutions for its customers that are unique to Panavision and enables Panavision to differentiate itself from its competitors.

Panavision’s most recent technological innovation came in February 2018, with the introduction of the Millennium DXL2 8K camera. This large-format camera is the heart of a complete imaging ecosystem designed from filmmakers’ perspectives, seamlessly incorporating Panavision’s optics and camera architecture, an 8K sensor from RED Digital Cinema, and Light Iron color2 science (LiColor2). The DXL2 camera is the one of the most advanced digital cameras currently on the market.

Our focus on technology and innovation has enabled us to aggregate an impressive portfolio of intellectual property, developed over six decades of innovation. We hold more than 35 patents issued and pending in the United States, European Union, Australia and Asia Pacific countries, covering product areas including lenses and optical components, camera parts and accessories, and filters. Similarly, we hold nearly 90 trademarks registered worldwide. Panavision’s product quality has been recognized through numerous achievement awards including 3 Oscars, 6 Emmy awards, and 25 other Academy Awards for Scientific and Technical Achievement. Feature films shot with Panavision cameras and lenses have also received 171 Oscar Best Picture nominations since 1954.

Technical Expertise and Creative Support

Panavision’s long history of service and its reputation within the entertainment industry as a creative partner to leading artists has enabled us to develop strong and enduring relationships with content producers, including the major studios, cable networks and OTT providers, as well as with leading producers, directors and



 

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cinematographers. Our experienced and highly trained technical staff works closely with production personnel to assemble the right products and services to help content creators achieve the desired look as well as meet any production specific challenges. Panavision’s special optics group has distinguished itself by providing customized solutions to meet the unique needs of directors and cinematographers.

During production, we also provide customers with access to our highly trained technical personnel 24-hours a day and are ready to meet the unique challenges that can arise from filming in exotic locations or under extreme conditions. We continue to leverage our end-to-end technical expertise across the image processing chain to provide better technical input to our customers across the entire production process. On a combined company basis, during 2017 our solutions were utilized in 459 episodic projects, 583 feature films, including 8 of the top 10 highest grossing non-animated feature films in the U.S., and thousands of commercials.

Global Scale and Expansive Rental Inventory

We believe that our global presence is an important differentiator from our competitors when our customers are evaluating their production needs. The combined company operates out of 80 facilities strategically located in core production centers throughout the Americas, Europe, Asia-Pacific, and Africa. We lease all of our facilities pursuant to long-term leases, including office space for corporate and administrative employees, stage and production-related space, storage space for production and post-production equipment, in-house editing suites, and production office space that can also be utilized on a short term basis by customers. Our locations enable us to provide local resources and rapid technical support to our international customers as well as end-to-end support for productions, even in remote filming destinations.

We believe that we have the largest inventory of camera systems and advanced optics for content production. Our depth of inventory, global scale, and ability to provide high-quality customer service has made us one of the premier providers of camera systems to episodic and large budget feature film productions. We can respond quickly to customers’ time-sensitive needs and minimize the likelihood that production days are lost due to camera system problems. As both film and episodic production budgets become larger and production crews continue to leverage tax incentives across various global geographies, we believe our global footprint will be increasingly more valuable to our customer base.



 

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LOGO 15 Countries1 80 Global Facilities 1,700+ Employees 24/7 Service

 

 

¹

Direct business operations in 11 countries, and operations through third-party independent distributors in an additional 11 countries.

Transaction Rationale

The combination of Panavision and Sim is highly strategic, and we expect several resulting benefits, including the following:

Creates an end-to-end content production services provider: We believe the Business Combination will create one of the industry’s only end-to-end content production services providers. Our combined operations and complementary services will result in a comprehensive set of production and post-production solutions that will allow us to better service our customers. Panavision has a long history as a leading production services provider and partner to the industry’s leading creative talent. Sim has established a prominent presence in the episodic content production segment and a robust suite of post-production solutions. We intend to leverage each company’s core competencies to cross-sell and capture additional service opportunities with existing customers by offering a more holistic solutions platform.

Increases exposure to attractive market trends: We believe the Business Combination will increase our access to the rapidly growing episodic production market and OTT distribution channels. Intense competition among OTT, large technology companies and traditional media companies has been driving substantial investment in content, and we are well positioned to benefit from this trend. For the fiscal year ending December 31, 2018, we expect approximately 50% of our pro forma total revenues will be from the episodic segment. Additionally, the Business Combination enhances and expands our position and capabilities in post-production creative services. Post-production creative services are less capital intensive than our production



 

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solutions, which will enhance our pro forma financial profile. For the fiscal year ending December 31, 2018, we expect approximately 17% of our pro forma total revenues will be from post-production services.

Reinforces the complementary strengths of each business: Since the 1950s, Panavision has provided customers with cutting-edge camera and optics systems as well as premier service and production support. Panavision has become a trusted partner to some of the world’s largest content producers, and the Panavision name has come to represent excellence within the industry. Similarly, over the past four decades, Sim has grown into a leading provider of production and post-production services to the episodic and feature film industries. The combined company will benefit from the complementary strengths of each individual business. We will leverage the Panavision brand across a broader set of production services, a deeper equipment base, and a wider geographic footprint. The Business Combination will enable us to offer our customers additional services and allow us to become an even more important partner to content producers.

Increases yield of asset base: The management team at Panavision has successfully reduced third party subrent expense as a percentage of revenue over the past several years and expects the scale of the combined asset base as well as access to $15 million of incremental growth capital through the Business Combination to provide additional margin improvement. The successful reduction in Panavision’s subrent has been driven by recent investments in cameras and other equipment, which decreases the need to rent from other vendors in order to meet customer needs. We anticipate being able to improve profitability by $7 million through the reduction of subrent expenses due to the $15 million capital investment that is being funded as part of the Business Combination. We also believe there to be additional margin improvement as the combined asset base is expected to give management the ability to assemble equipment packages with more efficiency across the combined inventory.

Realizes cost savings: Management estimates $12.8 million in cost-savings and subrent expense reduction that will be realized from the Business Combination in the first year after the transaction closing. Of the $12.8 million, management estimates $5.5 million will be generated from the elimination of overlapping functions, $0.3 million will be generated from facility rent reduction, and, as described above, $7.0 million will be generated from a reduction of subrent expense due to the $15.0 million capital investment that is being funded as part of the Business Combination.

Enhances revenue base, improves margins and increases free cash flow: We believe the Business Combination enhances our revenue through greater exposure to episodic productions, which are produced with greater frequency, consistency, and are a faster growing segment than feature films. Additionally, we expect to further benefit from increased scale, operational improvements, and synergy realization as a result of the Business Combination. Panavision’s management team has steadily grown the business and nearly doubled its Adjusted EBITDA margin over the last 5 years. We expect the Business Combination to increase the proportion of revenues derived from less capital-intensive post-production services and enhance asset utilization by combining equipment asset bases.

Key Combined Business Strategy

The key elements of our growth strategy are described below:

Capitalizing on the growth in content production: We are well-positioned to continue to capitalize on the industry tailwinds generated from increased content spending. Intense competition for viewers among OTT providers, large technology companies and traditional media companies has been driving substantial investment in content. This explosion in content creation is a trend we believe will continue. As a result, we stand to benefit from our position as a service provider agnostic to distribution channel.

Cross-selling and white space: By bringing together Panavision and Sim, we will become an incumbent end-to-end production and post-production services provider. The complementary service offerings between



 

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Panavision and Sim will enhance cross-selling opportunities to our combined customer base. Furthermore, we believe a significant opportunity exists to enhance the scope and breadth of our service offerings across our expanded international footprint.

Expansion in post-production: The combined company will continue to expand its Post-Production Services business, which should drive increased cash conversion based on lower capital intensity. For the fiscal year ended December 31, 2017, we generated 15% of our pro forma total revenues from Post-Production Services. The below graphic shows how Panavision management has grown its post-production business at over a 30% compound annual growth rate (“CAGR”) after acquiring Light Iron in 2015. With Sim’s significant footprint in post-production, management believes that, through the Business Combination, the combined company’s Post-Production Services business will continue to grow.

 

 

 

LOGO

Light Iron Revenue ($ in millions) 2015-2018 CAGR: 30.5% $9.0 2015E1 $11.8 2016A $16.5 2017A $20.0 2018E

Operational improvements: Panavision’s management employs vigilant cost discipline and sophisticated business analytics, which has translated to an increase in Adjusted EBITDA and net income margins, growing from 14% and (44)%, respectively in fiscal year 2013 when the management team joined Panavision to 25% and 9%, respectively, in fiscal year 2017. We believe the same operational excellence and analytical rigor can be applied to the Sim business and we can improve profitability of the combined company. Additionally, the operating leverage from the Production Services segment achieved through the combination of the two businesses is expected to drive additional margin expansion.

Strategic M&A: We believe our industry is highly fragmented, and there exists significant potential for acquisitions in both the Production and Post-Production segments. Panavision, Sim, and SCAC have relationships across all significant parts of the value chain, creating attractive opportunities for potential future partnerships and acquisitions, some of which would significantly increase the company’s scale, depth of service offering, and penetration in the industry. Lastly, as exemplified by the Light Iron acquisition, management has a proven track record of completing and integrating acquisitions.

Industry Trends

The content production industry has experienced strong growth over the past decade and is forecasted to see continued growth fueled by numerous industry tailwinds. Over the past decade, there has been a proliferation of new content distribution channels led by OTT providers (e.g., Netflix, Amazon, and Hulu) as well as large technology companies (e.g., Apple, Facebook, and Google). These changes are also driving increased content investment from traditional media companies (e.g., Disney, WarnerMedia, and CBS).

Driven by the above mentioned trends, the episodic production segment that Panavision and Sim serve has experienced substantial growth over recent years and, as a result, the episodic segment has grown for the



 

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combined business from 39% of total revenue in 2015 to an estimated 50% for 2018E. According to research from FX Networks, the number of scripted original TV series has more than doubled since 2010, driven by streaming services as well as by traditional media. In addition to revenue growth, both companies’ episodic segments benefit from the recurring nature of television series revenues; successful series are often renewed for multiple seasons and create a recurring revenue stream for the company over the life of that series.

 

 

LOGO

Estimated Number of Scripted Original TV Series Distribution 17 vs. 02 17 vs. 12 Online Services n/a +680% Broadcast +13% +29% Pay Cable +147% +45% Basic Cable +483% +40% All +168% +69%2002 2010 CAGR: 2.2% 2010 2017 CAGR: 12.3% 182 135 2002A 30 17 216 74 113 2010A 25 4 266 111 116 2011A 33 6 288 125 119 2012A 29 15 349 161 131 2013A 33 24 389 174 148 2014A 34 33 422 186 150 2015A 37 49 455 183 146 90 2016A 36 487 175 153 117 2017A 42

Source: Estimates from FX Networks Research

In recent years, the content landscape has become increasingly competitive as several new companies, many with deep pockets, have entered the playing field. New entrants – primarily large technology and OTT companies such as Netflix, Amazon, Hulu, Apple, and Facebook have been actively investing in this space. These new entrants spent more than $12 billion in 2017 and are estimated to double their content investments to more than $28 billion by 2021. Netflix alone is estimated to spend about $8 billion on content in 2018, a 29% increase over 2017. Amazon is similarly positioned to spend approximately $5 billion on content in 2018, up 40% from 2017. As a result of the competitive pressures from the large technology companies, traditional media companies are projected to continue to grow their content spending in the coming years. According to estimates from Kagan (a media research group within S&P Global Market Intelligence), total programming spend in 2017 was more than $64 billion. As shown below, total spending is forecasted to grow to $89 billion by 2021 (representing a CAGR of 8.4%).



 

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LOGO

Programming Expenses ($ in billions)

Note: Programming expenses reflect direct costs of producing, acquiring, and distributing content and services. Digital Companies include Apple, Amazon, Facebook, Hulu, and Netflix. Analysis includes amortized content costs for Digital Companies and does not include distribution costs for Digital Companies. Apple and Facebook 2018E-2021E figures are management estimates (based on budgeted 2018E figures of $2.0 billion growing to $6.2 billion in 2021E). All other figures are from Kagan, a media research group within S&P Global Market Intelligence.

The feature film segment has also experienced continued growth in demand in recent years. According to the Motion Picture Association of America (“MPAA”), the number of films entering production with estimated budgets greater than $1 million increased 6.7% in 2017 when compared to 2016. The higher budget film segment (budgets greater than $1 million) has grown at a CAGR of 4.6% from 2013 to 2017. The global box office revenues exceeded $40 billion in 2017 and has grown at a 3.1% CAGR from 2013 to 2017. The amount of dollars being spent on theatrical films has also increased with approximately $10.9 billion spent on theatrical film budgets in 2017 in the United States according to Kagan, growing at a 3.8% CAGR from 2014 to 2017.



 

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LOGO Films Produced for Future Theatrical Releases1 Global Box Office Revenues ($ in billions)

Source: MPAA

1 

Includes full-length English-language feature films which began production in the reported year with a US production company (including co-productions with budgets of over $1 million). The counts do not include student films, or documentaries. Data for 2017 is provisional as of March 2018, and may be revised as more information becomes available.

In addition to the increase in volume of content production, advancements in technology, such as high-definition and ultra-high-definition televisions, have supported the demand for state-of-the-art equipment and services that produce content for these formats. We believe the growing demand for content production will continue in the future. We are ideally positioned to capitalize on this rising demand through our ability to provide end-to-end, integrated service and equipment solutions to customers on an international scale.

End Segment Performance

Our business provides services to customers in the following end segments:

Episodic: Consists of serial episodes of programming for distribution over internet, broadcast, or cable outlets. Due to the multi-season nature of television programming, key creative directors in episodic projects have the potential to become repeat customers.

Feature Major: Full-length film productions from the “Big Six” major film studios.

Feature Independent: Full-length film productions from independent film studios (including OTT providers).

Commercials: Short-form video content for recorded advertisement used by major brands and marketing campaigns.

Other: Includes revenues from live events, award shows, pilots, and music video productions, as well as camera and lighting ancillary product sales.

 

The charts below illustrate that the combined business has benefited from the industry tailwinds fueling episodic as well as feature independent content spend. Our revenue from the episodic end segment has grown in-line with the growth in the number of scripted TV series in the industry. Our revenue from the episodic end segment is projected to grow at a 12.3% CAGR from 2013 to 2018E and our revenue from the feature independent segment is projected to grow at an 8.6% CAGR over this period. Relative to the other end segments, the combined



 

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company’s feature major end segment experiences more variability from year to year. From the fiscal year ended December 31, 2013 to the fiscal year ended December 31, 2017, our revenue from the feature major end segment experienced a CAGR of 4.5%. In 2018, the feature major segment (which includes large budget tent-pole productions and other productions of the major studios) is expected to decline, which management attributes primarily to servicing productions with smaller budgets and fewer industry-wide tent-pole productions than in previous years. The combined company’s revenue from the commercial segment has grown relatively steadily.

 

 

 

LOGO Combined End Segment Revenue ($ in millions)

Note: Data includes Production Services segment revenue (excluding Studio Services) for the combined company. Panavision and Sim combined revenue is shown at a constant exchange rate per management (Sim financials converted at a rate of US$0.78 = C$1.00 for all periods).

Competitive Strengths

We believe that the combined company’s position as an industry leader results from its long-standing collaborative relationships with filmmakers and content creators as well as execution of key strategic pillars for success:

Unique Optics Program: Panavision lenses are utilized by filmmakers due to the high quality and distinctive images they provide. Since inception, Panavision’s technical personnel have helped pioneer anamorphic optics, consistently refining and advancing anamorphic lens technology while also producing top tier spherical lenses. Panavision currently has an inventory of over 8,000 proprietary high-end lenses for rent to its customers. The know-how of Panavision’s optics team also enables Panavision to work with its customers to create novel looks via customized optics to enhance filmmakers’ creative visions.

Proprietary Equipment Offering: Panavision’s history of working closely with content creators in film and television has provided it with unique insight into the needs of its customers. Panavision recently introduced the new Millennium DXL2 8K camera, one of the most advanced digital cameras currently on the market. In addition to proprietary optics, the Panavision team “Panavizes” third party products which allows Panavision to create solutions for its customers that are unique to Panavision and we believe enables Panavision to differentiate itself from its competitors. Panavision’s product quality has been recognized through numerous achievement awards including 3 Oscars, 6 Emmy awards, and 25 other Academy Awards for Scientific and Technical Achievement. Since 1954, 171 feature films shot with Panavision cameras and lenses received an Oscar Best Picture nomination, including Shape of Water, which won the Oscar Award for Best Picture in 2018.

Expansive Rental Inventory and Global Scale: We believe that we have the largest inventory of camera systems and advanced optics for content production. Panavision has historically been a highly demanded partner for major episodic series and films that are shot in locations around the world because it has a significant



 

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inventory of camera systems which will be across 80 global facilities for the combined business. The depth of our inventory will allow us to keep productions filming by being responsive to time-sensitive demands of filmmakers for additional or replacement equipment on sets across the globe. We can respond quickly to customers’ needs and minimize the likelihood that production days are lost due to camera system problems. As both film and episodic production budgets become larger and production crews continue to leverage tax incentives across various global geographies, we believe our global footprint will be increasingly more valuable to our customer base.

Technical Expertise and Quality Customer Service: Many competitors are unable to match the high-end customer service that Panavision and Sim provides, giving customers access to highly trained technical personnel 24 hours a day across geographies. Our experienced and highly trained technical staff work closely with production personnel to assemble the right camera packages to help content creators achieve the desired look as well as meet any production specific challenges. Panavision’s special optics group has distinguished itself by providing customized solutions to meet the unique needs of directors and cinematographers.

End-to-End Service Offering: We believe the combined business will be one of the industry’s only end-to-end content production services provider. Our combined operations and complementary services will result in a comprehensive set of production and post-production solutions that will allow us to better service our customers. Panavision has a long history as a leading production services provider and partner to many of the industry’s leading filmmakers. Sim has established a prominent presence in the episodic content production segment and a robust suite of post-production solutions. We intend to leverage each company’s core competencies to capture additional service opportunities with existing customers by offering a more holistic solutions platform.

The Parties to the Business Combination

SCAC

SCAC is a blank check company incorporated on March 15, 2016 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. SCAC has neither engaged in any operations nor generated any revenue to date. Based on SCAC’s business activities, it is a “shell company” as defined under the Exchange Act because it has no operations and nominal assets consisting almost entirely of cash.

On September 21, 2016, SCAC consummated its initial public offering of its units, with each unit consisting of one public share and one-half of one public warrant. Simultaneously with the closing of the initial public offering, SCAC completed the private sale of 7,000,000 private placement warrants at a purchase price of $1.00 per private placement warrant, to Sponsor generating gross proceeds to us of $7,000,000. The private placement warrants are substantially identical to the public warrants sold as part of the units in SCAC’s initial public offering, except that Sponsor agreed not to transfer, assign or sell any of the private placement warrants (except to certain permitted transferees) until 30 days after the completion of SCAC’s initial business combination. The private placement warrants are also not redeemable by SCAC so long as they are held by Sponsor or its permitted transferees, and they may be exercised by Sponsor and its permitted transferees on a cashless basis.

Following the closing of SCAC’s initial public offering, an amount equal to $250.0 million ($10.00 per unit) of the net proceeds from its initial public offering and the sale of the private placement warrants was placed 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, which invest only in direct



 

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U.S. government obligations. In connection with the Extension Amendment on September 18, 2018, $39.15 million was released from the trust account to satisfy the Extension Amendment Redemptions. As of September 30, 2018, funds in the trust account totaled $215,371,398 and were held in money market funds. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (1) the completion of SCAC’s initial business combination, (2) the redemption of any public shares properly tendered in connection with a shareholder vote to amend the Existing Organizational Documents to modify the substance and timing of our obligation to redeem 100% of the public shares if SCAC does not complete a business combination by the Extension Date, or (3) the redemption of all of the public shares if SCAC is unable to complete a business combination by the Extension Date, subject to applicable law.

SCAC’s units, public shares and public warrants are listed on Nasdaq under the symbols “SCACU”, “SCAC”, and “SCACW”, respectively.

SCAC’s principal executive office is located at 10100 Santa Monica Boulevard, 26th Floor, Los Angeles, California, 90067. Its telephone number is (310) 557-5100. SCAC’s corporate website address is www.sabanac.com. SCAC’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this Proxy Statement/Prospectus.

Panavision Acquisition Sub

Panavision Acquisition Sub, Inc., or Panavision Acquisition Sub, is a wholly owned subsidiary of SCAC formed solely for the purpose of effecting the Business Combination. Panavision Acquisition Sub was incorporated under the DGCL on September 7, 2018. Panavision Acquisition Sub owns no material assets and does not operate any business.

Pursuant to the terms and subject to the conditions of the Business Combination Agreement, among other things, Panavision Acquisition Sub will be merged with and into Panavision, whereupon the separate existence of Panavision Acquisition Sub will cease, and Panavision will continue as the surviving corporation and wholly owned subsidiary of New Panavision.

Sim Acquisition Sub

Sim Acquisition Sub, Inc., or Sim Acquisition Sub, is a wholly owned subsidiary of SCAC formed solely for the purpose of effecting the Business Combination. Sim Acquisition Sub was incorporated under the Ontario Business Corporations Act on September 10, 2018. Sim Acquisition Sub owns no material assets and does not operate any business.

Pursuant to the terms and subject to the conditions of the Business Combination Agreement, among other things, Sim Acquisition Sub will purchase all of the issued and outstanding shares of capital stock of Sim and Sim will be an indirect, wholly owned subsidiary of New Panavision.

Panavision

Panavision is a leading brand in the media and entertainment industry based on its success in providing directors and cinematographers with the equipment, technical support, and service they require to achieve their artistic visions. Since 1954, Panavision has been engaged in the design, manufacturing and rental of production equipment, primarily cinematic cameras and lenses. During that time, Panavision has assisted its customers in winning 171 nominations for Oscar Best Picture, including Shape of Water, which won the Oscar Award for Best Picture in 2018. Panavision has received numerous achievement awards for its products, including 3 Oscars®, 6 Emmy® awards, and 25 other Academy Awards® for Scientific and Technical Achievement.



 

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Today, Panavision is a leader in content production services providing a suite of production services and post-production creative services to episodic, feature film, and commercial markets on a worldwide basis. Offering an expansive inventory of both proprietary and non-proprietary equipment for rent, Panavision is one of the world’s leading providers of cinema camera systems, comprised of cameras, lenses and accessories, as well as lighting equipment. In addition to renting equipment, Panavision provides technical support services to its customers around the world in conjunction with these activities. Panavision also offers customers a suite of post-production workflow solutions, including the processing of dailies content and finishing services necessary to produce a final master of an episodic, feature film, or commercial project. Supporting these offerings, Panavision offers a variety of ancillary products that include camera and lighting filters and consumable items. Panavision products and services are delivered worldwide through its own facilities and through its distributor network. Based in Woodland Hills, California, Panavision has additional offices in North America, Europe, Africa and Asia, as well as representation via distributors in Asia, South America and Europe. Panavision’s principal executive offices are located at 6101 Variel Avenue, Woodland Hills, California, 91367, telephone (818) 316-1000. The corporate entity Panavision Inc. was incorporated in Delaware in 1990.

Panavision’s corporate website address is www.panavision.com. Panavision’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.

Sim

Sim is a provider of production and post-production services to the episodic and feature film industries, offering a comprehensive suite of solutions for the creation of content. Founded in 1982 by Robert and Peggy Sim, as of September 30, 2018, Sim employed over 550 employees across the five key production markets in North America, namely Los Angeles, New York, Atlanta, Vancouver and Toronto. Sim collaborates with major studios, networks, OTT providers and social media platforms to work on widely-known productions. Sim was incorporated in Ontario, Canada in 1982. Sim’s principal executive offices are located at 1 Atlantic Avenue, Suite 110, Toronto, Ontario, M6K 3E7, telephone (416) 979-9958.

Sim provides services through two divisions, Production Services (comprised of three operating segments including Studios, Camera Rental, and Lighting & Grip Rental) and Post-Production Services. Studios, Camera Rental, and Lighting & Grip Rental represent the Production Services business and offer a variety of studio spaces, and state-of-the-art production equipment and accessories. Post-Production Services provides diversified services concurrent with, and following the capturing of content, including dailies, editing of the digital image and sound, addition of visual and sound effects, as well as color grading and finishing.

Sim’s corporate website address is www.siminternational.com. Sim’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.

Proposals to be Put to the Shareholders of SCAC at the Extraordinary General Meeting

The following is a summary of the proposals to be put to the extraordinary general meeting of SCAC and certain transactions contemplated by the Business Combination Agreement. Each of the proposals below, except the Adjournment Proposal, is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus. The transactions contemplated by the Business Combination Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting.



 

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BCA Proposal

As discussed in this proxy statement/prospectus, SCAC is asking its shareholders to approve by ordinary resolution the Business Combination Agreement, pursuant to which, among other things, following the Domestication of SCAC to Delaware as described below, (1) Panavision Acquisition Sub will merge with and into Panavision, the separate corporate existence of Panavision Acquisition Sub will cease and Panavision will be the surviving corporation and a wholly owned subsidiary of New Panavision and (2) Sim Acquisition Sub will purchase all of the issued and outstanding shares of capital stock of Sim and Sim will be an indirect, wholly owned subsidiary of New Panavision. After consideration of the factors identified and discussed in the section entitled “BCA Proposal—SCAC’s Board of Directors’ Reasons for the Business Combination”, SCAC’s board of directors concluded that the Business Combination met all of the requirements disclosed in the prospectus for SCAC’s initial public offering, including that the businesses of Panavision and Sim had a fair market value of at least 80% of the balance of the funds in the trust account at the time of execution of the Business Combination Agreement. For more information about the transactions contemplated by the Business Combination Agreement, see “BCA Proposal”.

Business Combination Consideration

In accordance with the terms and subject to the conditions of the Business Combination Agreement and subject to certain adjustments set forth therein, the aggregate Business Combination Consideration payable by SCAC to the equityholders of Panavision and Sim under the Business Combination Agreement will be $590.5 million, which consists of (a) cash in an aggregate amount equal to $464.3 million, of which (i) $354.3 million will be paid to the equityholders of Panavision and (ii) $110.0 million will be paid to the equityholders of Sim; and (b) 12.6 million shares of New Panavision Common Stock (at a deemed value of $10.00 per share), of which (i) 9.5 million shares of New Panavision Common Stock will be paid to the equityholders of Panavision and (ii) 3.1 million shares of New Panavision Common Stock will be paid to the equityholders of Sim. The Business Combination Consideration does not include an additional 2.75 million shares of New Panavision Common Stock, which will be issued to the equityholders of Panavision and will be subject to vesting and certain other restrictions as set forth in the Business Combination Agreement (such shares, the “Panavision Contingent Shares” and, collectively with the Founder Contingent Shares (as defined below), the “Contingent Shares”). The Business Combination Consideration is expected to be financed through a combination of (i) shares of New Panavision Common Stock issued to the equityholders of Panavision and of Sim, (ii) cash held in the trust account net of redemptions (including the Extension Amendment Redemptions) and deferred underwriting discounts, (iii) gross proceeds of the PIPE Investment and (iv) gross proceeds of the Debt Facilities.

The Business Combination Consideration described above will change based upon certain adjustments to be calculated as of the date of the closing of the Business Combination (the “Closing Date”). The precise amount of such adjustments will depend upon, among other things, the total debt obligations and the cash and cash equivalents of Panavision and Sim on the Closing Date, each of which fluctuates in the ordinary course of business, as well as the net working capital, capital expenditures and unpaid transaction expenses of Panavision and Sim on the Closing Date. In addition, the Business Combination Consideration above reflects a $14.2 million reduction in the cash consideration payable to equityholders of Panavision and a related increase in 1.42 million shares of New Panavision Common Stock (at a deemed value of $10.00 per share) as a result of the Extension Amendment Redemptions. The remaining portion of the cash consideration otherwise payable to the equityholders of Panavision will be payable in part in additional shares of New Panavision Common Stock (at a deemed value of $10.00 per share) as provided in the Business Combination Agreement if (i) the holders of public shareholders exercise their rights to redeem any additional public shares in connection with the approval of the Business Combination Agreement or otherwise pursuant to SCAC’s Existing Organizational Documents, or (ii) New Panavision would have less than $30.0 million in available cash and cash equivalents immediately



 

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following the Closing, on a pro forma basis taking into account the transactions contemplated by the Business Combination Agreement and any redemptions (including the Extension Amendment Redemptions), deferred underwriting discounts and other fees. The Business Combination Consideration is also subject to adjustment to appropriately reflect the effect of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change prior to consummation of the Business Combination. At the Closing, $3.0 million of the cash portion of the Business Combination Consideration payable to the equityholders of Panavision and $2.0 million of the cash portion of the Business Combination Consideration payable to the equityholders of Sim will be placed in escrow by SCAC to secure any downward post-closing adjustments to the Business Combination Consideration. Any such adjustments (whether positive or negative) will be limited to $3.0 million (in the case of Panavision) or $2.0 million (in the case of Sim). For further details, see “BCA Proposal—The Business Combination Agreement—Business Combination Consideration”.

Contingent Shares

Pursuant to the terms and conditions of the Business Combination Agreement and the Contribution Agreement, the Panavision Contingent Shares and the Founder Contingent Shares shall be subject to transfer and other restrictions and shall be subject to forfeiture on the seventh anniversary of the Closing Date unless and until the occurrence of the following events, at which time the Panavision Contingent Shares or the Founder Contingent Shares, as applicable, shall become vested and free of restrictions as follows:

 

  (i)

with respect to 50% of the Panavision Contingent Shares and 50% of the Founder Contingent Shares, (1) the closing price of the New Panavision Common Stock as quoted on Nasdaq is greater than $12.50 per share (as adjusted for stock splits, dividends, reorganizations, recapitalizations and the like) (the “Minimum Target”) for 20 trading days over a 30 consecutive trading day period or (2) the price per share of New Panavision Common Stock paid or payable in connection with a Change in Control (as defined in the Business Combination Agreement) is greater than the Minimum Target; and/or

 

  (ii)

with respect to the other 50% of the Panavision Contingent Shares and other 50% of the Founder Contingent Shares, (1) the closing price of the New Panavision Common Stock as quoted on Nasdaq is greater than $15.00 per share (as adjusted for stock splits, dividends, reorganizations, recapitalizations and the like) (the “Maximum Target”) for 20 trading days over a 30 consecutive trading day period or (2) if the price per share of New Panavision Common Stock paid or payable in connection with a Change in Control is greater than the Maximum Target;

provided that upon a Change in Control, any Contingent Shares that have not previously vested or that do not vest upon such Change in Control will be forfeited upon such Change in Control.

From and after the Closing, until any Contingent Shares are no longer subject to the forfeiture provisions described above, each holder of the Contingent Shares shall (1) immediately contribute to New Panavision the net after-tax amount (determined in accordance with the Business Combination Agreement) of any and all dividends or distributions received by such holder in respect of such unvested Contingent Shares, (2) vote such shares pro rata with other shareholders of New Panavision on every matter submitted to the shareholders to vote (including, for this purpose, any abstentions and “withhold” votes, but disregarding any broker non-votes and other shares not present or voted) and (3) not transfer, sell, pledge or otherwise dispose or hypothecate any of his, her or its Contingent Shares unless the transferee of such shares agrees to be bound by the terms and conditions governing such Contingent Shares.

For further details, see “BCA Proposal—The Business Combination Agreement—Business Combination Consideration—Contingent Shares”.



 

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Closing Conditions

The consummation of the Business Combination is conditioned upon, among other things, (1) the approval of the Condition Precedent Proposals; (2) the effectiveness of a registration statement on Form S-4 registering the shares of New Panavision Common Stock to be issued pursuant to the Business Combination Agreement; (3) the shares of New Panavision Common Stock to be issued in connection with the Business Combination Agreement will have been conditionally approved for listing on Nasdaq, subject to official notice from Nasdaq of such issuance with respect to New Panavision’s post–combination listing; (4) the receipt of the Investment Canada Act Approval and the expiration or termination of the applicable waiting period under the HSR Act (the waiting period under the HSR Act was terminated on November 5, 2018); (5) the consummation of the PIPE Investment prior to or concurrently with the Closing and the Sponsor PIPE Entity committing at least $30.0 million thereof; (6) the consummation of the Debt Financing prior to or concurrently with the Closing; (7) no Sim Debt Exercise of Remedies (as defined in the Business Combination Agreement) having occurred; (8) the Redemption Conditions being satisfied; and (9) the net tangible assets of New Panavision (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) being at least $5,000,001.

Therefore, unless these conditions are waived by the applicable parties to the Business Combination Agreement, the Business Combination Agreement could terminate and the proposed business combination may not be consummated. In addition, the amendment, modification or waiver of certain provisions of the Business Combination Agreement in any manner that would be materially adverse to the lenders under the Debt Facilities requires the prior written consent of the lenders party to the ABL Commitment Letter and Second Lien Commitment Letter. There can be no assurance that the parties to the Business Combination Agreement would waive any such provision of the Business Combination Agreement, or that the lenders under the Debt Facilities would provide any required consents to such amendments, modifications or waivers.

For further details, see “BCA Proposal—The Business Combination Agreement— Closing Conditions”.

Domestication Proposal

As discussed in this proxy statement/prospectus, if the BCA Proposal is approved, then SCAC will ask its shareholders to approve by special resolution the Domestication Proposal. As a condition to closing the Business Combination pursuant to the terms of the Business Combination Agreement, the board of directors of SCAC has unanimously approved the Domestication Proposal. The Domestication Proposal, if approved, will authorize a change of SCAC’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware. Accordingly, while SCAC is currently governed by the Cayman Islands Companies Law, upon Domestication, New Panavision will be governed by the DGCL. There are differences between Cayman Islands corporate law and Delaware corporate law as well as the Existing Organizational Documents and the Proposed Organizational Documents. Accordingly, we encourage shareholders to carefully consult the information set out below under “Comparison of Corporate Governance and Shareholder Rights”.

On the effective date of the Domestication, (1) the issued and outstanding Class A ordinary shares will convert automatically by operation of law, on a one-for-one basis, into shares of New Panavision Common Stock, (2) the issued and outstanding warrants to purchase Class A ordinary shares will become automatically warrants to acquire shares of New Panavision Common Stock and no other changes will be made to the terms of any issued and outstanding warrants as a result of the Domestication, (3) the issued and outstanding units will become automatically units of New Panavision (each unit representing one public share and one-half of one public warrant) and no other changes will be made to the terms of any issued and outstanding units as a result of the Domestication and (4) the issued and outstanding Class F ordinary shares will convert automatically by operation of law, on a one-for-one basis without giving effect to any rights of adjustment or other anti-dilution protections, into shares of New Panavision Common Stock.

For further details, see “Domestication Proposal”.



 

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Organizational Documents Proposals

If the BCA Proposal and the Domestication Proposal are approved, SCAC will ask its shareholders to approve by special resolution seven separate proposals (collectively, the “Organizational Documents Proposals”) in connection with the replacement of the Existing Organizational Documents, under the Cayman Islands Companies Law, with the Proposed Organizational Documents, under the DGCL. SCAC’s board has unanimously approved the each of the Organizational Documents Proposals and believes such proposals are necessary to adequately address the needs of New Panavision after the Business Combination. Approval of each of the Organizational Documents Proposals is a condition to the consummation of the Business Combination. A brief summary of each of the Organizational Documents Proposals is set forth below. These summaries are qualified in their entirety by reference to the complete text of the Proposed Organizational Documents.

 

  A.

Organizational Documents Proposal A—to authorize the change in the authorized capital stock of SCAC from (i) 500,000,000 Class A ordinary shares, 20,000,000 Class F ordinary shares and 5,000,000 preferred shares of SCAC to (ii) 500,000,000 shares of New Panavision Common Stock and 100,000,000 shares of New Panavision preferred stock.

 

  B.

Organizational Documents Proposal B—to authorize the board of directors of New Panavision to issue any or all shares of New Panavision preferred stock in one or more classes or series, with such terms and conditions as may be expressly determined by New Panavision’s board of directors and as may be permitted by the DGCL.

 

  C.

Organizational Documents Proposal C—to authorize that directors of New Panavision designated by Sponsor or by the Panavision Holder Representative, in each case pursuant to the Director Composition and Standstill Agreement, may only be removed for cause.

 

  D.

Organizational Documents Proposal D—to authorize that the board of directors of New Panavision will be divided into three classes, with each class generally serving for a term of three years (except for those directors appointed prior to the first annual meeting of the stockholders) and only one class of directors being elected in each year and to make certain related changes.

 

  E.

Organizational Documents Proposal E— to provide that certain provisions of the certificate of incorporation of New Panavision are subject to the Director Composition and Standstill Agreement.

 

  F.

Organizational Documents Proposal F— to authorize the removal of the ability of New Panavision stockholders to take action by written consent in lieu of a meeting.

 

  G.

Organizational Documents Proposal G—to authorize all other changes in connection with the replacement of Existing Organizational Documents with the Proposed Organizational Documents as part of the Domestication, including (1) changing the post-Business Combination corporate name from “Saban Capital Acquisition Corp.” to “Panavision Holdings Inc.” (which is expected to occur after the Domestication in connection with the Acquisitions), (2) making New Panavision’s corporate existence perpetual, (3) adopting Delaware as the exclusive forum for certain stockholder litigation, (4) electing to not be governed by Section 203 of the DGCL and limiting certain corporate takeovers by interested stockholders, (5) granting an explicit waiver regarding corporate opportunities to New Panavision and its directors and (6) removing certain provisions related to our status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which SCAC’s board of directors believes is necessary to adequately address the needs of New Panavision after the Business Combination.

The Proposed Organizational Documents differ in certain material respects from the Existing Organizational Documents and we encourage shareholders to carefully consult the information set out in the section entitled “Organizational Documents Proposals” and the full text of the Proposed Organizational Documents of New Panavision, attached hereto as Annexes C and D.



 

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Director Election Proposal

Assuming the BCA Proposal, the Domestication Proposal and each of the Organizational Documents Proposals are approved, our shareholders are also being asked to approve, by ordinary resolution, the Director Election Proposal. Upon the consummation of the Business Combination, we anticipate the initial size of New Panavision’s board of directors will be increased from five directors to nine directors, each of whom will be voted upon by SCAC’s shareholders at the extraordinary general meeting. For additional information on the proposed directors, see “Director Election Proposal”.

Stock Issuance Proposal

Assuming the BCA Proposal, the Domestication Proposal, each of the Organizational Documents Proposals, and the Director Election Proposal are approved, our shareholders are also being asked to approve, by ordinary resolution, the Stock Issuance Proposal.

Our public shares are listed on Nasdaq and, as such, we are seeking shareholder approval of the issuance of New Panavision Common Stock to (1) the existing equityholders of Panavision and stockholders of Sim in connection with the Business Combination and (2) the PIPE Investors pursuant to their PIPE Investment in connection with the Business Combination, to the extent such issuance would require a shareholder vote under Nasdaq Listing Rule 5635, in each case, in order to comply with Nasdaq Listing Rule 5635. For additional information, see “Stock Issuance Proposal”.

Incentive Award Plan Proposal

Assuming the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal and the Stock Issuance Proposal are approved, our shareholders are also being asked to approve, by ordinary resolution, the Incentive Award Plan Proposal. Pursuant to the 2018 Plan, a copy of which is attached to this proxy statement/prospectus as Annex E,     % of New Panavision Common Stock outstanding immediately following the consummation of the Business Combination will be reserved for issuance under the Incentive Plan. For additional information, see “Incentive Award Plan Proposal”.

Adjournment Proposal

If, based on the tabulated vote, there are not sufficient votes at the time of the extraordinary general meeting to authorize SCAC to consummate the Business Combination (because any of the Condition Precedent Proposals have not been approved (including as a result of the failure of any other cross-conditioned Condition Precedent Proposals to be approved)), SCAC’s board of directors may submit a proposal to adjourn the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies. For additional information, see “Adjournment Proposal”.

SCAC’s Board of Directors’ Reasons for the Business Combination

SCAC was organized for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.

In evaluating the Business Combination, the SCAC board of directors consulted with SCAC’s senior management and considered a number of factors.

In particular, the SCAC board of directors considered, among other things, the following factors, although not weighted or in any order of significance:

 

  A.

Combination of Panavision and Sim. The strategic combination of Panavision and Sim will create a leading integrated content production services company for the episodic, feature film, and commercial



 

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  segments worldwide. New Panavision will provide end-to-end production and post-production services and leverage its proprietary equipment, technology and global footprint to offer customers a unique toolkit to achieve their creative visions. It is the belief of the SCAC board of directors that by combining Panavision and Sim, New Panavision will be able to offer its broader customer base a more expanded scope of service offerings.

 

  B.

Meaningful Opportunity for Synergies. New Panavision will have a number of meaningful synergy opportunities, including leveraging its assets, facilities, and personnel overlap to improve cash flow margins. The parties to the Business Combination have identified significant cost synergies that are expected to be actionable upon closing of the transaction and have a near-term impact to margins and free cash flow creation. Due to similar operating infrastructures between Panavision and Sim, the SCAC board of directors considered that New Panavision will have identified opportunities to achieve an estimated $12.8 million in annual cost savings through business process consolidation, corporate optimization and investment to reduce subrent expense for the combined business, with the potential for additional synergies over time as the businesses further integrate.

 

  C.

Attractive Industry and Strong Competitive Position. Over the past four years, there has been a rapid growth in content production spending, which has been driven by competition between traditional studios and new entrant digital players such as Netflix, Amazon, Apple, Hulu and others. We believe this growth will continue and that New Panavision is well positioned to participate in such growth while remaining agnostic to the distribution outlet or individual productions New Panavision’s customers choose to pursue. As productions become increasingly complex, we believe New Panavision’s significant footprint comprising 80 facilities worldwide will present a unique competitive advantage when serving its global customers.

 

  D.

Proprietary Intellectual Property. Panavision holds a number of patents that provide it with proprietary technology.

 

  E.

Potential for Operational Improvements through Experienced Management Team. Both Panavision and Sim management teams have a track record of innovating customer-centric comprehensive solutions, growing revenues and integrating strategic acquisitions. Panavision management has historically employed monitoring techniques and key performance indicator analytics to grow the business and EBITDA margins in recent years and we believe the combined business will significantly benefit from New Panavision management’s oversight. Key executives that have been identified to continue with New Panavision have significant experience in the entertainment, production, and post-production services industries.

 

  F.

Opportunities for Platform Growth. As customers across the industry look to one-stop providers, New Panavision will be well positioned to be a platform consolidator within a highly-fragmented industry. Breadth of service offerings, depth and quality of expertise, and a global footprint will continue to be differentiating factors for New Panavision and will offer New Panavision a competitive advantage as it looks to continue to acquire attractive businesses within the industry.

 

  G.

Financial Profile. New Panavision’s financial profile is characterized by scalable operating leverage, long-term revenue stability, and demonstrated margin expansion in recent years. Panavision’s diverse customer base, improving cash flow conversion, and asset base will provide New Panavision with the ability to efficiently grow and scale.

For a more complete description of the SCAC board of directors’ reasons for approving the Business Combination, including other factors and risks considered by the SCAC board of directors, see the section entitled “BCA Proposal—SCAC’s Board of Directors’ Reasons for the Business Combination”. Additionally, for a description of the Panavision’s board of directors’ and Sim’s board of directors’ respective reasons for approving the Business Combination, see the sections entitled “BCA Proposal—Panavision’s Board of



 

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Directors’ Reasons for the Business Combination” and “BCA Proposal—Sim’s Board of Directors’ Reasons for the Business Combination”.

Related Agreements

This section describes certain additional agreements entered into or to be entered into pursuant to the Business Combination Agreement. For additional information, see “BCA Proposal—Related Agreements”.

Equity Financing

Concurrently with the execution of the Business Combination Agreement, SCAC entered into the Subscription Agreements with the PIPE Investors pursuant to which the PIPE Investors have collectively subscribed for 5.5 million shares of New Panavision Common Stock for an aggregate purchase price of $55.0 million, $30.0 million of which will be funded by the Sponsor PIPE Entity. The PIPE Investment will be consummated substantially concurrently with the Closing and proceeds therefrom will be used to fund a portion of the cash consideration required to effect the Business Combination and up to $25.0 million of redemptions. The PIPE Investment is conditioned upon the satisfaction or waiver of conditions precedent to the closing of the Business Combination and other customary conditions. Pursuant to the Subscription Agreements, the third-party PIPE Investors will be entitled to certain shelf registration rights, subject to customary black-out periods and other limitations as set forth therein. For additional information, see “BCA Proposal—Related Agreements—Equity Financing”.

Debt Financing

Concurrently with the execution of the Business Combination Agreement, SCAC entered into (i) a debt commitment letter (the “ABL Commitment Letter”) with Bank of America, N.A., Bank of Montreal and ING Capital LLC (collectively, the “ABL Lenders”), pursuant to which the ABL Lenders committed to provide a $250.0 million ABL revolving credit facility (the “ABL Facility”) in accordance with the terms, and subject to the conditions, set forth in the ABL Commitment Letter and (ii) a debt commitment letter (the “Second Lien Commitment Letter”) with Solus Alternative Asset Management LP (the “Second Lien Lender”), pursuant to which the Second Lien Lender committed to provide a $100.0 million second lien term loan credit facility (the “Second Lien Facility” and, together with the ABL Facility, the “Debt Facilities”) in accordance with the terms, and subject to the conditions, set forth in the Second Lien Commitment Letter. The proceeds from the Debt Facilities will be used to fund, among other things, a portion of the cash consideration. For additional information, see “BCA Proposal—Related Agreements—Debt Financing”.

Contribution Agreement

New Panavision and the Class F Shareholders will enter into a Contribution Agreement (the “Contribution Agreement”) at the Closing, pursuant to which, among other things, (i) the Class F Shareholders will contribute an aggregate of approximately 2.0 million Converted Founder Shares to New Panavision, pro rata, which Converted Founder Shares will be cancelled for no consideration, (ii) 3.25 million Converted Founder Shares will become subject to vesting and the restrictions set forth in the Business Combination Agreement (such shares, the “Founder Contingent Shares”), pro rata, and (iii) Sponsor and its affiliates will contribute all of the 7.0 million private placement warrants, which are held by Sponsor or its affiliates, to New Panavision (which warrants will be cancelled for no consideration) and will forfeit for no consideration any other rights to obtain warrants (including in respect of that certain unsecured convertible promissory note issued by SCAC to Sponsor on March 12, 2018), in each case, on the terms and subject to the conditions set forth in the Contribution Agreement. For additional information, see “BCA Proposal—Related Agreements—Contribution Agreement”.



 

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Registration Rights Agreement

On the Closing Date, New Panavision, the Class F Shareholders, the Sponsor PIPE Entity and the Principal Panavision Holders (as defined in the Business Combination Agreement), will enter into an amended and restated registration rights agreement (the “Registration Rights Agreement”), providing for, among other things, customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions. For additional information, see “BCA Proposal—Related Agreements—Amended and Restated Registration Rights Agreement”.

Lock-Up Agreement

On the Closing Date, each of Sponsor, the Principal Panavision Holders and the Principal Sim Holders (as defined in the Business Combination Agreement) will execute and deliver to New Panavision a lock-up agreement (the “Lock-Up Agreement”), pursuant to which, among other things, Sponsor, the Principal Panavision Holders and the Principal Sim Holders will agree to certain restrictions regarding the transfer of New Panavision Common Stock held or to be received by them, from the Closing until the earlier of (1) 180 days after the date of Closing and (2) immediately prior to the closing of a transaction in which New Panavision consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of New Panavision’s shareholders having the right to exchange their equity holdings in New Panavision for cash, securities or other property. For additional information, see “BCA Proposal—Related Agreements—Lock-Up Agreement”.

Director Composition and Standstill Agreement

On September 13, 2018, concurrently with the execution of the Business Combination Agreement, SCAC, Sponsor, the Sponsor PIPE Entity, the Principal Panavision Holders and the Panavision Holder Representative entered into the Director Composition and Standstill Agreement, pursuant to which, among other things (i) the Panavision Holder Representative and Sponsor will each have certain rights to designate directors to the board of directors of New Panavision, (ii) the Principal Panavision Holders and Sponsor will agree not to take certain actions in respect of the members of the board of directors of New Panavision designated by Sponsor or the Principal Panavision Holders, as applicable, (iii) the Panavision Holder Representative and Sponsor each have certain negative consent rights with respect to certain future actions taken by New Panavision and its subsidiaries and (iv) each of SCAC and Sponsor will agree to take certain actions in connection with, or to facilitate, the Business Combination. For additional information, see “BCA Proposal—Related Agreements—Director Composition and Standstill Agreement”.

Employment Agreements

Concurrently with the execution of the Business Combination Agreement, SCAC entered into an employment agreement, with each of Kimberly Snyder and Bill Roberts (together, the “Employment Agreements”), that will become effective as of, and subject to, the Closing. For additional information, see “Management of New Panavision Following the Business Combination—Post-Business Combination Executive and Director Compensation—Employment Agreements”.



 

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Organizational Structure

The following diagram illustrates the ownership structure of SCAC, Panavision and Sim as of the date of this proxy statement/prospectus.

 

 

LOGO

Panavision Equityholders Class F Shareholders (including Sponsor) Public Shareholders SIM Equityholders Panavision Inc. (DE) Saban Capital Acquisition Corp. (Cayman) SIM Video International Inc. (Ontario) Subsidiaries of Panavision Panavision Acquisition Sub, Inc. (DE) SIM Acquisition Sub, Inc. (Ontario) Subsidiaries of SIM

The following diagram illustrates the ownership structure of New Panavision immediately following consummation of the acquisitions.

 

 

LOGO Former Panavision Equityholders Class F Shareholders (including Sponsor) Public Shareholders Former SIM Equityholders PIPE Investors (including Sponsor PIPE Entity) Panavision Holdings Inc. (f/k/a Saban Capital Acquisition Corp.) (DE) Panavision Inc. (DE) Subsidiaries of Panavision SIM Acquisition Sub, Inc. (Ontario) SIM Video International Inc. (Ontario) Subsidiaries of SIM

Ownership of New Panavision

As of the date of this proxy statement/prospectus, there are 27,401,256 ordinary shares issued and outstanding, which includes an aggregate of 6,243,480 Class F ordinary shares. As of the date of this proxy statement/prospectus, there is outstanding an aggregate of 19,500,000 warrants, which comprise the 7,000,000 private placement warrants held by Sponsor and the 12,500,000 public warrants. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share and, following the Domestication, will entitle the holder



 

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thereof to purchase one share of New Panavision Common Stock. Therefore, as of the date of this proxy statement/prospectus (without giving effect to the Business Combination and assuming no redemptions other than the Extension Amendment Redemptions), if we assume that each outstanding warrant is exercised and one Class A ordinary share is issued as a result of such exercise, the SCAC fully-diluted share capital would be 46,901,256 ordinary shares. In connection with the closing of the Business Combination, Sponsor will contribute all 7,000,000 private placement warrants it holds to New Panavision, which private placement warrants will be cancelled for no consideration.

It is anticipated that, upon completion of the Business Combination, (1) SCAC’s public shareholders are expected to own approximately 52.5% of the outstanding New Panavision Common Stock, (2) the former equityholders of Panavision and Sim (without taking into account any public shares held by Panavision equityholders or Sim stockholders prior to the consummation of the Business Combination), are expected to own approximately 23.6% and 7.7%, respectively, of the outstanding New Panavision Common Stock, (3) the Class F Shareholders are expected to own approximately 2.5% of outstanding New Panavision Common Stock and (4) the PIPE Investors (including the Sponsor PIPE Entity) are expected to own approximately 13.7% of outstanding New Panavision Common Stock. These percentages exclude the Contingent Shares, reflect adjustments to the consideration payable to the equityholders of Panavision as a result of the Extension Amendment Redemptions and assume (i) no public shareholders exercise their redemption rights in connection with the Business Combination, (ii) that New Panavision will issue 12,265,132 shares of New Panavision Common Stock to the former equityholders of Panavision (including 2,750,000 Contingent Shares but which are excluded from such calculation) and 3,100,000 shares of New Panavision Common Stock to the former equityholders of Sim pursuant to the Business Combination Agreement, (iii) 1,993,480 Converted Founder Shares and 7,000,000 private placement warrants are forfeited pursuant to the Contribution Agreement and 3,250,000 Converted Founder Shares become Contingent Shares (which are excluded from such calculations), and (iv) 5,500,000 shares of New Panavision Common Stock are issued to the PIPE Investors upon the consummation of the PIPE Investment. These percentages also do not take into account public warrants to purchase New Panavision Common Stock that will be outstanding immediately following the completion of the Business Combination. If the actual facts are different than these assumptions, the percentage ownership retained by the Company’s existing stockholders in the combined company will be different.

The following table illustrates varying ownership levels in New Panavision immediately following the consummation of the Business Combination based on the assumptions above except for varying levels of redemptions by the public shareholders:

 

     Share Ownership in New Panavision  
     No additional redemptions     Maximum redemptions(1)  
     Number of
Shares
    Percentage of
Outstanding
Shares
    Number of
Shares
     Percentage of
Outstanding
Shares
 

Former equityholders of Panavision(2)

     9,515,132 (3)       23.6     18,337,196        45.3

Former equityholders of Sim

     3,100,000       7.7     3,100,000        7.7

SCAC’s public shareholders

     21,157,776       52.5     12,500,000        30.9

Class F Shareholders(4)

     1,000,000       2.5     1,000,000        2.5

PIPE Investors(5)

     5,500,000       13.7     5,500,000        13.6

 

(1)

Assumes that 8,657,776 public shares (being our estimate of the maximum number of public shares that could be redeemed in connection with the Business Combination in order to satisfy the closing conditions contained in the Business Combination Agreement) are redeemed in connection with the Business Combination.

(2)

Excludes 2.75 million Contingent Shares.



 

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(3)

Includes 1,415,132 shares of New Panavision Common Stock payable to the equityholders of New Panavision as a result of the Extension Amendment Redemptions and corresponding downward adjustment to the cash consideration payable to the equityholders of New Panavision of approximately $14.2 million.

(4)

Excludes 3.25 million Contingent Shares.

(5)

Includes 3.0 million shares to be owned by Sponsor PIPE Entity.

In addition, the cash consideration otherwise payable to the equityholders of Panavision may be reduced according to the terms of the Business Combination Agreement and will be payable in part in an amount of additional shares of New Panavision Common Stock commensurate with the reduction in cash consideration (at a deemed value of $10.00 per share) if the public shareholders exercise their rights to redeem any additional public shares in connection with the approval of the Business Combination Agreement or otherwise pursuant to the Existing Organizational Documents. The Business Combination Consideration is also subject to adjustment to appropriately reflect the effect of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change prior to consummation of the Business Combination. As a result of the Extension Amendment Redemptions, the cash consideration payable to the equityholders of Panavision under the Business Combination Agreement will be adjusted downward pursuant to clause (i) of this paragraph by $14.2 million which amount will be payable in 1.42 million additional shares of New Panavision Common Stock, which adjustments are reflected above. For further details, see “BCA Proposal—The Business Combination Agreement—Business Combination Consideration”.

Date, Time and Place of Extraordinary General Meeting of SCAC’s Shareholders

The extraordinary general meeting of SCAC, will be held at                Pacific Time, on             ,             ,              at             , to consider and vote upon the proposals to be put to the extraordinary general meeting, including if necessary, the adjournment proposal, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the extraordinary general meeting, each of the Condition Precedent Proposals have not been approved.

Voting Power; Record Date

SCAC shareholders will be entitled to vote or direct votes to be cast at the extraordinary general meeting if they owned ordinary shares at the close of business on                 ,                 , which is the “record date” for the extraordinary general meeting. Shareholders will have one vote for each ordinary share owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. Our warrants do not have voting rights. As of the close of business on the record date, there were 27,401,256 ordinary shares issued and outstanding, of which 21,157,776 were issued and outstanding public shares.

Quorum and Vote of SCAC Shareholders

A quorum of SCAC shareholders is necessary to hold a valid meeting. A quorum will be present at the general meeting if a majority of the issued and outstanding ordinary shares entitled to vote at the extraordinary general meeting are represented in person or by proxy. As of the record date for the extraordinary general meeting, 13,700,629 ordinary shares would be required to achieve a quorum.

The Class F Shareholders have agreed to vote all of their ordinary shares in favor of the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/prospectus, the Class F Shareholders own approximately 22.8% of the issued and outstanding ordinary shares.



 

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The proposals presented at the extraordinary general meeting require the following votes:

 

  (i)

BCA Proposal: The approval of the BCA Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (ii)

Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under Cayman Islands Companies Law, being the affirmative vote of holders of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (iii)

Organizational Documents Proposals: The separate approval of each of the Organizational Documents Proposals requires a special resolution under Cayman Islands Companies Law, being affirmative vote of holders of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (iv)

Director Election Proposal: The approval of the Director Election Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (v)

Stock Issuance Proposal: The approval of the Stock Issuance Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (vi)

Incentive Award Plan Proposal: The approval of the Incentive Award Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

  (vii)

Adjournment Proposal: The approval of the adjournment proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

Redemption Rights

Pursuant to the Existing Organizational Documents, a public shareholder may request of SCAC that New Panavision redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a holder of public shares, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and warrants prior to exercising your redemption rights with respect to the public shares;

 

  (ii)

submit a written request to Continental, SCAC’s transfer agent, that New Panavision redeem all or a portion of your public shares for cash; and

 

  (iii)

deliver your public shares to Continental, SCAC’s transfer agent, physically or electronically through DTC.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 p.m. Eastern Time on             ,            (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

Holders of units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an



 

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account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact Continental, SCAC’s transfer agent, directly and instruct them to do so. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the BCA Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its shares to Continental, SCAC’s transfer agent, New Panavision will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account, calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of September 30, 2018, this would have amounted to approximately $10.19 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and accordingly it is shares of New Panavision Common Stock that will be redeemed immediately after consummation of the Business Combination. See “Extraordinary General Meeting of SCAC—Redemption Rights” in this proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash.

The Class F Shareholders have agreed to vote all of their ordinary shares in favor of the proposals being presented at the extraordinary general meeting and waive their redemption rights with respect to such ordinary shares in connection with the consummation of the Business Combination. The Class F ordinary shares will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/prospectus, the Class F Shareholders own approximately 22.8% of the issued and outstanding ordinary shares.

Holders of the warrants will not have redemption rights with respect to the warrants.

Appraisal Rights

Neither SCAC shareholders nor SCAC warrant holders have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Law or under the DGCL.

Proxy Solicitation

Proxies may be solicited by mail, telephone or in person. SCAC has engaged Morrow Sodali LLC to assist in the solicitation of proxies.

If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the extraordinary general meeting. A shareholder also may change its vote by submitting a later-dated proxy as described in the section entitled “Extraordinary General Meeting of SCAC—Revoking Your Proxy”.

Interests of SCAC’s Directors and Executive Officers in the Business Combination

When you consider the recommendation of SCAC’s board of directors in favor of approval of the BCA Proposal, you should keep in mind that the Class F Shareholders, including SCAC’s directors and executive



 

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officers, have interests in such proposal that are different from, or in addition to, those of SCAC shareholders and warrant holders generally. These interests include, among other things, the interests listed below:

 

   

If SCAC does not consummate a business combination by the Extension Date, it would cease all operations except for the purpose of winding up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Law to provide for claims of creditors and the requirements of other applicable law. In such event, the 6,243,480 Class F ordinary shares owned by the Class F Shareholders would be worthless because following the redemption of the public shares, SCAC would likely have few, if any, net assets and because our Class F Shareholders have agreed to waive their rights to liquidating distributions from the trust account with respect to the Class F ordinary shares if we fail to complete a Business Combination within the required period. Sponsor purchased the Class F ordinary shares prior to our initial public offering for approximately $0.004 per share. The 4,250,000 Converted Founder Shares (which includes 3,250,000 Contingent Shares) that the Class F Shareholders will hold following the Business Combination, if unrestricted and freely tradable, would have had aggregate market value of $43.0 million based upon the closing price of $10.12 per share of public share on the Nasdaq on December 7, 2018, the most recent closing price. Given such Converted Founder Shares will be subject to such restrictions, we believe such shares have less value.

 

   

Adam Chesnoff, SCAC’s President and Chief Executive Officer and a member of its board of directors, is expected to be a director of New Panavision after the consummation of the Business Combination. As such, in the future Mr. Chesnoff will receive any cash fees, stock options, stock awards or other remuneration that the New Panavision board of directors determines to pay to him.

 

   

SCAC’s existing directors and officers will be eligible for continued indemnification and continued coverage under SCAC’s directors’ and officers’ liability insurance after the Business Combination.

 

   

In order to protect the amounts held in the trust account, Sponsor has agreed that it will be liable to SCAC if and to the extent any claims by a vendor for services rendered or products sold to SCAC, or a prospective target business with which SCAC has discussed entering into a transaction agreement, reduce the amount of funds in the trust account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account or to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act.

 

   

Following the consummation of the Business Combination, Sponsor would be entitled to the repayment of any working capital loan and advances that have been made to SCAC and remain outstanding. As of November 30, 2018, an aggregate amount of $1.5 million was outstanding under promissory notes issued by SCAC to Sponsor. If SCAC does not complete an initial business combination by the Extension Date, SCAC may use a portion of its working capital held outside the trust account to repay these working capital loans, but no proceeds held in the trust account would be used to repay the working capital loans.

 

   

Following consummation of the Business Combination, Sponsor, our officers and directors and their respective affiliates would be entitled to reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by SCAC from time to time, made by Sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination. However, if SCAC fails to consummate a business combination within the required period, Sponsor and SCAC’s officers and directors and their respective affiliates will not have any claim against the trust account for reimbursement.



 

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In connection with the PIPE Investment, assuming the Sponsor PIPE Entity finances $30.0 million of the PIPE Investment, the Sponsor PIPE Entity will receive 3,000,000 shares of New Panavision Common Stock.

 

   

Pursuant to the Director Composition and Standstill Agreement, Sponsor will have the right to designate two directors to the board of directors of New Panavision, the Panavision Holder Representative will agree not to take certain actions in respect of directors designated by SCAC and Sponsor will have certain negative consent rights in respect of future actions taken by New Panavision and its subsidiaries.

 

   

Pursuant to the Registration Rights Agreement, the Class F Shareholders and the Sponsor PIPE Entity (as well as the Principal Panavision Holders) will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect to the shares of New Panavision Common Stock and warrants held by such parties.

 

   

The Proposed Certificate of Incorporation will contain provisions that have the same effect as Section 203, except that they provide that Sponsor, as well as Cerberus Series Four Holdings, LLC, Cerberus Institutional Partners V, L.P., SOLA LTD, Solus Senior High Income Fund LP, Solus Opportunities Fund 3 LP, Solus Opportunities Fund 5 LP, Ultra Master Ltd, Ultra NB LLC (the “Key Panavision Stockholders”), and certain of their affiliates and respective transferees will not be deemed to be “interested stockholders”.

SCAC’s directors and executive officers have agreed to vote all of their ordinary shares in favor of the proposals being presented at the extraordinary general meeting and waive their redemption rights with respect to such ordinary shares in connection with the consummation of the Business Combination. The Class F ordinary shares will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/prospectus, SCAC’s directors and executive officers own approximately 22.5% of the issued and outstanding ordinary shares.

At any time at or prior to the Business Combination, during a period when they are not then aware of any material nonpublic information regarding us or our securities, our Class F Shareholders, Panavision or Sim and/or their directors, officers, advisors or respective affiliates may purchase public shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares or vote their public shares in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our Class F Shareholders, Panavision or Sim and/or their directors, officers, advisors or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that (1) holders of a majority of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the BCA Proposal, the Director Election Proposal, the Stock Issuance Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal, (2) holders of at least two-thirds of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the Domestication Proposal and the Organizational Documents Proposals, (3) each of the Redemption Conditions is satisfied, (4) otherwise limit the number of public shares electing to redeem and (5) New Panavision’s net tangible assets (as determined in accordance with Rule 3a51(g)(1) of the Exchange Act) being at least $5,000,001.



 

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Entering into any such arrangements may have a depressive effect on the ordinary shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he or she owns, either at or prior to the Business Combination.

If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved. We will file or submit a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the extraordinary general meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

The existence of financial and personal interests of one or more of SCAC’s directors may result in a conflict of interest on the part of such director(s) between what he or they may believe is in the best interests of SCAC and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. In addition, SCAC’s officers have interests in the Business Combination that may conflict with your interests as a shareholder.

Recommendation to Shareholders of SCAC

SCAC’s board of directors believes that the BCA Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of SCAC’s shareholders and unanimously recommends that its shareholders vote “FOR” the BCA Proposal, “FOR” the Domestication Proposal, “FOR” each of the separate Organizational Documents Proposals, “FOR” the Director Election Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Incentive Award Plan Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting.

The existence of financial and personal interests of one or more of SCAC’s directors may result in a conflict of interest on the part of such director(s) between what he or they may believe is in the best interests of SCAC and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. In addition, SCAC’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of SCAC’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.



 

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Sources and Uses of Funds for the Business Combination

The following table summarizes the sources and uses for funding the Business Combination, assuming no public shareholders exercise their redemption rights in connection with the Business Combination and does not give effect to any purchase price adjustments that may be made pursuant to the Business Combination Agreement.

 

Source of Funds

(in millions)

    

Uses
(in millions)

 

Existing cash in trust account(1)

   $ 215.4     

Cash to Panavision Equityholders(4)

   $ 354.3  

PIPE Investment

     55.0     

Cash to Sim Equityholders

     110.0  

Committed Debt Financing

     240.9     

Shares of New Panavision issued to Panavision Equityholders(2)(3)(4)

     95.2  

Shares of New Panavision issued to Panavision Equityholders(2)(3)(4)

     95.2     

Shares of New Panavision issued to Sim Equityholders(2)

     31.0  

Shares of New Panavision issued to Sim Equityholders(2)

     31.0     

Transaction fees and expenses(5)

     32.0  
     

Subrent Capex Restricted Cash

     15.0  
  

 

 

       

 

 

 

Total Sources

   $ 637.5     

Total Uses

   $ 637.5  
  

 

 

       

 

 

 

 

(1)

Calculated as of September 30, 2018.

(2)

Shares issued to Panavision and Sim are at a deemed value of $10.00 per share.

(3)

Excludes 2.75 million Contingent Shares.

(4)

Includes 1,415,132 shares of New Panavision Common Stock payable to the equityholders of New Panavision as a result of the Extension Amendment Redemptions and corresponding downward adjustment to the cash consideration payable to the equityholders of New Panavision of approximately $14.2 million.

(5)

Includes deferred underwriting commission of $8.75 million.

U.S. Federal Income Tax Considerations

For a discussion summarizing the U.S. federal income tax considerations of the Domestication and exercise of redemption rights, please see “U.S. Federal Income Tax Considerations”.

Expected Accounting Treatment

The Domestication

There will be no accounting effect or change in the carrying amount of the consolidated assets and liabilities of the Company as a result of the Domestication. The business, capitalization, assets and liabilities and financial statements of New Panavision immediately following the Domestication will be the same as those of SCAC immediately prior to the Domestication.

The Business Combination

The Business Combination will be accounted for as a business combination under the scope of the Financial Accounting Standards Board’s Accounting Standards Codification 805, Business Combinations, or ASC 805. SCAC is the legal acquirer under the terms of the Business Combination Agreement. SCAC has been determined to be the accounting acquirer under ASC 805.

Regulatory Matters

Under the HSR Act and the rules that have been promulgated thereunder by the U.S. Federal Trade Commission (“FTC”), certain transactions may not be consummated unless information has been furnished to the



 

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Antitrust Division of the Department of Justice (“Antitrust Division”) and the FTC and certain waiting period requirements have been satisfied. The Panavision portion of the Business Combination is subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the filing of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted. On October 4, 2018, SCAC and Panavision filed the required forms under the HSR Act with the Antitrust Division and the FTC and requested early termination. Early termination of the HSR waiting period was granted on November 5, 2018.

Subject to certain exceptions, the direct acquisition of control of a Canadian business by a non-Canadian that exceeds the relevant financial threshold is subject to review and cannot be completed until the non-Canadian has submitted an Application for Review to the Minister responsible for the Investment Canada Act (the “Minister”) and the Minister is satisfied, or is deemed to be satisfied, that the relevant investment is likely to be of net benefit to Canada. The submission of an Application for Review triggers an initial review period of up to 45 days. If the Minister has not completed his review by that date, the Minister may unilaterally extend the review period for up to a further 30 days, beyond which the review period can be extended by such further period as agreed to by the Minister and the non-Canadian.

It is a condition to completion of the Business Combination that the Minister has sent a notice to SCAC under the Investment Canada Act stating that the Minister is satisfied, or the Minister is deemed to be satisfied, that the Sim portion of the Business Combination Agreement is likely to be of net benefit to Canada (the “Investment Canada Act Approval”). On October 4, 2018, Sim Acquisition Sub filed an Application for Review with the Cultural Sector Investment Review Directorate of Canadian Heritage regarding the Sim portion of the Business Combination Agreement. The initial 45-day review period was scheduled to expire on November 19, 2018. On November 16, 2018, the Minister unilaterally extended the review period by 30 days from that date, and the review period can be further extended. SCAC cannot assure you that the Minister will provide Investment Canada Act Approval regarding the Business Combination.

At any time before or after consummation of the Business Combination, notwithstanding termination of the waiting period under the HSR Act, the applicable competition authorities in the United States, Canada or any other applicable jurisdiction could take such action under applicable antitrust laws as such authority deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination, conditionally approving the Business Combination upon divestiture of New Panavision’s assets, subjecting the completion of the Business Combination to regulatory conditions or seeking other remedies. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. SCAC cannot assure you that the Antitrust Division, the FTC, any state attorney general, the Canadian Commissioner of Competition, or any other government authority will not attempt to challenge the Business Combination on antitrust grounds, and, if such a challenge is made, SCAC cannot assure you as to its result.

None of SCAC, Panavision and Sim are aware of any material regulatory approvals or actions that are required for completion of the Business Combination other than the expiration or early termination of the waiting period under the HSR Act and the Investment Canada Act Approval. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.

Emerging Growth Company

SCAC is an “emerging growth company”, as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor



 

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attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, 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. SCAC 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, SCAC, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of SCAC’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of SCAC’s initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.

Risk Factors

In evaluating the proposals to be presented at the SCAC extraordinary general meeting, a shareholder should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors”.



 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF SCAC

SCAC is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the Business Combination.

SCAC’s balance sheet data as of December 31, 2017 and 2016 and statement of operations data for the fiscal year ended December 31, 2017 and for the period from March 15, 2016 (inception) through December 31, 2016 are derived from SCAC’s audited financial statements included elsewhere in this proxy statement/prospectus. SCAC’s balance sheet data as of September 30, 2018 and statement of operations data for the nine months ended September 30, 2018 and September 30, 2017 are derived from SCAC’s unaudited financial statements included elsewhere in this joint proxy statement/prospectus.

The information is only a summary and should be read in conjunction with SCAC’s consolidated financial statements and related notes and “SCAC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this proxy statement/prospectus. Our historical results are not necessarily indicative of future results, and the results for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year.

 

    For the Fiscal
Year Ended
December 31,
2017
    For the Period
from March 15,
2016
(inception)
through
December 31,
2016
   

 

Nine Months Ended September 30,

 
          2018                     2017          

Statement of Operations Data:

       

Revenue:

       

Interest Income

  $ 1,625,844     $ 95,953     $ 2,800,930     $ 1,056,744  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenue

    1,625,844       95,953       2,800,930       1,056,744  

Expenses:

       

Professional fees and other expenses

    710,862       345,080       6,651,005       520,558  

Organizational Costs

    —         12,526       —         —    

Interest Expense

    —         —         7,007       —    
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss) attributable to ordinary shares

  $ 914,982     $ (261,653   $ (3,857,082   $ 536,186  

Net income/(loss) per ordinary share:

       

Class A ordinary shares—basic and diluted

  $ 0.04     $ (0.01   $ (0.10   $ 0.03  

Class F ordinary shares—basic and diluted

  $ (0.02   $ (0.03   $ (0.21   $ (0.02

 

     December 31, 2017      December 31, 2016      September 30, 2018  

Assets:

        

Total assets

   $ 251,985,745      $ 251,047,116      $ 215,628,292  

Total current liabilities

     110,258        86,587        6,761,216  

Deferred underwriting compensation

     8,750,000        8,750,000        8,750,000  
  

 

 

    

 

 

    

 

 

 

Total Liabilities

     8,860,258        8,836,587        15,511,216  
  

 

 

    

 

 

    

 

 

 

Working capital (Deficit)

     153,691        864,576        (6,504,322

Class A ordinary shares subject to possible redemptions; 23,721,053 shares, 23,812,549 shares and 19,511,708 shares as of December 31, 2016, December 31, 2017 and September 30, 2018, respectively

     238,125,486        237,210,528        195,117,075  
  

 

 

    

 

 

    

 

 

 

Total Shareholders’ equity

   $ 5,000,001      $ 5,000,001      $ 5,000,001  
  

 

 

    

 

 

    

 

 

 


 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF PANAVISION

The following table sets forth selected historical information of Panavision for the periods and as of the dates indicated. Panavision’s balance sheet data as of December 31, 2016 and December 31, 2017 and statement of operations data for the fiscal years ended December 31, 2015, December 31, 2016 and December 31, 2017 are derived from Panavision’s audited financial statements included elsewhere in this proxy statement/prospectus. Panavision’s balance sheet data as of December 31, 2013, December 31, 2014 and December 31, 2015, and statement of operations data for the fiscal years ended December 31, 2013 and December 31, 2014 are derived from Panavision’s financial statements that are not included in this proxy statement/prospectus.

Panavision’s balance sheet data as of September 30, 2018 and statement of operations data for the nine months ended September 30, 2018 and September 30, 2017 are derived from Panavision’s unaudited financial statements included elsewhere in this proxy statement/prospectus. Panavision’s balance sheet data as of September 30, 2017 is derived from Panavision’s financial statements that are not included in this proxy statement/prospectus.

The information is only a summary and should be read in conjunction with Panavision’s consolidated financial statements and related notes and “Panavision’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this proxy statement/prospectus. Panavision’s historical results are not necessarily indicative of future results, and the results for any interim period are not necessarily indicative of the results that may be expected for the full fiscal year.

 

(in thousands, except share and per share
data)

   Years Ended December 31,     Nine Months Ended
September 30,
 
   2017     2016     2015     2014(1)     2013(1)     2018     2017  

Statement of Operations Data:

              

Revenue

   $ 278,646     $ 257,569     $ 264,455     $ 256,909     $ 241,884     $ 201,047     $ 205,212  

Costs of revenue

     175,460       166,032       174,950       168,389       167,178       124,393       127,843  

Gross margin

     103,186       91,537       89,505       88,520       74,706       76,654       77,369  

Other operating expenses excluding transaction costs(2)

     89,008       90,194       87,459       92,228       92,328       69,710       66,994  

Impairment of goodwill and intangible asset

     —         —         4,347       —         35,965       —         —    

Transaction expenses(2)(3)

     —         —         —         —         —         8,652       —    

Non-Operating:

              

Interest expense(4)

     10,225       10,581       31,300       50,974       50,893       7,947       7,507  

Foreign exchange (income) loss

     (5,518     7,339       4,551       4,480       1,500       3,024       (6,351

Other (income) expense

     (1,657     757       (1,171     (2,837     1,415       (581     (1,844

Income (loss) before income taxes

     11,128       (17,334     (36,981     (56,325     (107,395     (12,098     11,063  

Net income (loss)(5)

   $ 24,252     $ (21,921   $ (35,661   $ (60,311   $ (106,499   $ (11,681   $ 8,879  

Adjusted EBITDA(6)

   $ 69,927     $ 55,080     $ 51,973     $ 46,545     $ 35,539     $ 48,753     $ 51,144  

Net Income (Loss) Per Share:

              

Basic and diluted

   $ 2.44     $ (2.21   $ (3.60   $ (6.12   $ (10.80   $ (1.18   $ 0.89  

Balance Sheet Data:

              

Cash and cash equivalents

   $ 21,984     $ 11,560     $ 11,062     $ 22,222     $ 25,462     $ 14,963     $ 21,095  

Working capital(7)

     29,564       29,038       (50,228     20,683       23,892       28,622       41,235  

Total assets

     346,097       326,502       327,411       327,939       345,001       352,972       354,164  

Long-term debt, net of current maturities(8)

     147,707       149,842       55,167       413,930       396,258       167,835       162,793  

Shareholders’ equity(9)

     127,558       103,247       123,169       (287,220     (226,510     117,053       110,129  


 

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(1)

December 31, 2014 & 2013 financial statements were audited under U.S. Generally Accepted Auditing Standards as promulgated by the AICPA.

(2)

The following table reconciles other operating expenses including transaction expenses for the nine months ended September 30, 2018 to the Statement of Operations:

 

Other operating expenses excluding transaction costs

   $ 69,710  

Transaction expenses

     8,652  
  

 

 

 

Other operating expenses

     78,362  
  

 

 

 

Selling, general, and administrative expenses

     72,968  

Research and development expenses

     5,394  
  

 

 

 

Other operating expenses per Statement of Operations

     78,362  
  

 

 

 

 

(3)

Transaction expenses consist of $4.2 million in audit fees, $3.6 million in legal fees and $0.8 million in consulting fees.

(4)

Interest expense fluctuations are due to declines in interest rates associated with the refinancing of secured debt in February 2016.

(5)

2017 Net income includes a tax benefit resulting from the impact of Tax Cuts and Jobs Act (TCJA) enacted in December 2017.

(6)

To supplement Panavision’s consolidated financial statements presented in accordance with U.S. GAAP, Panavision reports non-GAAP Adjusted EBITDA. This Non-GAAP measure excludes, where applicable, foreign exchange gains and losses, the effects of stock-based compensation, acquisition-related costs, severance costs, legal settlements, asset write-offs and other one-time costs. Panavision uses this non-GAAP financial measure to help it understand and evaluate its core operating performance and trends, to prepare and approve its annual budget, and to develop short-term and long-term operational plans. Panavision believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors. This non-GAAP financial measure should not be considered in isolation from, or as an alternative to, the measures prepared in accordance with GAAP, and is not based on any comprehensive set of accounting rules or principles. Panavision believes that this non-GAAP measure, when read in conjunction with our GAAP financials, provides useful information to investors by facilitating:

 

   

the comparability of our on-going operating results over the periods presented;

 

   

the ability to identify trends in our underlying business; and

 

   

the comparison of our operating results against analyst financial models and operating results of other public companies that supplement their GAAP results with non-GAAP financial measures.



 

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The following table presents a reconciliation of net income (loss) to Adjusted EBITDA:

 

(in thousands, except share and per
share data)
   Years Ended December 31,     Nine Months Ended
September 30,
 
   2017     2016     2015     2014     2013     2018     2017  

Net income (loss)

   $ 24,252     $ (21,921   $ (35,661   $ (60,311   $ (106,499   $ (11,681   $ 8,879  

EBITDA Adjustments:

              

Depreciation and amortization

     48,625       46,443       45,014       47,551       51,733       37,682       36,190  

Impairment of goodwill and intangible asset

     —         —         4,347       —         35,965       —         —    

Interest expense

     10,225       10,581       31,300       50,974       50,893       7,947       7,507  

Income tax provision (benefit)

     (13,124     4,587       (1,320     3,986       (896     (417     2,184  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 69,978     $ 39,690     $ 43,680     $ 42,200     $ 31,196     $ 33,531     $ 54,760  

Adjusted EBITDA Adjustments:

              

Foreign exchange (gain) loss

     (5,518     7,339       4,551       4,480       1,500       3,024       (6,351

Severance

     611       1,089       505       1,155       1,191       1,432       1,024  

Stock based compensation

     1,013       828       519       —         —         760       760  

Fixed asset adjustmenta

     4,281       4,418       2,750       (1,834     1,195       1,146       1,429  

Transaction expenses

     —         —         —         —         —         8,652       —    

Gain on sale of subsidiary

     (426     —         —         —         —         —         (426

Litigation award

     —         3,899       —         —         —         —         —    

Change in fair value of contingent consideration

     —         (2,339     —         —         —         —         —    

Other

     (12     156       (32     544       457       208       (52
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 69,927     $ 55,080     $ 51,973     $ 46,545     $ 35,539     $ 48,753     $ 51,144  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a)

Fixed asset adjustment includes rental asset obsolescence reserves and abandoned research and development project costs.

(7)

Working capital in 2015 includes $61.0 million in Senior First Lien Debt which was refinanced in February 2016.

(8)

Long-Term Debt consists of secured bank and tenant improvement financing arrangements. 2015 excludes $61.0 million in Senior First Lien Debt included in current liabilities. Capital lease obligations are included in other long-term liabilities on the Consolidated Balance Sheets.

(9)

In June 2015, Panavision executed a 100:1 reverse stock split. Panavision then issued additional common shares and $50.0 million in Exchange PIK Notes in exchange for cancellation of loans issued as part of the Junior First Lien Financing.



 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF SIM

The following table sets forth selected historical information of Sim for the periods and as of the dates indicated. Sim’s balance sheet data as of December 31, 2015, December 31, 2016 and December 31, 2017 and statement of operations data for the fiscal years ended December 31, 2015, December 31, 2016 and December 31, 2017 are derived from Sim’s audited financial statements included elsewhere in this proxy statement/prospectus. Sim’s balance sheet data as of December 31, 2013 and December 31, 2014 and statement of operations data for the fiscal years ended December 31, 2013 and December 31, 2014 are derived from Sim’s financial statements that are not included in this proxy statement/prospectus.

Sim’s balance sheet data as of September 30, 2018 and September 30, 2017 and statement of operations data for the nine months ended September 30, 2018 and September 30, 2017 are derived from Sim’s unaudited financial statements included elsewhere in this proxy statement/prospectus.

The information is only a summary and should be read in conjunction with Sim’s consolidated financial statements and related notes and “Sim’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this proxy statement/prospectus. Our historical results are not necessarily indicative of future results, and the results for any interim period are not necessarily indicative of the results that may be expected for the full fiscal year.

 

(in thousands of Canadian dollars, except share and
per share data)

  Years Ended December 31,     Nine Months Ended
September 30,
 
  2017     2016     2015     2014(1)     2013(1)     2018     2017  

Statement of Operations Data:

             

Revenue

  $ 147,785     $ 140,757     $ 119,379     $ 77,844     $ 41,867     $ 104,116     $ 103,218  

Operating expenses excluding transaction costs

    145,161       135,364       109,978       73,209       38,683       106,394       103,065  

Earnings from operations excluding transaction costs

    2,624       5,393       9,401       4,635       3,184       (2,278     153  

Transaction expenses(2)

    53       758       1,832       —         —         1,321       8  

Non-Operating:

             

Finance costs, net

    6,238       4,212       3,737       3,018       1,946       5,738       4,489  

Loss (gain) on unrealized foreign exchange

    225       (161     2,129       528       (315     (1,163     267  

Loss (Gain) on revaluation of contingent consideration

    (540     580       —         —         —         (92     —    

Gain on liability derecognition

    (405     —         —         —         —         —         —    

Other income

    —         (650     (47     —         —         —         —    

Earnings (loss) before income taxes

    (2,947     654       1,750       1,089       1,553       (8,082     (4,611

Net earnings (loss)

  $ (868   $ 523     $ 253     $ 1,090     $ 148     $ (5,868   $ (1,913

Adjusted EBITDA(3)

  $ 31,824     $ 31,460     $ 27,312     $ 20,394     $ 14,329     $ 17,267     $ 20,156  

Net Income (Loss) Per Share:

             

Basic(4)

  $ (1.27   $ 0.81     $ 0.42     $ 2.14     $ 0.32     $ (8.38   $ (2.83

Diluted(4)

  $ (1.27   $ 0.77     $ 0.41     $ 2.08     $ 0.31     $ (8.38   $ (2.83

Balance Sheet Data:

             

Cash

  $ 198     $ 1,452     $ 1,001     $ 707     $ 108     $ 5,728     $ 2,979  

Working capital(5)

    (16,209     (13,701     (43,024     (69,545     (28,571     (6,691     (8,625

Total assets

    185,144       167,722       148,265       124,170       96,459       198,495       190,856  

Long-term debt, net of current maturities(6)

    81,930       69,347       55,024       14,440       41,238       101,282       95,172  

Shareholders’ equity

    52,769       51,755       16,602       11,660       7,635       46,904       48,890  

 

(1)

2014 and 2013 financial statements were audited under Canadian GAAS guidelines. 2013 is for the period from May 2, 2013 (date of incorporation) to December 31, 2013.



 

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(2)

Transaction expenses for the nine months ended September 30, 2018 consisted of $1.0 million in legal fees and $0.3 million in audit fees.

(3)

To supplement Sim’s consolidated financial statements presented in accordance with IFRS as issued by IASB, Sim reports adjusted operating earnings (loss). This non-IFRS measure of earnings excludes non-cash operating costs and salaries; amortization; restructuring, transaction and acquisition costs; finance costs, net; gain on liability derecognition; income taxes (recovery); loss (gain) on revaluation of contingent consideration and loss (gain) on unrealized foreign exchange. Sim uses this non-IFRS financial measure to help it understand and evaluate its core operating performance and trends, to prepare and approve its annual budget, and to develop short term and long term operational plans. Sim believes that adjusted operating earnings (loss) provides useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors. This non-IFRS financial measure should not be considered in isolation from, or as an alternative to, the measures prepared in accordance with IFRS, and it is not based on any comprehensive set of accounting rules or principles. Sim believes that this non-IFRS measure, when read in conjunction with Sim’s IFRS financial statements, provides useful information to investors by facilitating:

 

   

the comparability of Sim’s on-going operating results over the periods presented;

 

   

the ability to identify trends in Sim’s underlying business; and

 

   

the comparison of Sim’s operating results against analyst financial models and operating results of other public companies that supplement their IFRS results with non-IFRS financial measures.

This non-IFRS financial measure has limitations in that it does not reflect all the amounts associated with Sim’s results of operations as determined in accordance with IFRS as noted above.

The following table presents a reconciliation of net income (loss) to Adjusted EBITDA:

 

(in thousands of Canadian dollars,
except share and per share data)
  Years Ended December 31,     Nine Months Ended
September 30,
 
  2017     2016     2015     2014(a)     2013(a)     2018     2017  

Net earnings (loss)

  $ (868   $ 523     $ 253     $ 1,090     $ 148     $ (5,868   $ (1,913

EBITDA Adjustments:

             

Amortization

    24,849       22,368       16,305       13,550       8,945       17,658       17,233  

Finance costs, net

    6,238       4,212       3,737       3,018       1,946       5,738       4,489  

Income taxes (recovery)

    (2,079     131       1,497       (1     1,405       (2,214     (2,698
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

  $ 28,140     $ 27,234     $ 21,792     $ 17,657     $ 12,444     $ 15,314     $ 17,111  

Adjusted EBITDA Adjustments:

             

Gain on liability derecognition

    (405     —         —         —         —         —         —    

Loss (gain) on disposal of revenue producing assets

    97       (654     135       545       43       949       1,052  

Loss (gain) on revaluation of contingent consideration

    (540     580       —         —         —         (92     —    

Loss (gain) on unrealized foreign exchange

    225       (161     2,129       528       (315     (1,163     267  

Management fees

    250       250       250       250       167       187       187  

Restructuring, transaction and acquisition

    2,882       3,098       2,637       988       873       1,791       1,299  

Share based payments

    155       283       106       107       580       48       74  

Write-off of obsolete equipment

    1,020       830       263       319       537       233       166  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 31,824     $ 31,460     $ 27,312     $ 20,394     $ 14,329     $ 17,267     $ 20,156  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a)

2014 and 2013 financial statements were audited under Canadian GAAS guidelines. 2013 is for the period from May 2, 2013 (date of incorporation) to December 31, 2013.

(4)

Adjusted to reflect the November 1, 2016 share reorganization as if it occurred as of May 2, 2013.

(5)

Working capital in 2015, 2014 and 2013 includes $31.8 million, $28.6 million and $24.0 million in redeemable preferred shares which were reorganized to common shares on November 1, 2016.

(6)

Long-term debt consists of long-term debt, secured debentures, promissory notes, contingent consideration, finance lease liabilities and deferred lease inducements.



 

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SELECTED UNAUDITED PRO FORMA

CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined balance sheet as of September 30, 2018 and the unaudited pro forma condensed combined statements of operations for the fiscal year ended December 31, 2017 and the nine months ended September 30, 2018 present the historical financial statements of SCAC, Panavision and Sim, adjusted to reflect the business combination among SCAC, Panavision Acquisition Sub, Sim Acquisition Sub, Panavision and Sim pursuant to the Business Combination Agreement and the transactions contemplated thereby including the Domestication, the Debt Financing, the PIPE Investment, redemptions of Class A ordinary shares and the forfeiture of the Converted Founder Shares pursuant to the Contribution Agreement. For additional information, see “Unaudited Pro Forma Condensed Combined Financial Information (Minimum Redemption Scenario)” and “Unaudited Pro Forma Condensed Combined Financial Information (Maximum Redemption Scenario”).

The unaudited pro forma condensed combined statements of operations for the fiscal year ended December 31, 2017 and for the nine months ended September 30, 2018 give pro forma effect to the Business Combination as if it had occurred on January 1, 2017. The unaudited pro forma condensed combined balance sheet as of September 30, 2018 assumes that the Business Combination was completed on September 30, 2018.

Historical information for Sim incorporates certain adjustments and estimates relating to Sim’s acquisition of Crossing Studios on August 31, 2017. The unaudited pro forma condensed consolidated statement of operations for the fiscal year ended December 31, 2017 gives pro forma effect to Sim’s acquisition of Crossing Studios as if it had occurred on January 1, 2017. Because Sim’s acquisition of Crossing Studios was consummated prior to September 30, 2018 and the business combination is reflected in Sim’s historical unaudited condensed combined balance sheet as of September 30, 2018 and the historical unaudited condensed combined statement of operations for the nine months ended September 30, 2018, there is no additional impact related this transaction to be reflected in the unaudited pro forma condensed combined balance sheet or unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2018 presented herein.

After giving effect to the Business Combination, SCAC will own, directly or indirectly, all of the assets of Panavision, Sim and their subsidiaries, and the Panavision and Sim equityholders will hold a portion of New Panavision Common Stock. The pro forma condensed combined information contained herein assumes SCAC’s shareholders approve the Business Combination. SCAC’s shareholders may elect to redeem their Class A ordinary shares even if they approve the Business Combination. SCAC cannot predict how many of its public shareholders will elect to redeem their shares of Class A Shares to cash. As a result, SCAC has elected to provide pro forma condensed combined financial information under two different assumptions which produce different allocations of total equity between holders of New Panavision Common Stock. If the Business Combination is consummated, the actual results are expected to be within the scenarios described below, however, there can be no assurance regarding which scenario will be closest to the actual results. Under both scenarios, SCAC is determined to be the accounting acquirer.



 

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The following unaudited pro forma condensed combined financial information presents a minimum redemption scenario of 15.4%, which represents the actual percentage of stockholders who have redeemed their Class A Shares on September 13, 2018, and a maximum redemption scenario of 50%.

 

     No Additional Redemptions     Maximum Redemptions  
(in thousands, except share and per share data)    December 31,
2017
     September 30,
2018
    December 31,
2017
     September 30,
2018
 

Selected Unaudited Pro Forma Condensed Combined Statement of Operations

          

Revenue

   $ 396,678      $ 280,826     $ 396,678      $ 280,826  

Net income (loss) per share–basic and diluted

   $ 0.34      $ (0.54   $ 0.34      $ (0.53

Weighted average shares outstanding–basic and diluted

     40,272,908        40,272,908       40,437,196        40,437,196  

 

(in thousands)    No Additional
Redemptions
     Maximum Redemptions  

Selected Unaudited Pro Forma Combined Balance Sheet Data as of September 30, 2018

     

Total assets

   $ 785,126      $ 785,126  

Total liabilities

   $ 392,966      $ 392,966  

Total equity

   $ 392,160      $ 392,160  

Non-GAAP Measures

 

    Years Ended December 31,     Nine Months Ended
September 30,
 
(in thousands)   2017     2016     2015     2014     2013     2018     2017  

Statement of Operations Data:

             

Panavision Adjusted EBITDA(1)(3)

  $ 69,927     $ 55,080     $ 51,973     $ 46,545     $ 35,539     $ 48,753     $ 51,144  

Sim Adjusted EBITDA(2)(3)

  C$ 31,824     C$ 31,460     C$ 27,312     C$ 20,394     C$ 14,329     C$ 17,267     C$ 20,156  

 

(1)

Panavision Adjusted EBITDA in United States Dollars as reflected in Selected Historical Financial Information of Panavision. See footnote 6 under “Selected Historical Financial Information of Panavision”.



 

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(2)

Sim Adjusted EBITDA in Canadian Dollars as reflected in Selected Historical Financial Information of Sim. For clarification, fiscal 2017 does not include the impact of Crossing Studios for the period of time pre-acquisition by Sim. See footnote 3 under “Selected Historical Financial Information of Sim”.

(3)

To supplement the unaudited pro forma condensed combined statements of operations for this fiscal year ended December 31, 2017 and for the nine months ended September 30, 2018 to give pro forma effect to the Business Combination as if it had occurred on January 1, 2017, we provide non-GAAP Pro Forma Adjusted EBITDA of Panavision and Sim (excluding SCAC). This non-GAAP measure excludes, where applicable, net interest expense, income tax benefit and expense, depreciation and amortization expense, the preacquisition net income of Crossing Studios, other EBITDA adjustments and net income of SCAC. We believe that Pro Forma Adjusted EBITDA of Panavision and Sim provides useful information to investors and others in understanding and evaluating the Business Combination.

The following table presents a reconciliation of Pro Forma Net Income/(Loss) to Pro Forma Adjusted EBITDA of Panavision and Sim (excluding SCAC):

 

(in thousands)    Year Ended
December 31, 2017
    Nine Months Ended
September 30,
2018
 

Pro Forma Net Income/(Loss)

   $ 13,774     $ (21,631

Interest expense, net

     13,311       11,183  

Income tax (benefit) expense

     (17,590     (472

Depreciation and amortization expense

     83,871       65,814  

Crossing Studios Net Income Pre-Acquisition(a)

     (781     —    

Other EBITDA adjustments

     2,789       2,692  

SCAC Net Income back-out(b)

     (915     3,590  
  

 

 

   

 

 

 

Adjusted EBITDA(c)

     94,460       61,443  
    

 

 

 

Combined company synergies(d)

     12,800    

Costs of operating public company(e)

     (3,100  
  

 

 

   

Pro Forma Adjusted EBITDA of Panavision and Sim (excludes SCAC)

     104,160    
  

 

 

   

Pro Forma Revenue(f)

     392,588       280,826  

Pro Forma Adjusted EBITDA as % of Pro Forma Revenue

     26.5     21.9

 

  (a)

This amount relates to Net Income for Crossing Studios for the 2017 period prior to its acquisition by Sim.

  (b)

This amount is the Net Income for SCAC. It is being excluded to provide Pro Forma Adjusted EBITDA for Panavision and Sim only.

  (c)

Adjusted EBITDA is based on the Unaudited Pro Forma Condensed Combined Financial Information but excluding the pre-acquisition impact of Crossing Studios in 2017 (see footnote a above) and the impact of financial performance of SCAC (see footnote b above).

  (d)

Management estimates $12.8 million in cost-savings and subrent expense reduction that will be realized from the Business Combination in the first year after the transaction closing. Of the $12.8 million, management estimates $5.5 million will be generated from the elimination of overlapping functions, $0.3 million will be generated from facility rent reduction, and $7.0 million will be generated from a reduction of subrent expense due to the $15.0 million capital investment that is being funded as part of the Business Combination.

  (e)

Expected additional costs related to operating a public company, including costs related to increased reporting and compliance requirements.

  (f)

This amount excludes Crossing Studios’ revenue for the 2017 period prior to its acquisition by Sim.



 

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COMPARATIVE PER SHARE DATA

The following table sets forth historical comparative share information for SCAC, Panavision and Sim and unaudited pro forma combined share information after giving effect to the Business Combination, based on the assumptions above except for varying levels of redemptions by the public shareholders. The following unaudited pro forma combined share information assumes (1) that New Panavision will issue 12,265,132 shares of New Panavision Common Stock to the former equityholders of Panavision (including 2,750,000 Contingent Shares but which are excluded from such calculation) and 3,100,000 shares of New Panavision Common Stock to the former equityholders of Sim pursuant to the Business Combination Agreement, (2) 1,993,480 Converted Founder Shares and 7,000,000 private placement warrants are forfeited pursuant to the Contribution Agreement and 3,250,000 Converted Founder Shares become Contingent Shares (which are excluded from such calculations), and (3) 5,500,000 shares of New Panavision Common Stock are issued to the PIPE Investors upon the consummation of the PIPE Investment. These numbers reflect adjustments to the consideration payable to the equityholders of Panavision as a result of the Extension Amendment Redemptions and assume no public shareholders exercise their redemption rights in connection with the Business Combination. If the actual facts are different than these assumptions, the above numbers will be different. In addition, the cash consideration otherwise payable to the equityholders of Panavision will be payable in part in shares of New Panavision Common Stock upon certain circumstances. These numbers also do not take into account public warrants to purchase New Panavision Common Stock that will be outstanding immediately following the completion of the Business Combination.



 

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The historical information should be read in conjunction with “Selected Historical Financial Information of SCAC,” “Selected Historical Financial Information of Panavision”, “Selected Historical Financial Information of Sim” SCAC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations”, Panavision’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Sim’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this proxy statement/prospectus, the historical financial statements and related notes of SCAC, Panavision and Sim contained elsewhere in this proxy statement/prospectus. The unaudited pro forma combined share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information and related notes included elsewhere in this proxy statement/prospectus. The unaudited pro forma combined share information does not purport to represent what the actual results of operations of New Panavision would have been had the Business Combination been completed or to project New Panavision’s results of operations that may be achieved after the Business Combination. The unaudited pro forma book value per share information below does not purport to represent what the value of New Panavision would have been had the Business Combination been completed nor the book value per share for any future date or period.

 

    Saban Capital
Acquisition
Corp.
          Sim Video
International
Inc.(3)
    Combined Pro Forma  
    Panavision Inc.     Assuming No
Additional
Redemptions
    Assuming
Maximum
Redemptions(4)
 

As of and for the Nine months Ended September 30, 2018

         

Book Value per share(1)(2)

  $ 0.18     $ 11.79     $ 0.05     $ 9.74     $ 9.70  

Weighted average shares outstanding—basic

    31,158,951       9,928,650       699,960       40,272,908       40,437,196  

Weighted average shares outstanding—diluted

    31,158,951       9,928,650       699,960       40,272,908       40,437,196  

Net income (loss) per share—basic

  $ (0.12   $ (1.18   $ (6.42   $ (0.54)     $ (0.53)  

Net income (loss) per share—diluted

  $ (0.12   $ (1.18   $ (6.42   $ (0.54)     $ (0.53)  

Cash dividends per share

    —         —         —       $ —       $ —    

As of and for the Fiscal Year Ended December 31, 2017

         

Book Value per share(1)

  $ 0.16     $ 12.85     $ 0.06      

Weighted average shares outstanding—basic

    31,247,006       9,932,826       682,057       40,272,908       40,437,196  

Weighted average shares outstanding—diluted

    31,247,006       9,932,826       682,057       40,272,908       40,437,196  

Net income (loss) per share—basic

  $ 0.03     $ 2.44     $ (0.98   $ 0.34     $ 0.34  

Net income (loss) per share—diluted

  $ 0.03     $ 2.44     $ (0.98   $ 0.34     $ 0.34  

Cash dividends per share

    —         —         —       $ —       $ —    

 

(1)

Book value per share = (Total Equity excluding Preferred Shares)/ Total Shares Outstanding.

(2)

The number of shares outstanding includes shares subject to possible redemption.

(3)

Sim information as of September 30, 2018 was converted into U.S. dollars at a rate of C$0.7665 to US$1.00 and as of December 31, 2017 was converted into U.S. dollars at a rate of C$0.7970 to US$1.00. Sim information for the period ended September 30, 2018 was converted into U.S. dollars at a rate of C$0.7660 to US$1.00 and for the period ended December 31, 2017 was converted into U.S. dollars at a rate of C$0.7710 to US$1.00.

(4)

Assumes that 8,657,776 public shares (being our estimate of the maximum number of public shares that could be redeemed in connection with the Business Combination in order to satisfy the closing conditions contained in the Business Combination Agreement) are redeemed in connection with the Business Combination.



 

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MARKET PRICE AND DIVIDEND INFORMATION

SCAC’s units, Class A ordinary shares and public warrants are currently listed on the Nasdaq Capital Market under the symbols “SCACU” and “SCAC” and “SCACW”, respectively.

The closing price of the units, Class A ordinary shares and public warrants on September 13, 2018, the last trading day before announcement of the execution of the Business Combination Agreement, was $10.75, $10.13 and $1.3496, respectively. As of                 ,                 , the record date for the extraordinary general meeting, the most recent closing price for each unit, Class A ordinary shares and public warrant was $        , $        and $        , respectively.

Holders of the units, public shares and public warrants should obtain current market quotations for their securities. The market price of SCAC’s securities could vary at any time before the Business Combination.

Holders

As of December 7, 2018, there was one holder of record of our Class A ordinary shares and 21 holders of record of our Class F ordinary shares, one holder of record of our units and two holders of our warrants. See “Beneficial Ownership of Securities”.

Dividend Policy

SCAC has not paid any cash dividends on its ordinary shares to date and does not intend to pay cash dividends prior to the completion of the Business Combination. The payment of any cash dividends after consummation of the Business Combination will be dependent upon the revenue, earnings and financial condition of New Panavision from time to time. The payment of any dividends subsequent to the Business Combination will be within the discretion of the board of directors of New Panavision. It is presently expected that New Panavision will retain all earnings for use in the business operations of New Panavision and, accordingly, it is not expected that the board of directors of New Panavision will declare any dividends in the foreseeable future. The ability of New Panavision to declare dividends may be limited by the terms of any other financing and other agreements entered into by New Panavision or its subsidiaries from time to time.

Price Range of Panavision Securities

Historical market price information regarding Panavision is not provided because there is no public market for Panavision’s securities. For information regarding Panavision’s liquidity and capital resources, see “Panavision’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources”.

Price Range of Sim Securities

Historical market price information regarding Sim is not provided because there is no public market for Sim’s securities. For information regarding Sim’s liquidity and capital resources, See “Sim’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources”.



 

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RISK FACTORS

SCAC shareholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the relevant proposals described in this proxy statement/prospectus.

Risks Related to New Panavision’s Business

The following risk factors apply to our business and operations prior to the completion of the Business Combination to the extent that they relate to SCAC and our business and operations following the completion of the Business Combination to the extent that they relate to New Panavision. These risk factors are not exhaustive and investors are encouraged to perform their own investigation with respect to our business, financial condition and prospects.

New Panavision will depend on the feature film, episodic, and commercial production markets. If production rates decline, New Panavision’s revenue and profitability could decline.

New Panavision’s operations will be dependent on the content production industry, including, in particular, the number of major studio feature films, which tend to use larger camera packages than the feature films made by independent producers. New Panavision will also be dependent on the number of episodic programs and commercials produced. If there is a significant reduction in the total number of feature films, particularly major studio or large-budget action films, episodic programs and commercials produced whether as a result of the consolidation of major media companies, restriction in distribution outlets for content, or other reason, it could have a material adverse impact on New Panavision’s operations. In addition, a reduction in the average equipment rental package size or in use of post-production services could have an adverse effect on revenues for each such project, and in turn, an adverse effect on New Panavision’s results of operations.

Labor disruptions in the content production industry could also adversely affect New Panavision’s operations. In North America, the Writers Guild of America, the Screen Actors Guild and other organizations periodically enter into negotiations with the major motion picture studios for the renewal of their respective collective bargaining agreements. These negotiations occasionally have resulted in strikes or other work stoppages. Labor disruptions due to such negotiations could significantly reduce production activities. Labor disruptions in the international territories in which New Panavision conducts business, arising from local labor issues, could also occur. Such disruptions could have an adverse effect on New Panavision’s operating results and cash flow.

In addition, content production is, in part, reliant on the availability of tax and other incentives from government organizations. These incentives change from time to time and any elimination or adverse change in availability of incentives can lead to a reduction in production activity which could have an adverse effect on New Panavision’s operating results and cash flow.

Responding to the rapid geographic shift of New Panavision’s customers creates operational challenges and failure to successfully respond to such challenges may adversely affect results of operations.

Although New Panavision will have in place a broad network of camera and lighting rental and post-production offices and distributors, there are often rapid and significant shifts in production activity between different states, countries and continents from year to year in response to changes in local tax incentives, currency fluctuations, labor market conditions, location preferences and other factors. Responding to these trends often requires the relocation of significant amounts of equipment, the establishment of new operations, or resizing existing operations, all of which may involve significant additional expense. If New Panavision is unable to respond to these geographic changes efficiently or effectively, New Panavision may lose certain productions to competitors which would have an adverse effect on New Panavision’s results of operations.

 

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The markets for New Panavision’s services are highly competitive. If New Panavision is unable to compete successfully, it could lose customers and revenue and profitability may decline.

New Panavision’s principal business segments, production equipment rental and post-production services, face competition from both regional companies in the geographic markets it serves and from companies with global reach. Some of these companies may have greater financial or other resources or more extensive development, marketing, and other capabilities than New Panavision. In addition, New Panavision may encounter competition from new entrants into the markets it serves. There can be no assurance that New Panavision will be able to successfully compete against its competitors or that such competition will not have an adverse effect on New Panavision’s results of operations.

The content production industry is subject to changes in technology, industry standards, customer requirements and product offerings.

The content production industry is subject to technological change, evolving industry standards, changing customer requirements including artistic preferences and trends, and improvements in and expansion of product offerings. The choice of image capture equipment and post-production services is very often driven by artistic preferences of particular cinematographers or post-production supervisors, as applicable, and these preferences may change over time. Predicting the trend of such preferences is difficult, particularly with respect to new technologies. New Panavision’s ability to anticipate and adapt to all of these changes will be significant factors in its ability to remain a leader in content production solutions. Keeping pace with technological advancements is an important part of New Panavision’s ability to compete. There can be no assurance that products or technologies developed by others will not render New Panavision’s products or technologies uncompetitive or obsolete, that New Panavision will be able to develop new products to meet the changes and demands in its industry or that New Panavision will be able to raise funds to purchase necessary equipment or adopt new technologies.

New Panavision’s business and competitive position will depend, in part, on its ability to protect and exploit new and existing intellectual property rights.

New Panavision will rely on a combination of patents, licensing arrangements, trade names, trade and service marks, proprietary know-how and technology and trade secrets to protect its intellectual property rights. New Panavision will own or license domestic and foreign patents and patent applications relating to its cameras, lenses and accessories. New Panavision will also own several domestic and foreign trademark or service mark registrations which, collectively, will be material to its business. The success of New Panavision’s business operations and competitive position within its industry depends, in part, on its continued ability to obtain intellectual property rights for new products. The existing intellectual property rights that New Panavision will hold may not provide commercially meaningful protection against competitors. New Panavision’s manufacturing competitors may challenge its patents or independently develop similar products that could result in an interference proceeding in the U.S. Patent Trademark Office or a legal action. Enforcing New Panavision’s rights under these circumstances may be difficult, costly and time consuming. New Panavision’s manufacturing competitors may also be able to design around its patents or develop unique products providing technology similar to its products. In addition, New Panavision’s ability to use its patent rights, as well as its ability to obtain new patent rights, may be more limited in certain markets outside of the United States because the protections available in other jurisdictions may not be as extensive as those available domestically.

New Panavision may not be successful in implementing strategies for future growth.

If New Panavision fails to successfully implement strategies for future growth, including cross-selling its end-to-end service offerings to its newly expanded customer base and offering its end-to-end services in more of the locations in which it operates, New Panavision may not be able to implement one of the key strategies for the Business Combination.

 

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In addition, as part of its strategy for growth, New Panavision may plan from time to time to pursue strategic acquisitions, which will be dependent upon a number of factors, including its ability to identify acceptable acquisition candidates, obtain regulatory approval from competition authorities, consummate acquisitions on favorable terms, successfully integrate acquired assets and obtain financing to support its growth. New Panavision may not be successful in acquiring additional assets and equipment, and any acquisitions that New Panavision does consummate may not produce the anticipated benefits or may have adverse effects on its business and operating results. In addition, although New Panavision will conduct what it believes to be a prudent level of investigation regarding the operating and financial condition of any businesses that it will purchase, in light of the circumstances of each transaction, an unavoidable level of risk remains regarding the actual operating and financial condition of each such business. Until New Panavision actually assumes operating and financial control of such business assets, it may not be able to ascertain the actual value of such assets.

Moreover, New Panavision may not adequately anticipate all the demands that its growth will impose on its personnel, procedures and structures, including its financial and reporting control systems, data processing systems and management structure, whether such growth is occurring as a result of the Business Combination or a future strategic acquisition. If New Panavision cannot adequately anticipate and respond to these demands, it may fail to realize acquisition synergies and its resources will be focused on incorporating new operations into its structure rather than on areas that may be more profitable.

Business may suffer if New Panavision does not attract and retain existing and additional highly skilled personnel.

New Panavision’s business may suffer if it does not attract and retain additional highly skilled personnel. To meet planned growth and to remain competitive, New Panavision believes that its future success will depend upon the ability to retain existing personnel and to hire, train and retain new, highly skilled personnel. New Panavision’s skilled research and development, engineering, and equipment service personnel are key components to creating proprietary solutions that are important to its customers and differentiate it from its competitors in the production equipment rental business. In addition, in the post-production business, creative talent is an important factor and attracting and retaining key customers. Competition for quality personnel in each of these areas is intense, particularly with respect to all areas relating to digital image capture expertise and optics. New Panavision cannot be sure that it will be successful in hiring, assimilating or retaining the necessary personnel, and a failure to do so could have an adverse effect on operating results.

New Panavision may not be able to obtain capital when desired on favorable terms, if at all, and it may not be able to obtain capital or complete acquisitions through the use of equity without dilution to its stockholders.

New Panavision may need additional financing to execute its current or future business strategies, including to develop new or enhance existing products and services, acquire businesses and technologies, or otherwise to respond to competitive pressures.

If New Panavision raises additional funds through the issuance of equity or convertible debt securities, the percentage ownership of its stockholders could be significantly diluted, and newly-issued securities may have rights, preferences or privileges senior to those of existing stockholders. If New Panavision accumulate additional funds through debt financing, a substantial portion of its operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds available for its business activities. There can be no assurance that additional financing will be available on terms favorable to New Panavision, or at all. If adequate funds are not available or are not available on acceptable terms, when New Panavision desires them, its ability to fund its operations, take advantage of unanticipated opportunities, develop or enhance its products and services, or otherwise respond to competitive pressures would be significantly limited. Any of these factors could harm the results of operations of New Panavision.

 

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New Panavision’s substantial indebtedness could adversely affect its financial condition, its ability to pay its debts or raise additional capital to fund its operations, its ability to operate its business and its ability to react to changes in the economy or its industry and could divert its cash flow from operations for debt payments.

New Panavision will have a significant amount of indebtedness. As of September 30, 2018, on a pro forma basis after giving effect to the Business Combination, its total indebtedness, excluding unamortized discount, premium, and issuance costs, was approximately $254 million. New Panavision’s substantial debt obligations could have important consequences, including:

 

   

requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on New Panavision’s indebtedness, thereby reducing its ability to use its cash flow to fund its operations and pursue future business opportunities;

 

   

exposing New Panavision to increased interest expense, as its degree of leverage may cause the interest rates of any future indebtedness (whether fixed or floating rate interest) to be higher than they would be otherwise;

 

   

exposing New Panavision to the risk of increased interest rates because certain of its indebtedness is at variable rates of interest;

 

   

making it more difficult for New Panavision to satisfy its obligations with respect to its indebtedness, and any failure to comply with the obligations of any of New Panavision’s debt instruments, including restrictive covenants, could result in an event of default that accelerates its obligation to repay indebtedness;

 

   

increasing New Panavision’s vulnerability to adverse economic, industry or competitive developments;

 

   

restricting New Panavision from making strategic acquisitions or causing it to make non-strategic divestitures;

 

   

limiting New Panavision’s ability to obtain additional financing for working capital, product development, satisfaction of debt service requirements, acquisitions and general corporate or other purposes; and

 

   

limiting New Panavision’s flexibility in planning for, or reacting to, changes in its business or market conditions and placing New Panavision at a competitive disadvantage compared to its competitors who may be better positioned to take advantage of opportunities that New Panavision’s leverage prevents it from exploiting.

New Panavision could be adversely affected by strikes and other union activity.

New Panavision is currently subject to certain collective bargaining agreements and may in the future become subject to additional collective bargaining agreements. In addition, a strike, lockout, work stoppage or similar action by one or more of the unions that provide personnel essential to New Panavision’s business could delay or halt its operations. For instance, the South African office of one of Panavision’s subsidiaries was recently the subject of a strike (which is no longer pending) by some of its workers, organized by a union purporting to have the right to represent its workforce. Such halts or delays could adversely affect New Panavision’s business and results of operations. In addition, wage and benefit increases resulting from new labor agreements could have an adverse impact on New Panavision’s results of operations.

New Panavision will depend upon key suppliers.

New Panavision will use outside vendors for the manufacture of certain components used in its products, such as the grinding, manufacture and polishing of certain camera lens elements. There is a limited number of companies throughout the world that are capable of delivering these elements to New Panavision’s specifications. New Panavision also depends upon vendors for the supply of its digital image capture camera inventory. Currently, Arri is the vendor of the majority of its digital image capture camera inventory, and RED is a key supplier for New Panavision’s Millennium DXL and Millennium DXL2. New Panavision generally will

 

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not have long term supply contracts with its outside vendors. If New Panavision were to lose one or more of such vendors, or if it were otherwise unable to obtain such components on terms that are favorable to New Panavision, it could disrupt New Panavision’s business in a manner that leads to an adverse effect on its results of operations.

New Panavision’s operations are subject to additional risks inherent in international operations.

New Panavision will conduct operations outside the United States, most significantly in Canada and the United Kingdom. Conducting extensive international operations subjects New Panavision to risks that are inherent in international operations, including challenges posed by different pricing environments and different forms of competition; lack of familiarity and burdens of complying with foreign laws, legal standards, regulatory requirements, tariffs and other barriers; unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties, or other trade restrictions; differing technology standards; difficulties in collecting accounts receivable; difficulties in managing and staffing international operations; varying expectations as to employee standards; potentially adverse tax consequences, including possible restrictions on the repatriation of earnings; and reduced or varied protection for intellectual property rights in some countries.

New Panavision will be subject to the effects of foreign currency fluctuations, international tariffs and social, political and economic risks affecting foreign operations.

On a pro forma basis after giving effect to the Business Combination, for the nine months ended September 30, 2018 and for the fiscal year ended December 31, 2017, approximately 58% and 61%, respectively, of New Panavision’s revenue was generated outside of the United States. New Panavision expects that international operations will continue to account for a significant portion of its revenue in future periods. As of September 30, 2018, on a pro forma basis after giving effect to the Business Combination, all but $68 million of New Panavision’s indebtedness was comprised of obligations denominated in United States dollars, and New Panavision expects this to continue to be the case. The results of operations of New Panavision’s international subsidiaries will be translated from international currencies to United States dollars. Therefore, the results of operations of New Panavision will be affected by fluctuations in exchange rates between such currencies. In addition to foreign exchange risk, international operations are subject to a number of special risks, including trade barriers, exchange controls, national and regional labor strikes, political risks and risk of increases in duties, taxes and governmental royalties, as well as changes in laws and policies governing operations of foreign-based companies. In addition, earnings of foreign subsidiaries and intercompany payments are subject to foreign income tax rules that may reduce cash flow available to meet required certain debt service and other obligations of New Panavision.

On June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the European Union (commonly referred to as “Brexit”). On March 29, 2017, the U.K. government delivered to the European Council notice of its intention to leave the European Union and, in the absence of an executed withdrawal agreement with the European Union, the effective date of the United Kingdom’s withdrawal from the European Union will, unless extended by the European Council in agreement with the United Kingdom, be March 29, 2019. There are many ways in which New Panavision’s business could be affected by this event, only some of which it can identify at this time. The negotiation of the withdrawal agreement has been, to date, a lengthy and contentious process, and New Panavision does not have certainty as to the terms of the United Kingdom’s future relationship with the European Union. Indeed, the negotiations may, ultimately, be unsuccessful and the United Kingdom may not reach agreement with the European Union on the future terms of the United Kingdom’s relationship with the European Union. If no agreement is reached, there will be a period of considerable uncertainty particularly in relation to United Kingdom financial and banking markets as well as on the regulatory process in Europe. As a result of this uncertainty, financial markets could experience volatility which could adversely affect the market price of New Panavision Common Stock. New Panavision may also face new regulatory costs and challenges that could have a material adverse effect on New Panavision’s operations. Depending on the terms of Brexit, the United Kingdom could lose the benefits of global trade agreements negotiated by the European Union on behalf of its members, which may result in increased trade barriers which could make it more difficult to engage in

 

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international business. In addition, currency exchange rates in the pound sterling and the euro with respect to each other and the U.S. dollar have already been adversely affected by Brexit. Should this foreign exchange volatility continue it could cause volatility in New Panavision’s financial results.

Furthermore, the current political landscape has introduced significant uncertainty with respect to future trade regulations and existing international trade agreements, as shown by the recent U.S.-initiated renegotiation of the North America Free Trade Agreement. This uncertainty includes the possibility of imposing tariffs or penalties on products manufactured outside the U.S., including the March 22, 2018 announcement of the U.S. government’s institution of a 25% tariff on a range of products from China and the potential for increased trade barriers between the UK and the European Union. The institution of trade tariffs both globally and between the U.S. and China specifically, carries the risk of negatively affecting the overall economic conditions of both China and the U.S., which could have a negative impact on New Panavision.

The failure to comply with economic sanction laws and the U.S. FCPA may subject New Panavision to substantial negative consequences.

Economic sanction laws in the United States and other jurisdictions may prohibit New Panavision from transacting with or in certain countries and with certain individuals and companies. In the United States, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) administers and enforces laws, Executive Orders and regulations establishing U.S. economic and trade sanctions. Such sanctions prohibit, among other things, transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals identified by OFAC. In addition, certain programs administered by OFAC prohibit dealing with individuals or entities in certain countries regardless of whether such individuals or entities have been specifically identified by OFAC.

On May 23, 2018, Panavision submitted initial voluntary self-disclosures with respect to certain transactions of Lee Filters, a UK division of Panavision Europe Limited, to OFAC and the United States Department of Commerce, Bureau of Industry and Security (“BIS”) with respect to: (i) apparent violations of OFAC’s Cuban Assets Control Regulations (31 C.F.R. Part 515); (ii) apparent violations of OFAC’s Iranian Transactions and Sanctions Regulations (31 C.F.R. Part 560); and (iii) suspected violations of the Export Administration Regulations with respect to Iran (15 C.F.R. § 764.5). Panavision recently concluded an extensive internal investigation and has determined that, during the period between August 2013 and November 2015, for Lee Filters eight such transactions to counterparties in Iran and two such transactions with one counterparty involving Cuba occurred. Panavision has also determined that one such transaction with Cuba from Direct Digital (a UK subsidiary of Panavision Europe Limited) in 2017 and one such transaction with Cuba from Panalux France (a French subsidiary of Panavision Europe Limited) in 2013 occurred. The value of all transactions was approximately $200,000. Panavision intends to submit its final voluntary self-disclosures to OFAC and BIS reporting these transactions shortly. Based upon the facts involved in the transactions to be reported, Panavision does not believe that any fines resulting from the transactions will be material.

New Panavision will be required to comply with the U.S. Foreign Corrupt Practices Act (“FCPA”) and other anti-corruption laws, anti-bribery laws and regulations, as well as anti-boycott regulations, to which New Panavision will be subject. In recent years, the U.S. Department of Justice and the SEC have devoted greater resources to enforcement of the FCPA. While New Panavision will generally seek to comply with the FCPA, such efforts may not be effective in all instances to prevent violations. In addition, despite New Panavision’s efforts, trading partners may engage in activities that could result in FCPA violations. Any determination that New Panavision has violated the FCPA or other applicable laws could subject us to, among other things, various penalties, fines, litigation or general loss of investor confidence, any one of which may have materially adverse consequences on New Panavision’s businesses, operations, prospects or cash flows due to reprisal from local or foreign governments.

 

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New Panavision will depend on existing facilities, the most important of which will be its facility in California.

Currently, Panavision’s sole lens manufacturing facility is located in Woodland Hills, California. It is also Panavision’s largest warehousing and camera rental facility, and Panavision is dependent on this facility for manufacturing, warehousing and rental. Other important facilities for New Panavision include three London facilities in Greenford, Perivale and Waxlow Road. Similarly, Sim currently depends on its principal facilities at Eastlake Drive, British Columbia, 1017 North Las Palmas Avenue, California, 12-14 Desbrosses, New York and 55 Brown’s Line, Toronto, Ontario (once Sim has occupied such property), for post-production activities and the warehousing of equipment. Accordingly, a disruption of operations at these facilities in particular but also at other facilities where New Panavision will store and service equipment and inventory could have an adverse effect on New Panavision’s business, financial condition and results of operations. Such disruption could result from various factors including a natural disaster such as an earthquake, fire or flood, or a terrorist attack.

New Panavision will not own the real estate for any of its principal facilities. Accordingly, New Panavision’s business will be highly dependent upon the ability to renew existing leases or locate new leasehold premises.

As New Panavision will not own the real estate on which any of its principal facilities are located throughout the world, New Panavision will depend on its ability to renew existing leases as they expire or to locate suitable alternate locations. Many of New Panavision’s operations will be located in markets where there is significant competition for appropriate commercial real estate, that may make it difficult, or more expensive, to renew existing leases or to obtain suitable alternate locations, if necessary. In addition, many of New Panavision’s existing leases (including for some of its principal facilities) contain restrictions, including with respect to a change of control. If New Panavision is unable to obtain the necessary consents relating to a change of control under such leases, the Business Combination could result in an event of default under such leases, which could result in an obligation to repay amounts outstanding under such leases, including rent, make it more difficult to renew the leases at such facilities or permit the landlords to terminate such leases. Furthermore, if it becomes necessary to relocate existing facilities it may cause significant disruption to New Panavision’s operations. Failure to effectively manage these real estate challenges may have an adverse effect on New Panavision’s operations and, accordingly, its results of operations.

New Panavision’s insurance may be insufficient or may not cover certain losses in entirely, which could adversely affect New Panavision’s business.

New Panavision will maintain insurance coverage in respect of its potential liabilities, including theft and the accidental loss of value of its assets from risks, in amounts, with such insurers, and on such terms as New Panavision considers appropriate, taking into account all relevant factors. However, there are certain types of losses, generally of a catastrophic nature such as earthquakes and floods, which may be uninsurable or not economically insurable. New Panavision will use its discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintain appropriate insurance coverage at reasonable costs and on suitable terms. This may result in insurance coverage that, in the event of a substantial loss, would not be sufficient to pay the full current market value or current replacement cost of the lost property. Certain factors also might make it unattractive to use insurance proceeds to replace property after such property has been damaged or destroyed. Under such circumstances, the insurance proceeds that New Panavision would receive might not be adequate to recover its economic position with respect to such properties.

There are no assurances that New Panavision’s insurance coverage will continue to be available to it on reasonable terms, including reasonable premiums, deductibles and co-insurance requirements, or that its insurers will not disclaim coverage of any future claim. New Panavision’s businesses, financial condition, liquidity, prospects and results of operations could be materially adversely affected if any of the foregoing developments were to occur.

 

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New Panavision’s operating results have been and may continue to be subject to seasonal fluctuations.

New Panavision’s business will fluctuate depending upon the schedule upon which studios, OTT producers and other content creators greenlight content production. The production cycle is also subject to seasonal fluctuations. Feature films are not greenlit in accordance with any particular schedule and thus feature film starts are more erratic. Scripted broadcast television production in North America is more cyclical, typically ceasing filming in the second quarter for several months and then resuming production in August. Other episodic productions, commercials and social media content productions are typically less cyclical. These factors may lead to fluctuations in the periodic operating results of New Panavision.

New Panavision will be subject to uncertain privacy laws, compliance with which could increase operating costs. System failure, information leakage and the cost of maintaining sufficient cybersecurity could adversely affect New Panavision’s business.

New Panavision will be subject to a number of laws, rules and directives (“privacy laws”) relating to the collection, use, retention, security, processing and transfer (“process”) of personally identifiable information about its customers and employees (“personal data”) in the countries where New Panavision operates. Much of the personal data that New Panavision will process, especially financial information, is regulated by multiple privacy laws and, in some cases, the privacy laws of multiple jurisdictions. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between or among New Panavision, its subsidiaries, and other parties with which New Panavision will have commercial relationships.

Regulatory scrutiny of privacy, data protection, collection, use and sharing of data is increasing on a global basis. There is uncertainty associated with the legal and regulatory environment around privacy and data protection laws, which continue to develop in unpredictable ways, including with respect to evolving technologies such as cloud computing. Privacy and data protection laws may be interpreted and applied inconsistently from country to country and impose inconsistent or conflicting requirements. Complying with varying jurisdictional requirements could increase the costs and complexity of compliance or require New Panavision to change its business practices in a manner adverse to its business, and violations of privacy and data protection-related laws can result in significant penalties and damage to its brand and business. In addition, compliance with inconsistent privacy laws may restrict New Panavision’s ability to provide products and services to its customers. A determination that there have been violations of privacy or data protection laws could expose us to significant damage awards, fines and other penalties that could, individually or in the aggregate, materially harm New Panavision’s business and reputation.

In October 2015, the European Court of Justice ruled that the U.S.-EU Safe Harbor framework clauses, one compliance method by which companies could transfer personal data regarding citizens of the EU to the U.S., could no longer be relied upon. The U.S. and EU authorities have agreed in principle on a replacement for Safe Harbor known as “Privacy Shield”. The Privacy Shield approach has not been fully endorsed by all relevant parties and there have already been challenges to this initiative in the European justice system. Panavision has chosen to enter into an Inter-Group Transfer Agreement with its subsidiaries as a basis for the export of data from the EU to other parts of the world.

The EU has recently implemented a comprehensive overhaul of its data protection regime from the current national legislative approach to a single European Economic Area Privacy Regulation, the General Data Protection Regulation (“GDPR”). The EU data protection regime extends the scope of the EU data protection law to all foreign companies processing data of EU residents. It provides for a harmonization of the data protection regulations throughout the EU, thereby making it easier for non-European companies to comply with these regulations. It imposes a strict data protection compliance regime with severe penalties of up to the greater of 4% of worldwide turnover and €20 million and includes new rights such as the “portability” of personal data. Although the GDPR will apply across the EU without a need for local implementing legislation, as has been the case under the current data protection regime, local data protection authorities (“DPAs”) will still have the ability

 

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to interpret the GDPR, which has the potential to create inconsistencies on a country-by-country basis. Continuing compliance with the GDPR could require changes to certain of New Panavision’s business practices, thereby increasing its costs.

New Panavision will post on its websites and any applications its privacy policies and practices regarding the collection, use and disclosure of user data. Any failure, or perceived failure, by New Panavision to comply with its posted privacy policies or with any applicable regulatory requirements or orders, or privacy, data protection, information security or consumer protection-related privacy laws and regulations in one or more jurisdictions could result in proceedings or actions against New Panavision by governmental entities or others, including class action privacy litigation in certain jurisdictions, subject New Panavision to significant fines, penalties, judgments and negative publicity, require New Panavision to change its business practices, increase the costs and complexity of compliance, and adversely affect its business. Data protection, privacy and information security have become the subject of increasing public, media and legislative concern. If New Panavision’s customers were to reduce their use of its products and services as a result of these concerns, New Panavision’s business could be materially harmed. As noted above, New Panavision will also be subject to the possibility of security and privacy breaches, which themselves may result in a violation of these privacy laws.

New Panavision may become the target of attempted unauthorized access, computer viruses or malware, and other cyber-attacks designed to access and obtain information on its systems or to disrupt and cause other damage to its services. Although these threats may originate from human error or technological failure, they may also originate from the malice or fraud of internal parties, such as employees, or third parties, including foreign non-state actors and extremist parties. Additionally, New Panavision could also be adversely impacted if any of the third-parties to whom it is interconnected are subject to cyber-attacks or other informational security breaches. Such events could cause interruptions to New Panavision’s systems, reputational damage, customer dissatisfaction, legal liability, enforcement actions or additional costs, any and all of which could adversely affect New Panavision’s financial condition and operations. Security breaches in New Panavision’s post-production business could be particularly serious, since the post-production business has custody of its customers’ content as a breach could lead to loss of a customer’s media required to complete or release a project, or could results in the disclosure of previously unreleased material relating to such project.

New Panavision could be subject to changes in its tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities, which could have a material and adverse impact on New Panavision’s operating results, cash flows and financial condition.

New Panavision will be subject to taxes in the U.S. and numerous foreign jurisdictions, where a number of its subsidiaries are organized. Due to economic and political conditions, tax rates in various jurisdictions including the U.S. may be subject to change. New Panavision’s future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and changes in tax laws or their interpretation, such as interpretations as to the legality of tax advantages granted under the EU state aid rules.

Recently enacted U.S. tax reform legislation known colloquially as the “Tax Cuts and Jobs Act”, among other things, makes significant changes to the rules applicable to the taxation of corporations, such as changing the corporate tax rate to a flat 21% rate, modifying the rules regarding limitations on certain deductions for executive compensation, introducing a capital investment deduction in certain circumstances, placing certain limitations on the interest deduction, modifying the rules regarding the usability of certain net operating losses, implementing a minimum tax on the “global intangible low-taxed income” of a “United States shareholder” of a “controlled foreign corporation”, modifying certain rules applicable to United States shareholders of controlled foreign corporations, imposing a deemed repatriation tax on certain earnings and adding certain anti-base erosion rules. New Panavision’s earnings in the foreign jurisdictions in which it will operate, which are uncertain, may affect the impact of this new legislation on New Panavision’s financial condition. We are currently in the process of analyzing the effects of this new legislation on New Panavision, and at this time the ultimate outcome of the

 

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new legislation on its business and financial condition is uncertain. It is possible that the application of this new legislation (and any other changes in U.S. or international tax legislation) may have a material and adverse impact on New Panavision’s operating results, cash flows and financial condition.

New Panavision will be subject to environmental as well as health and safety regulations that, if not complied with, could have a material and adverse impact on New Panavision’s operating results, cash flows and financial condition.

New Panavision will be subject to federal, provincial, state and local laws and regulations governing occupational health and safety and environmental protection. These laws regulate matters such as wastewater, waste disposal and air quality. Under these laws, New Panavision may be liable for, among other things, the costs of investigating and remediating contamination at its sites or adjacent sites regardless of fault, fines and penalties for non-compliance. Furthermore, some of New Panavision’s businesses will use hazardous materials such as solvents to clean and maintain inventory of rentals equipment. Such businesses may be liable under federal, provincial, state or local laws for environmental contamination at facilities in the event that such materials have been mishandled or incorrectly disposed.

Changes in federal, state, provincial and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies or practices may impact New Panavision’s businesses, financial conditions, results of operations and prospects. New Panavision may also be faced with changes in governments or the interventions of governments or other political or economic developments in the jurisdiction in which it presently, or will in the future, carry on business.

New Panavision may be exposed to liability under prior acquisition agreements of Panavision and Sim.

In connection with prior acquisitions undertaken by Panavision and Sim or their direct and indirect subsidiaries, certain representations and warranties may have been obtained from the selling owners and others, respecting the business and its assets and liabilities. If such representations and warranties were incorrect in any material respect, New Panavision could make a claim under the indemnities received from the selling owners. There is no assurance, however, that New Panavision would be successful in pursuing any such claim. The discovery of any material liabilities for which indemnities were not obtained from the selling owners could have an adverse effect on New Panavision’s results of operation, financial condition or prospects.

Pursuant to the acquisition agreements relating to the acquisitions previously undertaken by Panavision and Sim or their direct and indirect subsidiaries, the selling owners may have agreed to indemnify New Panavision and its subsidiaries in respect of the inaccuracy of representations and warranties of the selling owners contained in those agreements, subject to the limitations contained in those agreements. There may be no restrictions on the use of the cash proceeds received directly or indirectly by the selling owners pursuant to the acquisition agreements or on the ability of the selling owners or their shareholders to dispose of their assets, which may limit the recourse available to New Panavision against the selling owners. As such, there can be no assurance that New Panavision will be able to obtain any amount of any claim for indemnification made by them against the selling owners. Furthermore, there can be no assurance as to the sufficiency of the assets of the selling owners to satisfy any judgments obtained against them in connection with a claim for indemnification under the acquisition agreements.

Risks Related to the Business Combination and SCAC

Our Class F Shareholders have entered into letter agreements with us to vote in favor of the Business Combination, regardless of how our public shareholders vote.

Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business

 

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combination, our Class F Shareholders have agreed to vote all their public shares and Class F ordinary shares in favor of all the proposals being presented at the extraordinary general meeting, including the BCA Proposal. As of the date of this proxy statement/prospectus, our Class F Shareholders own 22.8% of the issued and outstanding ordinary shares.

Neither the SCAC board of directors nor any committee thereof obtained a third party valuation in determining whether or not to pursue the Business Combination.

Neither the SCAC board of directors nor any committee thereof is required to obtain an opinion from an independent investment banking or accounting firm that the price that SCAC is paying for Panavision and Sim is fair to SCAC from a financial point of view. Neither the SCAC board of directors nor any committee thereof obtained a third party valuation in connection with the Business Combination. In analyzing the Business Combination, the SCAC board of directors and management conducted due diligence on Panavision and Sim and researched the industry in which Panavision and Sim operate. The SCAC board of directors reviewed, among other things, financial due diligence materials prepared by professional advisors, including quality of earnings reports and tax due diligence reports, financial and market data information on selected comparable companies, the implied purchase price multiple of Panavision and Sim and the financial terms set forth in the Business Combination Agreement, and concluded that the Business Combination was in the best interest of its shareholders. Accordingly, investors will be relying solely on the judgment of the SCAC board of directors and management in valuing Panavision and Sim, and the SCAC board of directors and management may not have properly valued such businesses. The lack of a third party valuation may also lead an increased number of shareholders to vote against the Business Combination or demand redemption of their shares, which could potentially impact our ability to consummate the Business Combination.

Since the Class F Shareholders Sponsor, including SCAC’s directors and executive officers, have interests that are different, or in addition to (and which may conflict with), the interests of our shareholders, a conflict of interest may have existed in determining whether the Business Combination with Panavision and Sim is appropriate as our initial business combination. Such interests include that Sponsor, as well as our executive officers and directors will lose their entire investment in us if our business combination is not completed.

When you consider the recommendation of SCAC’s board of directors in favor of approval of the BCA Proposal, you should keep in mind that the Class F Shareholders, including SCAC’s directors and executive officers, have interests in such proposal that are different from, or in addition to (which may conflict with), those of SCAC shareholders and warrant holders generally.

These interests include, among other things, the interests listed below:

 

   

If SCAC does not consummate a business combination by the Extension Date, it would cease all operations except for the purpose of winding up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Law to provide for claims of creditors and the requirements of other applicable law. In such event, the 6,243,480 Class F ordinary shares owned by the Class F Shareholders would be worthless because following the redemption of the public shares, SCAC would likely have few, if any, net assets and because our Class F Shareholders have agreed to waive their rights to liquidating distributions from the trust account with respect to the Class F ordinary shares if we fail to complete a Business Combination within the required period. Sponsor purchased the Class F ordinary shares prior to our initial public offering for approximately $0.004 per share. The 4,250,000 Converted Founder Shares (which includes 3,250,000 Contingent Shares) that the Class F Shareholders will hold following the Business Combination, if unrestricted and freely tradable, would have had aggregate market value of $43.0 million based upon the closing price of $10.12 per share of public share on the Nasdaq on December 7, 2018, the most recent closing price. Given such Converted Founder Shares will be subject to such restrictions, we believe such shares have less value.

 

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Adam Chesnoff, SCAC’s President and Chief Executive Officer and a member of its board of directors, is expected to be a director of New Panavision after the consummation of the Business Combination. As such, in the future Mr. Chesnoff will receive any cash fees, stock options, stock awards or other remuneration that the New Panavision board of directors determines to pay to him.

 

   

SCAC’s existing directors and officers will be eligible for continued indemnification and continued coverage under SCAC’s directors’ and officers’ liability insurance after the Business Combination.

 

   

In order to protect the amounts held in the trust account, Sponsor has agreed that it will be liable to SCAC if and to the extent any claims by a vendor for services rendered or products sold to SCAC, or a prospective target business with which SCAC has discussed entering into a transaction agreement, reduce the amount of funds in the trust account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account or to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act.

 

   

Following the consummation of the Business Combination, Sponsor would be entitled to the repayment of any working capital loan and advances that have been made to SCAC and remain outstanding. As of November 30, 2018, an aggregate amount of $1.5 million was outstanding under promissory notes issued by SCAC to Sponsor. If SCAC does not complete an initial business combination by the Extension Date, SCAC may use a portion of its working capital held outside the trust account to repay these working capital loans, but no proceeds held in the trust account would be used to repay the working capital loans.

 

   

Following consummation of the Business Combination, Sponsor, our officers and directors and their respective affiliates would be entitled to reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by SCAC from time to time, made by Sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination. However, if SCAC fails to consummate a business combination within the required period, Sponsor and SCAC’s officers and directors and their respective affiliates will not have any claim against the trust account for reimbursement.

 

   

In connection with the PIPE Investment, assuming the Sponsor PIPE Entity finances $30.0 million of the PIPE Investment, the Sponsor PIPE Entity will receive 3,000,000 shares of New Panavision Common Stock.

 

   

Pursuant to the Director Composition and Standstill Agreement, Sponsor will have the right to designate two directors to the board of directors of New Panavision, the Panavision Holder Representative will agree not to take certain actions in respect of directors designated by SCAC and Sponsor will have certain negative consent rights in respect of future actions taken by New Panavision and its subsidiaries.

 

   

Pursuant to the Registration Rights Agreement, the Class F Shareholders and the Sponsor PIPE Entity (as well as the Principal Panavision Holders) will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect to the shares of New Panavision Common Stock and warrants held by such parties.

 

   

The Proposed Certificate of Incorporation will contain provisions that have the same effect as Section 203, except that they provide that Sponsor, the Key Panavision Stockholders, certain of their affiliates and respective transferees will not be deemed to be “interested stockholders”.

See “BCA Proposal—Interests of SCAC’s Directors and Executive Officers in the Business Combination” for additional information on interests of SCAC’s directors and executive officers.

The personal and financial interests of the Class F Shareholders as well as SCAC’s directors and executive officers may have influenced their motivation in identifying and selecting Panavision and Sim as business

 

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combination targets, completing an initial business combination with Panavision and Sim and influencing the operation of the business following the initial business combination. In considering the recommendations of SCAC’s board of directors to vote for the proposals, its shareholders should consider these interests.

The exercise of SCAC’s directors’ and executive officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in SCAC’s shareholders’ best interest.

In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Business Combination Agreement, would require SCAC to agree to amend the Business Combination Agreement, to consent to certain actions taken by Panavision and Sim or to waive rights that SCAC is entitled to under the Business Combination Agreement. Such events could arise because of changes in the course of Panavision’s and Sim’s businesses, a request by Panavision and Sim to undertake actions that would otherwise be prohibited by the terms of the Business Combination Agreement or the occurrence of other events that would have a material adverse effect on Panavision’s and Sim’s businesses and would entitle SCAC to terminate the Business Combination Agreement. In any of such circumstances, it would be at SCAC’s discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of financial and personal interests of one or more of the directors described in the preceding risk factors may result in a conflict of interest on the part of such director(s) between what he or they may believe is best for SCAC and its shareholders and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, SCAC does not believe there will be any changes or waivers that SCAC’s directors and executive officers would be likely to make after shareholder approval of the BCA Proposal has been obtained. While certain changes could be made without further shareholder approval, SCAC will circulate a new or amended proxy statement/prospectus and resolicit SCAC’s shareholders if changes to the terms of the transaction that would have a material impact on its shareholders are required prior to the vote on the BCA Proposal.

Sponsor and the Panavision Holder Representative will have significant influence over us after completion of the Business Combination.

Upon the completion of the Business Combination, the former equityholders of Panavision and Sim, the Class F Shareholders and the Sponsor PIPE Entity, will own approximately 41.3% of the outstanding New Panavision Common Stock (excluding any Contingent Shares) assuming no public shareholders redeem their public shares in connection with the Business Combination or approximately 51.8% of the outstanding New Panavision Common Stock (excluding any Contingent Shares) assuming that 8,657,776 public shares (being our estimate of the maximum number of public shares that could be redeemed in connection with the Business Combination in order to satisfy the closing conditions contained in the Business Combination Agreement) are redeemed in connection with the Business Combination. As long as the former equityholders of Panavision and Sim and Sponsor own or control a significant percentage of outstanding voting power, they will have the ability to strongly influence all corporate actions requiring stockholder approval, including the election and removal of directors and the size of our board of directors, any amendment of our certificate of incorporation or bylaws, or the approval of any merger or other significant corporate transaction, including a sale of substantially all of our assets. In addition, pursuant to the Director Composition and Standstill Agreement, the Principal Panavision Holders and Sponsor will each have certain rights to designate directors to the board of directors of New Panavision and the Panavision Holder Representative and Sponsor will each have certain negative consent rights with respect to certain future actions taken by New Panavision and its subsidiaries. For additional information, see “BCA Proposal—Related Agreements—Director Composition and Standstill Agreement”. Sponsor’s and the Principal Panavision Holders’ interests may not align with the interests of our other stockholders.

 

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Subsequent to consummation of the Business Combination, we may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your investment.

We cannot assure you that the due diligence conducted in relation to Panavision and Sim has identified all material issues or risks associated with Panavision and Sim, their businesses or the industry in which they compete. Furthermore, we cannot assure you that factors outside of Panavision, Sim and our control will not later arise. As a result of these factors, we may incur additional costs and expenses and we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence has identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. If any of these risks materialize, this could have a material adverse effect on our financial condition and results of operations and could contribute to negative market perceptions about our securities or New Panavision. Accordingly, any shareholders of SCAC who choose to remain New Panavision stockholders following the Business Combination could suffer a reduction in the value of their shares, warrants and units. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the registration statement or proxy statement/prospectus relating to the Business Combination contained an actionable material misstatement or material omission.

Our ability to successfully effect the Business Combination and to be successful thereafter will be dependent upon the efforts of key personnel of New Panavision, some of whom may be from SCAC, Panavision or Sim and some of whom may join New Panavision following the Business Combination. The loss of key personnel or the hiring of ineffective personnel after the Business Combination could negatively impact the operations and profitability of New Panavision.

Our ability to successfully effect the Business Combination and be successful thereafter will be dependent upon the efforts of our key personnel. Although some of SCAC’s key personnel may remain with the target business in senior management or advisory positions following our business combination, we expect Panavision’s and Sim’s current management to remain in place. While we intend to recruit and hire key individuals after the Business Combination, we cannot assure you that we will be successful in identifying, recruiting and integrating such key personnel.

The unaudited pro forma financial information included elsewhere in this proxy statement/prospectus may not be indicative of what New Panavision’s actual financial position or results of operations would have been.

The unaudited pro forma financial information in this proxy statement/prospectus is presented for illustrative purposes only and has been prepared based on a number of assumptions including, but not limited to, SCAC being considered the accounting acquiror in the Business Combination, the total debt obligations and the cash and cash equivalents of Panavision and Sim on the Closing Date, the value of the Contingent Shares and the number of Class A ordinary shares that are redeemed in connection with the Business Combination. Accordingly, such pro forma financial information may not be indicative of our future operating or financial performance and our actual financial condition and results of operations may vary materially from our pro forma results of operations and balance sheet contained elsewhere in this proxy statement/prospectus, including as a result of such assumptions not being accurate. Additionally, the final acquisition accounting adjustments could differ materially from the unaudited pro forma adjustments presented in this proxy statement/prospectus. Any increase or decrease in the fair value of the assets acquired and liabilities assumed, as compared to the information shown herein, could also change the portion of the purchase consideration allocable to goodwill and could impact the operating results of the Company following the Business Combination due to differences in the allocation of the purchase consideration, depreciation and amortization related to some of these assets and liabilities. The unaudited pro

 

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forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies or cost savings that may be associated with the Business Combination. See “Unaudited Pro Forma Condensed Combined Financial Information (Minimum Redemption Scenario)” and “Unaudited Pro Forma Condensed Combined Financial Information (Maximum Redemption Scenario”).

The ability of our public shareholders to exercise redemption rights with respect to a large number of our public shares may not allow us to complete the most desirable business combination or optimize the capital structure of New Panavision.

At the time of entering into the Business Combination Agreement, we did not know how many shareholders may exercise their redemption rights, and therefore, we needed to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. The Business Combination Agreement provides that Panavision’s obligation to consummate the Business Combination is conditioned on, among other things, (1) the consummation of the PIPE Investment prior to or concurrently with the Closing and the Sponsor PIPE Entity committing at least $30.0 million thereof, (2) the consummation of the Debt Financing prior to or concurrently with the Closing, (3) the redemptions by the public shareholders (including the Extension Amendment Redemptions) not exceeding 50% of the Class A ordinary shares held by the shareholders of SCAC at any time prior to the effective time of the Merger, (4) the PIPE Investment proceeds used for purposes of satisfying any redemptions by the public shareholders not exceeding $25.0 million, (5) there being at least $125.0 million remaining in the trust account after satisfying redemptions (including the Extension Amendment Redemptions) and deferred underwriting discounts, and (6) the net tangible assets of New Panavision (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) being at least $5,000,001.

Therefore, unless these conditions are waived by the applicable parties to the Business Combination Agreement, the Business Combination Agreement could terminate and the Business Combination may not be consummated. In addition, the amendment, modification or waiver of certain provisions of the Business Combination Agreement in any manner that would be materially adverse to the lenders under the Debt Facilities requires the prior written consent of the lenders party to the ABL Commitment Letter and Second Lien Commitment Letter. There can be no assurance that the parties to the Business Combination Agreement would waive any such provision of the Business Combination Agreement, or that the lenders under the Debt Facilities would provide any required consents to such amendments, modifications or waivers. Furthermore, as provided in our memorandum and articles of association, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules). In addition, the exercise of redemption rights with respect to a large number of our public shares may make SCAC, Panavision and Sim unable to take such actions as may be desirable in order to optimize the capital structure of New Panavision upon consummation of the Business Combination.

Sponsor, as well as our directors, executive officers, advisors and their affiliates may elect to purchase shares from public shareholders prior to the consummation of the Business Combination, which may influence the vote on the Business Combination and reduce the public “float” of our Class A ordinary shares.

At any time at or prior to the Business Combination, during a period when they are not then aware of any material nonpublic information regarding us or our securities, our Class F Shareholders, Panavision or Sim and/or their directors, officers, advisors or respective affiliates may purchase public shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares or vote their public shares in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our Class F Shareholders, Panavision or Sim and/or their directors, officers, advisors or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling

 

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shareholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that (1) holders of a majority of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the BCA Proposal, the Director Election Proposal, the Stock Issuance Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal, (2) holders of at least two-thirds of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the Domestication Proposal and the Organizational Documents Proposals, (3) each of the Redemption Conditions is satisfied, (4) otherwise limit the number of public shares electing to redeem and (5) New Panavision’s net tangible assets (as determined in accordance with Rule 3a51(g)(1) of the Exchange Act) being at least $5,000,001.

Entering into any such arrangements may have a depressive effect on the ordinary shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he or she owns, either at or prior to the Business Combination.

If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved.

In addition, if such purchases are made, the public “float” of our public shares and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.

We are not registering the shares of New Panavision Common Stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless.

We are not registering the shares of New Panavision Common Stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed, as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, to use our best efforts to file a registration statement under the Securities Act covering the issuance of such shares and maintain a current prospectus relating to the shares of New Panavision Common Stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current, complete or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder or an exemption from registration is available. Notwithstanding the above, if the New Panavision Common Stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In no event will we be required to net cash settle any warrant, or issue securities or

 

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other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of New Panavision Common Stock included in the units. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying shares of New Panavision Common Stock for sale under all applicable state securities laws.

If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received by shareholders may be less than $10.00 per share (which was the offering price in our initial public offering).

Our placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than our independent auditors), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.

Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to complete our business combination within the prescribed time frame, or upon the exercise of a redemption right in connection with our business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per share redemption amount received by public shareholders could be less than the $10.00 per share initially held in the trust account, due to claims of such creditors. In order to protect the amounts held in the trust account, Sponsor has agreed to be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduces the amount of funds in the trust account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account or to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, even in the event that an executed waiver is deemed to be unenforceable against a third party, Sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether Sponsor has sufficient funds to satisfy its indemnity obligations and we have not asked Sponsor to reserve for such indemnification obligations. Therefore, we cannot assure you that Sponsor would be able to satisfy those obligations. None of our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, or if we otherwise enter compulsory or court supervised liquidation, the proceeds held in

 

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the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public shareholders $10.00 per share (which was the offering price in our initial public offering).

If, after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board of directors may be exposed to claims of punitive damages.

If, after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance”. As a result, a bankruptcy court could seek to recover all amounts received by our shareholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing it and us to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.

If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.

If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.

Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.

If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, and thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.

We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure

 

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obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the market prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the market prices of our securities may be more volatile.

Further, 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. SCAC 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, SCAC, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of SCAC’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of SCAC’s initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.

Material weaknesses were identified in the internal controls over financial reporting of our acquiree, Panavision, which could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, investor confidence in our company, and the value of New Panavision Common Stock.

The management of Panavision concluded that, as of December 31, 2017, they did not maintain an effective control environment based on the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Deficiencies were identified in the principles associated with the control environment of the COSO framework, and these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to: (i) the review of manual journal entries, (ii) the sufficiency of accounting resources, (iii) appropriate segregation of duties, (iv) controls over general information technology, specifically surrounding access security, but also including elements of authentication controls and (v) entity level controls over the control environment, risk assessment, control activities, information and communication, and monitoring controls were not designed effectively.

A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The management of Panavision is actively engaged in developing and implementing a remediation plan designed to address these material weaknesses, but its remediation efforts are not complete and are ongoing and the aggregate cost of implementation is unknown. If remediation is not completed in a timely fashion or at all, or if the remediation plan is inadequate, and the Business Combination is consummated, there will be an increased risk that we will be unable to timely file future periodic reports with the SEC and that our future consolidated financial statements

 

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could contain errors that will be undetected. If we are unable to report our results in a timely and accurate manner, we may not be able to comply with the applicable covenants in our financing arrangements and may be required to seek amendments or waivers under these financing arrangements, which could adversely impact our liquidity and financial condition. Further and continued determinations that there are material weaknesses in the effectiveness of our internal control over financial reporting could reduce our ability to obtain financing or could increase the cost of any financing we obtain and require additional expenditures of both money and our management’s time to comply with applicable requirements.

Any failure to implement or maintain required new or improved controls, or any difficulties we encounter in their implementation, could result in additional material weaknesses or in material misstatements in our consolidated financial statements. Any material misstatement could result in a restatement of our consolidated financial statements, cause us to fail to meet our reporting obligations, reduce our ability to obtain financing, or cause investors to lose confidence in our reported financial information, leading to a decline in our stock price. In addition, we may discover additional weaknesses in our internal control over financial reporting.

We are obligated to implement and maintain effective internal control over financial reporting. As of December 31, 2017, the management of Panavision concluded that its internal control over financial reporting was not effective. In the future, we may not complete our analysis of our internal control over financial reporting in a timely manner, or our internal control over financial reporting may not be determined to be effective, or we may discover material weaknesses in our internal control over financial reporting, all of which may adversely affect investor confidence in our company and, as a result, the value of New Panavision Common Stock.

We are required, pursuant to the Exchange Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for each fiscal year. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.

One of our planned acquirees, Panavision, has experienced and is currently experiencing issues with its internal control over financial reporting. The management of Panavision has discovered, and it is possible that they may discover in the future, material weaknesses in their internal control over financial reporting. If, in any future reporting periods, we are unable to conclude that our internal control over financial reporting is effective, or if we are required to restate our financial statements as a result of ineffective internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our securities to decline.

Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate the Business Combination, require substantial financial and management resources and increase the time and costs of completing a business combination.

The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because neither Panavision nor Sim are currently subject to Section 404 of the Sarbanes-Oxley Act. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act are significantly more stringent than those required of either Panavision or Sim as privately-held companies. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable to New Panavision after the Business Combination. If we are not able to implement the requirements of Section 404, including any additional requirements once we are no longer an emerging growth company, in a timely manner or with adequate compliance, we may not be able to assess whether its internal control over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of New Panavision Common Stock. Additionally, once we are no longer an emerging growth company, we will be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.

 

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The price of New Panavision Common Stock, warrants and units may be volatile.

Upon consummation of the Business Combination, the price of New Panavision Common Stock, as well as New Panavision’s warrants and units may fluctuate due to a variety of factors, including:

 

   

changes in the industries in which New Panavision and its customers operate;

 

   

variations in its operating performance and the performance of its competitors in general;

 

   

actual or anticipated fluctuations in New Panavision’s quarterly or annual operating results;

 

   

publication of research reports by securities analysts about New Panavision or its competitors or its industry;

 

   

the public’s reaction to New Panavision’s press releases, its other public announcements and its filings with the SEC;

 

   

New Panavision’s failure or the failure of its competitors to meet analysts’ projections or guidance that New Panavision’s or its competitors may give to the market;

 

   

additions and departures of key personnel;

 

   

changes in laws and regulations affecting its business;

 

   

commencement of, or involvement in, litigation involving the combined company;

 

   

changes in the combined company’s capital structure, such as future issuances of securities or the incurrence of additional debt;

 

   

the volume of shares of New Panavision Common Stock available for public sale; and

 

   

general economic and political conditions such as recessions, interest rates, fuel prices, foreign currency fluctuations, international tariffs, social, political and economic risks and acts of war or terrorism.

These market and industry factors may materially reduce the market price of New Panavision Common Stock, warrants and units regardless of the operating performance of New Panavision, including the Panavision and Sim businesses acquired in the Business Combination.

A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of New Panavision Common Stock to drop significantly, even if the combined company’s business is doing well.

Sales of a substantial number of shares of New Panavision Common Stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of New Panavision Common Stock. Upon completion of the Business Combination, the former equityholders of Panavision and Sim, the Class F Shareholders and the Sponsor PIPE Entity will own approximately 41.3% of the outstanding shares of New Panavision Common Stock (excluding the Contingent Shares) assuming no public shareholders redeem their public shares in connection with the Business Combination or approximately 51.8% of the outstanding New Panavision Common Stock (excluding any Contingent Shares) assuming that 8,657,776 public shares (being our estimate of the maximum number of public shares that could be redeemed in connection with the Business Combination in order to satisfy the closing conditions contained in the Business Combination Agreement) are redeemed in connection with the Business Combination. While each of Sponsor, Sponsor PIPE Entity, the Principal Panavision Holders and the Principal Sim Holders will agree to certain restrictions regarding the transfer of New Panavision Common Stock, these shares may be sold after the expiration of the applicable lock-up. In addition, after the Business Combination, the PIPE Investors (other than the Sponsor PIPE Entity) will hold approximately 6.2% of the outstanding shares of New Panavision Common Stock (excluding Contingent Shares). We intend to file one or more registration

 

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statements prior to or shortly after the closing of the Business Combination to provide for the resale of such shares from time to time. As restrictions on resale end and the registration statements are available for use, the market price of New Panavision Common Stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.

Additionally, immediately following the closing of the Business Combination, there will be 6.0 million Continent Shares outstanding. While the Contingent Shares will be subject to transfer and other restrictions and will be subject to forfeiture on the seventh anniversary of the Closing Date, these shares may be sold by the former equityholders of Panavision and the Class F Shareholders if such shares are no longer subject to such restrictions. For example, 50% of such shares would no longer be subject to forfeiture if the closing price of the New Panavision Common Stock as quoted on Nasdaq is greater than the Minimum Target for 20 trading days over a 30 consecutive trading day period.

The public stockholders will experience immediate dilution as a consequence of the issuance of New Panavision Common Stock as consideration in the Business Combination and in the PIPE Investment.

It is anticipated that, upon completion of the Business Combination, (1) SCAC’s public shareholders are expected to own approximately 52.5% of the outstanding New Panavision Common Stock, (2) the former equityholders of Panavision and Sim (without taking into account any public shares held by Panavision equityholders or Sim stockholders prior to the consummation of the Business Combination), are expected to own approximately 23.6% and 7.7%, respectively, of the outstanding New Panavision Common Stock, (3) the Class F Shareholders are expected to own approximately 2.5% of outstanding New Panavision Common Stock and (4) the PIPE Investors (including the Sponsor PIPE Entity) are expected to own approximately 13.7% of outstanding New Panavision Common Stock. These percentages exclude the Contingent Shares, reflect adjustments to the consideration payable to the equityholders of Panavision as a result of the Extension Amendment Redemptions and assume (i) no public shareholders exercise their redemption rights in connection with the Business Combination, (ii) that New Panavision will issue 12,265,132 shares of New Panavision Common Stock to the former equityholders of Panavision (including 2,750,000 Contingent Shares but which are excluded from such calculation) and 3,100,000 shares of New Panavision Common Stock to the former equityholders of Sim pursuant to the Business Combination Agreement, (iii) 1,993,480 Converted Founder Shares and 7,000,000 private placement warrants are forfeited pursuant to the Contribution Agreement and 3,250,000 Converted Founder Shares become Contingent Shares (which are excluded from such calculations), and (iv) 5,500,000 shares of New Panavision Common Stock are issued to the PIPE Investors upon the consummation of the PIPE Investment. These percentages also do not take into account public warrants to purchase New Panavision Common Stock that will be outstanding immediately following the completion of the Business Combination. If the actual facts are different than these assumptions, the percentage ownership retained by the Company’s existing stockholders in the combined company will be different.

The issuance of additional common stock will significantly dilute the equity interests of existing holders of SCAC securities; and may adversely affect prevailing market prices for our units, public shares and/or public warrants.

Warrants will become exercisable for New Panavision Common Stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

If the Business Combination is completed, outstanding warrants to purchase an aggregate of 12,500,000 shares of New Panavision Common Stock will become exercisable in accordance with the terms of the warrant agreement governing those securities. These warrants will become exercisable 30 days after the completion of the Business Combination. The exercise price of these warrants will be $11.50 per share. To the extent such warrants are exercised, additional shares of New Panavision Common Stock will be issued, which will result in dilution to the holders of New Panavision Common Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such warrants

 

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may be exercised could adversely affect the market price of New Panavision Common Stock. However, there is no guarantee that the public warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless. See “—Even if the Business Combination is consummated, the public warrants may never be in the money, and they may expire worthless and the terms of the warrants may be amended in a manner adverse to a holder if holders of at least 65% of the then outstanding public warrants approve of such amendment”.

Even if the Business Combination is consummated, the public warrants may never be in the money, and they may expire worthless and the terms of the warrants may be amended in a manner adverse to a holder if holders of at least 65% of the then outstanding public warrants approve of such amendment.

The warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and SCAC. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 65% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease the number of shares of New Panavision Common Stock purchasable upon exercise of a warrant.

We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of the New Panavision Common Stock equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you to: (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants; or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants.

Nasdaq may not list New Panavision’s securities on its exchange, which could limit investors’ ability to make transactions in New Panavision’s securities and subject New Panavision to additional trading restrictions.

In connection with the Business Combination, in order to continue to maintain the listing of our securities on Nasdaq, we will be required to demonstrate compliance with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements. We will apply to have New Panavision’s securities listed on Nasdaq upon consummation of the Business Combination. We cannot assure you that we will be able to meet all initial listing requirements. Even if New Panavision’s securities are listed on Nasdaq, New Panavision may be unable to maintain the listing of its securities in the future.

If New Panavision fails to meet the initial listing requirements and Nasdaq does not list its securities on its exchange, Panavision and Sim would not be required to consummate the Business Combination. In the event that Panavision and Sim elected to waive this condition, and the Business Combination was consummated without

 

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New Panavision’s securities being listed on Nasdaq or on another national securities exchange, New Panavision could face significant material adverse consequences, including:

 

   

a limited availability of market quotations for New Panavision’s securities;

 

   

reduced liquidity for New Panavision’s securities;

 

   

a determination that New Panavision Common Stock is a “penny stock” which will require brokers trading in New Panavision Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for New Panavision’s securities;

 

   

a limited amount of news and analyst coverage; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities”. If New Panavision’s securities were not listed on Nasdaq, such securities would not qualify as covered securities and we would be subject to regulation in each state in which we offer our securities because states are not preempted from regulating the sale of securities that are not covered securities.

Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our common shares.

Securities research analysts may establish and publish their own periodic projections for New Panavision following consummation of the Business Combination. These projections may vary widely and may not accurately predict the results we actually achieve. Our share price may decline if our actual results do not match the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could decline. While we expect research analyst coverage following consummation of the Business Combination, if no analysts commence coverage of us, the market price and volume for our common shares could be adversely affected.

Risks Related to the Consummation of the Domestication

The Domestication may result in adverse tax consequences for holders of ordinary shares.

U.S. Holders (as defined in “U.S. Federal Income Tax Considerations” beginning on page 167 of this proxy statement/prospectus) may be subject to U.S. federal income tax as a result of the Domestication. Because the Domestication will occur immediately prior to the redemption of Class A ordinary shares, U.S. Holders exercising redemption rights will be subject to the potential tax consequences of the Domestication. Additionally, non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations” below) may become subject to withholding tax on any dividends paid on New Panavision Common Stock after the Domestication.

A U.S. Holder who on the day of the Domestication beneficially owns (actually or constructively) Class A ordinary shares with a fair market value of less than $50,000 on the date of the Domestication will not recognize any gain or loss and will not be required to include any part of SCAC’s earnings in income. A U.S. Holder who on the day of the Domestication beneficially owns (actually or constructively) Class A ordinary shares with a fair market value of $50,000 or more, but less than 10% of the total combined voting power of all classes of our stock entitled to vote and less than 10% or more of the total value of all classes of our stock, generally will recognize gain (but not loss) in respect of the Domestication as if such U.S. Holder exchanged its Class A ordinary shares for New Panavision Common Stock in a taxable transaction, unless such U.S. Holder elects in accordance with applicable Treasury Regulations to include in income as a deemed dividend the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to the Class A ordinary

 

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shares held directly by such U.S. Holder. A U.S. Holder who on the day of the Domestication beneficially owns (actually or constructively) 10% or more of the total combined voting power of all classes of our stock entitled to vote or 10% or more of the total value of all classes of our stock, will generally be required to include in income as a deemed dividend the all earnings and profits amount attributable to the Class A ordinary shares held directly by such U.S. Holder.

Additionally, proposed Treasury Regulations with a retroactive effective date have been promulgated under Section 1291(f) of the Code which generally require that, a U.S. person who disposes of stock of a PFIC (including for this purpose exchanging warrants for newly issued warrants in the Domestication) must recognize gain equal to the excess of the fair market value of such PFIC stock over its adjusted tax basis, notwithstanding any other provision of the Code. Because SCAC is a blank check company with no current active business, we believe that it is likely that SCAC is classified as a PFIC for U.S. federal income tax purposes. As a result, these proposed Treasury Regulations, if finalized in their current form, would generally require a U.S. Holder of Class A ordinary shares to recognize gain on the exchange of Class A ordinary shares or warrants for New Panavision common stock or warrants pursuant to the Domestication unless such U.S. Holder has made certain tax elections with respect to such U.S. Holder’s Class A ordinary shares. The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on complex rules designed to offset the tax deferral to such U.S. Holder on the undistributed earnings, if any, of SCAC. The same rule may also apply to a U.S. Holder who exchanges warrants for newly issued warrants; a U.S. Holder, however, cannot currently make the elections mentioned above with respect to such U.S. Holder’s warrants. It is not possible to determine at this time whether, in what form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code will be adopted.

All holders are urged to consult their tax advisor for the tax consequences of the Domestication to their particular situation. For a more detailed description of the U.S. federal income tax consequences associated with the Domestication, see “U.S. Federal Income Tax Considerations” (beginning on page 167 of this proxy statement/prospectus).

Upon consummation of the Business Combination, the rights of holders of New Panavision Common Stock arising under the DGCL as well as Proposed Organizational Documents will differ from and may be less favorable to the rights of holders of Class A ordinary shares arising under the Cayman Islands Companies Law as well as our current memorandum and articles of association.

Upon consummation of the Business Combination, the rights of holders of New Panavision Common Stock will arise under the Proposed Organizational Documents as well as the DGCL. Those new organizational documents and the DGCL contain provisions that differ in some respects from those in our current memorandum and articles of association and the Cayman Islands Companies Law and, therefore, some rights of holders of New Panavision Common Stock could differ from the rights that holders of Class A ordinary shares currently possess. For instance, while class actions are generally not available to shareholders under Cayman Islands Companies Law, such actions are generally available under the DGCL.