S-4 1 d763688ds4.htm S-4 S-4
Table of Contents

As filed with the Securities and Exchange Commission on September 5, 2019

Registration No. 333-[]

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

TPG Pace Holdings Corp.

(Exact Name of Registrant as Specified in its Articles of Association)

 

 

 

Cayman Islands   7011   98-1350261

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(IRS Employer

Identification Number)

301 Commerce St., Suite 3300

Fort Worth, TX 76102

(212) 405-8458

(Address, including Zip Code, and Telephone Number, including Area Code, of Principal Executive Offices)

 

 

Jerry Neugebauer

c/o

TPG Pace Holdings Corp.

301 Commerce St., Suite 3300

Fort Worth, TX 76102

Telephone: (212) 405-8458

Facsimile: (512) 533-6601

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

 

 

Copies to:

 

James R. Griffin, Esq.

Weil, Gotshal & Manges LLP

200 Crescent Court, Suite 300

Dallas, TX 75201

(214) 746-7779

 

Douglas Warner, Esq.

Christopher Machera, Esq.

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

(212) 310-8000

 

Mark Stevens, Esq.

Ken Myers, Esq.

Scott Behar, Esq.

Nicolas Dumont, Esq.

Fenwick & West LLP

902 Broadway, Suite 14

New York, NY 10010

(212) 430-2600

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this registration statement.

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, a smaller reporting company, or 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-1(d) (Cross Border Third-Party Tender Offer)  ☐

 

 


Table of Contents

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to be Registered

 

Amount

to be

Registered

 

Proposed

Maximum

Offering Price

Per Unit

 

Proposed

Maximum

Aggregate

Offering Price

 

Amount of

Registration Fee

Class A-1 common stock to be exchanged in the Pace Domestication(1)

  45,000,000(2)   N/A   $461,925,000(3)   $55,985.31(4)

Class A-1 common stock to be issued in the Business Combination

  23,732,993(5)(6)   N/A   $243,619,169.02(7)   $29,526.64(8)

Class A-2 common stock to be issued in the Business Combination

  3,000,000(8)   N/A   $30,795,000(9)(10)   $3,732.35(11)

Warrants to purchase Class A-1 common stock to be issued in the Business Combination

  2,444,444 (12)   N/A   $28,111,106(13)   $3,407.07(14)

Aggregate Fee

              $92,651.37

 

 

 

 

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 of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

(1)

Prior to the consummation of the transactions described in this proxy statement/prospectus forming part of this registration, the registrant (together with such entity following the Pace Domestication,“Pace”), intends to effect a deregistration of Pace as an exempted company in the Cayman Islands under the Cayman Islands Companies Law (2018 Revision), and domestication as a corporation incorporated under the laws of the State of Delaware under Section 388 of the DGCL, pursuant to which Pace’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “Pace Domestication”). All securities being registered will be issued by Pace (after the Pace Domestication), the continuing entity following the Pace Domestication.

(2)

Represents the number of shares of Class A-1 common stock (“Class A-1 Shares”), par value $0.0001 per share, of Pace to be issued to holders of Class A ordinary shares, par value $0.0001 per share, of Pace (the “Public Shares”) in the Pace Domestication.

(3)

Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is (i) $10.265 (the average of the high and low prices of Public Shares as reported on NYSE on August 30, 2019) multiplied by (ii) 45,000,000 Class A-1 Shares to be registered.

(4)

Computed in accordance with Rule 457(f) under the Securities Act to be $55,985.31, which is equal to 0.0001212 multiplied by the proposed maximum aggregate offering price of Class A-1 Shares of $461,925,000.

(5)

Represents the estimated maximum number of shares of Class A-1 Shares to be issued to Sellers that are not Business Combination Private Placement Sellers (as defined herein) upon completion of the Business Combination (defined herein), estimated solely for the purpose of calculating the registration fee and assuming that all Sellers (as defined herein) do not make any Cash Elections (as defined herein), and is based on an amount equal to (a) the sum of (i) 490,130 shares of Class A common stock, no par value, of Accel Entertainment, Inc. (“Accel”), (ii) 639,228 shares of Class B common stock, no par value, of Accel, (iii) 314,881 shares of Class C(1) preferred stock, no par value, of Accel, (iv) 637,929 shares of Class C(2) preferred stock, no par value, of Accel, (v) 482,339 shares of Class C(3) preferred stock, no par value, of Accel, (vi) 4,280 shares of Class C(4) preferred stock, no par value, of Accel, (vii) 944,925 shares of Class D preferred stock, no par value, of Accel, (viii) warrants to purchase 91,350 shares of Class C(1) preferred stock, no par value, of Accel, and (ix) options to purchase 148,030 shares of Class A common stock, no par value, of Accel, less (b) the sum of (i) 389,275 shares of Class A common stock, no par value, of Accel, (ii) 639,228 shares of Class B common stock, no par value, of Accel, (iii) 263,628 shares of Class C(1) preferred stock , no par value, of Accel, (iv) 543,806 shares of Class C(2) preferred stock, no par value, of Accel, (v) 362,731 shares of Class C(3) preferred stock, no par value, of Accel, (vi) 2,140 shares of Class C(4) preferred stock, no par value, of Accel, (vii) no shares of Class D preferred stock, no par value, of Accel, (viii) warrants to purchase 75,600 shares of Class C(1) preferred stock, no par value, of Accel and (ix) options to purchase 97,826 shares of Class A common stock, no par value, of Accel, estimated to be exchanged by Business Combination Private Placement Sellers in connection with the Business Combination Private Placement, pursuant to the Transaction Agreement, the Key Holder Support Agreement and the Holder Support Agreement (each, as defined herein) multiplied by (c) 17.21, the estimated exchange ratio under the Transaction Agreement, equal to (x) $177 divided by (y) the quotient equal to $462,756,811, the balance in the Trust Account as of August 30, 2019, divided by 45,000,000 outstanding Public Shares.

(6)

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

(7)

Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is (i) $10.265 (the average of the high and low prices of Public Shares as reported on NYSE on August 30, 2019) multiplied by (ii) 23,732,993 Class A-1 Shares to be registered.

(8)

Computed in accordance with Rule 457(f) under the Securities Act to be $29,526.64, which is equal to 0.0001212 multiplied by the proposed maximum aggregate offering price of Class A-1 Shares of $243,619,169.02.

(9)

Represents the estimated maximum number of shares of Class A-2 common stock, par value $0.0001 per share, of Pace (“Class A-2 Shares”) to be issued to Sellers in connection with the Business Combination pursuant to the Transaction Agreement and is equal to 3,000,000 Class A-2 Shares.

(10)

Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is (i) $10.265 (the average of the high and low prices of Public Shares as reported on NYSE on August 30, 2019) multiplied by (ii) 3,000,000 Class A-2 Shares to be registered.

(11)

Computed in accordance with Rule 457(f) under the Securities Act to be $3,732.35, which is equal to 0.0001212 multiplied by the proposed maximum aggregate offering price of the Class A-2 Shares of $30,795,000.

(12)

Represents the estimated maximum number of warrants of Pace to be issued to Sellers in connection with the Business Combination and is equal to the 2,444,444 New Pace Warrants to be issued pursuant to the Transaction Agreement and the New Pace Warrant Agreement (as defined herein).

(13)

Pursuant to Rule 457(g), the proposed aggregate maximum offering price is the product of (i) $11.50 (the price at which each New Pace Warrant may be exercised) multiplied by (ii) 2,444,444 New Pace Warrants.

(14)

Computed in accordance with Rule 457(f) under the Securities Act to be $3,407.07, which is equal to 0.0001212 multiplied by the proposed maximum aggregate offering price of New Pace Warrants of $28,111,106.

 

 

 


Table of Contents

EXPLANATORY NOTE

This proxy statement/prospectus relates to a Transaction Agreement, dated as of June 13, 2019 (as amended on July 22, 2019 and as it may be further amended from time to time, the “Transaction Agreement”), by and among TPG Pace Holdings Corp., a Cayman Islands exempted company (together with such entity following the Pace Domestication, “Pace”), each of the shareholders of Accel Entertainment, Inc., an Illinois corporation (“Accel”) named as Sellers therein (each a “Seller” and collectively, including those Accel shareholders joined to the Transaction Agreement pursuant to the Drag-Along Agreement (as defined below), the “Sellers”) and David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein) (each of David W. Ruttenberg and John S. Bakalar in their capacity as a “Shareholder Representative” and collectively, the “Shareholder Representatives”). Pursuant to the Transaction Agreement and in connection therewith, among other things and subject to the terms and conditions contained therein:

 

   

Pace will acquire, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock of Accel (together, the “Accel Stock”) held by the Sellers (the “Stock Purchase”);

 

   

following the closing of the Stock Purchase, Accel will merge with and into New Pace LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Pace (“NewCo”), with NewCo surviving such merger (the “Merger” and, together with the other transactions contemplated by the Transaction Agreement, the “Business Combination”);

 

   

immediately prior to the Stock Purchase, Pace will domesticate (or transfer by way of continuation as a matter of Cayman Islands law) as a Delaware corporation (the “Pace Domestication”) in accordance with Section 388 of the Delaware General Corporation Law (the “DGCL”), whereupon (i) each Class A ordinary share of Pace (each, a “Public Share”) shall be converted into one share of Class A-1 common stock, par value $0.0001 per share, of Pace (each, a “Class A-1 Share”), (ii) each Class F ordinary share of Pace (each, a “Founder Share”) shall be converted into one share of Class F common stock, par value $0.0001 per share, of Pace (each, a “Class F Share”) and (iii) the warrants held by TPG Pace II Sponsor, LLC, a Cayman Islands limited liability company and the sponsor of Pace (“Pace Sponsor”) that were issued to Pace Sponsor in a private placement prior to the consummation of Pace’s initial public offering (the “Pace IPO”), each of which is exercisable for one Public Share at an exercise price of $11.50 per Public Share, in accordance with its terms (the “Private Placement Warrants”) and the warrants that are included in the units sold in the Pace IPO (the “Public Units”), consisting of one Public Share and one-third of a Public Warrant of Pace, each of which is exercisable for one Public Share at an exercise price of $11.50 per Public Share, in accordance with its terms (the “Public Warrants”), in each case, shall entitle the holder to acquire a corresponding number of Class A-1 Shares on the same terms as in effect immediately prior to the effective time of the Pace Domestication;

 

   

immediately prior to the Stock Purchase and following the Pace Domestication, Pace Sponsor will, pursuant to a letter agreement dated as of June 13, 2019 (as amended on July 22, 2019 and as it may be further amended from time to time, the “Pace Sponsor Support Agreement”), by and among Pace Sponsor, Pace and the Shareholder Representatives, (i) surrender for cancelation 1,250,000 of its Class F Shares and any additional Class F Shares necessary to ensure its aggregate ownership of Class A-1 Shares would not exceed 10.25% of the aggregate ownership of all holders of Class A-1 Shares (after giving pro forma effect to the Stock Purchase), (ii) exchange 2,000,000 Class F Shares for an equal number of shares of Class A-2 common stock, par value $0.0001 per share, of Pace (each, a “Class A-2 Share” and together with the Class A-1 Shares, the “Pace Shares”), which shall be subject to terms set forth in the Restricted Stock Agreement (as defined below), (iii) exchange any remaining Class F Shares (up to 7,800,000) for an equal number of Class A-1 Shares (such cancelations and exchanges by Pace Sponsor referenced in clauses (i) through (iii) above, the “Sponsor Class F Share Exchange”), (iv) surrender for cancelation 2,444,444 Private Placement Warrants held by Pace Sponsor (the “Sponsor Warrant Cancelation”), and (v) contribute 500,000 Class A-1 Shares to a donor advised fund of its choice for purposes of participation in charitable efforts in the communities in which Pace

 

i


Table of Contents
 

Sponsor and its affiliates operate, or anticipate operating (provided that Pace Sponsor may, with the prior written consent of Accel, elect to contribute cash to such donor advised fund in lieu of some or all of such Class A-1 Shares at a rate of $10.22 per share and surrender for cancelation a number of Class A-1 Shares to Parent equal to the amount of cash contributed divided by $10.22 per share) (the “Sponsor Contribution,” and collectively with the Sponsor Class F Share Exchange and the Sponsor Warrant Cancelation, the “Sponsor Transactions”);

 

   

following the Sponsor Transactions but immediately prior to the Stock Purchase, Pace Sponsor will distribute all of its Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants to its members, TPG Pace II Sponsor Successor, LLC (“Pace Sponsor Successor”), TPG Pace Governance, LLC (“Pace Governance”) and Karl Peterson (collectively, the “Pace Sponsor Members”);

 

   

immediately prior to the Stock Purchase and following the Pace Domestication, the independent directors of Pace will exchange, pursuant to letter agreements, dated June 13, 2019, by and between such directors and Pace (the “Director Letter Agreement”), 200,000 Class F Shares for an equal number of Class A-1 Shares (such exchanges by such Pace directors, the “Director Class F Share Exchange,” and together with the Sponsor Class F Share Exchange, the “Class F Share Exchange”);

 

   

in connection with the Stock Purchase, each Seller will receive in exchange for their Accel Stock, (a) cash consideration equal to the number of shares of Accel Stock for which such Seller has elected to receive cash, in exchange for their shares of Accel Stock (a “Cash Election”), multiplied by $177 per share (the “Purchase Price”) and (b) share consideration comprised of a number of Class A-1 Shares equal to the number of shares of Accel Stock for which such Seller does not make a Cash Election multiplied by an exchange ratio calculated by dividing the Purchase Price by a per share price (the “Public Share Value”) equal to the aggregate balance of the Trust Account immediately prior to closing of the Stock Purchase and prior to any redemptions of Public Shares divided by the number of then outstanding Public Shares, and subject to pro rata adjustment in the event that aggregate Cash Elections by the Sellers exceed $350,000,000;

 

   

in connection with the Stock Purchase and concurrently with entering into the Transaction Agreement, certain Sellers, being certain members of management of Accel, have made Cash Elections with respect to less than 20% of the number of shares of Accel Stock owned by such Seller and each of its affiliates on an aggregated basis, pursuant to a key holder support agreement with Pace (the “Key Holder Support Agreement”);

 

   

in connection with the Stock Purchase and concurrently with entering into the Transaction Agreement, certain other Sellers have made a non-binding Cash Election, pursuant to a holder support agreement (the “Holder Support Agreement”);

 

   

in connection with the Stock Purchase, Pace will issue to each Seller that makes a Cash Election with respect to less than 70% of its shares of Accel Stock, its pro rata share of 2,444,444 warrants to acquire Class A-1 Shares (the “New Pace Warrants”), which will be subject to the terms of the warrant agreement (the “New Pace Warrant Agreement”) to be entered into at the closing of the Stock Purchase, by and between Pace and each Seller that will receive New Pace Warrants, with such pro rata share to be determined with reference to a number of shares equal to 70% of such Seller’s shares of Accel Stock less the number of shares of Accel Stock in respect of which the Seller made a Cash Election;

 

   

in connection with the Stock Purchase, Pace will issue to each Seller that makes a Cash Election with respect to less than 70% of its shares of Accel Stock, its pro rata share of 3,000,000 Class A-2 Shares, which shall have the terms set forth in the Restricted Stock Agreement (as defined below), with such pro rata share to be determined with reference to a number of shares equal to 70% of such Seller’s shares of Accel Stock less the number of shares of Accel Stock in respect of which the Seller made a Cash Election;

 

   

holders of Founder Shares have agreed to waive, pursuant to a waiver agreement (the “Waiver Agreement”), any adjustment to the conversion ratio of Founder Shares set forth in Pace’s amended and

 

ii


Table of Contents
 

restated memorandum and articles of association (the “Articles”) resulting from the Investment Private Placement (as described below);

 

   

Pace will, pursuant to Subscription Agreements (as defined below), with the Investors (as defined below) issue and sell to the Investors, and the Investors will subscribe for and purchase, Class A-1 Shares, as described below;

 

   

at the closing of the Stock Purchase, Pace, the Pace Sponsor Members and certain other persons, including members of management of Accel, certain Accel shareholders, the independent directors of Pace and each other person who has executed and delivered a joinder to the Registration Rights Agreement, including any person who (1) will be a stockholder of Pace immediately following the Business Combination, (2) either (A) makes a written request to Pace to enter into the Registration Rights Agreement or (B) will, immediately following the Business Combination, be subject to Section (b)(2) of Rule 144 of the Securities Act with respect to such person’s Class A-1 Shares following the Business Combination and (3) elects to enter into a Registration Rights Agreement (such parties other than Pace, together with each other person who has executed and delivered a joinder to the Registration Rights Agreement, the “Registration Rights Holders”), will enter into a Registration Rights Agreement (the “Registration Rights Agreement”);

 

   

at the closing of the Stock Purchase, Pace, the Pace Sponsor Members and certain other persons, including Sellers that will receive Class A-2 Shares (such parties other than Pace, the “Restricted Stockholders”), will enter into a Restricted Stock Agreement (the “Restricted Stock Agreement”); and

 

   

Pace Sponsor will, pursuant to the Pace Sponsor Support Agreement, vote in favor of the Business Combination.

In addition and in connection with the foregoing, Pace entered into a Support Agreement with Accel concurrently upon the execution of the Transaction Agreement (the “Support Agreement”), pursuant to which (i) Accel will use commercially reasonable efforts to assist the Sellers in complying with certain covenants contained therein, and (ii) Pace and Accel have agreed to certain expense reimbursement arrangements payable under certain circumstances upon termination of the Transaction Agreement.

In addition, and in connection with the foregoing, each of the Sellers who had duly executed and delivered a signature page to the Transaction Agreement as of June 13, 2019 (the “Dragging Shareholders”) being parties to the Drag-Along Agreement, (the “Drag-Along Agreement”) dated as of June 13, 2019, by and among Pace and the Dragging Shareholders, issued a written notice dated July 23, 2019 (the “Drag-Along Notice”), to Accel and shareholders of Accel that are not Dragging Shareholders (the “Drag-Along Shareholders”). Pursuant to the Drag-Along Notice, the Dragging Shareholders exercised their drag-along rights under and in accordance with the Second Amended and Restated Statement of Designation of Preferred Shares of Accel Entertainment, Inc., dated as of March 7, 2016 (the “Accel Articles”), and in accordance with the Drag-Along Agreement, the Dragging Shareholders will cause each Accel shareholder who had not entered into the Transaction Agreement on June 13, 2019, to deliver a joinder to the Transaction Agreement, pursuant to which such shareholder will be admitted to the Transaction Agreement as a Seller and will agree to be bound by all of the terms and conditions of the Transaction Agreement (as modified by such joinder).

In connection with the foregoing and pursuant to the terms of the Transaction Agreement, the Key Holder Support Agreement and the Holder Support Agreement, Sellers party to either the Key Holder Support Agreement or the Holder Support Agreement, all of whom are “accredited investors” (as defined by Rule 501 of the Regulation D) (the “Business Combination Private Placement Sellers”), will receive, in exchange for their shares of Accel Stock, Class A-1 Shares and Class A-2 Shares issued pursuant to a private placement and not registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder (the “Business Combination Private Placement”) as well as cash consideration as a result of their Cash Elections, in each case, in an amount calculated pursuant to the Transaction Agreement. The closing of the Business Combination Private Placement will occur as part of the closing of the Stock Purchase.

 

iii


Table of Contents

In addition, and in connection with the foregoing and concurrently with the execution of the Transaction Agreement, Pace entered into subscription agreements with certain investors (the “Original General Investors”) that are “accredited investors” (as defined by Rule 501 of Regulation D) and a subscription agreement with an affiliate of Pace that is an “accredited investor” (as defined by Rule 501 of Regulation D) (the “Pace Affiliate” and, together with the Original General Investors, the “Original Investors”) (the subscription agreement with the Pace Affiliate together with the subscription agreements with the Original General Investors, the “Original Subscription Agreements”). On August 13, 2019, Pace entered into an additional subscription agreement, on the same terms as the Original Subscription Agreements with the Original General Investors, with an “accredited investor” (as defined by Rule 501 of Regulation D) (such investor, the “Additional Investor,” and together with the Original General Investors, the “General Investors,” and the Additional Investor together with the Original Investors, the “Investors,” and such additional subscription agreement together with the Original Subscription Agreements, the “Subscription Agreements”). Pursuant to the Subscription Agreements, the Investors agreed to subscribe for and purchase and Pace agreed to issue and sell to such Investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million (the “Investment Private Placement”). The Subscription Agreement to which the Pace Affiliate is a party is substantially similar to the Subscription Agreements to which the General Investors are parties except that: (a) the Pace Affiliate may assign its rights under the Subscription Agreement, subject to compliance with the securities laws; and (b) the Pace Affiliate is not entitled to liquidated damages if there is a delay in the registration of the securities. The proceeds from the Investment Private Placement will be used to fund a portion of the cash consideration required to effect the Stock Purchase. The closing of the Investment Private Placement will occur immediately prior to the closing of the Stock Purchase and is conditioned thereon and on other customary closing conditions. The Class A-1 Shares to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act, and will be issued in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

This proxy statement/prospectus serves as:

 

   

A proxy statement for the extraordinary general meeting of Pace in lieu of the 2019 annual general meeting of Pace being held on [●], 2019, where Pace shareholders will vote on, among other things, proposals to (i) adopt the Transaction Agreement and approve the transactions contemplated thereby, including the Business Combination, (ii) change Pace’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, (iii) approve the issuance of the Class A-1 Shares and Class A-2 Shares in connection with the Business Combination and (iv) adopt the amended and restated certificate of incorporation of Pace under the DGCL to be effective upon the consummation of the Business Combination (the “Proposed Charter”);

 

   

A prospectus for the Class A-1 Shares that holders of Public Shares (the “public shareholders”) will receive in exchange for their Public Shares in the Pace Domestication; and

 

   

A prospectus for the Class A-1 Shares, Class A-2 Shares and New Pace Warrants that Sellers that are not Business Combination Private Placement Sellers will receive in the Business Combination.

This proxy statement/prospectus does not serve as a prospectus for (1) the Class A-1 Shares, Class A-2 Shares, Class F Shares that the Pace Initial Shareholders will receive in the Business Combination, (2) the Class A-1 Shares, the Class A-2 Shares or the New Pace Warrants that the Business Combination Private Placement Sellers will receive in the Business Combination Private Placement or (3) the Class A-1 Shares that Investors will receive in the Investment Private Placement.

 

iv


Table of Contents

The information contained in this document is subject to completion or amendment. A registration statement relating to these securities has been filed with the United States Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

PRELIMINARY — SUBJECT TO COMPLETION, DATED SEPTEMBER 5, 2019

LETTER TO SHAREHOLDERS OF TPG PACE HOLDINGS CORP.

TPG Pace Holdings Corp.

301 Commerce Street, Suite 3300

Fort Worth, Texas 76102

Dear TPG Pace Holdings Corp. Shareholder:

You are cordially invited to attend an extraordinary general meeting of TPG Pace Holdings Corp., a Cayman Islands exempted company (together with such entity following the Pace Domestication, “Pace”) in lieu of the 2019 annual general meeting of Pace, which will be held on [●] at [●] local time at [●] (the “Extraordinary General Meeting”).

On June 13, 2019, Pace, each of the shareholders of Accel Entertainment, Inc., an Illinois corporation (“Accel”) named as Sellers therein (each a “Seller” and collectively, including those Accel shareholders joined to the Transaction Agreement pursuant to the Drag-Along Agreement (as defined below), the “Sellers”) and David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein) (each of David W. Ruttenberg and John S. Bakalar in their capacity as a “Shareholder Representative” and collectively, the “Shareholder Representatives”) entered into a Transaction Agreement (as amended on July 22, 2019, and as it may be further amended from time to time, the “Transaction Agreement”). Pursuant to the Transaction Agreement and in connection therewith, among other things and subject to the terms and conditions contained therein:

 

   

Pace will acquire, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock of Accel (together, the “Accel Stock”) held by the Sellers (the “Stock Purchase”);

 

   

following the closing of the Stock Purchase, Accel will merge with and into New Pace LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Pace (“NewCo”), with NewCo surviving such merger (the “Merger” and, together with the other transactions contemplated by the Transaction Agreement, the “Business Combination”);

 

   

immediately prior to the Stock Purchase, Pace will domesticate (or transfer by way of continuation as a matter of Cayman Islands law) as a Delaware corporation (the “Pace Domestication”) in accordance with Section 388 of the Delaware General Corporation Law (the “DGCL”), whereupon (i) each Class A ordinary share of Pace (each, a “Public Share”) shall be converted into one share of Class A-1 common stock, par value $0.0001 per share, of Pace (each, a “Class A-1 Share”), (ii) each Class F ordinary share of Pace (each, a “Founder Share”) shall be converted into one share of Class F common stock, par value $0.0001 per share, of Pace (each, a “Class F Share”) and (iii) the warrants held by TPG Pace II Sponsor, LLC, a Cayman Islands limited liability company and the sponsor of Pace (“Pace Sponsor”) that were issued to Pace Sponsor in a private placement prior to the consummation of Pace’s initial public offering (the “Pace IPO”), each of which is exercisable for one Public Share at an exercise price of $11.50 per Public Share, in accordance with its terms (the “Private Placement Warrants”) and the warrants that are included in the units sold in the Pace IPO (the “Public Units”), consisting of one Public Share and one-third of a Public Warrant of Pace, each of which is exercisable for one Public Share at an exercise price of $11.50 per Public Share, in accordance with its terms (such warrants, the “Public Warrants”), in each case, shall entitle the holder to acquire a corresponding number of Class A-1 Shares on the same terms as in effect immediately prior to the effective time of the Pace Domestication;

 

   

immediately prior to the Stock Purchase and following the Pace Domestication, Pace Sponsor will, pursuant to a letter agreement dated as of June 13, 2019 (as amended on July 22, 2019 and

 

v


Table of Contents
 

as it may be further amended from time to time, the “Pace Sponsor Support Agreement”) by and among Pace Sponsor, Pace and the Shareholder Representatives, (i) surrender for cancelation 1,250,000 of its Class F Shares and any additional Class F Shares necessary to ensure its aggregate ownership of Class A-1 Shares would not exceed 10.25% of the aggregate ownership of all holders of Class A-1 Shares (after giving pro forma effect to the Stock Purchase), (ii) exchange 2,000,000 Class F Shares for an equal number of shares of Class A-2 common stock, par value $0.0001 per share, of Pace (each, a “Class A-2 Share” and together with the Class A-1 Shares, the “Pace Shares”), which shall be subject to terms set forth in the Restricted Stock Agreement (as defined below), (iii) exchange any remaining Class F Shares (up to 7,800,000) for an equal number of Class A-1 Shares (such cancelations and exchanges by Pace Sponsor referenced in clauses (i) through (iii) above, the “Sponsor Class F Share Exchange”), (iv) surrender for cancelation 2,444,444 Private Placement Warrants held by Pace Sponsor (the “Sponsor Warrant Cancelation”), and (v) contribute 500,000 Class A-1 Shares to a donor advised fund of its choice for purposes of participation in charitable efforts in the communities in which Pace Sponsor and its affiliates operate, or anticipate operating (provided that Pace Sponsor may, with the prior written consent of Accel, elect to contribute cash to such donor advised fund in lieu of some or all of such Class A-1 Shares at a rate of $10.22 per share and surrender for cancelation a number of Class A-1 Shares to Parent equal to the amount of cash contributed divided by $10.22 per share) (the “Sponsor Contribution,” and collectively with the Sponsor Class F Share Exchange and the Sponsor Warrant Cancelation, the “Sponsor Transactions”);

 

   

following the Sponsor Transactions but immediately prior to the Stock Purchase, Pace Sponsor will distribute all of its Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants to its members, TPG Pace II Sponsor Successor, LLC (“Pace Sponsor Successor”), TPG Pace Governance, LLC (“Pace Governance”) and Karl Peterson (collectively, the “Pace Sponsor Members”);

 

   

immediately prior to the Stock Purchase and following the Pace Domestication, the independent directors of Pace will exchange, pursuant to letter agreements, dated June 13, 2019, by and between such directors and Pace (the “Director Letter Agreements”), 200,000 Class F Shares for an equal number of Class A-1 Shares (such exchanges by such Pace directors, the “Director Class F Share Exchange,” and together with the Sponsor Class F Share Exchange, the “Class F Share Exchange”);

 

   

in connection with the Stock Purchase, each Seller will receive in exchange for their Accel Stock, (a) cash consideration equal to the number of shares of Accel Stock for which such Seller has elected to receive cash, in exchange for their shares of Accel Stock (a “Cash Election”), multiplied by $177 per share (the “Purchase Price”) and (b) share consideration comprised of a number of Class A-1 Shares equal to the number of shares of Accel Stock for which such Seller does not make a Cash Election multiplied by an exchange ratio calculated by dividing the Purchase Price by a per share price (the “Public Share Value”) equal to the aggregate balance of the Trust Account immediately prior to closing of the Stock Purchase and prior to any redemptions of Public Shares divided by the number of then outstanding Public Shares, and subject to pro rata adjustment in the event that aggregate Cash Elections by the Sellers exceed $350,000,000;

 

   

in connection with the Stock Purchase and concurrently with entering into the Transaction Agreement, certain Sellers, being certain members of management of Accel, have made Cash Elections with respect to less than 20% of the number of shares of Accel Stock owned by such Seller and each of its affiliates on an aggregated basis, pursuant to a key holder support agreement with Pace (the “Key Holder Support Agreement”);

 

   

in connection with the Stock Purchase and concurrently with entering into the Transaction Agreement, certain other Sellers have made a non-binding Cash Election, pursuant to a holder support agreement (the “Holder Support Agreement”);

 

   

in connection with the Stock Purchase, Pace will issue to each Seller that makes a Cash Election with respect to less than 70% of its shares of Accel Stock, its pro rata share of 2,444,444 warrants to acquire Class A-1 Shares (the “New Pace Warrants”), which will be subject to the terms of the warrant

 

vi


Table of Contents
 

agreement (the “New Pace Warrant Agreement”) to be entered into at the closing of the Stock Purchase, by and between Pace and each Seller that will receive New Pace Warrants, with such pro rata share to be determined with reference to a number of shares equal to 70% of such Seller’s shares of Accel Stock less the number of shares of Accel Stock in respect of which the Seller made a Cash Election;

 

   

in connection with the Stock Purchase, Pace will issue to each Seller that makes a Cash Election with respect to less than 70% of its shares of Accel Stock, its pro rata share of 3,000,000 Class A-2 Shares, which shall have the terms set forth in the Restricted Stock Agreement (as defined below), with such pro rata share to be determined with reference to a number of shares equal to 70% of such Seller’s shares of Accel Stock less the number of shares of Accel Stock in respect of which the Seller made a Cash Election;

 

   

holders of Founder Shares have agreed to waive, pursuant to a waiver agreement (the “Waiver Agreement”), any adjustment to the conversion ratio of Founder Shares set forth in Pace’s amended and restated memorandum and articles of association (the “Articles”) resulting from the Investment Private Placement (as described below);

 

   

Pace will, pursuant to Subscription Agreements (as defined below) with the Investors (as defined below) issue and sell to the Investors, and the Investors will subscribe for and purchase, Class A-1 Shares, as described below;

 

   

at the closing of the Stock Purchase, Pace, the Pace Sponsor Members and certain other persons, including members of management of Accel, certain Accel shareholders, the independent directors of Pace and each other person who has executed and delivered a joinder to the Registration Rights Agreement, including any person who (1) will be a stockholder of Pace immediately following the Business Combination, (2) either (A) makes a written request to Pace to enter into the Registration Rights Agreement or (B) will, immediately following the Business Combination, be subject to Section (b)(2) of Rule 144 of the Securities Act with respect to such person’s Class A-1 Shares following the Business Combination and (3) elects to enter into a Registration Rights Agreement (such parties other than Pace, the “Registration Rights Holders”), will enter into a Registration Rights Agreement (the “Registration Rights Agreement”);

 

   

at the closing of the Stock Purchase, Pace, the Pace Sponsor Members and certain other persons, including Sellers that will receive Class A-2 Shares (such parties other than Pace, the “Restricted Stockholders”), will enter into a Restricted Stock Agreement (the “Restricted Stock Agreement”); and

 

   

Pace Sponsor will, pursuant to the Pace Sponsor Support Agreement, vote in favor of the Business Combination.

In addition and in connection with the foregoing, Pace entered into a Support Agreement with Accel concurrently upon the execution of the Transaction Agreement (the “Support Agreement”), pursuant to which (i) Accel will use commercially reasonable efforts to assist the Sellers in complying with certain covenants contained therein, and (ii) Pace and Accel have agreed to certain expense reimbursement arrangements payable under certain circumstances upon termination of the Transaction Agreement.

At the Extraordinary General Meeting, Pace shareholders will be asked to consider and vote upon a proposal (the “Business Combination Proposal” or “Proposal No. 1”) to adopt the Transaction Agreement, a copy of which is attached to the accompanying proxy statement/prospectus as Annexes A and A-1, and approve the transactions contemplated thereby, including the Business Combination.

In addition, and in connection with the foregoing, each of the Sellers who had duly executed and delivered a signature page to the Transaction Agreement as of June 13, 2019 (the “Dragging Shareholders”) being parties to the Drag-Along Agreement, (the “Drag-Along Agreement”) dated as of June 13, 2019, by and among Pace and the Dragging Shareholders, issued a written notice dated July 23, 2019 (the “Drag-Along Notice”), to Accel and

 

vii


Table of Contents

shareholders of Accel that are not Dragging Shareholders (the “Drag-Along Shareholders”). Pursuant to the Drag-Along Notice, the Dragging Shareholders exercised their drag-along rights under and in accordance with the Second Amended and Restated Statement of Designation of Preferred Shares of Accel Entertainment, Inc., dated as of March 7, 2016 (the “Accel Articles”), and in accordance with the Drag-Along Agreement, the Dragging Shareholders will cause each Accel shareholder who had not entered into the Transaction Agreement on June 13, 2019, to deliver a joinder to the Transaction Agreement, pursuant to which such shareholder will be admitted to the Transaction Agreement as a Seller and will agree to be bound by all of the terms and conditions of the Transaction Agreement (as modified by such joinder).

In connection with the foregoing and pursuant to the terms of the Transaction Agreement, the Key Holder Support Agreement and the Holder Support Agreement, Sellers party to either the Key Holder Support Agreement or the Holder Support Agreement, all of whom are “accredited investors” (as defined by Rule 501 of the Regulation D) (the “Business Combination Private Placement Sellers”), will receive, in exchange for their shares of Accel Stock, Class A-1 Shares and Class A-2 Shares issued pursuant to a private placement and not registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder (the “Business Combination Private Placement”) as well as cash consideration as a result of their Cash Election, in each case, in an amount calculated pursuant to the Transaction Agreement. The closing of the Business Combination Private Placement will occur as part of the closing of the Stock Purchase.

In addition, and in connection with the foregoing and concurrently with the execution of the Transaction Agreement, Pace entered into subscription agreements with certain investors (the “Original General Investors”) that are “accredited investors” (as defined by Rule 501 of Regulation D) and a subscription agreement with an affiliate of Pace that is an “accredited investor” (as defined by Rule 501 of Regulation D) (the “Pace Affiliate” and, together with the Original General Investors, the “Original Investors”) (the subscription agreement with the Pace Affiliate together with the subscription agreements with the Original General Investors, the “Original Subscription Agreements”). On August 13, 2019, Pace entered into an additional subscription agreement, on the same terms as the Original Subscription Agreements with the Original General Investors, with an “accredited investor” (as defined by Rule 501 of Regulation D) (such investor, the “Additional Investor,” and together with the Original General Investors, the “General Investors,” and the Additional Investor together with the Original Investors, the “Investors,” and such additional subscription agreement together with the Original Subscription Agreements, the “Subscription Agreements”). Pursuant to the Subscription Agreements, the Investors agreed to subscribe for and purchase and Pace agreed to issue and sell to such Investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million (the “Investment Private Placement”). The Subscription Agreement to which the Pace Affiliate is a party is substantially similar to the Subscription Agreements to which the General Investors are parties except that: (a) the Pace Affiliate may assign its rights under the Subscription Agreement, subject to compliance with the securities laws; and (b) the Pace Affiliate is not entitled to liquidated damages if there is a delay in the registration of the securities. The proceeds from the Investment Private Placement will be used to fund a portion of the cash consideration required to effect the Stock Purchase. The closing of the Investment Private Placement will occur immediately prior to the closing of the Stock Purchase and is conditioned thereon and on other customary closing conditions. The Class A-1 Shares to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act, and will be issued in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

In addition to the Business Combination Proposal, Pace shareholders are being asked to (i) to consider and vote upon a proposal to approve by special resolution the change of Pace’s jurisdiction of incorporation (the “Pace Domestication”) 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, to occur immediately prior to the Stock Purchase (the “Domestication Proposal” or “Proposal No. 2”); (ii) consider and vote upon a proposal to approve, for purposes of complying with applicable provisions of New York Stock Exchange (“NYSE”) Listing Rule 312.03, the issuance of more than 20% of Pace’s issued and outstanding common stock

 

viii


Table of Contents

following the Pace Domestication to Accel shareholders in connection with the Business Combination (the “NYSE Proposal” or “Proposal No. 3”), (iii) consider and vote upon a proposal to adopt the amended and restated certificate of incorporation of Pace (the “Proposed Charter”) in the form attached hereto as Annex C, to be effective following the Pace Domestication but immediately prior to the Stock Purchase (the “Charter Proposal” or “Proposal No. 4”), (iv) consider and vote upon by ordinary resolution, on a non-binding advisory basis, separate proposals to approve certain governance provisions in the Proposed Charter that materially affect stockholder rights, which are being separately presented as required by the Securities and Exchange Commission (the “SEC”) (each of which is referred to individually as a “Governance Proposal” and collectively as the “Governance Proposals” or “Proposal No. 5”) and (v) to consider and vote upon a proposal to adjourn the Extraordinary General Meeting to a later date or dates (A) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Public Shares and Founder Shares (together, the “Pace Ordinary Shares”) represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (B) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or (C) if Pace shareholders redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied (the “Adjournment Proposal” or “Proposal No. 6”). The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or in the event that Pace shareholders redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied.

Each of these proposals is more fully described in this proxy statement/prospectus, which each shareholder is encouraged to read carefully.

The Public Shares, Public Units and Public Warrants are currently listed on the NYSE under the symbols “TPGH,” “TPGH.U” and “TPGH.WS,” respectively. Following the Pace Domestication, the Public Shares that are converted into Class A-1 Shares will continue to be listed on the NYSE under the symbol “ACEL,” and the Public Warrants, which will entitle the holder to acquire a corresponding number of Class A-1 Shares on the same terms as in effect immediately prior to the effective time of the Pace Domestication, will continue to be listed on the NYSE under the symbol “ACEL.WS.” Each Public Unit will be canceled in exchange for (i) the right to receive one validly issued fully paid and non-assessable Class A-1 Share and (ii) one-third of a Public Warrant. It is anticipated that the Class A-1 Shares to be issued in the Business Combination will be listed on the NYSE upon the consummation of the Business Combination under the symbol “ACEL.”

Pursuant to the Articles, Pace is providing its public shareholders with the opportunity to redeem, upon the consummation of the Business Combination, Public Shares then held by them at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account of Pace that holds the proceeds from the Pace IPO (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 Pace to fund its working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes, divided by the number of then outstanding Public Shares. Redemptions referred to herein shall take effect as repurchases under the Articles. The per-share amount Pace will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commission totaling $15,750,000 that Pace will pay to the underwriters of the Pace IPO or transaction expenses incurred in connection with the Business Combination. For illustrative purposes, based on the balance of the Trust Account of approximately $461,275,222 as of June 30, 2019 the estimated per share redemption price would have been approximately $10.25. Public shareholders may elect to redeem their shares even if they vote for the Business Combination. A public shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 15% of the Public

 

ix


Table of Contents

Shares included in the Public Units sold in the Pace IPO (i.e., in excess of 6,750,000 Public Shares). Pace has no specified maximum redemption threshold under the Articles, other than the aforementioned 15% threshold. Each redemption of Public Shares by Pace’s public shareholders will reduce the balance the Trust Account, which was approximately $461,275,222 as of June 30, 2019. The Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem Public Shares, plus (ii) an amount determined by Pace prior to closing which shall not exceed proceeds available under that certain Third Amended and Restated Loan and Security Agreement, dated as of April 10, 2018, among, inter alios, Accel Entertainment Gaming, LLC, as borrower, the financial institutions party thereto as lenders and CIBC Bank USA, as administrative agent, as in effect on the date of the Transaction Agreement and/or as amended in accordance with the terms of the Transaction Agreement (as amended by that certain First Amendment to Third Amended and Restated Loan and Security Agreement, dated as of August 22, 2019, the “Credit Agreement”) and/or any alternative credit facility arranged by Pace and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be $22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) equaling or exceeding the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel. The conditions to closing in the Transaction Agreement are for the sole benefit of the parties thereto and may be waived by such parties. If, as a result of redemptions of Public Shares by Pace’s public shareholders, this condition is not met and is not waived, then each of Pace and Accel may elect not to consummate the Business Combination. In addition, in no event will Pace redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as provided in the Articles and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Transaction Agreement. Holders of outstanding Public Warrants do not have redemption rights with respect to such warrants in connection with the Business Combination. Unless otherwise specified, the information in the accompanying proxy statement/prospectus assumes that none of Pace’s public shareholders exercise their redemption rights with respect to their Public Shares.

Pace Sponsor and the current independent directors of Pace (collectively, including, following the Business Combination, the Pace Sponsor Members, the “Pace Initial Shareholders”), as well as Pace’s officers and other current directors, have agreed to waive their redemption rights with respect to any of Pace Ordinary Shares they may hold in connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Currently, the Pace Initial Shareholders own 20% of Pace’s issued and outstanding Pace Ordinary Shares, including all of the Founder Shares. The Pace Initial Shareholders, and the other directors and officers of Pace have agreed to vote any of Pace Ordinary Shares owned by them in favor of the Business Combination. The Founder Shares are subject to transfer restrictions. The Articles include a conversion adjustment which provides that the Founder Shares will automatically convert at the time of a business combination into a number of Public Shares one day after the completion of a business combination, at a conversion rate that entitles the holders of such Founder Shares to continue to own, in the aggregate, 20% of Pace’s issued and outstanding Pace Ordinary Shares (including those deemed issued in connection with a business combination). However, the Pace Initial Shareholders have agreed to waive such conversion adjustment pursuant to a waiver agreement (the “Waiver Agreement”). Instead, in connection with the Pace Domestication, each Founder Share will be converted into one Class F Share, and, pursuant to the Pace Sponsor Support Agreement and in connection with the Sponsor Transactions, Pace Sponsor will (i) surrender for cancelation or exchange its Class F Shares in the Sponsor Class F Share Exchange, (ii) surrender for cancelation 2,444,444 Private Placement Warrants in the Sponsor Warrant Cancelation and (iii) make the Sponsor Contribution. Following the Sponsor Transactions but immediately prior to the Stock Purchase, Pace Sponsor will distribute all of its Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants to the Pace Sponsor Members. Further, pursuant to the Director Letter Agreements, the independent directors of Pace will exchange their Class F Shares in the Director Class F Share Exchange. Accordingly, the Pace Initial Shareholders will hold approximately 8.61% of the total number of Pace Shares outstanding after the consummation of the Business Combination.

 

x


Table of Contents

Pace is providing the accompanying proxy statement/prospectus and accompanying proxy card to its shareholders in connection with the solicitation of proxies to be voted at the Extraordinary General Meeting and at any adjournments of the Extraordinary General Meeting. Information about the Extraordinary General Meeting, the Business Combination and other related business to be considered by Pace’s shareholders at the Extraordinary General Meeting is included in this proxy statement/prospectus. Whether or not you plan to attend the Extraordinary General Meeting, all Pace shareholders are urged to read carefully this proxy statement/prospectus, including the Annexes and the accompanying financial statements of Pace and Accel, carefully and in their entirety. In particular, you are urged to read carefully the section entitled “Risk Factors” beginning on page [●] of this proxy statement/prospectus.

After careful consideration, the board of directors of Pace (the “Pace Board”) has unanimously approved the Transaction Agreement and the transactions contemplated therein, and unanimously recommends that Pace shareholders vote “FOR” each of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal, the Charter Proposal, the Governance Proposals and the Adjournment Proposal. When you consider the Pace Board’s recommendation of these proposals, you should keep in mind that certain Pace directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. Please see the section entitled “The Business Combination — Interests of Certain Persons in the Business Combination — Interests of the Pace Initial Shareholders and Pace’s Other Current Officers and Directors” for additional information.

Approval of the Business Combination Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Approval of the Domestication Proposal requires a special resolution as a matter of Cayman Islands law, being the affirmative vote of holders of at least two-thirds of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Approval of the NYSE Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of the majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Approval of the Charter Proposal requires (i) a special resolution as a matter of Cayman Islands law, being the affirmative vote of holders of at least two-thirds of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting and (ii) the Pace Ordinary Shares so voted constitute, upon conversion to Class A-1 Shares in connection with the Pace Domestication but excluding any conversions to be consummated pursuant to the Class F Share Exchange, a majority of outstanding stock entitled to vote thereon. Approval of each of the Governance Proposals requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Approval of the Adjournment Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of the Pace Ordinary Shares that are entitled to vote and are voted 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 ensure 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 Transaction Agreement will be consummated only if the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal and the Charter Proposal are approved at the Extraordinary General Meeting. Each of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal and the Charter Proposal are cross-conditioned on the approval of each other. Each of the Governance Proposals is non-binding and is not conditioned on the approval of any individual Governance Proposal or any other proposal set forth in this proxy statement/prospectus. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

 

xi


Table of Contents

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 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.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND THAT PACE REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO THE TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE EXTRAORDINARY GENERAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. 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 the Pace Board, I would like to thank you for your support of TPG Pace Holdings Corp. and look forward to a successful completion of the Business Combination.

 

      Sincerely,
[●], 2019        
      David Bonderman
      Chairman of the Board of Directors

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 [●], 2019, and is expected to be first mailed or otherwise delivered to Pace shareholders on or about [●], 2019.

 

xii


Table of Contents

ADDITIONAL INFORMATION

No person is authorized to give any information or to make any representation with respect to the matters that this proxy statement/prospectus describes other than those contained in this proxy statement/prospectus, and, if given or made, the information or representation must not be relied upon as having been authorized by Pace or Accel. This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy securities or a solicitation of a proxy in any jurisdiction where, or to any person to whom, it is unlawful to make such an offer or a solicitation. Neither the delivery of this proxy statement/prospectus nor any distribution of securities made under this proxy statement/prospectus will, under any circumstances, create an implication that there has been no change in the affairs of Pace or Accel since the date of this proxy statement/prospectus or that any information contained herein is correct as of any time subsequent to such date.

 

xiii


Table of Contents

NOTICE OF EXTRAORDINARY GENERAL MEETING

OF TPG PACE HOLDINGS CORP.

IN LIEU OF 2019 ANNUAL GENERAL MEETING OF TPG PACE HOLDINGS CORP.

TO BE HELD [], 2019

To the Shareholders of TPG Pace Holdings Corp.:

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of TPG Pace Holdings Corp., a Cayman Islands exempted company (together with such entity following the Pace Domestication, “Pace”) in lieu of the 2019 annual general meeting of Pace , will be held on [●] at [●] at [●] (the “Extraordinary General Meeting”). You are cordially invited to attend the Extraordinary General Meeting to conduct the following items of business:

 

1.

Business Combination Proposal — To consider and vote upon a proposal to adopt the Transaction Agreement, dated as of June 13, 2019 (as amended on July 22, 2019, and as it may be further amended from time to time, the “Transaction Agreement”), by and among Pace, each of the shareholders of Accel Entertainment, Inc., an Illinois corporation (“Accel”) named as Sellers therein (each a “Seller” and collectively, including those Accel shareholders joined to the Transaction Agreement pursuant to the Drag-Along Agreement (as defined below), the “Sellers”) and David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein) (each of David W. Ruttenberg and John S. Bakalar in their capacity as a “Shareholder Representative” and collectively, the “Shareholder Representatives”), a copy of which is attached to this proxy statement/prospectus as Annexes A and A-1, and approve the transactions contemplated thereby, including, among other things:

 

  (i)

the acquisition by Pace, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock of Accel (together, the “Accel Stock”) held by the Sellers (the “Stock Purchase”);

 

  (ii)

the merger of Accel with and into New Pace LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Pace (“NewCo”) following the closing of the Stock Purchase, with NewCo surviving such merger (the “Merger” and, together with the other transactions contemplated by the Transaction Agreement, the “Business Combination”);

 

  (iii)

the consummation of the Pace Domestication (as defined below) immediately prior to the Stock Purchase whereupon: (i) each Class A ordinary share of Pace (each, a “Public Share”) shall be converted into one share of Class A-1 common stock, par value $0.0001 per share, of Pace (each, a “Class A-1 Share”), (ii) each Class F ordinary share of Pace (each, a “Founder Share”) shall be converted into one share of Class F common stock, par value $0.0001 per share, of Pace (each, a “Class F Share”) and (iii) the warrants held by TPG Pace II Sponsor, LLC, a Cayman Islands limited liability company and the sponsor of Pace (“Pace Sponsor”) that were issued to Pace Sponsor in a private placement prior to the consummation of Pace’s initial public offering (the “Pace IPO”), each of which is exercisable for one Public Share at an exercise price of $11.50 per Public Share, in accordance with its terms (the “Private Placement Warrants”) and the warrants that are included in the units sold in the Pace IPO (the “Public Units”), consisting of one Public Share and one-third of a Public Warrant of Pace, each of which is exercisable for one Public Share at an exercise price of $11.50 per Public Share, in accordance with its terms (such warrants, the “Public Warrants”), in each case, shall entitle the holder to acquire a corresponding number of Class A-1 Shares on the same terms as in effect immediately prior to the effective time of the Pace Domestication;

 

  (iv)

the surrender for cancelation by Pace Sponsor immediately prior to the Stock Purchase and following the Pace Domestication of 1,250,000 of its Class F Shares and any additional Class F Shares necessary to ensure its aggregate ownership of Class A-1 Shares would not exceed 10.25% of the aggregate ownership of all holders of Class A-1 Shares (after giving pro forma effect to the Stock Purchase);

 

xiv


Table of Contents
  (v)

the exchange by Pace Sponsor immediately prior to the Stock Purchase and following the Pace Domestication of 2,000,000 Class F Shares for an equal number of Class A-2 common stock, par value $0.0001 per share, of Pace (such shares, the “Class A-2 Shares”);

 

  (vi)

the exchange by Pace Sponsor immediately prior to the Stock Purchase and following the Pace Domestication of any remaining Class F Shares (up to 7,800,000) for an equal number of Class A-1 Shares (such cancelations and exchanges by Pace Sponsor in (iv) through (vi), the “Sponsor Class F Share Exchange”);

  (vii)

the surrender for cancelation by Pace Sponsor immediately prior to the Stock Purchase and following the Pace Domestication of 2,444,444 Private Placement Warrants held by Pace Sponsor (the “Sponsor Warrant Cancelation”);

 

  (viii)

the contribution by Pace Sponsor immediately prior to the Stock Purchase and following the Pace Domestication of 500,000 Class A-1 Shares to a donor advised fund of its choice for purposes of participation in charitable efforts in the communities in which Pace Sponsor and its affiliates operate, or anticipate operating (provided that Pace Sponsor may, with the prior written consent of Accel, elect to contribute cash to such donor advised fund in lieu of some or all of such Class A-1 Shares at a rate of $10.22 per share and surrender for cancelation a number of Class A-1 Shares to Parent equal to the amount of cash contributed divided by $10.22 per share) (the “Sponsor Contribution,” and collectively with the Sponsor Class F Share Exchange and the Sponsor Warrant Cancelation, the “Sponsor Transactions”);

 

  (ix)

the distribution by Pace Sponsor, following the Sponsor Transactions but immediately prior to the Stock Purchase, of all of its Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants to its members, TPG Pace II Sponsor Successor, LLC (“Pace Sponsor Successor”), TPG Pace Governance, LLC (“Pace Governance”) and Karl Peterson (collectively, the “Pace Sponsor Members”); and

 

  (x)

the exchange by the independent directors of Pace immediately prior to the Stock Purchase and following the Pace Domestication of 200,000 Class F Shares for an equal number of Class A-1 Shares (such exchanges by such Pace directors, the “Director Class F Share Exchange,” and together with the Sponsor Class F Share Exchange, the “Class F Share Exchange”); (the “Business Combination Proposal”) (Proposal No. 1);

 

2.

Domestication Proposal — To consider and vote upon a proposal to approve by special resolution the change of Pace’s jurisdiction of incorporation (the “Pace Domestication”) 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, to occur immediately prior to the Stock Purchase (the “Domestication Proposal”) (Proposal No. 2);

 

3.

NYSE Proposal — To consider and vote upon a proposal to approve, for purposes of complying with applicable provisions of New York Stock Exchange (“NYSE”) Listing Rule 312.03, the issuance of more than 20% of Pace’s issued and outstanding common stock following the Pace Domestication to Accel shareholders in connection with the Business Combination (the “NYSE Proposal”) (Proposal No. 3);

 

4.

Charter Proposal — To consider and vote upon a proposal to adopt the amended and restated certificate of incorporation of Pace (the “Proposed Charter”) in the form attached hereto as Annex C, to be effective following the Pace Domestication and immediately prior to the Stock Purchase (the “Charter Proposal”) (Proposal No. 4);

 

5.

Governance Proposals — To consider and vote upon, on a non-binding advisory basis, separate proposals to approve certain aspects of the provisions of the Proposed Charter that materially affect stockholder rights, which are being separately presented in accordance with SEC requirements (each of which is referred to individually as a “Governance Proposal” and collectively as the “Governance Proposals”) (Proposal No. 5); and

 

xv


Table of Contents
6.

Adjournment Proposal — To consider and vote upon a proposal to approve the adjournment of the Extraordinary General Meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Class A ordinary shares, par value $0.0001 per share, of Pace (the “Public Shares”) and Class F ordinary shares, par value $0.0001 per share, of Pace (the “Founder Shares,” and together with the Public Shares, the “Pace Ordinary Shares”) represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (ii) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or (iii) if Pace shareholders redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied. The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or in the event that Pace shareholders redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied (the “Adjournment Proposal”) (Proposal No. 6).

In addition, and in connection with the foregoing, each of the Sellers who had duly executed and delivered a signature page to the Transaction Agreement as of June 13, 2019 (the “Dragging Shareholders”) being parties to the Drag-Along Agreement, (the “Drag-Along Agreement”) dated as of June 13, 2019, by and among Pace and the Dragging Shareholders, issued a written notice dated July 23, 2019 (the “Drag-Along Notice”), to Accel and shareholders of Accel that are not Dragging Shareholders (the “Drag-Along Shareholders”). Pursuant to the Drag-Along Notice, the Dragging Shareholders exercised their drag-along rights under and in accordance with the Second Amended and Restated Statement of Designation of Preferred Shares of Accel Entertainment, Inc., dated as of March 7, 2016 (the “Accel Articles”), and in accordance with the Drag-Along Agreement, the Dragging Shareholders will cause each Accel shareholder who had not entered into the Transaction Agreement on June 13, 2019, to deliver a joinder to the Transaction Agreement, pursuant to which such shareholder will be admitted to the Transaction Agreement as a Seller and will agree to be bound by all of the terms and conditions of the Transaction Agreement (as modified by such joinder).

The above matters are more fully described in this proxy statement/prospectus, which also includes, as Annexes A and A-1, a copy of the Transaction Agreement. You are urged to read carefully this proxy statement/prospectus in its entirety, including the Annexes and accompanying financial statements of Pace and Accel.

The record date for the Extraordinary General Meeting is [●], 2019. Only Pace shareholders of record at the close of business on that date may vote at the Extraordinary General Meeting or any adjournment thereof.

Pace Sponsor and the current independent directors of Pace (collectively, including, following the Business Combination, the Pace Sponsor Members, the “Pace Initial Shareholders”) and the officers and other current directors of Pace have agreed to vote any Founder Shares held by them and any Public Shares purchased during or after the Pace IPO in favor of the Business Combination. Currently, the Pace Initial Shareholders own 20% of the issued and outstanding Pace Ordinary Shares, including the issued and outstanding Founder Shares.

Pursuant to its amended and restated memorandum and articles of association (the “Articles”), Pace is providing its public shareholders with the opportunity to redeem, upon the consummation of the Business Combination, Public Shares then held by them at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account of Pace that holds the proceeds from the Pace IPO (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 Pace to fund its working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes, divided by the number of then

 

xvi


Table of Contents

outstanding Public Shares. Redemptions referred to herein shall take effect as repurchases under the Articles. The per-share amount Pace will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commission totaling $15,750,000 that Pace will pay to the underwriters of the Pace IPO or transaction expenses incurred in connection with the Business Combination. For illustrative purposes, based on the balance of the Trust Account of approximately $461,275,222 as of June 30, 2019 the estimated per share redemption price would have been approximately $10.25. Public shareholders may elect to redeem their shares even if they vote for the Business Combination. A public shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 15% of the Public Shares included in the Public Units sold in the Pace IPO (i.e., in excess of 6,750,000 Public Shares). Pace has no specified maximum redemption threshold under the Articles, other than the aforementioned 15% threshold. Each redemption of Public Shares by Pace’s public shareholders will reduce the balance of the Trust Account, which was approximately $461,275,222 as of June 30, 2019. The Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem Public Shares, plus (ii) an amount determined by Pace prior to closing which shall not exceed proceeds available under the that certain Third Amended and Restated Loan and Security Agreement, dated as of April 10, 2018 (as amended by that certain First Amendment to Third Amended and Restated Loan and Security Agreement, dated as of August 22, 2019), among, inter alios, Accel Entertainment Gaming, LLC, as borrower, the financial institutions party thereto as lenders and CIBC Bank USA, as administrative agent, as in effect on the date of the Transaction Agreement and/or as amended in accordance with the terms of the Transaction Agreement (the “Credit Agreement”) and/or any alternative credit facility arranged by Pace and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be $22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) equaling or exceeding the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel. The conditions to closing in the Transaction Agreement are for the sole benefit of the parties thereto and may be waived by such parties. If, as a result of redemptions of Public Shares by Pace’s public shareholders, this condition is not met and is not waived, then each of Pace and Accel may elect not to consummate the Business Combination. In addition, in no event will Pace redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as provided in the Articles and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Transaction Agreement. Holders of outstanding Public Warrants do not have redemption rights with respect to such warrants in connection with the Business Combination. Unless otherwise specified, the information in the accompanying proxy statement/prospectus assumes that none of Pace’s public shareholders exercise their redemption rights with respect to their Public Shares.

The Pace Initial Shareholders, as well as Pace’s officers and other current directors, have agreed to waive their redemption rights with respect to any of Pace Ordinary Shares they may hold in connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Currently, the Pace Initial Shareholders own 20% of Pace’s issued and outstanding Pace Ordinary Shares, including all of the Founder Shares. The Pace Initial Shareholders, and the other directors and officers of Pace have agreed to vote any of Pace Ordinary Shares owned by them in favor of the Business Combination. The Founder Shares are subject to transfer restrictions. The Articles include a conversion adjustment which provides that the Founder Shares will automatically convert at the time of a business combination into a number of Public Shares one day after the completion of a business combination, at a conversion rate that entitles the holders of such Founder Shares to continue to own, in the aggregate, 20% of Pace’s issued and outstanding Pace Ordinary Shares (including those deemed issued in connection with a business combination). However, the Pace Initial Shareholders have agreed to waive such conversion adjustment pursuant to the Waiver Agreement. Instead, in connection with the Pace Domestication, each Founder Share will be converted into one Class F Share, and, pursuant to the letter agreement dated June 13, 2019, by and among Pace, the Pace Sponsor and the Shareholder Representatives (as amended on July 22, 2019

 

xvii


Table of Contents

and as it may be further amended from time to time, the “Pace Sponsor Support Agreement”) and in connection with the Sponsor Transactions, Pace Sponsor will (i) surrender for cancelation or exchange its Class F Shares in the Sponsor Class F Share Exchange, (ii) surrender for cancelation 2,444,444 Private Placement Warrants in the Sponsor Warrant Cancelation and (iii) make the Sponsor Contribution. Following the Sponsor Transactions but immediately prior to the Stock Purchase, Pace Sponsor will distribute all of its Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants to the Pace Sponsor Members. Further, pursuant to the Director Letter Agreements, the independent directors of Pace will exchange their Class F Shares in the Director Class F Share Exchange. Accordingly, the Pace Initial Shareholders will hold approximately 8.61% of the total number of Pace Shares outstanding after the consummation of the Business Combination.

In connection with the foregoing and pursuant to the terms of the Transaction Agreement, a key holder support agreement, by and between Pace and certain Sellers who are management of Accel, pursuant to which such Sellers made a Cash Election with respect to less than 20% of the number of shares of Accel Stock owned by such Seller and each of its affiliates on an aggregated basis (the “Key Holder Support Agreement”) and a holder support agreement, by and between certain Sellers and Pace, pursuant to which such Sellers agreed to make a non-binding Cash Election (the “Holder Support Agreement”), Sellers party to either the Key Holder Support Agreement or the Holder Support Agreement, all of whom are “accredited investors” (as defined by Rule 501 of the Regulation D) (the “Business Combination Private Placement Sellers”), will receive, in exchange for their shares of Accel Stock, Class A-1 Shares and Class A-2 Shares issued pursuant to a private placement and not registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder (the “Business Combination Private Placement”) as well as cash consideration as a result of their Cash Election, in each case, in an amount calculated pursuant to the Transaction Agreement. The closing of the Business Combination Private Placement will occur as part of the closing of the Stock Purchase.

In addition, and in connection with the foregoing and concurrently with the execution of the Transaction Agreement, Pace entered into subscription agreements with certain investors (the “Original General Investors”) that are “accredited investors” (as defined by Rule 501 of Regulation D) and a subscription agreement with an affiliate of Pace that is an “accredited investor” (as defined by Rule 501 of Regulation D) (the “Pace Affiliate” and, together with the Original General Investors, the “Original Investors”) (the subscription agreement with the Pace Affiliate together with the subscription agreements with the Original General Investors, the “Original Subscription Agreements”). On August 13, 2019, Pace entered into an additional subscription agreement, on the same terms as the Original Subscription Agreements with the Original General Investors, with an “accredited investor” (as defined by Rule 501 of Regulation D) (the “Additional Investor,” and together with the Original General Investors, the “General Investors,” and the Additional Investor together with the Original Investors, the “Investors”). Pursuant to the Subscription Agreements, the Investors agreed to subscribe for and purchase and Pace agreed to issue and sell to such Investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million (the “Investment Private Placement”). The Subscription Agreement to which the Pace Affiliate is a party is substantially similar to the Subscription Agreements to which the General Investors are parties except that: (a) the Pace Affiliate may assign its rights under the Subscription Agreement, subject to compliance with the securities laws; and (b) the Pace Affiliate is not entitled to liquidated damages if there is a delay in the registration of the securities. The proceeds from the Investment Private Placement will be used to fund a portion of the cash consideration required to effect the Stock Purchase. The closing of the Investment Private Placement will occur immediately prior to the closing of the Stock Purchase and is conditioned thereon and on other customary closing conditions. The Class A-1 Shares to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act, and will be issued in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

Each of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal and the Charter Proposal are cross-conditioned on the approval of each other. Each of the Governance Proposals is non-binding and is not conditioned on the approval of the Charter Proposal or any other proposal set forth in this

 

xviii


Table of Contents

proxy statement/prospectus. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

Approval of the Business Combination Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Approval of the Domestication Proposal requires a special resolution as a matter of Cayman Islands law, being the affirmative vote of holders of at least two-thirds of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Approval of the NYSE Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of the majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Approval of the Charter Proposal requires (i) a special resolution as a matter of Cayman Islands law, being the affirmative vote of holders of at least two-thirds of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting and (ii) the Pace Ordinary Shares so voted constitute, upon conversion to Class A-1 Shares in connection with the Pace Domestication but excluding any conversions to be consummated pursuant to the Class F Share Exchange, a majority of outstanding stock entitled to vote thereon. Approval of each of the Governance Proposals requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Approval of the Adjournment Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. The Pace Board unanimously recommends that you vote “FOR” each of these proposals.

 

By Order of the Board of Directors
David Bonderman
Chairman of the Board of Directors
Fort Worth, Texas
[●], 2019

 

xix


Table of Contents

TABLE OF CONTENTS

 

EXPLANATORY NOTE

     i  

LETTER TO SHAREHOLDERS OF TPG PACE HOLDINGS CORP.

     v  

ADDITIONAL INFORMATION

     xiii  

NOTICE OF EXTRAORDINARY GENERAL MEETING OF TPG PACE HOLDINGS CORP. IN LIEU OF 2019 ANNUAL GENERAL MEETING OF TPG PACE HOLDINGS CORP.

     xiv  

TABLE OF CONTENTS

     xx  

FREQUENTLY USED TERMS

     1  

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE EXTRAORDINARY GENERAL MEETING

     11  

SUMMARY

     30  

RISK FACTORS

     59  

GENERAL INFORMATION

     101  

EXTRAORDINARY GENERAL MEETING OF PACE IN LIEU OF THE 2019 ANNUAL GENERAL MEETING OF PACE

     103  

THE BUSINESS COMBINATION

     113  

MATERIAL TAX CONSIDERATIONS

     141  

THE TRANSACTION AGREEMENT AND RELATED AGREEMENTS

     153  

REGULATORY APPROVALS RELATED TO THE BUSINESS COMBINATION

     172  

SELECTED HISTORICAL FINANCIAL DATA OF PACE

     174  

SELECTED HISTORICAL FINANCIAL DATA OF ACCEL AND NON-GAAP FINANCIAL MEASURES

     176  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     179  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

     187  

BUSINESS OF PACE AND CERTAIN INFORMATION ABOUT PACE

     189  

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

     207  

BUSINESS OF ACCEL AND CERTAIN INFORMATION ABOUT ACCEL

     213  

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

     232  

MANAGEMENT OF PACE AFTER THE BUSINESS COMBINATION

     250  

REGULATORY AND LEGAL ENVIRONMENT

     257  

DESCRIPTION OF PACE SECURITIES

     258  

COMPARISON OF SHAREHOLDER RIGHTS

     274  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     294  

BENEFICIAL OWNERSHIP OF PACE SECURITIES

     300  

PRICE RANGE OF SECURITIES AND DIVIDENDS

     302  

PROPOSAL NO. 1 — THE BUSINESS COMBINATION PROPOSAL

     304  

PROPOSAL NO. 2 — THE DOMESTICATION PROPOSAL

     305  

PROPOSAL NO. 3 — THE NYSE PROPOSAL

     306  

PROPOSAL NO. 4 — THE CHARTER PROPOSAL

     307  

PROPOSAL NO. 5 — THE GOVERNANCE PROPOSALS

     309  

PROPOSAL NO. 6 — THE ADJOURNMENT PROPOSAL

     313  

LEGAL MATTERS

     314  

EXPERTS

     314  

ENFORCEMENT OF CIVIL LIABILITIES

     314  

APPRAISAL RIGHTS

     314  

HOUSEHOLDING INFORMATION

     314  

TRANSFER AGENT AND REGISTRAR

     315  

FUTURE SHAREHOLDER PROPOSALS

     315  

WHERE YOU CAN FIND MORE INFORMATION

     315  

 

xx


Table of Contents
ANNEX A     TRANSACTION AGREEMENT      A-1  
ANNEX A-1     FORM OF AMENDMENT NO. 1 TO TRANSACTION AGREEMENT      A-1-1  
ANNEX B     PROPOSED DELAWARE CERTIFICATE OF INCORPORATION OF TPG PACE HOLDINGS CORP.      B-1  
ANNEX C     PROPOSED CHARTER      C-1  
ANNEX D     PROPOSED AMENDED AND RESTATED BYLAWS OF TPG PACE HOLDINGS CORP.      D-1  
ANNEX E     PACE SPONSOR SUPPORT AGREEMENT      E-1  
ANNEX E-1     AMENDMENT NO. 1 TO PACE SPONSOR SUPPORT AGREEMENT      E-1-1  
ANNEX F     FORM OF RESTRICTED STOCK AGREEMENT      F-1  
ANNEX G     WAIVER AGREEMENT      G-1  
ANNEX H     FORM OF DIRECTOR LETTER AGREEMENT      H-1  
ANNEX I     FORM OF NEW PACE WARRANT AGREEMENT      I-1  
ANNEX J     FORM OF NEW CONTINENTAL WARRANT AGREEMENT      J-1  
ANNEX K     KEY HOLDER SUPPORT AGREEMENT      K-1  
ANNEX L     HOLDER SUPPORT AGREEMENT      L-1  
ANNEX M     FORM OF REGISTRATION RIGHTS AGREEMENT      M-1  
ANNEX N     FORM OF SUBSCRIPTION AGREEMENT WITH GENERAL INVESTORS      N-1  
ANNEX O     FORM OF SUBSCRIPTION AGREEMENT WITH PACE AFFILIATE      O-1  
ANNEX P     FORM OF SUPPORT AGREEMENT      P-1  

 

INDEX TO CONSOLIDATED FINANCIAL INFORMATION

     F-1  

 

xxi


Table of Contents

FREQUENTLY USED TERMS

In this proxy statement/prospectus:

Accel” means Accel Entertainment, Inc., an Illinois corporation, and, unless the context otherwise requires, its consolidated subsidiaries.

Accel Articles” means the Second Amended and Restated Statement of Designation of Preferred Shares of Accel Entertainment, Inc., dated as of March 7, 2016.

Accel Material Adverse Effect” means any fact, circumstance, occurrence, condition, change, development, event or effect that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the financial condition, business, assets, liabilities or results of operations of Accel and its subsidiaries, taken as a whole, or that prevents or materially delays or impairs, or would reasonably be expected to prevent or materially delay or impair, the ability of Accel to consummate the transactions contemplated by the Transaction Agreement; provided, that, in no event shall any of the following constitute an Accel Material Adverse Effect: (i) any occurrence, condition, change, development, event or effect resulting from or relating to changes in general economic, regulatory or political conditions or conditions in the United States, the markets where Accel and its subsidiaries operate or worldwide capital markets; (ii) any occurrence, condition, change, development, event or effect that affects the industries in which Accel and its subsidiaries operate generally (including changes in commodity prices, general market prices and regulatory changes); (iii) the outbreak or escalation of hostilities, the declaration of a national emergency or war, the issuance of health advisories or the occurrence of any other similar calamity or crisis, including natural disasters and acts of terrorism; (iv) any change in applicable law, or the interpretation or enforcement policy thereof after the date of the Transaction Agreement; (v) any change in accounting requirements or principles imposed upon Accel or its subsidiaries or their respective businesses after the date of the Transaction Agreement; (vi) the announcement or pendency of the transactions contemplated by the Transaction Agreement; and (vii) any failure (but not the underlying cause of such failure) to meet any projections, forecasts, guidance, estimates, milestones, budgets or financial or operating predictions of revenue, earnings, cash flows or cash position; provided, further, that the exceptions in clauses (i) through (iv) shall only apply to the extent that Accel and/or its subsidiaries are not, or would not reasonably be expected to be, adversely affected in a disproportionate manner relative to other participants in the markets or industries in which Accel and its subsidiaries operate.

Accel Shareholders Agreement” means the Shareholders Agreement, dated as of March 9, 2016, by and between Accel and the Shareholders named therein.

Accel Stock” means the common stock and preferred stock of Accel.

Additional Investor” means that certain investor that is an accredited investor (as defined by Rule 501 of Regulation D) and party to the additional subscription agreement, dated as of August 13, by and between Pace and such investor.

Antitrust Division” means the Antitrust Division of the U.S. Department of Justice.

Articles” means the amended and restated memorandum and articles of association of Pace, effective June 27, 2017.

ASC” means Accounting Standards Codification.

Business Combination” means all of the transactions contemplated by the Transaction Agreement, including among other things: (i) the Stock Purchase; (ii) the Merger; (iii) the Pace Domestication, (iv) the Sponsor Transactions; (v) the distribution by Pace Sponsor of all of its Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants to the Pace Sponsor Members and (vi) the Director Class F Share Exchange.

 

1


Table of Contents

Business Combination Private Placement” means the private placement of Class A-1 Shares and Class A-2 Shares with Business Combination Private Placement Sellers pursuant to Section 4(a)(2) of the Securities Act, pursuant to the terms of the Transaction Agreement, the Key Holder Support Agreement and the Holder Support Agreement.

Business Combination Private Placement Sellers” means those Sellers that are party to the Key Holder Support Agreement or the Holder Support Agreement, all of whom are “accredited investors” (as defined by Rule 501 of Regulation D).

CAGR” means compounded annual growth rates.

Cash Election” means an election by a Seller to receive, in exchange for its shares of Accel Stock, cash in lieu of Class A-1 Shares pursuant to the terms of the Transaction Agreement.

Cash Election Agreement” means that certain Cash Election Agreement to be mailed or transmitted to record holders of Accel Stock, pursuant to which such holders of record of Accel stock make a Cash Election.

Cayman Pace” means TPG Pace Holdings Corp., a Cayman Islands exempted company.

Charter Filing” means the filing of the Proposed Charter with the Secretary of State of the State of Delaware.

Clairvest” means Clairvest Group, Inc.

Clairvest Investors” means collectively Clairvest Equity Partners V Limited Partnership, an Ontario limited partnership, Clairvest Equity Partners V-A Limited Partnership, an Ontario limited partnership, and CEP V Co-Investment Limited Partnership, a Manitoba limited partnership.

Clairvest Litigation” means the lawsuit relating to the Business Combination, filed by the Clairvest Plaintiffs on July 16, 2019 in the Circuit Court of Cook County, Illinois, County Department, Chancery Division, naming Accel, Jeffrey C. Rubenstein, Andrew Rubenstein, Gordon Rubenstein and David Ruttenberg, as defendants, and voluntarily dismissed without prejudice on August 20, 2019.

Clairvest Plaintiffs” means Clairvest Equity Partners V Limited Partnership, acting through its general partner Clairvest GP Manageco Inc., Clairvest Equity Partners V-A Limited Partnership, and CEP V Co- Investment Limited Partnership, through their general partner Clairvest General Partner V L.P., through its general partner Clairvest GP (GPLP) Inc.

Class A-1 Shares” means the shares of Class A-1 common stock, par value $0.0001 per share, of Pace.

Class A-2 Shares means the shares of Class A-2 common stock, par value $0.0001 per share, of Pace.

Class F Shares” means the shares of Class F common stock, par value $0.0001 per share, of Pace.

Class F Share Exchange” means the Sponsor Class F Share Exchange and the Director Class F Share Exchange.

Common Stock” means the Class A-1 Shares, the Class A-2 Shares and the Class F Shares.

Company Alternative Transaction” means any potential acquisition (whether by purchase of stock or assets or otherwise) of equity interests in Accel or its subsidiaries or of all or any material portion of the assets of Accel or its subsidiaries or any other transaction involving a change in ownership, or a debt or equity financing of Accel with any person (other than Pace, its subsidiaries and their respective representatives).

 

2


Table of Contents

Continental Warrant Agreement” means that certain Warrant Agreement, by and between Pace and Continental Stock Transfer & Trust Company, as warrant agent, dated as of June 27, 2017.

Court of Chancery” means the court of chancery in the State of Delaware.

Credit Agreement” means that certain Third Amended and Restated Loan and Security Agreement, dated as of April 10, 2018 (as amended by that certain First Amendment to Third Amended and Restated Loan and Security Agreement, dated as of August 22, 2019), among, inter alios, Accel Entertainment Gaming, LLC, as borrower, the financial institutions party thereto as lenders and CIBC Bank USA, as administrative agent, as in effect on the date of the Transaction Agreement and/or as amended in accordance with the terms of the Transaction Agreement.

Deferred Discount” means the deferred discount of 3.50% of the gross proceeds of the Pace IPO, or $15,750,000, that Pace is committed to pay to the underwriters upon the completion of an initial business combination.

DGCL” means the General Corporation Law of the State of Delaware.

Director Class F Share Exchange” means the exchange by the independent directors of Pace, pursuant to the Director Letter Agreements, of an aggregate of 200,000 Class F Shares owned by such directors for an equal number Class A-1 Shares following the Pace Domestication but prior to the effectiveness of the Stock Purchase.

Director Letter Agreements” means those certain Director Letter Agreements dated June 13, 2019, by and between Pace and each of the independent directors of Pace pursuant to which such directors agree that, following the Pace Domestication but prior to the effectiveness of the Stock Purchase, 200,000 Class F Shares owned by such directors shall be exchanged for an equal number Class A-1 Shares; and substantially in the form attached hereto as Annex H.

Drag-Along Agreement” means that certain Drag-Along Agreement dated June 13, 2019, by and between the Dragging Shareholders and Pace, pursuant to which each Dragging Shareholder has agreed to exercise their drag-along rights pursuant to and in accordance with the Accel Articles and the Accel Shareholders Agreement, in a manner so as to facilitate consummation of the transactions contemplated by the Transaction Agreement.

Drag-Along Notice” means the written notice dated July 23, 2019, issued by the Dragging Shareholders to Accel and the Drag-Along Shareholder in connection with the Drag-Along Agreement and pursuant to the Accel Articles.

Drag-Along Shareholders” means the shareholders of Accel that are not Dragging Shareholders.

Dragging Shareholders” means each of the Sellers who had duly executed and delivered a signature page to the Transaction Agreement as of June 13, 2019, being parties to the Drag-Along Agreement.

Excess Shares” means the Public Shares held in excess of 15% of the total Public Shares issued as part of the Public Units sold in the Pace IPO which any individual public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group,” as defined under Section 13 of the Exchange Act, is restricted from seeking redemption rights with respect to.

Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

Extraordinary General Meeting” means the extraordinary general meeting of Pace in lieu of the 2019 annual general meeting of Pace that is the subject of this proxy statement/prospectus.

 

3


Table of Contents

F Reorganization” means a “reorganization” within the meaning of section 368(a)(1)(F) of the U.S. Tax Code.

FATCA” means The Foreign Account Tax Compliance Act, as reflected in Sections 1471 through 1474 of the U.S. Tax Code.

FINRA” means the Financial Industry Regulatory Authority.

Founder Shares” means the Class F ordinary shares, par value $0.0001 per share, of Pace.

FTC” means the U.S. Federal Trade Commission.

General Investors” means the Original General Investors and the Additional Investor.

hold-per-day” means post-acquisition net video gaming revenue per VGT per day.

Holder Support Agreement” means that certain agreement dated June 13, 2019, by and between certain Sellers and Pace, pursuant to which such Sellers agreed to make a non-binding Cash Election; and attached hereto as Annex L.

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

IGB” means the State of Illinois Gaming Board.

IL Operating Subsidiary” means Accel Entertainment Gaming, LLC, an Illinois limited liability company formed in 2009 for the purposes of providing video gaming services in Illinois.

Illinois Gaming Act” means the Illinois Video Gaming Act and amendments thereto enacted by the Illinois state legislature.

Investment Company Act” means the Investment Company Act of 1940, as amended.

Investment Private Placement” means the private placement of 4,696,675 Class A-1 Shares with the Investors pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, for a purchase price of $10.22 per share or gross proceeds to Pace in an aggregate amount of approximately $48 million, pursuant to the Subscription Agreements.

Investors” means the General Investors and the Pace Affiliate.

IRS” means the U.S. Internal Revenue Service.

JOBS Act” means the Jumpstart Our Business Startups Act of 2012.

Key Holder Support Agreement” means that certain Key Holder Support Agreement, dated June 13, 2019, by and between Pace and certain Sellers pursuant to which such Sellers agreed to restrict the amount of Accel Stock for which they elect to receive cash (a “Cash Election”) to less than 20% of the number of shares of Accel Stock owned by such Seller and each of its affiliates on an aggregated basis; and attached hereto as Annex K.

KPMG” means KPMG LLP, an independent registered public accounting firm.

licensed establishments” means, collectively, authorized non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores.

 

4


Table of Contents

Merger” means the merger of Accel with and into NewCo following the closing of the Stock Purchase, with NewCo surviving such merger.

Morrow” means Morrow Sodali LLC, proxy solicitor to Pace.

New Continental Warrant Agreement” means the warrant agreement to be entered into at the closing of the Stock Purchase, by and between Pace and Continental Stock Transfer & Trust Company as warrant agent, substantially in the form attached as Annex J.

New Pace Warrants” means the 2,444,444 newly issued warrants of Pace, issued pursuant to the New Pace Warrant Agreement, each of which entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per Class A-1 Share in accordance with its terms.

New Pace Warrant Agreement” means that certain Warrant Agreement to be entered into at the closing of the Stock Purchase, by and between Pace and Sellers who will receive New Pace Warrants pursuant to which 2,444,444 New Pace Warrants will be issued; and substantially in the form attached hereto as Annex I.

NewCo” means New Pace LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Pace.

NYSE” means the New York Stock Exchange.

Original General Investors” means those certain investors, other than Pace Affiliate, that are accredited investors (as defined by Rule 501 of Regulation D) and party to the Original Subscription Agreements.

Original Investors” means the Original General Investors and Pace Affiliate.

Original Subscription Agreements” means those certain Subscription Agreements dated as of June 13, 2019 entered into by and between Pace and the Original Investors, pursuant to which such Investors agree to subscribe for and purchase, and Pace agrees to issue and sell to the Investor, on the terms and subject to the conditions and limitations set forth therein, Class A-1 Shares; and attached hereto as Annexes N and O.

PA Board” means the Pennsylvania Gaming Control Board.

Pace” means prior to the Pace Domestication, Cayman Pace and following the Pace Domestication, Pace Delaware.

Pace Affiliate” means the affiliate of Pace who is party to a Subscription Agreement.

Pace Board” means the board of directors of Pace.

Pace Delaware” means the post-domestication corporation of Cayman Pace after Cayman Pace changes its jurisdiction of incorporation from the Cayman Islands to Delaware through the Pace Domestication.

Pace Delaware Warrants” means the warrants to purchase Class A-1 Shares of Pace Delaware.

Pace Domestication” means the intended deregistration of Pace as an exempted company in the Cayman Islands under the Cayman Islands Companies Law (2018 Revision), and domestication as a corporation incorporated under the laws of the State of Delaware under Section 388 of the DGCL, pursuant to which Pace’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware.

Pace Governance” means TPG Pace Governance, LLC, a Cayman Islands limited liability company and an affiliate of TPG.

 

5


Table of Contents

Pace Initial Shareholders” means Pace Sponsor, including, following the Business Combination, the Pace Sponsor Members, and Mr. Chad Leat, Miss Kathleen Philips, Mr. Robert Suss, Mr. Paul Walsh and Mr. Kneeland Youngblood, Pace’s independent directors.

Pace IPO” means Pace’s initial public offering, consummated on June 30, 2017, through the sale of 45,000,000 Public Units (including 5,000,000 Public Units sold pursuant to the underwriters’ partial exercise of their over-allotment option) at $10.00 per Public Unit.

Pace Material Adverse Effect” means any fact, circumstance, occurrence, condition, change, development, event or effect that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the financial condition, business, assets, liabilities or results of operations of Pace and its subsidiaries, taken as a whole, or that prevents or materially delays or impairs, or would reasonably be expected to prevent or materially delay or impair, the ability of Pace to consummate the transactions contemplated by the Transaction Agreement; provided, that, in no event shall any of the following constitute a Pace Material Adverse Effect: (i) any occurrence, condition, change, development, event or effect resulting from or relating to changes in general economic, regulatory or political conditions or conditions in the United States or worldwide capital markets; (ii) any occurrence, condition, change, development, event or effect that affects the industries in which Pace and its subsidiaries operate generally (including changes in commodity prices, general market prices and regulatory changes); (iii) the outbreak or escalation of hostilities involving the United States, the declaration by the United States of a national emergency or war or the occurrence of any other similar calamity or crisis, including natural disasters and acts of terrorism; (iv) any change in applicable law, or the interpretation thereof; (v) any change in accounting requirements or principles imposed upon Pace, its subsidiaries or their respective businesses after the date of the Transaction Agreement; (vi) the announcement or pendency of the transactions contemplated by the Transaction Agreement; and (vii) any failure (but not the underlying cause of such failure) to meet any projections, forecasts, guidance, estimates, milestones, budgets or financial or operating predictions of revenue, earnings, cash flows or cash position; provided, further, that, the exceptions in clauses (i) through (iv) shall only apply to the extent that Pace and/or its subsidiaries are not, or would not reasonably be expected to be, adversely affected in a disproportionate manner relative to other participants in the markets or industries in which Pace and its subsidiaries operate.

Pace Ordinary Shares” means the Public Shares and the Founder Shares.

Pace Shares” means the Class A-1 Shares and Class A-2 Shares.

Pace Sponsor” means TPG Pace II Sponsor, LLC, a Cayman Islands exempted company and an affiliate of TPG.

Pace Sponsor Indemnified Parties” means Pace Sponsor and each of its directors, officers, managers, employees, affiliates, equityholders, agents, attorneys, representatives, successors and assigns, which Surviving NewCo has agreed to hold harmless from and against, and to pay the amount of, any and all losses based upon, attributable to or resulting from any actual or threatened action brought by any shareholder of Accel, or any of their respective directors, officers, managers, employees, affiliates, equityholders, agents, attorneys, representatives, successors and assigns in connection with any of the transactions contemplated by the Transaction Agreement.

Pace Sponsor Members” means Pace Governance, Pace Sponsor Successor and Karl Peterson.

Pace Sponsor Successor” means TPG Pace II Sponsor Successor, LLC, a Delaware limited liability company and a continuation of the Pace Sponsor.

Pace Sponsor Support Agreement” means the letter agreement dated June 13, 2019 (as amended on July 22, 2019 and as it may be further amended from time to time), by and among Pace, the Pace Sponsor and the

 

6


Table of Contents

Shareholder Representatives, pursuant to which Pace Sponsor will (i) surrender for cancelation 1,250,000 of its Class F Shares and any additional Class F Shares necessary to ensure its aggregate ownership of Class A-1 Shares would not exceed 10.25% of the aggregate ownership of all holders of Class A-1 Shares (after giving pro forma effect to the Stock Purchase), (ii) exchange 2,000,000 Class F Shares for an equal number of Class A-2 Shares which shall be subject to terms set forth in the Restricted Stock Agreement, (iii) exchange any remaining Class F Shares (up to 7,800,000) for an equal number of Class A-1 Shares, (iv) surrender for cancelation 2,444,444 Private Placement Warrants held by Pace Sponsor, (v) contribute 500,000 Class A-1 Shares to a donor advised fund of its choice for purposes of participation in charitable efforts in the communities in which Pace Sponsor and its affiliates operate, or anticipate operating (provided that Pace Sponsor may, with the prior written consent of Accel, elect to contribute cash to such donor advised fund in lieu of some or all of such Class A-1 Shares at a rate of $10.22 per share and surrender for cancelation a number of Class A-1 Shares to Parent equal to the amount of cash contributed divided by $10.22 per share) and (vi) vote in favor of the Business Combination; and attached hereto as Annexes E and E-1.

Pace Warrants” means, collectively, the Private Placement Warrants and the Public Warrants.

Pennsylvania Gaming Act” means the Pennsylvania Race Horse Development and Gaming Act and amendments thereto enacted by the Pennsylvania legislature.

PFIC” means a passive foreign investment company within the meaning of Section 1297 of the U.S. Tax Code.

Permitted Investments” means investments of the net proceeds from the Pace IPO in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. “PFIC” means a passive foreign investment company.

Preferred Stock” means the preferred stock, par value of $0.0001 per share, of Pace.

Preferred Stock Designation” means any resolution or resolution adopted by the Pace Board providing for the issuance of one or more series of Preferred Stock stating the voting rights, if any, designations, powers, preferences and relative, participating, optional, special and other rights, if any, of each such series and any qualifications, limitations and restrictions thereof and included in a certificate of designation.

Private Placement Warrants” means the warrants held by Pace Sponsor that were issued to Pace Sponsor in a private placement prior to the consummation of the Pace IPO, each of which is exercisable for one Public Share at an exercise price of $11.50 per Public Share, in accordance with its terms.

Proposed Charter” means the amended and restated certificate of incorporation of Pace under the DGCL that, assuming the Charter Proposal is approved and the Business Combination is to be consummated, will replace the Articles upon the consummation of the Business Combination; and attached hereto as Annex C.

Public Securities” means the Public Shares and Public Warrants.

Public Shares” means the Class A ordinary shares, par value $0.0001 per share, of Pace.

Public Share Value” means a per share price equal to the aggregate balance of the Trust Account immediately prior to closing of the Stock Purchase and prior to any redemptions of Public Shares divided by the number of then outstanding Public Shares.

public shareholders” means holders of Public Shares, including the Pace Initial Shareholders and Pace’s other officers and directors to the extent they hold Public Shares or, following the Pace Domestication, Class A-1 Shares, as applicable, provided, that the Pace Initial Shareholders and Pace’s other officers and directors will be considered a “public shareholder” only with respect to any Public Shares or Class A-1 Shares (as applicable) held by them.

 

7


Table of Contents

Public Units” means one Public Share and one-third of a Public Warrant of Pace sold in the Pace IPO.

Public Warrants” means the warrants included in the Public Units, each of which is exercisable for one Public Share at an exercise price of $11.50 per Public Share, in accordance with its terms.

Purchase Price” means $177 per share.

QEF Election” means a U.S. Holder’s timely and effective election to treat Pace as a “qualified electing fund” under Section 1295 of the U.S. Tax Code for the taxable year that is the first year of the U.S. Holder’s holding period of Public Securities during which Pace qualified as a PFIC.

Registration Rights Agreement” means that certain Registration Rights Agreement to be entered into at the closing of the Stock Purchase, by and among Pace and the Registration Rights Holders; and in substantially the form attached hereto as Annex M.

Registration Rights Holders” means the Pace Sponsor Members, certain founders of Accel, certain members of management of Accel, certain Accel shareholders, the independent directors of Pace and each other person who has executed and delivered a joinder to the Registration Rights Agreement, including any person who (1) will be a stockholder of Pace immediately following the Business Combination, (2) either (A) makes a written request to Pace to enter into the Registration Rights Agreement or (B) will, immediately following the Business Combination, be subject to Section (b)(2) of Rule 144 of the Securities Act with respect to such person’s Class A-1 Shares following the Business Combination and (3) elects to enter into the Registration Rights Agreement.

Related Agreements” means, collectively, the Drag-Along Agreement, the Pace Sponsor Support Agreement, the Restricted Stock Agreement, the Waiver Agreement, the Director Letter Agreements, the Subscription Agreements, the New Pace Warrant Agreement, the Key Holder Support Agreement, the Holder Support Agreements, the Registration Rights Agreement, the Cash Election Agreements and the Support Agreement.

Restricted Stockholders” means the Pace Sponsor Members and certain holders of Accel Stock, including Sellers who will receive Class A-2 Shares, as named in the Restricted Stock Agreement.

Restricted Stock Agreement” means that certain Restricted Stock Agreement to be entered into at the closing of the Stock Purchase, by and between Pace and the Restricted Stockholders setting forth, among other things, the terms governing the exchange of the Class A-2 Shares for Class A-1 Shares by the Restricted Stockholders; and in substantially the form attached hereto as Annex F.

Rubenstein Family” means Mr. Andrew Rubenstein, together with his brother, Mr. Gordon Rubenstein and their father, Mr. Jeffrey Rubenstein.

Rule 144” means Rule 144 of the Securities Act.

Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

SEC” means the United States Securities and Exchange Commission.

Second Request” means a request for additional information or documentary material issued by the Antitrust Division or the FTC, which will extend the initial waiting period under the HSR Act until 30 days after each of the parties has substantially complied with the Second Request.

Section 203” means Section 203 of the DGCL.

 

8


Table of Contents

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Sellers” means the shareholders of Accel named as Sellers in the Transaction Agreement, including those Sellers joined as parties to the Transaction Agreement pursuant to executed and delivered joinders to the Transaction Agreement.

Shareholder Representatives” means David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein), each in their capacity as a “Shareholder Representative”.

Sponsor Class F Share Exchange” means, collectively: (i) the surrender for cancelation by Pace Sponsor of 1,250,000 of its Class F Shares and any additional Class F Shares necessary to ensure its aggregate ownership of Class A-1 Shares would not exceed 10.25% of the aggregate ownership of all holders of Class A-1 Shares (after giving pro forma effect to the Stock Purchase), (ii) the exchange by Pace Sponsor of 2,000,000 Class F Shares for an equal number of Class A-2 Shares, in each case pursuant to the Pace Sponsor Support Agreement and (iii) the exchange by Pace Sponsor of any remaining Class F Shares (up to 7,800,000) for an equal number of Class A-1 Shares.

Sponsor Contribution” means the contribution by Pace Sponsor, pursuant to the Pace Sponsor Support Agreement, of 500,000 Class A-1 Shares to a donor advised fund of its choice for purposes of participation in charitable efforts in the communities in which Pace Sponsor and its affiliates operate, or anticipate operating (provided that Pace Sponsor may, with the prior written consent of Accel, elect to contribute cash to such donor advised fund in lieu of some or all of such Class A-1 Shares at a rate of $10.22 per share and surrender for cancelation a number of Class A-1 Shares to Parent equal to the amount of cash contributed divided by $10.22 per share);

Sponsor Warrant Cancelation” means the surrender for cancelation 2,444,444 Private Placement Warrants held by Pace Sponsor pursuant to the Pace Sponsor Support Agreement.

Sponsor Transactions” means the Sponsor Class F Share Exchange, the Sponsor Warrant Cancelation and the Sponsor Contribution.

Sponsor Letter Agreement” means the letter agreement, dated as of June 27, 2017, by and between Pace Sponsor, Pace directors and officers and Pace.

Stock Purchase” means the acquisition by Pace, directly or indirectly, all of the issued and outstanding shares of Accel Stock held by the Sellers.

Subject Securities” means Accel Stock and any security convertible or exchangeable into Accel Stock.

Subscription Agreements” means the Original Subscription Agreements and the additional subscription agreement dated August 13, 2019, by and between Pace and the Additional Investor.

Support Agreement” means the support agreement, dated as of June 13, 2019, by and between Pace and Accel, pursuant to which Accel will use commercially reasonable efforts to assist the Sellers in complying with certain covenants contained therein and Pace and Accel have agreed to certain expense reimbursement arrangements payable under certain circumstances upon termination of the Transaction Agreement and attached hereto as Annex P.

Surviving NewCo” means NewCo, in its capacity as surviving company of the Merger.

Termination Date” means November 30, 2019.

 

9


Table of Contents

TPG” means TPG Global, LLC and its affiliates.

Transaction Agreement” means that certain Transaction Agreement, dated as of June 13, 2019 (as amended on July 22, 2019 and as it may be further amended from time to time), by and among Pace, each of the Sellers and David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein), each in their capacity as a Shareholder Representative, which is attached hereto as Annexes A and A-1.

Transfer Agent” means Continental Stock Transfer & Trust Company.

Trust Account” means the trust account of Pace that holds the proceeds from the Pace IPO.

Trustee” means Continental Stock Transfer & Trust Company.

U.S. Holder” means a beneficial owner of the Public Securities who or that is for U.S. federal income tax purposes (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source or (iv) trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons (as defined in the U.S. Tax Code) have authority to control all substantial decisions of the trust or (b) it has a valid election in effect under Treasury Regulations to be treated as a U.S. person.

U.S. Tax Code” means the U.S. Internal Revenue Code of 1986, as amended.

VGTs” means Video Gaming Terminals.

Waiver Agreement” means that certain Waiver Agreement, dated as of June 13, 2019, by and among Pace and the Pace Initial Shareholders, pursuant to which holders of the Founder Shares waive any adjustment to the conversion ratio of Founder Shares set forth in the Articles and in substantially the form attached hereto as Annex G.

Weil” means Weil, Gotshal & Manges LLP, counsel to Pace.

 

10


Table of Contents

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION

AND THE EXTRAORDINARY GENERAL MEETING

The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the Extraordinary General Meeting and 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 Pace shareholders. Shareholders are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the proposed Business Combination and the voting procedures for the Extraordinary General Meeting, which will be held on [●], 2019 at [●] local time at [●].

 

Q:

Why am I receiving this proxy statement/prospectus?

 

A:

Pace shareholders are being asked to consider and vote upon a proposal to adopt the Transaction Agreement and approve the transactions contemplated thereby, among other proposals. Pace has entered into the Transaction Agreement, providing for, among other things: (i) the Stock Purchase; (ii) the Merger; (iii) the Pace Domestication, (iv) the Sponsor Transactions; (v) the distribution by Pace Sponsor, following the Sponsor Transactions but immediately prior to the Stock Purchase, of all of its Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants to the Pace Sponsor Members and (vi) the Director Class F Share Exchange. A copy of the Transaction Agreement is attached to this proxy statement/prospectus as Annexes A and A-1.

This proxy statement/prospectus and its Annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the Extraordinary General Meeting. You should read this proxy statement/prospectus and its Annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its Annexes.

 

Q:

When and where is the Extraordinary General Meeting?

 

A:

The Extraordinary General Meeting will be held on [●], 2019 at [●] local time at [●].

 

Q:

What are the specific proposals on which I am being asked to vote at the Extraordinary General Meeting?

 

A:

Pace shareholders are being asked to approve the following proposals:

 

  1.

Business Combination Proposal — To consider and vote upon a proposal to adopt the Transaction Agreement and approve the transactions contemplated thereby, including the Business Combination (Proposal No. 1);

 

  2.

Domestication Proposal — To consider and vote upon a proposal to approve by special resolution the Pace Domestication, to occur immediately prior to the Stock Purchase (Proposal No. 2)

 

  3.

NYSE Proposal — To consider and vote upon a proposal to approve, for purposes of complying with applicable provisions of NYSE Listing Rule 312.03, the issuance of more than 20% of Pace’s issued and outstanding common stock following the Pace Domestication to Accel shareholders in connection with the Business Combination (Proposal No. 3);

 

  4.

Charter Proposal — To consider and vote upon a proposal to adopt the Proposed Charter, to be effective following the Pace Domestication and immediately prior to the Stock Purchase (the “Charter Proposal”) (Proposal No. 4);

 

11


Table of Contents
  5.

Governance Proposals — To consider and vote upon, on a non-binding advisory basis, separate proposals to approve certain aspects of the provisions of the Proposed Charter that materially affect stockholder rights, which are being separately presented in accordance with SEC requirements (Proposal No. 5); and

 

  6.

Adjournment Proposal — To consider and vote upon a proposal to approve the adjournment of the Extraordinary General Meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Pace Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (ii) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or (iii) if Pace shareholders redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied. The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or in the event that Pace shareholders redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied (Proposal No. 6).

 

Q:

Are the proposals conditioned on one another?

 

A:

The Business Combination is conditioned on the approval of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal and the Charter Proposal. Each of the Governance Proposals is non-binding and is not conditioned on the approval of the Charter Proposal or any other proposal set forth in this proxy statement/prospectus. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event that the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal does not receive the requisite vote for approval, then Pace will not consummate the Business Combination. If Pace does not consummate the Business Combination and fails to complete an initial business combination by [●], 2019, Pace will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such Trust Account to its public shareholders.

 

Q:

Why is Pace proposing the Business Combination?

 

A:

Pace is a blank check company incorporated as a Cayman Islands exempted company on February 14, 2017 and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more target businesses. Pace’s acquisition plan is not limited to a particular industry, geographic region or minimum transaction value for purposes of consummating an initial business combination, except that it is not, under the Articles, permitted to effect a business combination with a blank check company or a similar type of company with nominal operations.

Pace has identified several criteria and guidelines it believes are important for evaluating acquisition opportunities. These criteria and guidelines include, among others: attractive risk-adjusted equity returns for Pace shareholders; significant embedded and/or underexploited expansion opportunities; unrecognized value or other characteristics that Pace believes have been misevaluated by the marketplace; and being at an inflection point, such as requiring additional management expertise, innovation and development of new products or services or where Pace believes it can drive improved financial performance and where an acquisition may help facilitate growth. Based on its due diligence investigations of Accel and the industry in which it operates, including the financial and other information provided by Accel in the course of negotiations, Pace believes that Accel meets the criteria and guidelines listed above. Please see the section entitled “The Business Combination — The Pace Board’s Reasons for the Business Combination” for additional information.

 

12


Table of Contents
Q:

Why is Pace providing shareholders with the opportunity to vote on the Business Combination?

 

A:

Under the Articles, Pace must provide all holders of Public Shares with the opportunity to have their Public Shares redeemed upon the consummation of its initial business combination either in conjunction with a tender offer or in conjunction with a shareholder vote. For business and other reasons, Pace has elected to provide its shareholders with the opportunity to have their Public Shares redeemed in connection with a shareholder vote rather than a tender offer. Therefore, Pace is seeking to obtain the approval of its shareholders of the Business Combination Proposal in order to allow its public shareholders to effectuate redemptions of their Public Shares in connection with the consummation of the Business Combination. The approval of the Business Combination, the Pace Domestication and the adoption of the Proposed Charter is required under the Articles and under Cayman Islands law, and the approval of the issuance of Pace Shares in connection with the Business Combination is required under the rules and regulations of the NYSE. In addition, such approvals are also conditions to the closing of the Stock Purchase under the Transaction Agreement.

 

Q:

What revenues and profits/losses has Accel generated in the last two years?

 

A:

For the fiscal years ended December 31, 2018 and December 31, 2017, Accel had total net revenue of $331,992,692 and $248,434,919, and net income of $10,802,664 and $8,310,721, respectively. At the end of fiscal year 2018, Accel’s total assets were $335,174,215 and its total liabilities were $278,056,723. For additional information, please see the sections entitled “Selected Historical Financial Data of Accel and Non-GAAP Financial Measures” and “Accel Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

Q:

What will happen in the Business Combination?

 

A:

Pursuant to the Transaction Agreement, and upon the terms and conditions set forth therein, Pace and Accel will effect a transaction through a series of equity purchases and mergers, referred to collectively as the “Business Combination,” which includes, among other things, (i) the Stock Purchase; (ii) the Merger; (iii) the Pace Domestication, (iv) the Sponsor Transactions; (v) the distribution by Pace Sponsor, following the Sponsor Transactions but immediately prior to the Stock Purchase, of all of its Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants to the Pace Sponsor Members and (vi) the Director Class F Share Exchange.

 

Q:

How has the announcement of the Business Combination affected the trading price of the Public Shares?

 

A:

On June 12, 2019, the last trading date before the public announcement of the Business Combination, the Public Shares, Public Warrants and Public Units closed at $10.32, $1.39 and $10.81, respectively. On [●], 2019, the trading date immediately prior to the date of this proxy statement/prospectus, the Public Shares, Public Warrants and Public Units closed at $[●], $[●] and $[●], respectively.

 

Q:

Following the Business Combination, will Pace’s securities continue to trade on a stock exchange?

 

A:

Yes. The Public Shares, Public Units and Public Warrants are currently listed on the NYSE under the symbols “TPGH,” “TPGH.U” and “TPGH.WS,” respectively. Following the Pace Domestication, the Public Shares that are converted into Class A-1 Shares will continue to be listed on the NYSE under the symbol “ACEL,” and the Public Warrants, which will entitle the holder to acquire a corresponding number of Class A-1 Shares on the same terms as in effect immediately prior to the effective time of the Pace Domestication, will continue to be listed on the NYSE under the symbol “ACEL.WS.” Each Public Unit will be canceled in exchange for (i) the right to receive one validly issued fully paid and non-assessable Class A-1 Share and (ii) one-third of a Public Warrant. It is anticipated that the Class A-1 Shares to be

 

13


Table of Contents
  issued in the Business Combination will be listed on the NYSE upon the consummation of the Business Combination under the symbol “ACEL.”

 

Q:

Is the Business Combination the first step in a “going private” transaction?

 

A:

No. Pace does not intend for the Business Combination to be the first step in a “going private” transaction. One of the primary purposes of the Business Combination is to provide a platform for Accel to access the U.S. public markets.

 

Q:

Will the management of Pace change in the Business Combination?

 

A:

The current executive officers of Accel, including Mr. Andrew Rubenstein, the Chief Executive Officer, Mr. Brian Carroll, the Chief Financial Officer, Mr. Derek Harmer, the General Counsel and Chief Compliance Officer, and a current executive officer of Pace, Mr. Karl Peterson, the President and Chief Executive Officer, will serve as Pace’s executive officers upon consummation of the Business Combination. Pace anticipates that the Pace Board will initially consist of seven directors, including three members jointly nominated by the parties to the Transaction Agreement and two members jointly nominated in writing by Pace and the Shareholder Representatives.

Please see the section entitled “Management of Pace after the Business Combination” for additional information.

 

Q:

What will Pace public shareholders receive in the Business Combination?

 

A:

In connection with the Business Combination and immediately prior to the Stock Purchase, at the effective time of the Pace Domestication, each Public Share will be converted into the right to receive one Class A-1 Share.

 

Q:

What will Pace Warrant holders receive in the Business Combination?

 

A:

In connection with the Business Combination and immediately prior to the Stock Purchase, at the effective time of the Pace Domestication, each Private Placement Warrant and Public Warrant, in each case, shall entitle the holder to acquire a corresponding number of Class A-1 Shares on the same terms as in effect immediately prior to the effective time of the Pace Domestication.

 

Q:

What will Pace unitholders receive in the Business Combination?

 

A:

Each Public Unit will be canceled in exchange for consideration consisting of (i) the right to receive one validly issued fully paid and non-assessable Class A-1 Share and (ii) one-third of a Public Warrant.

 

Q:

What will Accel shareholders receive in the Business Combination?

 

A:

Pursuant to the Transaction Agreement, at the closing of the Stock Purchase, each Seller will receive a mix of consideration comprised of (a) cash consideration equal to the number of shares of Accel Stock for which such Seller makes a Cash Election multiplied by the Purchase Price and (b) share consideration comprised of a number of Class A-1 Shares equal to the number of shares of Accel Stock for which such Seller does not make a Cash Election multiplied by an exchange ratio calculated by dividing the Purchase Price by the Public Share Value (the Public Share Value was approximately $10.25 per share as of June 30, 2019), and subject to pro rata adjustment in the event that aggregate Cash Elections by the Sellers exceed $350,000,000. In addition, each Seller that makes a Cash Election with respect to less than 70% of its shares of Accel Stock will receive its pro rata share, with such pro rata share to be determined with reference to a

 

14


Table of Contents
  number of shares equal to 70% of such Seller’s shares of Accel Stock less the number of shares of Accel Stock in respect of which the Seller made a Cash Election, of (a) 2,444,444 New Pace Warrants, subject to the conditions set forth in the New Pace Warrant Agreement and (b) 3,000,000 Class A-2 Shares, subject to the conditions set forth in the Restricted Stock Agreement.

 

Q:

What is the Business Combination Private Placement?

 

A:

In connection with the Business Combination and pursuant to the terms of the Transaction Agreement, the Key Holder Support Agreement and the Holder Support Agreement, the Business Combination Private Placement Sellers will receive, in exchange for their shares of Accel Stock, Class A-1 Shares and Class A-2 Shares issued pursuant to a private placement and not registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder in the Business Combination Private Placement, as well as cash consideration as a result of their Cash Elections, in each case, in an amount calculated pursuant to the Transaction Agreement. The closing of the Business Combination Private Placement will occur as part of the closing of the Stock Purchase.

 

Q:

What is the Investment Private Placement?

 

A:

Pursuant to the Subscription Agreements, the Investors agreed to subscribe for and purchase and Pace agreed to issue and sell to such Investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million. The proceeds from the Investment Private Placement will be used to fund a portion of the cash consideration required to effect the Stock Purchase. The closing of the Investment Private Placement will occur immediately prior to the closing of the Stock Purchase and is conditioned thereon and on other customary closing conditions. The Class A-1 Shares to be issued in the Investment Private Placement pursuant to the Subscription Agreements have not been registered under the Securities Act, and will be issued in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

 

Q:

What equity stake will the current shareholders of Pace, the Investors and the current shareholders of Accel hold in Pace after the consummation of the Business Combination?

 

A:

It is anticipated that, upon completion of the Business Combination: (i) Pace’s public shareholders (other than the Investors) will own approximately 51.68% of the equity interests of Pace; (ii) the General Investors will own approximately 3.79% of Pace (such that public shareholders, including the General Investors, will own approximately 55.46% of the equity interests of Pace); (iii) the Pace Affiliate will own approximately 1.61% of the equity interests of Pace; (iv) the Pace Initial Shareholders will own approximately 8.61% of the equity interests of Pace, after giving effect to the conversion of all Public Shares and Founder Shares held by the Pace Initial Shareholders on a one-for-one basis to Class A-1 Shares and Class F Shares, respectively, in connection with the Pace Domestication, and the Class F Share Exchange; (v) Accel shareholders will own approximately 33.75% of the equity interests of Pace; and (vi) the donor advised fund will own approximately 0.57% of the equity interests of Pace.

The ownership percentages with respect to Pace following the Business Combination do not take into account the Class A-2 Shares that will be exchanged for Class A-1 Shares pursuant to the terms of the Restricted Stock Agreement, Pace Warrants to purchase to Class A-1 Shares that will remain outstanding immediately following the Business Combination or options to purchase Accel Stock that had not vested as of June 30, 2019. The ownership percentages also assume (i) outstanding shares of Accel Stock as of June 30, 2019, (ii) a balance of the Trust Account equal to approximately $461,275,222, (iii) aggregate Cash Elections by the Accel shareholders of $350,000,000, including that holders of Class D preferred stock, no par value, of Accel elect to receive cash in respect of 100% of such shares, (iv) that no Public Shares are elected to be redeemed by Pace’s public shareholders, (v) that none of the Private Placement Warrants are

 

15


Table of Contents

exercised and (vi) that Pace Sponsor elects to contribute 500,000 Class A-1 Shares and no cash to the donor advised fund in connection with the Sponsor Contribution. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Pace’s existing shareholders in Pace will be different. For more information, please see the sections entitled “The Business Combination — Impact of the Business Combination on Pace’s Public Float” and “Unaudited Pro Forma Condensed Combined Financial Information.”

 

Q:

Will Pace obtain new financing in connection with the Business Combination?

 

A:

Yes. Pace will obtain new equity financing through a private placement of Class A-1 Shares in the Investment Private Placement. Pace will use the proceeds from the Investment Private Placement, together with a portion of the funds in the Trust Account, to fund a portion of the cash consideration required to effect the Business Combination. The Investment Private Placement is contingent upon, among other things, the consummation of the Business Combination.

 

Q:

Are there any arrangements to help ensure that Pace will satisfy the condition in the Transaction Agreement relating to the availability of sufficient funds?

 

A:

Unless waived by Pace or Accel, the Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem Public Shares, plus (ii) an amount determined by Pace prior to closing which shall not exceed proceeds available under the Credit Agreement and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be $22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) equaling or exceeding the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel.

In connection with the Investment Private Placement, Pace will issue and sell to the Investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million.

 

Q:

Why is Pace proposing the Domestication Proposal?

 

A:

The Pace Board believes that it would be in the best interests of Pace to effect the Pace Domestication to enable Pace to avoid certain taxes that would be imposed on Pace if Pace were to conduct an operating business in the United States as a foreign corporation following the Business Combination. In addition, a Delaware corporation will provide Pace’s stockholders with certain rights not afforded to them by a Cayman Islands company. The Pace Domestication will be completed immediately prior to the Stock Purchase. For additional information, please see the section entitled “Proposal No. 2 — The Domestication Proposal.”

 

Q:

Why is Pace proposing the NYSE Proposal?

 

A:

Pace is proposing the NYSE Proposal in order to comply with NYSE Listing Rule 312.03, which requires stockholder approval of certain transactions that result in the issuance of 20% or more of the outstanding voting power outstanding before the issuance of stock or securities.

Pace expects to issue approximately 72,805,947 Class A-1 Shares (assuming a trust account balance of $461,275,222 as of June 30, 2019), no more than 5,000,000 Class A-2 Shares and approximately 2,444,444 New Pace Warrants in connection with the Business Combination, including the Business Combination Private Placement. In connection with the Investment Private Placement, Pace expects to issue 4,696,675 Class A-1 Shares. Because Pace may issue 20% or more of the outstanding Class A-1 Shares when considering together the Business Combination, including the Business Combination Private Placement, and the Investment Private Placement, Pace is required to obtain stockholder approval of such issuance pursuant to NYSE Listing Rule 312.03. For additional information, please see the sections entitled “Proposal No. 3 — The NYSE Proposal.”

 

16


Table of Contents
Q:

Why is Pace proposing the Charter Proposal?

 

A:

The Proposed Charter that will be effective upon the consummation of the Stock Purchase that Pace is asking Pace shareholders to approve in connection with the Business Combination provides for: (i) the change of Pace’s name to “Accel Entertainment, Inc.”, (ii) the increase of the total number of authorized shares of all classes of Common Stock from [●] shares of Common Stock (as converted from Pace Ordinary Shares in connection with the Business Combination) to [●] shares of Common Stock, which will consist of (x) increasing the post-Business Combination company’s Pace Shares from [●] to [●] (consisting of [●] Class A-1 Shares and [●] Class A-2 Shares and (y) decreasing the post-Business Combination company’s Class F shares from [●] to zero, (iii) the classification of the Pace Board into three separate classes, (iv) the removal of the ability of stockholders to act by written consent in lieu of a meeting, and (v) the selection of Delaware as the exclusive forum for certain stockholder litigation. It also eliminates certain provisions specific to Pace’s status as a blank check company, which the Pace Board believes are necessary to adequately address the needs of the post-Business Combination company.

Pursuant to Cayman Islands law and the Articles, Pace is required to submit the Charter Proposal to Pace’s shareholders for approval. For additional information, please see the section entitled “Proposal No. 4 — The Charter Proposal.

 

Q:

Why is Pace proposing the Governance Proposals?

 

A:

As required by applicable SEC guidance, Pace is requesting that its shareholders vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the Proposed Charter. This separate vote is not otherwise required by Cayman Islands law separate and apart from Proposal No. 4, but pursuant to SEC guidance, Pace is required to submit these provisions to its shareholders separately for approval. However, the shareholder vote regarding this proposal is an advisory vote, and is not binding on Pace or the Pace Board (separate and apart from the approval of Proposal No. 4). Furthermore, the Business Combination is not conditioned on the separate approval of the Governance Proposals (separate and apart from the approval of Proposal No. 4). For additional information, please see the section entitled “Proposal No. 5 — The Governance Proposals.

 

Q:

Why is Pace proposing the Adjournment Proposal?

 

A:

Pace is proposing the Adjournment Proposal to allow the Pace Board to adjourn the Extraordinary General Meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Pace Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (ii) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or (iii) if Pace shareholders redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied. The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or in the event that Pace shareholders redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied. Please see the section entitled “Proposal No. 6 — The Adjournment Proposal” for additional information.

 

Q:

What happens if I sell my Public Shares before the Extraordinary General Meeting?

 

A:

The record date for the Extraordinary General Meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your Public Shares after the record date, but before

 

17


Table of Contents
  the Extraordinary General Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Extraordinary General Meeting. However, you will not be able to seek redemption of your Public Shares because you will no longer be able to deliver them for cancelation upon consummation of the Business Combination. If you transfer your Public Shares prior to the record date, you will have no right to vote those shares at the Extraordinary General Meeting or redeem those shares for a pro rata portion of the proceeds held in the Trust Account.

 

Q:

What vote is required to approve the proposals presented at the Extraordinary General Meeting?

 

A:

The approval of the Business Combination Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Business Combination Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Business Combination Proposal. The holders of a majority of the Pace Ordinary Shares being present in person or by proxy shall be a quorum. The Pace Initial Shareholders have agreed to vote their Founder Shares and any Public Shares purchased by them during or after the Pace IPO in favor of the Business Combination Proposal.

The approval of the Domestication Proposal requires a special resolution as a matter of Cayman Islands law, being the affirmative vote of holders of at least two-thirds of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Domestication Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Domestication Proposal. The holders of a majority of the Pace Ordinary Shares being present in person or by proxy shall be a quorum.

The approval of the NYSE Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the NYSE Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the NYSE Proposal. The holders of a majority of the Pace Ordinary Shares being present in person or by proxy shall be a quorum.

The approval of the Charter Proposal requires (i) a special resolution as a matter of Cayman Islands law, being the affirmative vote of holders of at least two-thirds of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting and (ii) the Pace Ordinary Shares so voted constitute, upon conversion to Class A-1 Shares in connection with the Pace Domestication but excluding any conversions to be consummated pursuant to the Class F Share Exchange, a majority of outstanding stock entitled to vote thereon. Accordingly, a shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting, as well as an abstention from voting and a broker non-vote with regard to the Charter Proposal will have the same effect as a vote “AGAINST” the Charter Proposal.

The approval of each of the Governance Proposals, which is a non-binding advisory vote, requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting.

 

18


Table of Contents

Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on a Governance Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on a Governance Proposal. The holders of a majority of the Pace Ordinary Shares being present in person or by proxy shall be a quorum.

The approval of the Adjournment Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Adjournment Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Adjournment Proposal. The holders of a majority of the Pace Ordinary Shares being present in person or by proxy shall be a quorum.

 

Q:

What happens if the Business Combination Proposal is not approved?

 

A:

If the Business Combination Proposal is not approved and Pace does not consummate a business combination by [●], 2019, Pace will be required to dissolve and liquidate the Trust Account.

 

Q:

How many votes do I have at the Extraordinary General Meeting?

 

A:

Pace shareholders are entitled to one vote on each proposal presented at the Extraordinary General Meeting for each Pace Ordinary Share held of record as of [●], 2019, the record date for the Extraordinary General Meeting. As of the close of business on the record date, there were [●] outstanding Pace Ordinary Shares.

 

Q:

What constitutes a quorum at the Extraordinary General Meeting?

 

A:

A majority of the issued and outstanding Pace Ordinary Shares entitled to vote as of the record date at the Extraordinary General Meeting must be present, in person or represented by proxy, at the Extraordinary General Meeting to constitute a quorum and in order to conduct business at the Extraordinary General Meeting. Broker non-votes and abstentions will be counted as present for the purpose of determining a quorum. The Pace Initial Shareholders, who currently own 20% of the issued and outstanding Pace Ordinary Shares, will count towards this quorum. In the absence of a quorum, the chairman of the Extraordinary General Meeting has power to adjourn the Extraordinary General Meeting. As of the record date for the Extraordinary General Meeting, [●] Pace Ordinary Shares would be required to achieve a quorum.

 

Q:

How will the Pace Initial Shareholders and Pace’s other current directors and officers vote?

 

A:

Prior to the Pace IPO, Pace entered into agreements with the Pace Initial Shareholders and each of its other directors and officers, pursuant to which each agreed to vote any Pace Ordinary Shares owned by them in favor of the Business Combination Proposal. None of the Pace Initial Shareholders nor any of Pace’s other current directors or officers has purchased any Pace Ordinary Shares during or after the Pace IPO and, as of the date of this proxy statement/prospectus, neither Pace nor the Pace Initial Shareholders or any of Pace’s other directors or officers have entered into agreements and are not currently in negotiations to purchase Pace Ordinary Shares prior to the consummation of the Business Combination. Currently, the Pace Initial Shareholders own 20% of the issued and outstanding Pace Ordinary Shares, including all of the Founder Shares, and will be able to vote all of such shares at the Extraordinary General Meeting.

 

19


Table of Contents
Q:

What interests do the Pace Initial Shareholders and Pace’s other current officers and directors have in the Business Combination?

 

A:

The Pace Initial Shareholders and certain other members of the Pace Board and officers of Pace have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. You should take these interests into account in deciding whether to approve the Business Combination. These interests include the fact that:

 

   

the Pace Initial Shareholders and Pace’s other directors and officers have agreed not to redeem any Pace Ordinary Shares held by them in connection with a shareholder vote to approve a proposed initial business combination;

 

   

the Pace Initial Shareholders and Pace’s other directors and officers have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them (but not with respect to any Public Shares held by them) if Pace fails to complete an initial business combination by [●], 2019;

 

   

Pace Sponsor and Pace’s officers and directors will lose their entire investment in Pace and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by [●], 2019;

 

   

if the Trust Account is liquidated, including in the event Pace is unable to complete an initial business combination within the required time period, Pace Sponsor has agreed to indemnify Pace to ensure that the proceeds in the Trust Account are not reduced below $10.00 per Public Share, or such lesser per Public Share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Pace has discussed entering into a transaction agreement or claims of any third party (other than Pace’s independent auditors) for services rendered or products sold to Pace, but only if such third party or target business has not executed a waiver of any and all rights to seek access to the Trust Account;

 

   

Pace Sponsor paid an aggregate of $11,000,000 for its 7,333,333 Private Placement Warrants to purchase Public Shares (of which 2,444,444 will be surrendered for cancelation in the Sponsor Warrant Cancelation) and that such Private Placement Warrants will expire worthless if the Business Combination is not consummated by [●], 2019;

 

   

with certain limited exceptions, the Private Placement Warrants and the underlying Public Shares will not be transferable, assignable or salable by the Pace Sponsor until 30 days after the completion of a business combination;

 

   

at the option of Pace Sponsor, any amounts outstanding under any working capital loan made by Pace Sponsor or any of its affiliates to Pace in an aggregate amount up to $1,500,000 may be converted into warrants to purchase Class A-1 Shares;

 

   

the Founder Shares will not be transferable, assignable or salable by the Pace Initial Shareholders until the earlier of (i) one year after the completion of a business combination, (ii) subsequent to an initial business combination, if the last sale price of the Public Shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a business combination or (iii) following a business combination, the date on which Pace consummates a liquidation, merger, share exchange, reorganization, or other similar transaction that results in all of Pace’s shareholders having the right to exchange their Public Shares for cash, securities or other property;

 

   

Pace Sponsor will receive, in connection with the Sponsor Class F Share Exchange and pursuant to the Pace Sponsor Support Agreement, up to 7,800,000 Class A-1 Shares and 2,000,000 Class A-2 Shares;

 

   

the independent directors of Pace will receive, in connection with the Director Class F Share Exchange and pursuant to the Director Letter Agreements, 200,000 Class A-1 Shares;

 

20


Table of Contents
   

the Pace Initial Shareholders may continue to hold Class A-1 Shares and the Class A-1 Shares to be issued to Pace Initial Shareholders upon exercise of Private Placement Warrants following the Business Combination, subject to certain lock-up periods. Specifically, with certain limited exceptions, the Class A-1 Shares to be received by the Pace Initial Shareholders will not be transferable, assignable or salable by the Pace Initial Shareholders until the earlier of (i) one year after the closing of the Stock Purchase, (ii) following the closing of the Stock Purchase, if the last sale price of the Class A-1 Shares equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the closing of the Stock Purchase) and (iii) the date following the closing of the Stock Purchase on which Pace consummates a liquidation, merger, share exchange, reorganization, or other similar transaction that results in all of Pace’s shareholders having the right to exchange their Public Shares for cash, securities or other property;

 

   

the Pace Initial Shareholders paid an aggregate of $25,000 for the Founder Shares and a certain portion of such Founder Shares will be exchanged for up to 8,000,000 Class A-1 Shares in the Class F Share Exchange, which, if unrestricted and freely tradable, would be valued at approximately up to $80,496,000 assuming a Class A-1 Share price of $10.32 per share, based on the trading price of Public Shares as of June 12, 2019, the last trading day before the Business Combination was publicly announced, but, given the lock-up periods on Class A-1 Shares to be received the Pace Initial Shareholders in connection with the Business Combination as described above, Pace believes such shares have less value;

 

   

Pace and certain other parties to the Transaction Agreement will have the right to nominate to the Pace Board, five of its seven members, who are anticipated to serve on the Pace Board following the Business Combination;

 

   

Pace existing directors and officers will continue to be indemnified and the Pace’s directors’ and officers’ liability insurance will continue after the Business Combination;

 

   

the Pace Initial Shareholders have registration rights pursuant to a registration rights agreement with Pace, and that in connection with the Business Combination, the Pace Initial Shareholders will enter into the Registration Rights Agreement;

 

   

the Pace Affiliate has entered into a Subscription Agreement with Pace, pursuant to which the Pace Affiliate will purchase an aggregate of 1,399,212 Class A-1 Shares for a purchase price of $10.22 per share; and

 

   

none of the Pace officers or directors are required to commit his or her full time to Pace’s affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities.

These interests may influence the Pace Board in making their recommendation that you vote in favor of the approval of the Business Combination.

 

Q:

Did the Pace Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A:

No. The Pace Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination. Pace’s officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of Pace’s advisors, enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, Pace’s officers and directors and its advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the Pace Board in valuing Accel’s business and assuming the risk that the Pace Board may not have properly valued such business.

 

21


Table of Contents
Q:

What happens if I vote against the Business Combination Proposal?

 

A:

If you vote against the Business Combination Proposal but the Business Combination Proposal still obtains the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting, then the Business Combination Proposal will be approved and, assuming the approval of the Domestication Proposal, the NYSE Proposal and the Charter Proposal and the satisfaction or waiver of the other conditions to closing, the Business Combination will be consummated in accordance with the terms of the Transaction Agreement.

If you vote against the Business Combination Proposal and the Business Combination Proposal does not obtain the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting, then the Business Combination Proposal will fail and Pace will not consummate the Business Combination. If Pace does not consummate the Business Combination, it will likely not be able to complete a business combination with a different target business by [●], 2019, and will be required to dissolve and liquidate the Trust Account by returning the then-remaining funds in such account to its public shareholders.

 

Q:

Do I have redemption rights?

 

A:

If you are a holder of Public Shares, you may redeem your Public Shares for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (which interest shall be net of taxes payable), by (ii) the total number of then-outstanding Public Shares; provided that Pace will not redeem any Public Shares issued in the Pace IPO to the extent that such redemption would result in Pace having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) of less than $5,000,001. A public shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 15% of the Public Shares included in the Public Units sold in the Pace IPO. Holders of outstanding Pace Warrants do not have redemption rights with respect to such warrants in connection with the Business Combination. The Pace Initial Shareholders, officers and directors have agreed to waive their redemption rights with respect to any Pace Ordinary Shares they may hold in connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. For illustrative purposes, based on the balance of the Trust Account of approximately $461,275,222 as of June 30, 2019 the estimated per share redemption price would have been approximately $10.25. Additionally, Public Shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise holders of such shares will only be entitled to a pro rata portion of the Trust Account (including interest but net of franchise and income taxes payable) in connection with the liquidation of the Trust Account, unless Pace completes an alternative business combination prior to [●], 2019.

 

Q:

Can the Pace Initial Shareholders redeem their Founder Shares in connection with consummation of the Business Combination?

 

A:

No. The Pace Initial Shareholders, officers and directors have agreed to waive their redemption rights, with respect to their Founder Shares and any Public Shares they may hold, in connection with the consummation of the Business Combination.

 

Q:

Is there a limit on the number of shares I may redeem?

 

A:

Yes. A public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), is

 

22


Table of Contents
  restricted from seeking redemption rights with respect to more than an aggregate of 15% of the Public Shares sold in the Pace IPO. Accordingly, all Public Shares in excess of such 15% threshold owned by a holder will not be redeemed for cash. On the other hand, a public shareholder who holds less than 15% of the Public Shares may redeem all of the Public Shares held by such shareholder for cash.

In no event is your ability to vote all of your shares (including those shares held by you in excess of 15% of the shares sold in the Pace IPO) for or against the Business Combination restricted.

Pace has no specified maximum redemption threshold under the Articles, other than the aforementioned 15% threshold. Each redemption of Public Shares by Pace public shareholders will reduce the balance of the Trust Account, which was approximately $461,275,222 as of June 30, 2019. The Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem to Public Shares, plus (ii) an amount determined by Pace prior to closing which shall not exceed proceeds available under the Credit Agreement and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be $22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) equaling or exceeding the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel. The conditions to closing in the Transaction Agreement are for the sole benefit of the parties thereto and may be waived by such parties. If, as a result of redemptions of Public Shares by Pace’s public shareholders, this condition is not met and is not waived, then each of Pace and Accel may elect not to consummate the Business Combination. In addition, in no event will Pace redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as provided in the Articles and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Transaction Agreement.

 

Q:

Is there a limit on the total number of Public Shares that may be redeemed?

 

A:

Yes. The Articles provide that Pace may not redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 (such that Pace is not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the Transaction Agreement. Other than this limitation, the Articles do not provide a specified maximum redemption threshold. The Transaction Agreement provides that, as a condition to each party’s obligation to consummate the Business Combination, Pace may not have net tangible assets less than $5,000,001 at the closing date of the Transaction Agreement. In addition, the Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem Public Shares, plus (ii) an amount determined by Pace prior to closing which shall not exceed proceeds available under the Credit Agreement and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be $22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) equaling or exceeding the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel. In the event the aggregate cash consideration Pace would be required to pay for all Public Shares that are validly submitted for redemption plus the amounts required to satisfy closing cash conditions pursuant to the terms of the Transaction Agreement exceeds the aggregate amount of cash available to Pace, it may not complete the Business Combination or redeem any shares, all Public Shares submitted for redemption will be returned to the holders thereof, and Pace instead may search for an alternate business combination.

 

Q:

Will how I vote affect my ability to exercise redemption rights?

 

A:

No. You may exercise your redemption rights whether you vote your Public Shares for or against, or whether you abstain from voting on, Business Combination Proposal, the Domestication Proposal, the NYSE Proposal, the Charter Proposal or any of the Governance Proposals or any other proposal described

 

23


Table of Contents
  by this proxy statement/prospectus. As a result, the Transaction Agreement can be approved by shareholders who will redeem their shares and no longer remain shareholders, leaving shareholders who choose not to redeem their shares holding shares in a company with a potentially less-liquid trading market, fewer shareholders, potentially less cash and the potential inability to meet the listing standards of the NYSE.

 

Q:

How do I exercise my redemption rights?

 

A:

In order to exercise your redemption rights, you must (i) check the box on the enclosed proxy card to elect redemption, (ii) check the box on the enclosed proxy card marked “Shareholder Certification,” (iii) if you hold Public Units, separate the underlying Public Shares and Public Warrants, and (iv) prior to 5:00 P.M., Eastern Time on [●], 2019 (two business days before the Extraordinary General Meeting), tender your shares physically or electronically and submit a request in writing that Pace redeem your Public Shares for cash to Continental Stock Transfer & Trust Company, the Transfer Agent, at the following address:

Continental Stock Transfer & Trust Company

1 State Street 30th Floor

New York, New York 10004

Attention: Mark Zimkind

Email: mzimkind@continentalstock.com

Please check the box on the enclosed proxy card marked “Shareholder Certification” if you are not acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) with any other shareholder with respect to the Public Shares. Notwithstanding the foregoing, a holder of the Public Shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) will be restricted from seeking redemption rights with respect to more than 15% of the Public Shares included in the Public Units sold in the Pace IPO. Accordingly, all Public Shares in excess of the aforementioned 15% threshold beneficially owned by a Pace public shareholder or group will not be redeemed for cash.

Pace shareholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the Transfer Agent and time to effect delivery. It is Pace’s understanding that Pace shareholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, Pace does not have any control over this process and it may take longer than two weeks. Pace shareholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically.

Pace shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name” are required to either tender their certificates to the Transfer Agent prior to the date set forth in this proxy statement/prospectus, or up to two business days prior to the vote on the proposal to approve the Business Combination at the Extraordinary General Meeting, or to deliver their shares to the Transfer Agent electronically using Depository Trust Company’s (DTC) Deposit/Withdrawal At Custodian (DWAC) system, at such shareholder’s option. The requirement for physical or electronic delivery prior to the Extraordinary General Meeting ensures that a redeeming shareholder’s election to redeem is irrevocable once the Business Combination is approved.

There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC system. The Transfer Agent will typically charge a tendering broker a fee and it is in the broker’s discretion whether or not to pass this cost on to the redeeming shareholder. However, this fee would be incurred regardless of whether or not shareholders seeking to exercise redemption rights are required to tender their shares, as the need to deliver shares is a requirement to exercising redemption rights, regardless of the timing of when such delivery must be effectuated.

 

24


Table of Contents
Q:

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

 

A:

As described more fully below, a U.S. Holder of Public Shares that exercises its redemption rights to receive cash in exchange for such shares may (subject to the application of the PFIC rules) be treated as selling ordinary shares resulting in the recognition of capital gain or capital loss (assuming such U.S. Holder holds its Public Shares as a capital asset). There may be certain circumstances in which the redemption may be treated as a distribution as an amount equal to the redemption proceeds, for U.S. federal income tax purposes, depending on the amount of ordinary shares or common stock, as the case may be, that a U.S. Holder owns or is deemed to own by attribution (including through the ownership of warrants).

Please see the section entitled “Material Tax Considerations — Material U.S. Federal Income Tax Considerations” for additional information. You are urged to consult your tax advisors regarding the tax consequences of exercising your redemption rights.

 

Q:

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

 

A:

The Pace Domestication should constitute a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the U.S. Tax Code. Assuming that the domestication so qualifies, subject to the discussion concerning PFICs and Section 367 of the U.S. Tax Code, a U.S. Holder will generally not recognize gain or loss with respect to the exchange of its Public Shares for Class A-1 Shares.

However, Pace believes it is a PFIC for U.S. federal income tax purposes and, if certain proposed Treasury Regulations are finalized in their current form, U.S. Holders may be required to recognize gain as a result of the Pace Domestication unless the U.S. Holder makes (or has made) certain elections discussed further below.

Additionally, Section 367 of the Code may apply to certain U.S. Holders which would require such taxpayers to recognize gain (but not loss) with respect to Class A-1 Shares received in the Pace Domestication unless a certain election is made to include the “all earnings and profits” amount attributable to the taxpayer’s Public Shares as discussed further below.

The Pace Domestication may cause non-U.S. Holders to become subject to U.S. federal withholding taxes on any dividends in respect of such non-U.S. Holder’s Class A-1 Shares subsequent to the Pace Domestication.

The tax consequences of the Pace Domestication are complex and will depend on a holder’s particular circumstances. You are urged to consult your tax advisors regarding the tax consequences of the Pace Domestication.

 

Q:

If I am a Public Warrant holder, can I exercise redemption rights with respect to my Public Warrants?

 

A:

No. The holders of Public Warrants have no redemption rights with respect to such Public Warrants.

 

Q:

Do I have appraisal rights or dissenters’ rights if I object to the proposed Business Combination?

 

A:

No. Appraisal rights or dissenters’ rights are not available to holders of Pace Ordinary Shares (or, following the Pace Domestication, Class A-1 Shares) in connection with the Business Combination.

 

Q:

What happens to the funds held in the Trust Account upon consummation of the Business Combination?

 

A:

If the Business Combination is consummated, the funds held in the Trust Account (together with the proceeds from the Investment Private Placement) will be used to: (i) pay Pace public shareholders who properly exercise their redemption rights; (ii) pay $15,750,000 in deferred underwriting commissions to the

 

25


Table of Contents
  underwriters of the Pace IPO, in connection with the Business Combination; (iii) pay certain other fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees and other professional fees) that were incurred by Pace and other parties to the Transaction Agreement in connection with the transactions contemplated by the Transaction Agreement, including the Business Combination, and pursuant to the terms of the Transaction Agreement and (iv) pay the cash consideration payable to purchase shares of Accel Stock outstanding upon the closing of the Stock Purchase. Any remaining funds will be used by Pace for general corporate purposes.

 

Q:

What conditions must be satisfied to complete the Business Combination?

 

A:

There are a number of closing conditions in the Transaction Agreement, including the approval by Pace shareholders of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal and the Charter Proposal. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, please see the section entitled “The Transaction Agreement and Related Agreements.”

 

Q:

What happens if the Business Combination is not consummated?

 

A:

There are certain circumstances under which the Transaction Agreement may be terminated. Please see the section entitled “The Transaction Agreement and Related Agreements” for information regarding the parties’ specific termination rights.

Pace executed a letter of intent with Accel with respect to the Business Combination on May 23, 2019, and accordingly pursuant to the Sponsor Letter Agreement and the Articles, has until [●], 2019 to complete a business combination. If Pace does not consummate the Business Combination, it is unlikely it will be able to complete a business combination with a different target business by [●], 2019. If Pace fails to complete an initial business combination by [●], 2019, then Pace will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on funds held in the Trust Account and not previously released to fund working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes (less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding Public Shares, which redemption will completely extinguish Pace public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Pace’s remaining shareholders and the Pace Board, dissolve and liquidate, subject in each case to Pace’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per Public Unit in the Pace IPO. Please see the section entitled “Risk Factors — Risks Related to Pace and the Business Combination” for additional information.

Holders of Founder Shares have waived any right to any liquidation distribution with respect to such shares. In addition, there will be no redemption rights or liquidating distributions with respect to the Public Warrants and Private Placement Warrants, which will expire worthless if Pace fails to complete an initial business combination by [●], 2019.

 

Q:

When is the Business Combination expected to be completed?

 

A:

The closing of the Stock Purchase is expected to take place on or prior to the third business day following the satisfaction or waiver of the conditions described below in the subsection entitled “The Transaction Agreement and Related Agreements — Conditions to Closing of the Stock Purchase.” Following the closing of the Stock Purchase, Accel will merge with and into NewCo, with NewCo surviving the Merger. The

 

26


Table of Contents
  Merger will become effective at the time and on the date specified in the certificate of merger in accordance with the Delaware Limited Liability Company Act. The completion of the Business Combination is expected to occur in the fourth quarter of 2019. The Transaction Agreement may be terminated by Pace or Accel if the closing of the Stock Purchase has not occurred by November 30, 2019 (the “Termination Date”).

For a description of the conditions to the completion of the Business Combination, see the section entitled “The Transaction Agreement and Related Agreements—Conditions to Closing of the Stock Purchase.”

 

Q:

What do I need to do now?

 

A:

You are urged to read carefully and consider the information contained in this proxy statement/prospectus, including the Annexes, and to consider how the Business Combination will affect you as a shareholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

 

Q:

How do I vote?

 

A:

If you were a holder of record of Pace Ordinary Shares on [●], 2019, the record date for the Extraordinary General Meeting, you may vote with respect to the proposals in person at the Extraordinary General Meeting, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

Voting by Mail. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the Extraordinary General Meeting in the manner you indicate. You are encouraged to sign and return the proxy card even if you plan to attend the Extraordinary General Meeting so that your shares will be voted if you are unable to attend the Extraordinary General Meeting. If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted. Votes submitted by mail must be received by [●] on [●], 2019.

Voting in Person at the Meeting. If you attend the Extraordinary General Meeting and plan to vote in person, you will be provided with a ballot at the Extraordinary General Meeting. If your shares are registered directly in your name, you are considered the shareholder of record and you have the right to vote in person at the Extraordinary General Meeting. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the Extraordinary General Meeting and vote in person, you will need to bring to the Extraordinary General Meeting a legal proxy from your broker, bank or nominee authorizing you to vote these shares. For additional information, please see the section entitled “Extraordinary General Meeting of Pace.”

 

Q:

What will happen if I abstain from voting or fail to vote at the Extraordinary General Meeting?

 

A:

At the Extraordinary General Meeting, a properly executed proxy marked “ABSTAIN” with respect to a particular proposal will be counted as present for purposes of determining whether a quorum is present. For purposes of approval, an abstention will have the same effect as a vote “AGAINST” the Charter Proposal and an abstention will have no effect on the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal, each of the Governance Proposals or the Adjournment Proposal.

 

27


Table of Contents
Q:

What will happen if I sign and return my proxy card without indicating how I wish to vote?

 

A:

Signed and dated proxies received by Pace without an indication of how the shareholder intends to vote on a proposal will be voted “FOR” each proposal presented to the shareholders. The proxyholders may use their discretion to vote on any other matters which properly come before the Extraordinary General Meeting.

 

Q:

If I am not going to attend the Extraordinary General Meeting in person, should I return my proxy card instead?

 

A:

Yes. Whether you plan to attend the Extraordinary General Meeting or not, please read the enclosed proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

 

Q:

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

 

A:

No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. Pace believes that all of the proposals presented to the shareholders at this Extraordinary General Meeting will be considered non-discretionary and, therefore, your broker, bank, or nominee cannot vote your shares without your instruction on any of the proposals presented at the Extraordinary General Meeting. If you do not provide instructions with your proxy card, your broker, bank, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares. This indication that a broker, bank, or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will be counted for the purposes of determining the existence of a quorum and for purposes of determining the number of votes cast on the Charter Proposal, but will not be counted for purposes of determining the number of votes cast on the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal, each of the Governance Proposals or the Adjournment Proposal. For additional information, please see the section entitled “Proposal No. 4 — The Charter Proposal.” Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

 

Q:

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

 

A:

Yes. You may change your vote by sending a later-dated, signed proxy card to Pace’s Secretary at the address listed below so that it is received by Pace’s Secretary prior to the Extraordinary General Meeting or attend the Extraordinary General Meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to Pace’s Secretary, which must be received by Pace’s Secretary prior to the Extraordinary General Meeting.

 

Q:

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

 

A:

You 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 your vote with respect to all of your shares.

 

Q:

Who will solicit and pay the cost of soliciting proxies for the Extraordinary General Meeting?

 

A:

Pace will pay the cost of soliciting proxies for the Extraordinary General Meeting. Pace has engaged Morrow to assist in the solicitation of proxies for the Extraordinary General Meeting. Pace has agreed to pay

 

28


Table of Contents
  Morrow a fee of $30,000, 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. Pace will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of Pace Ordinary Shares for their expenses in forwarding soliciting materials to beneficial owners of Pace Ordinary Shares and in obtaining voting instructions from those owners. The directors, officers and employees of Pace 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:

Who can help answer my questions?

 

A:

If you have questions about the proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card you should contact:

TPG Pace Holdings Corp.

301 Commerce Street, Suite 3300

Fort Worth, Texas 76102

(212) 405-8458

Email: Pace@tpg.com

You may also contact the proxy solicitor for Pace at:

Morrow Sodali LLC

470 West Avenue

Stamford, Connecticut 06902

Individuals, please call toll-free: (800) 662-5200

Banks and brokerage, please call: (203) 658-9400

Email: TPGH.info@morrowsodali.com

To obtain timely delivery, Pace shareholders must request the materials no later than [●], 2019, or five business days prior to the Extraordinary General Meeting.

You may also obtain additional information about Pace from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

If you intend to seek redemption of your Public Shares, you will need to send a letter demanding redemption and deliver your Public Shares (either physically or electronically) to the Transfer Agent prior to the Extraordinary General Meeting in accordance with the procedures detailed under the question “How do I exercise my redemption rights?” If you have questions regarding the certification of your position or delivery of your Public Shares, please contact the Transfer Agent:

Continental Stock Transfer & Trust Company

1 State Street 30th Floor

New York, New York 10004

Attention: Mark Zimkind

Email: mzimkind@continentalstock.com

 

29


Table of Contents

SUMMARY

This summary highlights selected information contained in this proxy statement/prospectus and does not contain all of the information that is important to you. You should read carefully this entire proxy statement/prospectus, including the Annexes and accompanying financial statements of Pace and Accel, to fully understand the proposed Business Combination (as described below) before voting on the proposals to be considered at the Extraordinary General Meeting (as described below). Please see the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement/prospectus.

Unless otherwise specified, all share calculations assume (i) no exercise of redemption rights by Pace’s public shareholders; (ii) no inclusion of any Public Shares issuable upon the exercise of the Pace Warrants; (iii) the issuance of Pace Shares in connection with the Business Combination Private Placement and (iv) the issuance of Class A-1 Shares and approximately $48 million of gross proceeds from the Investment Private Placement that will fund a portion of the cash consideration required to effect the Business Combination.

Pace

Pace is a blank check company incorporated as a Cayman Islands exempted company on February 14, 2017 and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more target businesses. Pace consummated the Pace IPO on June 30, 2017, generating gross proceeds of approximately $461,000,000, which includes proceeds from the private placement of the Private Placement Warrants to Pace Sponsor.

The Public Shares, Public Units and Public Warrants are currently listed on the NYSE under the symbols “TPGH,” “TPGH.U” and “TPGH.WS,” respectively. Following the Pace Domestication, the Public Shares that are converted into Class A-1 Shares will continue to be listed on the NYSE under the symbol “ACEL,” and the Public Warrants, which will entitle the holder to acquire a corresponding number of Class A-1 Shares on the same terms as in effect immediately prior to the effective time of the Pace Domestication, will continue to be listed on the NYSE under the symbol “ACEL.WS.” Each Public Unit will be canceled in exchange for (i) the right to receive one validly issued fully paid and non-assessable Class A-1 Share and (ii) one-third of a Public Warrant. It is anticipated that the Class A-1 Shares to be issued in the Business Combination will be listed on the NYSE upon the consummation of the Business Combination under the symbol “ACEL.”

The mailing address of Pace’s principal executive office is 301 Commerce Street, Suite 3300, Fort Worth, Texas 76102.

Accel

Accel is a leading distributed gaming operator in the United States on an Adjusted EBITDA basis, and a preferred partner for local business owners in the Illinois market. Accel’s business consists of the installation, maintenance and operation of VGTs, redemption devices that disburse winnings and contain ATM functionality, and other amusement devices in authorized non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores, which are referred to collectively as “licensed establishments.” Accel also operates a small number of stand-alone ATMs in gaming and non-gaming locations. Accel has been licensed by the IGB since 2012 and holds a conditional license from the PA Board. As of June 30, 2019, Accel’s VGT operations comprised 8,082 VGTs in 1,762 licensed establishments, representing CAGR of 22% and 18%, respectively since December 31, 2016. Accel’s total revenue has increased from $173 million for the fiscal year ended December 31, 2016 to $332 million for the fiscal year ended December 31, 2018, representing a CAGR in revenue of 38% over such period. Accel’s net income has increased from



 

30


Table of Contents

$4.9 million for the fiscal year ended December 31, 2016 to $10.8 million for fiscal year ended December 31, 2018, a CAGR of 48% over such period. Accel’s Adjusted EBITDA increased from $33.3 million to $63.8 million over the same period, representing a 38% CAGR, and its Adjusted Net Income increased from $9.0 million to $23.1 million, representing a 61% CAGR, each over the same period. Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures and should not be used as substitutes for net income. For a reconciliation of Adjusted EBITDA and Adjusted Net Income to net income and a further discussion of such measures see “Selected Historical Data of Accel and Non-GAAP Financial Measures.”

The mailing address of Accel’s principal executive office is 140 Tower Drive, Burr Ridge, Illinois 60527.

The Business Combination

General

On June 13, 2019, Pace, certain of the Sellers and the Shareholder Representatives entered into the Transaction Agreement. Pursuant to the Transaction Agreement and in connection therewith, among other things and subject to the terms and conditions contained therein:

 

   

Pace will acquire, directly or indirectly, all of the issued and outstanding shares of Accel held by the Sellers in the Stock Purchase;

 

   

following the closing of the Stock Purchase, Accel will merge with and into NewCo in the Merger, with NewCo surviving the Merger;

 

   

immediately prior to the Stock Purchase, Pace will domesticate (or transfer by way of continuation as a matter of Cayman Islands law) as a Delaware corporation in the Pace Domestication in accordance with Section 388 of the DGCL, whereupon (i) each Public Share shall be converted into one Class A-1 Share, (ii) each Founder Share shall be converted into one Class F Share and (iii) the Private Placement Warrants and Public Warrants, in each case, shall entitle the holder to acquire a corresponding number of Class A-1 Shares on the same terms as in effect immediately prior to the effective time of the Pace Domestication;

 

   

immediately prior to the Stock Purchase and following the Pace Domestication, Pace Sponsor will, pursuant to the Pace Sponsor Support Agreement and in connection with the Sponsor Transactions: (i) surrender for cancelation or exchange its Class F Shares in the Sponsor Class F Share Exchange, (ii) surrender for cancelation 2,444,444 Private Placement Warrants held by Pace Sponsor in the Sponsor Warrant Cancelation and (iii) make the Sponsor Contribution;

 

   

following the Sponsor Transactions but immediately prior to the Stock Purchase, Pace Sponsor will distribute all of its Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants to the Pace Sponsor Members;

 

   

immediately prior to the Stock Purchase and following the Pace Domestication, the independent directors of Pace will, pursuant to the Director Letter Agreements, exchange their Class F Shares in the Director Class F Share Exchange;

 

   

in connection with the Stock Purchase, each Seller will receive in exchange for their Accel Stock, (a) cash consideration equal to the number of shares of Accel Stock for which such Seller makes a Cash Election multiplied by the Purchase Price and (b) share consideration comprised of a number of Class A-1 Shares equal to the number of shares of Accel Stock for which such Seller does not make a Cash Election multiplied by an exchange ratio calculated by dividing the Purchase Price by the Public Share Value, and subject to pro rata adjustment in the event that aggregate Cash Elections by the Sellers exceed $350,000,000;



 

31


Table of Contents
   

in connection with the Stock Purchase and concurrently with entering into the Transaction Agreement, certain Sellers, being certain members of management of Accel, have made Cash Elections with respect to less than 20% of the number of shares of Accel Stock owned by such Seller and each of its affiliates on an aggregated basis, pursuant to the Key Holder Support Agreement;

 

   

in connection with the Stock Purchase and concurrently with entering into the Transaction Agreement, certain other Sellers have made a non-binding Cash Election, pursuant to the Holder Support Agreement;

 

   

in connection with the Stock Purchase, Pace will issue to each Seller that makes a Cash Election with respect to less than 70% of its shares of Accel Stock, its pro rata share of 2,444,444 New Pace Warrants, which will be subject to the terms of the New Pace Warrant Agreement, with such pro rata share to be determined with reference to a number of shares equal to 70% of such Seller’s shares of Accel Stock less the number of shares of Accel Stock in respect of which the Seller made a Cash Election;

 

   

in connection with the Stock Purchase, Pace will issue to each Seller that makes a Cash Election with respect to less than 70% of its shares of Accel Stock, its pro rata share of 3,000,000 Class A-2 Shares, which shall have the terms set forth in the Restricted Stock Agreement, with such pro rata share to be determined with reference to a number of shares equal to 70% of such Seller’s shares of Accel Stock less the number of shares of Accel Stock in respect of which the Seller made a Cash Election;

 

   

holders of Founder Shares have agreed to waive, pursuant to the Waiver Agreement, any adjustment to the conversion ratio of Founder Shares set forth in the Articles resulting from the Investment Private Placement;

 

   

Pace will, pursuant to Subscription Agreements with the Investors issue and sell to the Investors, and the Investors will subscribe for and purchase, Class A-1 Shares, as described below;

 

   

at the closing of the Stock Purchase, Pace and the Registration Rights Holders will enter into the Registration Rights Agreement;

 

   

at the closing of the Stock Purchase, Pace and the Restricted Stockholders will enter into the Restricted Stock Agreement; and

 

   

Pace Sponsor will, pursuant to the Pace Sponsor Support Agreement, vote in favor of the Business Combination.

In addition and in connection with the foregoing, Pace entered into the Support Agreement with Accel concurrently upon the execution of the Transaction Agreement, pursuant to which (i) Accel will use commercially reasonable efforts to assist the Sellers in complying with certain covenants contained therein, and (ii) Pace and Accel have agreed to certain expense reimbursement arrangements payable under certain circumstances upon termination of the Transaction Agreement.

In addition and in connection with the foregoing, on July 23, 2019, the Dragging Shareholders issued the Drag-Along Notice to Accel and the Drag-Along Shareholders, pursuant to which the Dragging Shareholders exercised their drag-along rights under and in accordance with the Accel Articles. In accordance with the Drag-Along Agreement, the Dragging Shareholders will cause each Accel shareholder who had not entered into the Transaction Agreement on June 13, 2019, to deliver a joinder to the Transaction Agreement, pursuant to which such shareholder will be admitted to the Transaction Agreement as a Seller and will agree to be bound by all of the terms and conditions of the Transaction Agreement (as modified by such joinder).

In connection with the foregoing and pursuant to the terms of the Transaction Agreement, the Key Holder Support Agreement and the Holder Support Agreement, the Business Combination Private Placement Sellers will



 

32


Table of Contents

receive, in exchange for their shares of Accel Stock, Class A-1 Shares and Class A-2 Shares issued pursuant to the Business Combination Private Placement as well as cash consideration as a result of their Cash Elections, in each case, in an amount calculated pursuant to the Transaction Agreement. The closing of the Business Combination Private Placement will occur as part of the closing of the Stock Purchase.

In addition, and in connection with the foregoing, Pace entered into the Subscription Agreements with the Original Investors concurrently with the execution of the Transaction Agreement and the Subscription Agreements with the Additional Investor on August 13, 2019. Pursuant to the Subscription Agreements, the Investors agreed to subscribe for and purchase and Pace agreed to issue and sell to such Investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million in the Investment Private Placement. The Subscription Agreement to which the Pace Affiliate is a party is substantially similar to the Subscription Agreements to which the General Investors are parties except that: (a) the Pace Affiliate may assign its rights under the Subscription Agreement, subject to compliance with the securities laws; and (b) the Pace Affiliate is not entitled to liquidated damages if there is a delay in the registration of the securities. The proceeds from the Investment Private Placement will be used to fund a portion of the cash consideration required to effect the Stock Purchase. The closing of the Investment Private Placement will occur immediately prior to the closing of the Stock Purchase and is conditioned thereon and on other customary closing conditions. The Class A-1 Shares to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act, and will be issued in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

Organizational Structure

The following diagram shows the current ownership structure of Pace:

 

 

LOGO



 

33


Table of Contents

The following diagram shows the current ownership structure of Accel:

 

 

LOGO

The following diagram illustrates the ownership percentages and structure of Pace immediately following the Business Combination(1):

 

 

LOGO

 

(1)

Ownership percentages do not take into account the Class A-2 Shares that will be exchanged for Class A-1 Shares pursuant to the terms of the Restricted Stock Agreement, Pace Warrants to purchase to Class A-1 Shares that will remain outstanding immediately following the Business Combination or options to purchase Accel Stock that had not vested as of June 30, 2019. The ownership percentages also assume (i) outstanding shares of Accel Stock as of June 30, 2019, (ii) a balance of the Trust Account equal to approximately $461,275,222, (iii) aggregate Cash Elections by the Accel shareholders of $350,000,000, including that holders of Class D preferred



 

34


Table of Contents
  stock, no par value, of Accel elect to receive cash in respect of 100% of such shares; (iv) that no Public Shares are elected to be redeemed by Pace’s public shareholders, (v) that none of the Private Placement Warrants are exercised and (vi) that Pace Sponsor elects to contribute 500,000 Class A-1 Shares and no cash to the donor advised fund in connection with the Sponsor Contribution. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Pace’s existing shareholders in Pace will be different. For more information, please see the sections entitled “The Business Combination — Impact of the Business Combination on Pace’s Public Float” and “Unaudited Pro Forma Condensed Combined Financial Information.”

Consideration in the Business Combination

Consideration to Pace Shareholders and Warrant Holders in the Business Combination

In connection with the Business Combination and immediately prior to the Stock Purchase, at the effective time of the Pace Domestication, (i) each Public Share will be converted into the right to receive one Class A-1 Share, (ii) each Founder Share will be converted into the right to receive one Class F Share, and (iii) each Private Placement Warrant and Public Warrant, in each case, shall entitle the holder to acquire a corresponding number of Class A-1 Shares on the same terms as in effect immediately prior to the effective time of the Pace Domestication.

Consideration to Accel Shareholders in the Business Combination

Subject to the terms and conditions of the Transaction Agreement, at the closing of the Stock Purchase, each Seller will receive a mix of consideration comprised of (a) cash consideration equal to the number of shares of Accel Stock for which such Seller makes a Cash Election multiplied by the Purchase Price and (b) share consideration comprised of a number of Class A-1 Shares equal to the number of shares of Accel Stock for which such Seller does not make a Cash Election multiplied by an exchange ratio calculated by dividing the Purchase Price by the Public Share Value (the Public Share Value was approximately $10.25 per share as of June 30, 2019), and subject to pro rata adjustment in the event that aggregate Cash Elections by the Sellers exceed $350,000,000. In addition, each Seller that makes a Cash Election with respect to less than 70% of its shares of Accel Stock will receive its pro rata share, with such pro rata share to be determined with reference to a number of shares equal to 70% of such Seller’s shares of Accel Stock less the number of shares of Accel Stock in respect of which the Seller made a Cash Election, of (a) 2,444,444 New Pace Warrants, subject to the conditions set forth in the New Pace Warrant Agreement and (b) 3,000,000 Class A-2 Shares, subject to the conditions set forth in the Restricted Stock Agreement.

Conditions to Closing of the Stock Purchase

Conditions to Each Party’s Obligations

The respective obligations of Pace and the Sellers to consummate the transactions contemplated by the Transaction Agreement are subject to the satisfaction, or written waiver by both Pace and the Sellers, of each of the following conditions:

 

   

the required vote of Pace’s shareholders to approve the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal and the Charter Proposal and any other proposals reasonably agreed upon by Pace and the Shareholder Representatives necessary or appropriate in connection with the Business Combination shall have been obtained;

 

   

the applicable waiting periods (and any extension thereof, including any timing agreements with any antitrust authority not to consummate the transactions contemplated by the Transaction Agreement) under the HSR Act shall have expired or been terminated;

 

   

the approval, either by formal action or written confirmation that no such formal action is required, of the PA Board shall have been obtained;



 

35


Table of Contents
   

no governmental entity having jurisdiction over any party to the Transaction Agreement shall have issued any order, decree, ruling, injunction or other action (whether temporary, preliminary or permanent) restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by the Transaction Agreement and no law shall have been adopted that makes consummation of the transactions contemplated by the Transaction Agreement illegal or otherwise prohibited;

 

   

this proxy statement/prospectus must have become effective in accordance with the Securities Act and no stop order issued by the SEC may be in effect or threatened;

 

   

the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem Public Shares, plus (ii) an amount determined by Pace prior to closing which shall not exceed proceeds available under the Credit Agreement and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be $22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) must equal or exceed the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel;

 

   

the Class A-1 Shares to be issued pursuant to the Transaction Agreement shall have been approved for listing on the NYSE, subject only to official notice of issuance thereof; and

 

   

Pace must have at least $5,000,001 of net tangible assets remaining.

Conditions to Pace’s Obligations

The obligations of Pace to effect the transactions contemplated by the Transaction Agreement are subject to fulfillment, on or prior to the closing date of the Transaction Agreement , of each of the following conditions (any or all of which may be waived in writing by Pace):

 

   

the representations and warranties made with respect to Accel, in most instances disregarding qualifications contained therein relating to materiality or Accel Material Adverse Effect, must be true and correct as of the date of the Transaction Agreement and as of the closing date of the Transaction Agreement as if made on and as of the closing date of the Transaction Agreement (or, if given as of a specified date, as of such specified date), except where the failure of such representations and warranties of Accel to be so true and correct would not be reasonably likely to have an Accel Material Adverse Effect;

 

   

the representations and warranties of the Sellers must be true and correct in all material respects as of the date of the Transaction Agreement and as of the closing as if made on and as of the closing date of the Transaction Agreement (or, if given as of a specified date, as of such specified date);

 

   

the Sellers must have performed and complied in all material respects with all obligations required to be performed or complied with by the Sellers under the Transaction Agreement at or prior to closing date of the Transaction Agreement;

 

   

since the date of the Transaction Agreement, there must not have occurred an Accel Material Adverse Effect;

 

   

Pace must have received a certificate executed by the chief executive officer or chief financial officer of Accel, dated as of the closing date of the Transaction Agreement, confirming that the conditions set forth in the first, and two immediately preceding bullet points have been satisfied;

 

   

the Sellers must have executed and delivered copies of all certificates, instruments, contracts, closing deliverables and other documents required to be delivered to Pace pursuant to the terms of the Transaction Agreement; and



 

36


Table of Contents
   

Pace must have received evidence of Accel having obtained any required consent under the Credit Agreement.

Conditions to Sellers’ Obligations

The obligations of the Sellers to effect the transactions contemplated by the Transaction Agreement are subject to fulfillment, on or prior to the closing date of the Transaction Agreement, of each of the following conditions (any or all of which may be waived in writing by Accel):

 

   

the representations and warranties of Pace, in most instances disregarding qualifications contained therein relating to materiality or Pace Material Adverse Effect, must be true and correct as of the date of the Transaction Agreement and as of the closing date of the Transaction Agreement as if made on and as of the closing date of the Transaction Agreement (or, if given as of an earlier date, as of such earlier date), except where the failure of such representations and warranties of Pace to be so true and correct, would not be reasonably likely to have, individually or in the aggregate, a Pace Material Adverse Effect;

 

   

Pace must have performed and complied in all material respects with all obligations required to be performed or complied with by it under the Transaction Agreement at or prior to the closing date of the Transaction Agreement;

 

   

since the date of the Transaction Agreement, there must not have occurred a Pace Material Adverse Effect;

 

   

Accel must have received a certificate executed by the chief executive officer or chief financial officer of Pace, dated as of the closing date of the Transaction Agreement, confirming that the conditions set forth in the three immediately preceding bullet points have been satisfied; and

 

   

Pace must have executed and delivered copies of all documents required to be delivered to Accel by Pace.

Related Agreements

Drag-Along Agreement

Concurrently with the execution of the Transaction Agreement, Pace and each of Dragging Shareholders entered into the Drag-Along Agreement, pursuant to which such Dragging Shareholders agreed to exercise their drag-along rights pursuant to and in accordance with the Articles of Incorporation of Accel and the Accel Shareholders Agreement, in a manner so as to facilitate the consummation of the transactions contemplated by the Transaction Agreement.

Pursuant to the Drag-Along Agreement, each Dragging Shareholder has agreed, with respect to (a) the shares of Accel Stock that the Dragging Shareholder owns, (b) any security convertible or exchangeable into Accel Stock (together with Accel Stock, the “Subject Securities”), and (c) any additional Subject Securities that the Dragging Shareholder may acquire following the date of the Drag-Along Agreement, to: (i) from the date of the execution of the Transaction Agreement until the earliest to occur of (a) the closing of the Stock Purchase, and (b) such date and time as the Transaction Agreement shall have been terminated validly in accordance with its terms, not to transfer any such Subject Securities; (ii) exercise such Dragging Shareholder’s drag-along rights on the terms and conditions set forth in the Drag-Along Agreement; (iii) take any and all actions reasonably requested by Pace in connection with the exercise of their drag-along rights to consummate the transactions contemplated by the Transaction Agreement; (iv) following delivery of the Drag-Along Notice to the Drag-Along Shareholders, take any and all actions necessary to cause the Drag-Along Shareholders to comply with their respective obligations under the Articles of Incorporation of Accel and the Accel Shareholders Agreement



 

37


Table of Contents

(including to take all actions as may be reasonably necessary to consummate the transactions contemplated by the Transaction Agreement and to enter into agreements and deliver certificates and instruments on the same terms as the Dragging Shareholders); and (v) promptly after the Drag-Along Notice has been delivered, cause each Drag-Along Shareholder to deliver a joinder to the Transaction Agreement.

On July 23, 2019, the Dragging Shareholders issued the Drag-Along Notice to Accel and the Drag-Along Shareholders, pursuant to which the Dragging Shareholders exercised their drag-along rights under and in accordance with the Accel Articles. In accordance with the Drag-Along Agreement, the Dragging Shareholders will cause each Accel shareholder who had not entered into the Transaction Agreement on June 13, 2019, to deliver a joinder to the Transaction Agreement, pursuant to which such shareholder will be admitted to the Transaction Agreement as a Seller and will agree to be bound by all of the terms and conditions of the Transaction Agreement (as modified by such joinder).

Pace Sponsor Support Agreement

Concurrently with the execution of the Transaction Agreement, Pace Sponsor, Pace and the Shareholder Representatives entered into the Pace Sponsor Support Agreement pursuant to which Pace Sponsor agreed to: (i) surrender for cancelation or exchange its Class F Shares in the Sponsor Class F Share Exchange; (ii) surrender for cancelation 2,444,444 Private Placement Warrants held by Pace Sponsor in the Sponsor Warrant Cancelation; (iii) contribute 500,000 Class A-1 Shares in the Sponsor Contribution, to a donor advised fund of its choice for purposes of participation in charitable efforts in the communities in which Pace Sponsor and its affiliates operate, or anticipate operating (provided that Pace Sponsor may, with the prior written consent of Accel, elect to contribute cash to such donor advised fund in lieu of some or all of such Class A-1 Shares at a rate of $10.22 per share and surrender for cancelation a number of Class A-1 Shares to Parent equal to the amount of cash contributed divided by $10.22 per share); and (iv) vote in favor of the Business Combination.

Restricted Stock Agreement

In connection with the closing of the Stock Purchase, Pace, the Pace Sponsor Members and the Restricted Stockholders will enter into the Restricted Stock Agreement, which will set forth the terms upon which the Class A-2 Shares will be exchanged for an equal number of Class A-1 Shares. The exchange of Class A-2 Shares for Class A-2 Shares will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of the following triggers:

 

   

Tranche I, equal to 1,666,666 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of Surviving Newco (as successor to Accel) (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2021, March 31, 2022 or June 30, 2022 equals or exceeds $120 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $12.00 for at least twenty trading days in any consecutive thirty trading day period;

 

   

Tranche II, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of Surviving Newco (as successor to Accel) (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $140 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $14.00 for at least twenty trading days in any thirty trading day period; and

 

   

Tranche III, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of Surviving Newco (as successor to Accel) (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $160 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $16.00 for at least twenty trading days in any thirty trading day period.



 

38


Table of Contents

The LTM EBITDA and LTM EBITDA thresholds will be reasonably adjusted by the independent directors of the Pace Board from time to time following the closing of the Stock Purchase to take into account the anticipated effect of any acquisitions or dispositions that exceed certain thresholds and are otherwise materially different from certain forecasts.

Notwithstanding the foregoing, Class A-2 Shares, if not previously exchanged for Class A-1 Shares pursuant to the triggers described above, will be exchanged for an equal number of Class A-1 Shares immediately prior to the consummation of a transaction or series of related transactions that would result in a third party or group (as defined in or under Section 13 of the Exchange Act) becoming the beneficial owner of, directly or indirectly, more than fifty percent of the total voting power of the equity securities of Pace, or more than fifty percent of the consolidated net revenues, net income or total assets (including equity securities of its subsidiaries) of Pace, provided that the satisfaction of the conditions set forth in the aforementioned triggers cannot be determined at such time.

The Restricted Stock Agreement further provides that holders of Class A-2 Shares are not required to exchange such shares for Class A-1 Shares if, (x) prior to giving effect to exchanges pursuant to the triggers described above, such holder beneficially owns less than 4.99% of the issued and outstanding Class A-1 Shares, and (y) after giving effect to the exchanges pursuant to the triggers described above, such holder would beneficially own in excess of 4.99% of the issued and outstanding Class A-1 Shares. However, notwithstanding the limitation described in the previous sentence, if and when a holder of Class A-2 Shares has obtained all required gaming approvals from the applicable gaming authorities permitting such holder to beneficially own Class A-1 Shares in excess of 4.99%, then the Class A-2 Shares held by such holder which are subject to exchange shall immediately be exchanged for Class A-1 Shares without regard to the limitation.

Waiver Agreement

Concurrently with the execution of the Transaction Agreement, Pace and holders of Founder Shares entered into the Waiver Agreement, pursuant to which such holders agreed to waive any adjustment to the conversion ratio of Founder Shares set forth in the Articles resulting from the Investment Private Placement.

Director Letter Agreements

Concurrently with the execution of the Transaction Agreement, Pace and the independent directors of Pace entered into Director Letter Agreements pursuant to which such directors agreed that, following the Pace Domestication but prior to the effectiveness of the Stock Purchase, 200,000 Class F Shares held by such directors shall be exchanged for an equal number of validly issued, fully paid and non-assessable Class A-1 Shares.

New Pace Warrant Agreement

In connection with the closing of the Stock Purchase, Pace and the Sellers that will receive New Pace Warrants will enter into the New Pace Warrant Agreement, pursuant to which Pace will issue to each such Seller their respective pro rata share of 2,444,444 New Pace Warrants, with such pro rata share to be determined with reference to a number of shares equal to 70% of such Seller’s shares of Accel Stock less the number of shares of Accel Stock in respect of which the Seller made a Cash Election. Each New Pace Warrant will entitle the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the Pace Warrants, at any time 30 days after the consummation of the Business Combination. Please see “Description of Pace Securities — Warrants — New Pace Warrants.”

Key Holder Support Agreement

Concurrently with the execution of the Transaction Agreement, Pace and certain Sellers who are members of management of Accel entered into the Key Holder Support Agreement, pursuant to which such members



 

39


Table of Contents

agreed (i) to restrict the amount of Accel Stock for which they make a Cash Election to less than 20% of the number of shares of Accel Stock owned by such member and each of its affiliates on an aggregated basis (ii) not to transfer any of their Subject Securities (except to a permitted transferee or in furtherance of the transactions contemplated by the Transaction Agreement) and (iii) to enter into the Registration Rights Agreement.

Holder Support Agreement

Concurrently with the execution of the Transaction Agreement, certain Sellers, Pace, and NewCo entered into a Holder Support Agreement, pursuant to which such Sellers agreed (i) to make non-binding Cash Elections, (ii) not to transfer any of their Subject Securities (except to a permitted transferee or in furtherance of the transactions contemplated by the Transaction Agreement), and (iii) to enter into the Registration Rights Agreement if such Seller will receive New Pace Warrants and Class A-2 Shares.

Registration Rights Agreement

The Registration Rights Holders, which include the Pace Sponsor Members, certain founders of Accel, certain members of management of Accel, certain Accel shareholders, the independent directors of Pace and each other person who has executed and delivered a joinder to the Registration Rights Agreement, including any person who (1) will be a stockholder of Pace immediately following the Business Combination, (2) either (A) makes a written request to Pace to enter into the Registration Rights Agreement or (B) will, immediately following the Business Combination, be subject to Section (b)(2) of Rule 144 of the Securities Act with respect to such person’s Class A-1 Shares following the Business Combination and (3) elects to enter into the Registration Rights Agreement, will be entitled to registration rights under the Registration Rights Agreement in respect of the Pace Shares held by or issuable upon the exercise of New Pace Warrants held by such Registration Rights Holders. Pursuant to the Registration Rights Agreement, at any time, and from time to time, after the consummation of the Business Combination and subject to the lock-up restrictions set forth therein, certain of the Registration Rights Holders, being the Pace Sponsor, Pace Governance, the Accel Founders or the Restricted Accel Stockholders set forth therein, may demand that Pace register for resale some or all of their Pace Shares for so long as they continue to meet certain ownership thresholds.

Subscription Agreements

In connection with the Investment Private Placement, Pace entered into the Subscription Agreements with the Original Investors concurrently with the execution of the Transaction Agreement and the Subscription Agreements with the Additional Investor on August 13, 2019. Pursuant to the Subscription Agreements, the Investors agreed to subscribe for and purchase and Pace agreed to issue and sell to such Investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million in the Investment Private Placement. The Subscription Agreement to which the Pace Affiliate is a party is substantially similar to the Subscription Agreements to which the General Investors are parties except that: (a) the Pace Affiliate may assign its rights under the Subscription Agreement, subject to compliance with the securities laws; and (b) the Pace Affiliate is not entitled to liquidated damages if there is a delay in the registration of the securities. The proceeds from the Investment Private Placement will be used to fund a portion of the cash consideration required to effect the Stock Purchase. The closing of the Investment Private Placement will occur immediately prior to the closing of the Stock Purchase and is conditioned thereon and on other customary closing conditions. The Class A-1 Shares to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act, and will be issued in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

Support Agreement

Concurrently with the execution of the Transaction Agreement, Pace entered into the Support Agreement with Accel, pursuant to which Accel will use commercially reasonable efforts to assist the Sellers in complying



 

40


Table of Contents

with certain covenants contained therein, and the Pace and Accel have agreed to certain expense reimbursement arrangements payable under certain circumstances upon termination of the Transaction Agreement.

Impact of the Business Combination on Pace’s Public Float

It is anticipated that, upon completion of the Business Combination: (i) Pace’s public shareholders (other than the Investors) will own approximately 51.68% of the equity interests of Pace; (ii) the General Investors will own approximately 3.79% of Pace (such that public shareholders, including the General Investors, will own approximately 55.46% of the equity interests of Pace); (iii) the Pace Affiliate will own approximately 1.61% of the equity interests of Pace; (iv) the Pace Initial Shareholders will own approximately 8.61% of the equity interests of Pace, after giving effect to the conversion of all Public Shares and Founder Shares held by the Pace Initial Shareholders on a one-for-one basis to Class A-1 Shares and Class F Shares, respectively, in connection with the Pace Domestication, and the Class F Share Exchange; (v) Accel shareholders will own approximately 33.75% of the equity interests of Pace; and (vi) the donor advised fund will own approximately 0.57% of the equity interests of Pace.

The ownership percentages with respect to Pace following the Business Combination do not take into account the Class A-2 Shares that will be exchanged for Class A-1 Shares pursuant to the terms of the Restricted Stock Agreement, Pace Warrants to purchase to Class A-1 Shares that will remain outstanding immediately following the Business Combination or options to purchase Accel Stock that had not vested as of June 30, 2019. The ownership percentages also assume (i) outstanding shares of Accel Stock as of June 30, 2019, (ii) a balance of the Trust Account equal to approximately $461,275,222, (iii) aggregate Cash Elections by the Accel shareholders of $350,000,000, including that holders of Class D preferred stock, no par value, of Accel elect to receive cash in respect of 100% of such shares, (iv) that no Public Shares are elected to be redeemed by Pace’s public shareholders, (v) that none of the Private Placement Warrants are exercised and (vi) that Pace Sponsor elects to contribute 500,000 Class A-1 Shares and no cash to the donor advised fund in connection with the Sponsor Contribution. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Pace’s existing shareholders in Pace will be different. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

Pace Board’s Reasons for Approval of the Business Combination

The Pace Board considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the Transaction Agreement, including but not limited to, the following material factors:

 

   

Highly Attractive Business, Financial Model and Prospects. Accel is one of the largest video gaming terminal operators in the United States, operating over 8,000 Video Gaming Terminals (“VGTs”) in more than 1,700 licensed establishments as of the date of the Transaction Agreement, including bars, restaurants, gaming cafes, convenience stores and truck stops. Accel’s operating model allows it to secure long-term contracts with licensed establishment owners, which provide predictable maturation curves, highly visible earnings growth and compelling free cash flow. In addition, Accel’s operations rely on a diversified revenue base, with Accel’s best-performing licensed establishments accounting for less than 1% of its gross revenue for the fiscal year ended December 31, 2018. Accel’s reliance on low-limit slot machines also provides a resilient business model, even in difficult economic climates. Further, newly-passed gaming regulations in Illinois have increased the maximum number of VGTs that may be operated at a given licensed establishment and higher limits on maximum wagers and payouts, which the Pace Board believes will further increase Accel’s growth prospects.

 

   

“Gaming-as-a-Service” Platform. Accel is a gaming-as-a-service provider, which allows Accel to benefit from several advantages over traditional gaming businesses, including a “business-to-business”



 

41


Table of Contents
 

model secured by long-term exclusive customer contracts, operations in fast-growing segments that are primarily served by fragmented, sub-scale providers and comparatively low capital expenditures and an asset-light operating model compared to casinos, driving high return on capital. In addition to installation, operation and maintenance of gaming equipment such as VGTs and redemption devices, Accel also installs, operates and services ancillary devices such as ATMs, payment devices, and amusement machines at licensed establishments, allowing it to operate as a value-added “one-stop shop” for licensed establishment partners. Accel’s best-in-class services also provide digital and data analytics to help customers capture gaming revenue, early access to cutting-edge games and state-of-the art technology, highly secure cash collection operations, proactive maintenance and technical capabilities and strong marketing, legal, compliance and other support systems.

 

   

Strong Revenue Growth and Visibility. As of the date of the Transaction Agreement, Accel had over 300 licensed establishments signed under contract but not yet live. When considering the expected annualized performance of recently added licensed establishments in light of predictable maturation trends evidenced by historical performance of licensed establishments previously added, the Pace Board believes there is high visibility into Accel’s expected licensed establishment and revenue growth for the near-term.

 

   

Strong Relationships with Licensed Establishment Partners. Accel prioritizes establishing strong, lasting relationships with licensed establishment partners from inception. Accel dedicates a relationship manager to each of its establishments, who oversee every aspect of customer relationship management and retention. Accel prides itself on providing prompt, reliable customer service and education, all of which helps to increase referral marketing by its partners. Accel’s relationship managers’ efforts to provide value-additive services to their licensed establishment partners result in consistent pre-renewals long before contracts expire and are a key element of its competitive differentiation. As a result, Accel has very high recurring revenue, and its voluntary contract renewal rate was over 99% for the three years ended December 31, 2018.

 

   

Deep Industry and Vendor Relationships. Accel’s leading market position has led to strong relationships within its industry and with equipment suppliers. Accel has successfully integrated multiple other operators, adding more than 480 licensed establishments to its portfolio of over 1,700 licensed establishment partners as of the date of the Transaction Agreement. The Pace Board believes this successful roll-up strategy positions Accel well with potential additional local operators who could benefit from Accel’s gaming-as-a-service platform. In addition, Accel’s industry leadership permits it to seek and obtain favorable pricing and supply of gaming machines. Due to its ability to procure machines and parts easily, Accel is able to rotate machines quickly in response to partner demand and to where they are most needed across its operating footprint. This results in longer, more effective usage and greater lifetimes for Accel’s machines.

 

   

Platform Opportunity to Drive Accretive Acquisitions. The Pace Board considered Accel’s opportunity for significant growth both organically and strategically. Accel has a proven track record in converting competitors’ licensed establishments as well as making accretive acquisitions. As of the date of the Transaction Agreement, Accel had added over 850 new licensed establishments to its portfolio since 2016, and, since becoming a licensed VGT Terminal Operator in 2012, Accel had acquired eight distributed gaming operators, adding more than 480 licensed establishment partners to its portfolio of over 1,700 licensed establishment partners. The Pace Board believes Accel’s scale and position as the industry leader in Illinois combined with a public currency through the Business Combination will make it the acquirer of choice.

 

   

Significant Optionality for Expansion into Additional States. The gaming industry in the United States is continuing to grow rapidly, bolstered by an increasing number of states approving additional forms of gaming as a means to increase tax revenues. Thus, the Pace Board believes there is



 

42


Table of Contents
 

a meaningful opportunity for additional expansion and penetration of video gaming across the country. Accel’s growth strategy in Illinois is focused on expanding its footprint, where its leading market position poises it to take advantage of favorable legislative changes including an increase in VGT per licensed establishment and increases in maximum wagers and payouts. Accel was also recently granted a provisional license in Pennsylvania where it expects to begin operations and position itself to take advantage of further gaming expansion in that state. The Pace Board believes Accel has the opportunity to expand and diversify into other states that currently permit VGTs. This potential expansion could occur either through a strategic entrance into nascent markets or through participation in states with more mature video gaming markets where Accel does not yet have a presence, such as Nevada, Georgia, and Montana. There are also an increasing number of states considering regulations that allow for the adoption of VGTs, such as Indiana, Missouri and Mississippi. As an established and transparent operator in its home market, the Pace Board believes Accel would be an attractive entrant into the new markets in these states.

 

   

Balance Sheet Strength. The Pace Board believes that the Business Combination will provide significant primary capital and financial flexibility for Accel to pursue value-additive growth opportunities. Accel’s strong initial balance sheet combined with its financial performance and access to the public markets through the Business Combination will enable Accel to expedite its growth strategy through both organic growth and strategic acquisitions. The Pace Board also expects that Accel can support additional levels of debt as a public entity in the medium term, which could support further acquisitions and organic growth. Accel is in a position to implement share repurchases, even at a premium to the deal price, which could be accretive due to its advantaged capitalization or pay regular and special dividends. Further, Accel’s low initial leverage and meaningful free cash flow generation capabilities reduces its credit risk and exposure to economic cycles.

 

   

Experienced and Proven Management Team. The Pace Board considered the fact that, post-Business Combination, Pace will be led by the senior management team of Accel which has successfully led the business of Accel as a high-quality gaming-as-a-service provider. In addition, the Pace Board considered the fact that Mr. A. Rubenstein, who oversaw the growth of Accel into one of the largest video game terminal operators in the United States, would continue as the Chief Executive Officer of the post-Business Combination Pace.

 

   

Other Alternatives. After a thorough review of other business combination opportunities reasonably available to Pace, the Pace Board’s believes that the proposed Business Combination represents the best potential business combination for Pace and the most attractive opportunity for Pace management to accelerate its business plan based upon the process utilized to evaluate and assess other potential acquisition targets. The Pace Board also believes that such processes have not presented a better alternative.

 

   

Terms of the Transaction Agreement. The Pace Board considered the terms and conditions of the Transaction Agreement and the transactions contemplated thereby, including the Business Combination.

 

   

Independent Director Role. The Pace Board is comprised of a majority of independent directors who are not affiliated with Pace Sponsor and its affiliates, including TPG. In connection with the Business Combination, Pace’s independent directors, Ms. Kathleen Philips and Messrs. Chad Leat, Robert Suss, Paul Walsh and Kneeland Youngblood, took an active role in evaluating and guiding Pace management on the proposed terms of the Business Combination, including the Transaction Agreement, the Related Agreements and the governance of Pace post-Business Combination, including the Proposed Charter. Pace’s independent directors evaluated and unanimously approved, as members of the Pace Board, the Transaction Agreement and the transactions contemplated therein, including the Business Combination.



 

43


Table of Contents

For more information about the Pace Board’s decision-making process concerning the Business Combination, please see the section entitled “The Business Combination — The Pace Board’s Reasons for the Business Combination.”

Independent Director Oversight

The Pace Board is comprised of a majority of independent directors who are not affiliated with Pace Sponsor and its affiliates, including TPG. In connection with the Business Combination, Pace’s independent directors, Messrs. Chad Leat, Robert Suss, Paul Walsh and Kneeland Youngblood and Ms. Kathleen Philips, took an active role in evaluating the proposed terms of the Business Combination, including the Transaction Agreement, the Related Agreements and the governance of Pace post-Business Combination, including the Proposed Charter. As part of their evaluation of the Business Combination, Pace’s independent directors were aware of the potential conflicts of interest with Pace Sponsor and its affiliates, including TPG, that could arise with regard to the proposed terms of the Transaction, the Investment Private Placement and Pace Charter and the governance of Pace following the Business Combination. The independent directors of Pace reviewed and considered these interests during the negotiation of the Business Combination and in evaluating and unanimously approving, as members of the Pace Board, the Transaction Agreement and the transactions contemplated therein, including the Business Combination.

Satisfaction of 80% Test

It is a requirement under the Articles and NYSE listing requirements that the business or assets acquired in Pace’s initial business combination have a fair market value equal to at least 80% of the balance of the funds in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the execution of a definitive agreement for such initial business combination. As of June 13, 2019, the date of the execution of the Transaction Agreement, the balance of the Trust Account was approximately $445,802,899 (excluding $15,750,000 of deferred underwriting commissions and taxes payable on the income earned on the Trust Account) and 80% thereof represents approximately $356,642,319. In reaching its conclusion that the Business Combination meets the 80% asset test, the Pace Board reviewed the enterprise value of Accel of approximately $763 million implied by adding a common equity value of approximately $651 million and approximately $112 million of net debt. In determining whether the enterprise value described above represents the fair market value of Accel, the Pace Board considered all of the factors described in this section and the section of this proxy statement/prospectus entitled “The Transaction Agreement and Related Agreements” and the fact that the purchase price for Accel was the result of an arm’s length negotiation. As a result, the Pace Board concluded that the fair market value of the business acquired was significantly in excess of 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account).

The Extraordinary General Meeting of Pace in lieu of the 2019 Annual General Meeting of Pace

Date, Time and Place of Extraordinary General Meeting

The Extraordinary General Meeting of Pace will be held on [●], 2019, at [●] local time at [●].

Proposals

At the Extraordinary General Meeting, Pace shareholders will be asked to consider and vote on:

 

  1.

Business Combination Proposal — To consider and vote upon a proposal to adopt the Transaction Agreement and approve the transactions contemplated thereby, including the Business Combination (Proposal No. 1);



 

44


Table of Contents
  2.

Domestication Proposal — To consider and vote upon a proposal to approve by special resolution the Pace Domestication, to occur immediately prior to the Stock Purchase (Proposal No. 2);

 

  3.

NYSE Proposal — To consider and vote upon a proposal to approve, for purposes of complying with applicable provisions of NYSE Listing Rule 312.03, the issuance of more than 20% of Pace’s issued and outstanding common stock following the Pace Domestication to Accel shareholders in connection with the Business Combination (Proposal No. 3);

 

  4.

Charter Proposal — To consider and vote upon a proposal to adopt the Proposed Charter, to be effective following the Pace Domestication and immediately prior to the Stock Purchase (Proposal No. 4);

 

  5.

Governance Proposals—To consider and vote upon, on a non-binding advisory basis, separate proposals to approve certain aspects of the provisions of the Proposed Charter that materially affect stockholder rights, which are being separately presented in accordance with SEC requirements (Proposal No. 5); and

 

  6.

Adjournment Proposal — To consider and vote upon a proposal to approve the adjournment of the Extraordinary General Meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Pace Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (ii) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or (iii) if Pace shareholders redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied. The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or in the event that Pace shareholders redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied (Proposal No. 6).

Voting Power; Record Date

Only Pace shareholders of record at the close of business on [●], 2019, the record date for the Extraordinary General Meeting, will be entitled to vote at the Extraordinary General Meeting. Each Pace shareholder is entitled to one vote for each Pace Ordinary Share that such shareholder owned as of the close of business on the record date. If a Pace shareholder’s shares are held in “street name” or are in a margin or similar account, such shareholder should contact its broker, bank or other nominee to ensure that votes related to the shares beneficially owned by such shareholder are properly counted. On the record date, there were [●] Pace Ordinary Shares outstanding, of which [●] are Public Shares and [●] are Founder Shares held by the Pace Initial Shareholders.

Vote of the Pace Initial Shareholders and Pace’s Other Directors and Officers

Prior to the Pace IPO, Pace entered into agreements with the Pace Initial Shareholders and the other current directors and officers of Pace, pursuant to which each agreed to vote any Pace Ordinary Shares owned by them in favor of an initial business combination. These agreements apply to the Pace Initial Shareholders, including the Pace Sponsor, as it relates to the Founder Shares and the requirement to vote all of the Founder Shares in favor of the Business Combination. As of the record date, the Pace Initial Shareholders and the other current directors and officers own [●] Founder Shares, representing [●]% of the Pace Ordinary Shares then outstanding and entitled to vote at the Extraordinary General Meeting.



 

45


Table of Contents

The Pace Initial Shareholders and the other current directors and officers of Pace have waived any redemption rights, including with respect to Public Shares purchased in the Pace IPO or in the aftermarket, in connection with Business Combination. The Founder Shares held by the Pace Initial Shareholders have no redemption rights upon the liquidation of Pace and will be worthless if no business combination is effected by Pace by [●], 2019. However, the Pace Initial Shareholders, officers and directors are entitled to redemption rights upon the liquidation of Pace with respect to any Public Shares they may own.

Quorum and Required Vote for Proposals at the Extraordinary General Meeting

The approval of the Business Combination Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Business Combination Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Business Combination Proposal. The holders of a majority of the Pace Ordinary Shares being present in person or by proxy shall be a quorum. The Pace Initial Shareholders have agreed to vote their Founder Shares and any Public Shares purchased by them during or after the Pace IPO in favor of the Business Combination Proposal.

The approval of the Domestication Proposal requires a special resolution as a matter of Cayman Islands law, being the affirmative vote of holders of at least two-thirds of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Domestication Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Domestication Proposal. The holders of a majority of the Pace Ordinary Shares being present in person or by proxy shall be a quorum.

The approval of the NYSE Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the NYSE Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the NYSE Proposal. The holders of a majority of the Pace Ordinary Shares being present in person or by proxy shall be a quorum.

The approval of the Charter Proposal requires (i) a special resolution as a matter of Cayman Islands law, being the affirmative vote of holders of at least two-thirds of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting and (ii) the Pace Ordinary Shares so voted constitute, upon conversion to Class A-1 Shares in connection with the Pace Domestication but excluding any conversions to be consummated pursuant to the Class F Share Exchange, a majority of outstanding stock entitled to vote thereon. Accordingly, a shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting, as well as an abstention from voting and a broker non-vote with regard to the Charter Proposal will have the same effect as a vote “AGAINST” the Charter Proposal.

The approval of each of the Governance Proposals, which is a non-binding advisory vote, requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of Pace



 

46


Table of Contents

Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on a Governance Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on a Governance Proposal. The holders of a majority of the Pace Ordinary Shares being present in person or by proxy shall be a quorum.

The approval of the Adjournment Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of the Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Adjournment Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Adjournment Proposal. The holders of a majority of the Pace Ordinary Shares being present in person or by proxy shall be a quorum.

It is important for you to note that, in the event that Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal does not receive the requisite vote for approval, Pace will not consummate the Business Combination. If Pace does not consummate the Business Combination, it is likely that it will fail to complete an initial business combination by [], 2019, and will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such account to the public shareholders.

Recommendation to Pace Shareholders

The Pace Board believes that each of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal, the Charter Proposal, the Governance Proposals and the Adjournment Proposal to be presented at the Extraordinary General Meeting is in the best interests of Pace and its shareholders and unanimously recommends that its shareholders vote “FOR” each of the proposals.

Interests of Certain Persons in the Business Combination

Interests of the Pace Initial Shareholders and Pace’s Other Current Officers and Directors

In considering the recommendation of the Pace Board to vote in favor of the Business Combination, Pace shareholders should be aware that aside from their interests as shareholders, the Pace Initial Shareholders and certain other members of the Pace Board and officers have interests in the Business Combination that are different from, or in addition to, those of other shareholders generally. The Pace Board was aware of and considered these interests, among other matters, in evaluating the Business Combination, and in recommending to Pace shareholders that they approve the Business Combination. Pace shareholders should take these interests into account in deciding whether to approve the Business Combination.

These interests include, among other things, the fact that:

 

   

the Pace Initial Shareholders and Pace’s other directors and officers have agreed not to redeem any Pace Ordinary Shares held by them in connection with a shareholder vote to approve a proposed initial business combination;

 

   

the Pace Initial Shareholders and Pace’s other directors and officers have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them (but not with respect to any Public Shares held by them) if Pace fails to complete an initial business combination by [●], 2019;



 

47


Table of Contents
   

Pace Sponsor and Pace’s officers and directors will lose their entire investment in Pace and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by [●], 2019;

 

   

if the Trust Account is liquidated, including in the event Pace is unable to complete an initial business combination within the required time period, Pace Sponsor has agreed to indemnify Pace to ensure that the proceeds in the Trust Account are not reduced below $10.00 per Public Share, or such lesser per Public Share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Pace has discussed entering into a transaction agreement or claims of any third party (other than Pace’s independent auditors) for services rendered or products sold to Pace, but only if such third party or target business has not executed a waiver of any and all rights to seek access to the Trust Account;

 

   

Pace Sponsor paid an aggregate of $11,000,000 for its 7,333,333 Private Placement Warrants to purchase Public Shares (of which 2,444,444 will be surrendered for cancelation in the Sponsor Warrant Cancelation) and that such Private Placement Warrants will expire worthless if the Business Combination is not consummated by [●], 2019;

 

   

with certain limited exceptions, the Private Placement Warrants and the underlying Public Shares will not be transferable, assignable or salable by the Pace Sponsor until 30 days after the completion of a business combination;

 

   

at the option of Pace Sponsor, any amounts outstanding under any working capital loan made by Pace Sponsor or any of its affiliates to Pace in an aggregate amount up to $1,500,000 may be converted into warrants to purchase Class A-1 Shares;

 

   

the Founder Shares will not be transferable, assignable or salable by the Pace Initial Shareholders until the earlier of (i) one year after the completion of a business combination, (ii) subsequent to an initial business combination, if the last sale price of the Public Shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a business combination or (iii) following a business combination, the date on which Pace consummates a liquidation, merger, share exchange, reorganization, or other similar transaction that results in all of Pace’s shareholders having the right to exchange their Public Shares for cash, securities or other property;

 

   

Pace Sponsor will receive, in connection with the Sponsor Class F Share Exchange and pursuant to the Pace Sponsor Support Agreement, up to 7,800,000 Class A-1 Shares and 2,000,000 Class A-2 Shares;

 

   

the independent directors of Pace will receive, in connection with the Director Class F Share Exchange and pursuant to the Director Letter Agreements, 200,000 Class A-1 Shares;

 

   

the Pace Initial Shareholders may continue to hold Class A-1 Shares and the Class A-1 Shares to be issued to Pace Initial Shareholders upon exercise of Private Placement Warrants following the Business Combination, subject to certain lock-up periods. Specifically, with certain limited exceptions, the Class A-1 Shares to be received by the Pace Initial Shareholders will not be transferable, assignable or salable by the Pace Initial Shareholders until the earlier of (i) one year after the closing of the Stock Purchase, (ii) following the closing of the Stock Purchase, if the last sale price of the Class A-1 Shares equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the closing of the Stock Purchase) and (iii) the date following the closing of the Stock Purchase on which Pace consummates a liquidation, merger, share exchange, reorganization, or other similar transaction that results in all of Pace’s shareholders having the right to exchange their Public Shares for cash, securities or other property;



 

48


Table of Contents
   

the Pace Initial Shareholders paid an aggregate of $25,000 for the Founder Shares and a certain portion of such Founder Shares will be exchanged for up to 8,000,000 Class A-1 Shares in the Class F Share Exchange, which, if unrestricted and freely tradable, would be valued at approximately up to $80,496,000 assuming a Class A-1 Share price of $10.32 per share, based on the trading price of Public Shares as of June 12, 2019, the last trading day before the Business Combination was publicly announced, but, given the lock-up periods on Class A-1 Shares to be received the Pace Initial Shareholders in connection with the Business Combination as described above, Pace believes such shares have less value;

 

   

Pace and certain other parties to the Transaction Agreement will have the right to nominate to the Pace Board, five of its seven members, who are anticipated to serve on the Pace Board following the Business Combination;

 

   

Pace existing directors and officers will continue to be indemnified and the Pace’s directors’ and officers’ liability insurance will continue after the Business Combination;

 

   

the Pace Initial Shareholders have registration rights pursuant to a registration rights agreement with Pace, and that in connection with the Business Combination, the Pace Initial Shareholders will enter into the Registration Rights Agreement;

 

   

the Pace Affiliate has entered into a Subscription Agreement with Pace, pursuant to which the Pace Affiliate will purchase an aggregate of 1,399,212 Class A-1 Shares for a purchase price of $10.22 per share; and

 

   

none of the Pace officers or directors are required to commit his or her full time to Pace’s affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities.

Redemption Rights

Pursuant to the Articles, holders of Public Shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the Articles. As of June 30, 2019, this would have amounted to approximately $10.25 per share. If a holder of Public Shares exercises its redemption rights, then such holder will be exchanging its Public Shares for cash and will not own shares of Pace following the consummation of the Business Combination. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to the Transfer Agent in accordance with the procedures described herein. Notwithstanding the foregoing, a holder of the Public Shares, together with any affiliate of his or her or any other person with whom he or she is acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) will be restricted from seeking redemption rights with respect to more than fifteen percent (15%) of the Public Shares included in the Public Units sold in the Pace IPO. Accordingly, all Public Shares in excess of such 15% threshold beneficially owned by a public shareholder or group will not be redeemed for cash and will be converted to Class A-1 Shares on a one-for-one basis pursuant to the Business Combination.

Pace has no specified maximum redemption threshold under the Articles, other than the aforementioned 15% threshold. Each redemption of Public Shares by Pace public shareholders will reduce the balance of the Trust Account, which was approximately $461,275,222 as of June 30, 2019. The Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem Public Shares, plus (ii) an amount determined by Pace prior to closing which shall not exceed proceeds available under the Credit Agreement and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be



 

49


Table of Contents

$22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) equaling or exceeding the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel. The conditions to closing in the Transaction Agreement are for the sole benefit of the parties thereto and may be waived by such parties. If, as a result of redemptions of Public Shares by Pace’s public shareholders, this condition is not met and is not waived, then each of Pace and Accel may elect not to consummate the Business Combination. In addition, in no event will Pace redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as provided in the Articles and as required as a closing condition to each party’s obligation to consummate the Business Combination under the terms of the Transaction Agreement. Pace shareholders who wish to redeem their Public Shares for cash must refer to and follow the procedures set forth in the section entitled “Extraordinary General Meeting of Pace—Redemption Rights” in order to properly redeem their Public Shares.

Certain Information Relating to Pace

Pace Board and Executive Officers before the Business Combination

Prior to the Business Combination, the following individuals serve as directors and executive officers of Pace:

 

Name

  Age   

Position

David Bonderman

  76    Chairman

Chad Leat

  63    Director

Kathleen Philips

  52    Director

Robert Suss

  48    Director

Paul Walsh

  64    Director

Kneeland Youngblood

  63    Director

Karl Peterson

  48    President, Chief Executive Officer and Director

Martin Davidson

  42    Chief Financial Officer

Eduardo Tamraz

  35    Executive Vice President of Corporate Development, Secretary

Pace Board and Executive Officers Following the Business Combination

Pace is currently evaluating potential director nominees and executive officer appointments, but anticipates that the directors and executive officers of Pace upon consummation of the Business Combination will include the following:

 

Name

  Age   

Position

Andrew Rubenstein

  50    Chief Executive Officer, President and Director

Karl Peterson

  48    Chairman and Director

Brian Carroll

  56    Chief Financial Officer

Derek Harmer

  52    Secretary

Gordon Rubenstein

  48    Director

Kathleen Philips

  52    Director

David W. Ruttenberg

  78    Director

Eden Godsoe

  50    Director

[●]

  [●]    Director

Listing of Securities

The Public Shares, Public Units and Public Warrants are currently listed on the NYSE under the symbols “TPGH,” “TPGH.U” and “TPGH.WS,” respectively. Following the Pace Domestication, the Public Shares that



 

50


Table of Contents

are converted into Class A-1 Shares will continue to be listed on the NYSE under the symbol “ACEL,” and the Public Warrants, which will entitle the holder to acquire a corresponding number of Class A-1 Shares on the same terms as in effect immediately prior to the effective time of the Pace Domestication, will continue to be listed on the NYSE under the symbol “ACEL.WS.” Each Public Unit will be canceled in exchange for (i) the right to receive one validly issued fully paid and non-assessable Class A-1 Share and (ii) one-third of a Public Warrant. It is anticipated that the Class A-1 Shares to be issued in the Business Combination will be listed on the NYSE upon the consummation of the Business Combination under the symbol “ACEL.”

Comparison of Shareholder Rights

Until consummation of the Business Combination, Cayman Islands law and the Articles will continue to govern the rights of Pace shareholders. After consummation of the Business Combination, Delaware law and the Proposed Charter will govern the rights of Pace shareholders.

There are certain differences in the rights of the Pace shareholders prior to the Business Combination and after the Business Combination. See “Comparison of Shareholder Rights.

Regulatory Approvals

Under the Transaction Agreement, the parties are required to make all pre-merger notification filings required under the HSR Act. The parties submitted filings required under the HSR Act in connection with the transactions contemplated by the Transaction Agreement on June 27, 2019, and received early termination of the waiting period under the HSR Act on July 10, 2019.

In addition, under the Transaction Agreement, the parties are required to make all filings and submissions with the PA Board and the IGB, or such successor governmental entity, as are required under any law applicable to such party or any of its affiliates. As of July 31, 2019, Pace had made all such filings with the PA Board and the IGB.

Material U.S. Federal Income Tax Consequences

Please see the section entitled “Material Tax Considerations.

Accounting Treatment of the Business Combination

The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Pace will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Accel issuing stock for the net assets of Pace, accompanied by a recapitalization. The net assets of Pace will be stated at historical cost, with no goodwill or other intangible assets recorded.

Appraisal Rights

Appraisal rights or dissenters’ rights are not available to holders of Pace Ordinary Shares in connection with the Business Combination.

Appraisal rights are not available to holders of Accel Stock in connection with the Business Combination.

Proxy Solicitation

Proxies may be solicited by mail, via telephone or via e-mail or other electronic correspondence. Pace has engaged Morrow to assist in the solicitation of proxies.



 

51


Table of Contents

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

Risk Factor Summary

In evaluating the Business Combination and the proposals to be considered and voted on at the Extraordinary General Meeting, you should carefully review and consider the risk factors set forth under “Risk Factors.” The occurrence of one or more of the events or circumstances described in that section, alone or in combination with other events or circumstances, may have a material adverse effect on (i) the ability of Pace and Accel to complete the Business Combination and (ii) the business, cash flows, financial condition and results of operations of Pace following consummation of the Business Combination.

Selected Financial Data

Selected Historical Financial Data of Pace

Statement of Operations Data:

 

     For the Six
Months Ended
June 30, 2019
(unaudited)
    For the Six
Months Ended
June 30, 2018
(unaudited)
    For the
Year Ended
December 31, 2018
(audited)
    For the
Period from
February 14, 2017
(inception) to
December 31, 2017
(audited)
 

Revenue

   $ —       $ —       $ —       $ —    

Professional fees, formation costs and other expenses

     4,575,958       458,888       804,050       376,372  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (4,575,958     (458,888     (804,050  

Interest income

     5,105,671       3,216,244       7,669,551    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to ordinary shares

   $ 529,713     $ 2,761,356     $ 6,865,501     $ (376,372
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per ordinary share:

        

Basic and diluted

   $ 0.01     $ 0.05     $ 0.12     $ (0.01
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average ordinary shares outstanding:

        

Basic and diluted

     56,250,000       56,250,000       56,250,000       37,038,941  
  

 

 

   

 

 

   

 

 

   

 

 

 


 

52


Table of Contents

Consolidated Balance Sheet Data:

 

     As of
June 30, 2019
(unaudited)
     As of
December 31, 2018
(audited)
     As of
December 31, 2017
(audited)
 

Assets

        

Current assets:

        

Cash

   $ 692,097      $ 512,827      $ 372,073  

Prepaid expenses

     60,700        35,000        134,722  
  

 

 

    

 

 

    

 

 

 

Total current assets

     752,797        547,827        506,795  

Investments held in Trust Account

     461,275,222        456,919,551        450,000,000  
  

 

 

    

 

 

    

 

 

 

Total assets

   $ 462,028,019      $ 457,467,378      $ 450,506,795  
  

 

 

    

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

        

Current liabilities:

        

Accrued professional fees, travel and other expenses

   $ 4,283,400      $ 252,472      $ 157,390  
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     4,283,400        252,472        157,390  

Deferred underwriting compensation

     15,750,000        15,750,000        15,750,000  
  

 

 

    

 

 

    

 

 

 

Total liabilities

     20,033,400        16,002,472        15,907,390  

Commitments and contingencies

        

Class A ordinary shares subject to possible redemption; 43,699,461, 43,646,490 and 42,959,940 shares at June 30, 2019, December 31, 2018 and December 31, 2017, respectively, at a redemption value of $10.00 per share

     436,994,610        436,464,900        429,599,400  

Shareholders’ equity:

        

Preferred shares, $0.0001 par value; 1,000,000 shares authorized, none issued or outstanding

     —          —          —    

Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 1,300,539 shares issued and outstanding (excluding 43,699,461 shares subject to possible redemption) at June 30, 2019, 1,353,510 shares and outstanding (excluding 43,646,490 shares subject to possible redemption) at December 31, 2018 and 2,040,060 shares issued and outstanding (excluding 42,959,940 shares subject to possible redemption) at December 31, 2017

     130        135        204  

Class F ordinary shares, $0.0001 par value; 20,000,000 shares authorized, 11,250,000 shares issued and outstanding

     1,125        1,125        1,125  

Additional paid-in capital

     —          —          5,375,048  

Retained earnings (accumulated deficit)

     4,998,754        4,998,746        (376,372
  

 

 

    

 

 

    

 

 

 

Total shareholders’ equity

     5,000,009        5,000,006        5,000,005  
  

 

 

    

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 462,028,019      $ 457,467,378      $ 450,506,795  


 

53


Table of Contents

Selected Financial Information of Accel

The following selected financial data should be read in conjunction with “Accel’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Accel’s consolidated financial statements and notes thereto contained elsewhere in this proxy statement/prospectus.

The consolidated statements of income data and consolidated statements of cash flows data for the years ended December 31, 2018, 2017 and 2016 and the consolidated balance sheet data as of December 31, 2018 and 2017 are derived from Accel’s audited consolidated financial statements contained herein. The consolidated statements of income data and consolidated statements of cash flows data for the six months ended June 30, 2019 and 2018 and the consolidated balance sheet data as of June 30, 2019 are derived from Accel’s unaudited consolidated financial statements contained herein. The unaudited consolidated financial statements and data have been prepared on the same basis as Accel’s audited consolidated financial statements and, in the opinion of Pace and Accel, reflect all adjustments, necessary for a fair presentation of this data. Historical results are not necessarily indicative of the results to be expected in the future.

Consolidated Statement of Income and Cash Flows Data

 

    Six months ended June 30,     Year Ended December 31,  
    2019     2018     2018     2017     2016  
                (As Restated)     (As Restated)     (As Restated)  

Consolidated Statements of Income Data:

         

Total net revenues

  $ 201,691,655     $ 159,355,521     $ 331,992,692     $ 248,434,919     $ 173,329,965  

Operating income

    17,974,949       14,500,740       24,868,526       18,170,065       13,777,943  

Income before income tax expense

    11,772,389       9,810,865       15,225,079       10,064,502       8,391,568  

Net income

    8,322,790       7,044,833       10,802,664       8,310,721       4,905,080  

Consolidated Statements of Cash Flows Data:

         

Net cash provided by operating activities

  $ 26,082,837     $ 23,755,419     $ 44,342,987     $ 33,097,094     $ 24,774,159  

Net cash used in investing activities

    (10,548,075     (11,730,174     (73,546,424     (70,869,094     (51,533,913

Net cash provided by (used in) financing activities

    (8,257,343     (1,423,017     46,121,721       59,080,982       49,314,673  

Consolidated Balance Sheet Data

 

     As of June 30,      As of December 31,  
     2019      2018      2017  
            (As Restated)      (As Restated)  

Consolidated Balance Sheet Data:

        

Cash and cash equivalents

   $ 99,506,812      $ 92,229,393      $ 75,311,109  

Total current assets

     113,698,058        102,010,712        83,165,649  

Property and equipment, net

     93,082,276        92,442,348        81,279,833  

Total assets

     339,755,453        335,174,215        263,374,226  

Total current liabilities

     80,929,915        85,882,584        82,957,539  

Total long-term liabilities

     191,278,861        192,174,139        135,881,823  

Stockholders’ equity

     67,546,677        57,117,492        44,534,864  


 

54


Table of Contents

Selected Historical Financial Data of Pace on a Pro Forma Basis5

The selected unaudited pro forma condensed combined financial information for the six months ended June 30, 2019 and year ended December 31, 2018 combines the historical consolidated statements of operations of Pace and Accel, giving effect to the Business Combination as if it had been completed on January 1, 2018. The summary unaudited pro forma condensed combined balance sheet as of June 30, 2019 combines the historical unaudited consolidated balance sheets of Pace and Accel, giving effect to the Business Combination as if it had been completed on June 30, 2019. The summary unaudited pro forma condensed combined financial information has been derived from and should be read in conjunction with the unaudited pro forma condensed combined financial information, including the notes thereto, which is included in this proxy statement/prospectus under “Unaudited Pro Forma Condensed Combined Financial Information.

The selected unaudited pro forma condensed combined financial information is presented for informational purposes only. The summary unaudited pro forma condensed combined financial information does not purport to represent what the combined company’s results of operations or financial condition would have been had the Business Combination actually occurred on the dates indicated and does not purport to project the combined company’s results of operations or financial condition for any future period or as of any future date. The summary unaudited pro forma condensed combined financial information does not reflect any cost savings that may be realized as a result of the Business Combination or any potential changes in compensation plans. Additionally, the unaudited pro forma adjustments made in the summary unaudited pro forma condensed combined financial information, which are described in those notes, are preliminary and may be revised.

 

     Assuming No
Redemptions
     Assuming
Illustrative
Redemptions
     Assuming No
Redemptions
     Assuming
Illustrative
Redemptions
 
     Year Ended December 31, 2018      Six Months Ended June 30, 2019  

Pro Forma Condensed Combined Statement of Operations Data:

           

Total revenues

   $ 331,992,692      $ 331,992,692      $ 201,691,655      $ 201,691,655  

Operating income

   $ 24,064,476      $ 24,064,476      $ 13,398,991      $ 13,398,991  

Net income available to shareholders of Pace

   $ 9,998,614      $ 9,998,614      $ 3,746,832      $ 3,746,832  

Earnings per share — basic and diluted

   $ 0.11      $ 0.12      $ 0.04      $ 0.05  

Weighted-average number of shares outstanding during the period — basic and diluted

     87,081,609        82,581,609        87,081,609        82,581,609  

 

     Assuming No
Redemptions
     Assuming
Illustrative
Redemptions
 
     As of June 30, 2019  

Pro Forma Condensed Combined Balance Sheet Data:

     

Cash and cash equivalents

   $ 216,838,849      $ 170,711,326  

Property and equipment

   $ 93,082,276      $ 93,082,276  

Total assets

   $ 457,148,190      $ 411,020,667  

Total liabilities

   $ 276,492,176      $ 276,492,176  

Total stockholders’ equity

   $ 180,656,014      $ 134,528,491  

 

5 

Note: On August 26, 2019, Accel entered into an agreement to acquire 100% of the outstanding membership interests of Grand River Jackpot, LLC. Pro forma per share data reflecting Accel’s acquisition of Grand River Jackpot, LLC will be filed by amendment.



 

55


Table of Contents

Selected Comparative Per Share Information

Comparative Per Share Data of Pace

The following table sets forth the closing market prices per share of the Public Units, Public Shares and Public Warrants as reported by the NYSE on June 12, 2019, the last trading day before the Business Combination was publicly announced, and on [●], 2019, the last practicable trading day before the date of this proxy statement/prospectus.

 

Trading Date

   Public Units
(TPGH.U)
     Public
Shares
(TPGH)
     Public
Warrants
(TPGH.WS)
 

June 12, 2019

   $ 10.81      $ 10.32      $ 1.39  

[●], 2019

   $ [●]      $ [●]      $ [●]  

The market prices of Pace securities could change significantly. Because the Pace conversion / exchange ratio will not be adjusted for changes in the market prices of the Public Shares, the value of the Pace Shares that Pace shareholders will receive in the Business Combination may vary significantly from the value implied by the market prices of shares of Public Shares on the date of the Transaction Agreement, the date of this proxy statement/prospectus, and the date on which Pace shareholders vote on adoption of the Transaction Agreement. Pace shareholders are urged to obtain current market quotations for Pace securities before making their decision with respect to the adoption of the Transaction Agreement.

Comparative Per Share Data of Accel

Historical market price information regarding Accel is not provided because there is no public market for Accel Stock.

Comparative Historical and Pro Forma Per Share Data6

The following table sets forth:

 

   

historical per share information of Pace and Accel for the year ended December 31, 2018 and the six months ended June 30, 2019;

 

   

unaudited pro forma net income and cash dividends per share information giving effect to the Business Combination as if it had been completed on January 1, 2018; and

 

   

unaudited pro forma per share information of Pace for the year ended December 31, 2018 and the six months ended June 30, 2019, after giving effect to the Business Combination, assuming two redemption scenarios as follows:

 

   

No Redemptions: This scenario assumes that no Public Shares are redeemed; and

 

   

Illustrative Redemptions: This scenario assumes that approximately 4,500,000 Public Shares are redeemed at the estimated per share redemption price of $10.25, resulting in an aggregate payment of $46,127,522. Pace believes that an estimated redemption of 10% of 45,000,000 Public Shares is reasonable, based on redemptions made in prior business combinations consummated by Pace’s affiliates that are special purpose acquisition companies incorporated for purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination.

 

6 

Note: On August 26, 2019, Accel entered into an agreement to acquire 100% of the outstanding membership interests of Grand River Jackpot, LLC. Pro forma per share data reflecting Accel’s acquisition of Grand River Jackpot, LLC will be filed by amendment.



 

56


Table of Contents

This information is based on, and should be read together with, the selected historical consolidated financial information, the unaudited pro forma condensed combined financial information and the historical consolidated financial information of Pace and Accel, and the accompanying notes to such financial statements, that are included in this proxy statement/prospectus. The unaudited pro forma condensed combined per share data are presented for illustrative purposes only and are not necessarily indicative of actual or future financial position or results of operations that would have been realized if the Business Combination had been completed as of the dates indicated or will be realized upon the completion of the Business Combination. Uncertainties that could impact Pace’s financial condition include risks that effect Accel’s operations, any failures of Pace to manage its growth effectively or to respond to the demand of licensed establishment partners following the consummation of the Business Combination, any inability to complete acquisitions and integrate acquired businesses, strict government regulation that is subject to frequent amendment, repeal or new interpretation and general economic uncertainty and the effect of general economic conditions on the gaming industry. For more information on the risks, please see the section entitled “Risk Factors.” You are also urged to read the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements.”

 

     Historical      Assuming No
Redemptions
     Assuming
Illustrative
Redemptions
 
     Accel      Pace  

Book value per share(1)

   $ 18.80      $ 0.09      $ 2.07      $ 1.63  

Basic net income per share for the six months ended June 30, 2019

   $ 2.47      $ 0.01      $ 0.04      $ 0.05  

Basic net income per share for the year ended December 31, 2018

   $ 3.22      $ 0.12      $ 0.11      $ 0.12  

Diluted net income per share for the six months ended June 30, 2019

   $ 2.32      $ 0.01      $ 0.04      $ 0.05  

Diluted net income per share for the year ended December 31, 2018

   $ 2.99      $ 0.12      $ 0.11      $ 0.12  

Cash dividends per share

   $ —        $ —        $ —        $ —    

 

(1)

Book value per share = (Total equity)/shares outstanding as of June 30, 2019.

Market Prices and Dividends

Pace

The Public Units, Public Shares and Public Warrants trade on the NYSE, under the symbols “TPGH.U,” “TPGH” and “TPGH.WS,” respectively. Each Public Unit consists of one Public Unit and one-third of a Public Warrant. The Public Units began trading on June 28, 2017, and the Public Shares and Public Units began trading on August 18, 2017.



 

57


Table of Contents

The following table sets forth, for the calendar quarter indicated, the high and low sales prices per Public Unit, Public Share and Public Warrant as reported on the NYSE for the periods presented:

 

     Public Units
(TPGH.U)
     Public Shares
(TPGH)
     Public
Warrants
(TPGH.WS)
 
     High      Low      High      Low      High      Low  

Fiscal Year 2019:

                 

Quarter ended March 31, 2019

   $ 11.48      $ 10.32      $ 10.34      $ 9.98      $ 1.69      $ 1.00  

Quarter ended June 30, 2019

   $ 11.05      $ 10.50      $ 10.50      $ 10.11      $ 1.77      $ 1.20  

Fiscal Year 2018:

                 

Quarter ended March 31, 2018

   $ 11.43      $ 10.10      $ 9.86      $ 9.67      $ 1.60      $ 1.49  

Quarter ended June 30, 2018

   $ 10.80      $ 10.25      $ 10.00      $ 9.76      $ 1.70      $ 1.42  

Quarter ended September 30, 2018

   $ 10.79      $ 10.10      $ 10.20      $ 9.84      $ 1.75      $ 1.59  

Quarter ended December 31, 2018

   $ 11.65      $ 10.30      $ 10.40      $ 9.98      $ 1.75      $ 0.97  

Fiscal Year 2017:

                 

Quarter ended June 30, 2017(1)

   $ 10.35      $ 10.20        N/A        N/A        N/A        N/A  

Quarter ended September 30, 2017(2)

   $ 10.39      $ 10.15      $ 9.82      $ 9.75      $ 1.45      $ 1.40  

Quarter ended December 31, 2017

   $ 10.40      $ 10.16      $ 9.89      $ 9.69      $ 1.65      $ 1.50  

_____________

(1)

Beginning on June 28, 2017 with respect to TPGH.U.

(2)

Beginning on August 18, 2017 with respect to TPGH and TPGH.WS.

On June 12, 2019, the trading date before the public announcement of the Business Combination, the Public Shares, Public Warrants and Public Units closed at $10.32, $1.39 and $10.81, respectively.

Pace has not paid any cash dividends on its Public Shares to date and does not intend to pay cash dividends prior to the completion of the Business Combination.

Accel

Historical market price information regarding shares of Accel Stock is not provided because there is no public market for Accel Stock. Other than a one-time distribution in 2015, Accel has not paid any dividends on shares of Accel Stock and does not intend to pay dividends prior to the completion of the Business Combination.



 

58


Table of Contents

RISK FACTORS

You should carefully review and consider the following risk factors and the other information contained in this proxy statement/prospectus, including the financial statements and notes to the financial statements included herein, in evaluating the Business Combination and the proposals to be voted on at the Extraordinary General Meeting. Certain of the following risk factors apply to the business and operations of Accel and will also apply to the business and operations of Pace following the completion of the Business Combination. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Business Combination, and may have a material adverse effect on the business, cash flows, financial condition and results of operations of Pace following the Business Combination. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by Pace and Accel which later may prove to be incorrect or incomplete. Pace and Accel may face additional risks and uncertainties that are not presently known to such entity, or that are currently deemed immaterial, which may also impair its business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.

Risks Related to Pace and the Business Combination

If Pace is unable to complete an initial business combination by [], 2019, Pace will cease all operations except for the purpose of winding up and Pace will redeem the Public Shares and liquidate, in which case Pace’s public shareholders may only receive $10.00 per Public Share, or less than such amount in certain circumstances, and the Private Placement Warrants will expire worthless.

Pace executed a letter of intent with Accel with respect to the Business Combination on May 23, 2019, and accordingly pursuant to the Sponsor Letter Agreement and the Articles, has until [●], 2019 to complete a business combination. If Pace has not completed an initial business combination within such time period, it will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on funds held in the Trust Account and not previously released to fund Pace’s working capital requirements, subject to an annual limit of $750,000, net of tax (less up to $100,000 of such net 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 (iii) as promptly as reasonably possible following such redemption, subject to the approval of Pace’s remaining shareholders and the Pace Board, dissolve and liquidate, subject in each case to Pace’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law, in which case Pace’s public shareholders may only receive $10.00 per Public Share, or less than such amount in certain circumstances. In addition, if Pace fails to complete an initial business combination by [●], 2019, there will be no redemption rights or liquidating distributions with respect to Pace Public Warrants or the Private Placement Warrants, which will expire worthless.

Because of Pace’s limited resources and the significant competition for business combination opportunities, if the Business Combination is not completed, it may be more difficult for Pace to complete an initial business combination. In addition, resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If Pace is unable to complete an initial business combination by [], 2019, Pace’s public shareholders may receive only approximately $10.00 per Public Share, on the liquidation of the Trust Account (or less than $10.00 per Public Share in certain circumstances where a third party brings a claim against Pace that Pace Sponsor is unable to indemnify), and the Public Warrants will expire worthless.

If Pace is unable to complete the Business Combination, Pace would expect to encounter intense competition from other entities having a business objective similar to its business objective, including private

 

59


Table of Contents

investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses Pace could acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than Pace does and Pace’s financial resources will be relatively limited when contrasted with those of many of these competitors. While Pace believes there are numerous target businesses Pace could potentially acquire with the net proceeds of the Pace IPO and the sale of the Private Placement Warrants, Pace’s ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by Pace’s available financial resources. This inherent competitive limitation may give others an advantage in pursuing the acquisition of certain target businesses. Furthermore, if Pace is obligated to pay cash for the Public Shares redeemed and, in the event Pace seeks shareholder approval of a business combination, Pace makes purchases of its Public Shares, potentially reducing the resources available to Pace for a business combination. Any of these obligations may place Pace at a competitive disadvantage in successfully negotiating a business combination.

Pace anticipates that, if Pace is unable to complete the Business Combination, the investigation of other specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If Pace decides not to complete a specific business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if Pace reaches an agreement relating to a specific target business, Pace may fail to complete such business combination (including the Business Combination described in this proxy statement/prospectus) for any number of reasons including those beyond Pace’s control. Any such event will result in a loss to Pace of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

If Pace does not complete the Business Combination and is unable to complete an initial business combination by [●], 2019, Pace’s public shareholders may receive only approximately $10.00 per Public Share on the liquidation of the Trust Account (or less than $10.00 per Public Share in certain circumstances where a third party brings a claim against Pace that Pace Sponsor is unable to indemnify) and the Public Warrants and Private Placement Warrants will expire worthless.

If the Business Combination is not completed, potential target businesses may have leverage over Pace in negotiating a business combination and Pace’s ability to conduct due diligence on a business combination as it approaches [], 2019 may decrease, which could undermine Pace’s ability to complete a business combination on terms that would produce value for Pace’s shareholders.

Any potential target business with which Pace enters into negotiations concerning a business combination will be aware that Pace must complete an initial business combination by [●], 2019. Consequently, if Pace is unable to complete the Business Combination, a potential target may obtain leverage over Pace in negotiating a business combination, knowing that it is unlikely Pace will be unable to complete a business combination with another target business by [●], 2019. This risk will increase as [●], 2019 gets closer. In addition, Pace may have limited time to conduct due diligence and may enter into a business combination on terms that Pace would have rejected upon a more comprehensive investigation

TPG, through its affiliates, and members of the Rubenstein Family will own a significant portion of Pace Shares and will have representation on the Pace Board. TPG, through its affiliates, and members of the Rubenstein Family may have interests that differ from those of other shareholders.

Upon the completion of the Business Combination and Investment Private Placement and, when making the assumptions set forth under “The Business Combination — Impact of the Business Combination on Pace’s Public Float,” approximately 8.38% of Class A-1 Shares will be beneficially owned by the Pace Sponsor Members and

 

60


Table of Contents

approximately 1.61% of Class A-1 Shares will be beneficially owned by Pace Affiliate, all of which are affiliates of TPG. In addition, it is anticipated that three members of the Pace Board following the consummation of the Business Combination will be jointly nominated by Pace, an affiliate of TPG, the Sellers and the Shareholder Representatives, and another two members of the Pace Board following the consummation of the Business Combination will be jointly nominated by Pace, an affiliate of TPG, and the Shareholder Representatives. While Accel’s subsidiaries (including those holding gaming licenses) are expected to manage their respective operations in the ordinary course following the Business Combination, TPG may be able to significantly influence the outcome of matters submitted for action by directors of the Pace Board, subject to Pace’s directors’ obligation to act in the interest of all of Pace’s stakeholders, and for shareholder action, including the designation and appointment of the Pace Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers. Following the Business Combination, so long as TPG continues to directly or indirectly own a significant amount of Pace’s outstanding equity interests and any individuals affiliated with TPG are members of the Pace Board and/or any committees thereof, TPG may be able to exert substantial influence on Pace and may be able to exercise its influence in a manner that is not in the interests of Pace’s other stakeholders. TPG’s influence over Pace’s management could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of Pace, which could cause the market price of Class A-1 Shares to decline or prevent public shareholders from realizing a premium over the market price for Class A-1 Shares. Additionally, TPG and its affiliates are in the business of making investments in companies and owning real estate, and may from time to time acquire and hold interests in businesses that compete directly or indirectly with Pace or that supply Pace with goods and services. TPG or its affiliates may also pursue acquisition opportunities that may be complementary to (or competitive with) Pace’s business, including Surviving NewCo, and as a result those acquisition opportunities may not be available to Pace. Prospective investors should consider that the interests of TPG may differ from their interests in material respects.

In addition, when making the assumptions set forth under “The Business Combination — Impact of the Business Combination on Pace’s Public Float,” approximately [●]% of Class A-1 Shares will be beneficially owned by Mr. A. Rubenstein, approximately [●]% of Class A-1 Shares will be beneficially owned by his brother, Mr. G. Rubenstein, and Mr. A. Rubenstein, together with Mr. G. Rubenstein and their father, Mr. Jeffrey Rubenstein (together, the “Rubenstein Family”) will collectively beneficially own approximately [●]% of Class A-1 Shares upon the completion of the Business Combination. Although each of Mr. A. Rubenstein, Mr. G. Rubenstein, and Mr. J. Rubenstein each disclaim legal or beneficial ownership of any Accel Stock owned or controlled by the others, the Rubenstein Family have and may exert significant influence over corporate actions requiring stockholder approval. In addition, Pace anticipates that each of Mr. A. Rubenstein and Mr. G. Rubenstein will be members of the Pace Board following the consummation of the Business Combination. As a result, the Rubenstein Family, including Mr. A. Rubenstein and Mr. G. Rubenstein may be able to significantly influence the outcome of matters submitted for director action, subject to Pace’s directors’ obligation to act in the interest of all of Pace’s stakeholders, and for shareholder action, including the designation and appointment of the Pace Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers. Following the Business Combination, so long as the Rubenstein Family, including Mr. A. Rubenstein and Mr. G. Rubenstein continues to directly or indirectly own a significant amount of Pace’s outstanding equity interests and any individuals affiliated with members of the Rubenstein Family are members of the Pace Board and/or any committees thereof, and the Rubenstein Family, including Mr. A. Rubenstein and Mr. G. Rubenstein may be able to exert substantial influence on Pace and may be able to exercise its influence in a manner that is not in the interests of Pace’s other stakeholders. The Rubenstein Family, including Mr. A. Rubenstein’s and Mr. G. Rubenstein’s influence over Pace’s management could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of Pace, which could cause the market price of Class A-1 Shares to decline or prevent public shareholders from realizing a premium over the market price for Class A-1 Shares. Prospective investors should consider that the interests of the Rubenstein Family may differ from their interests in material respects.

 

61


Table of Contents

The Pace Initial Shareholders and other officers and directors of Pace have agreed to vote in favor of the Business Combination, regardless of how Pace’s public shareholders vote.

Unlike many other blank check companies in which the founders agree to vote their Founder Shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, the Pace Initial Shareholders and the other officers and directors of Pace have agreed, and their permitted transferees will agree, pursuant to the terms of the Sponsor Letter Agreement entered into with Pace, to vote any Founder Shares held by them, as well as any Public Shares owned by them, in favor the Business Combination. As of the date hereof, the Pace Initial Shareholders and their permitted transferees own shares equal to 20% of the issued and outstanding Pace Ordinary Shares. Accordingly, it is more likely that the necessary shareholder approval will be received for the Business Combination than would be the case if the Pace Initial Shareholders agreed to vote any Pace Ordinary Shares owned by them in accordance with the majority of the votes cast by Pace’s public shareholders.

The Pace Initial Shareholders, certain other members of the Pace Board and Pace’s officers have interests in the Business Combination that are different from or are in addition to other Pace shareholders in recommending that Pace shareholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in this proxy statement/prospectus.

When considering the Pace Board’s recommendation that Pace shareholders vote in favor of the approval of the Business Combination Proposal, Pace shareholders should be aware that aside from their interests as shareholders, the Pace Initial Shareholders and certain other members of the Pace Board and officers have interests in the Business Combination that are different from, or in addition to, those of other Pace shareholders generally. These interests include the fact that:

 

   

the Pace Initial Shareholders and Pace’s other directors and officers have agreed not to redeem any Pace Ordinary Shares held by them in connection with a shareholder vote to approve a proposed initial business combination;

 

   

the Pace Initial Shareholders and Pace’s other directors and officers have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them (but not with respect to any Public Shares held by them) if Pace fails to complete an initial business combination by [●], 2019;

 

   

Pace Sponsor and Pace’s officers and directors will lose their entire investment in Pace and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by [●], 2019;

 

   

if the Trust Account is liquidated, including in the event Pace is unable to complete an initial business combination within the required time period, Pace Sponsor has agreed to indemnify Pace to ensure that the proceeds in the Trust Account are not reduced below $10.00 per Public Share, or such lesser per Public Share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which Pace has discussed entering into a transaction agreement or claims of any third party (other than Pace’s independent auditors) for services rendered or products sold to Pace, but only if such third party or target business has not executed a waiver of any and all rights to seek access to the Trust Account;

 

   

Pace Sponsor paid an aggregate of $11,000,000 for its 7,333,333 Private Placement Warrants to purchase Public Shares (of which 2,444,444 will be surrendered for cancelation in the Sponsor Warrant Cancelation) and that such Private Placement Warrants will expire worthless if the Business Combination is not consummated by [●], 2019;

 

   

with certain limited exceptions, the Private Placement Warrants and the underlying Public Shares will not be transferable, assignable or salable by the Pace Sponsor until 30 days after the completion of a business combination;

 

62


Table of Contents
   

at the option of Pace Sponsor, any amounts outstanding under any working capital loan made by Pace Sponsor or any of its affiliates to Pace in an aggregate amount up to $1,500,000 may be converted into warrants to purchase Class A-1 Shares;

 

   

the Founder Shares will not be transferable, assignable or salable by the Pace Initial Shareholders until the earlier of (i) one year after the completion of a business combination, (ii) subsequent to an initial business combination, if the last sale price of the Public Shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a business combination or (iii) following a business combination, the date on which Pace consummates a liquidation, merger, share exchange, reorganization, or other similar transaction that results in all of Pace’s shareholders having the right to exchange their Public Shares for cash, securities or other property;

 

   

Pace Sponsor will receive, in connection with the Sponsor Class F Share Exchange and pursuant to the Pace Sponsor Support Agreement, up to 7,800,000 Class A-1 Shares and 2,000,000 Class A-2 Shares;

 

   

the independent directors of Pace will receive, in connection with the Director Class F Share Exchange and pursuant to the Director Letter Agreements, 200,000 Class A-1 Shares;

 

   

the Pace Initial Shareholders may continue to hold Class A-1 Shares and the Class A-1 Shares to be issued to Pace Initial Shareholders upon exercise of Private Placement Warrants following the Business Combination, subject to certain lock-up periods. Specifically, with certain limited exceptions, the Class A-1 Shares to be received by the Pace Initial Shareholders will not be transferable, assignable or salable by the Pace Initial Shareholders until the earlier of (i) one year after the closing of the Stock Purchase, (ii) following the closing of the Stock Purchase, if the last sale price of the Class A-1 Shares equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the closing of the Stock Purchase) and (iii) the date following the closing of the Stock Purchase on which Pace consummates a liquidation, merger, share exchange, reorganization, or other similar transaction that results in all of Pace’s shareholders having the right to exchange their Public Shares for cash, securities or other property;

 

   

the Pace Initial Shareholders paid an aggregate of $25,000 for the Founder Shares and a certain portion of such Founder Shares will be exchanged for up to 8,000,000 Class A-1 Shares in the Class F Share Exchange, which, if unrestricted and freely tradable, would be valued at approximately up to $80,496,000 assuming a Class A-1 Share price of $10.32 per share, based on the trading price of Public Shares as of June 12, 2019, the last trading day before the Business Combination was publicly announced, but, given the lock-up periods on Class A-1 Shares to be received the Pace Initial Shareholders in connection with the Business Combination as described above, Pace believes such shares have less value;

 

   

Pace and certain other parties to the Transaction Agreement will have the right to nominate to the Pace Board, five of its seven members, who are anticipated to serve on the Pace Board following the Business Combination;

 

   

Pace existing directors and officers will continue to be indemnified and the Pace’s directors’ and officers’ liability insurance will continue after the Business Combination;

 

   

the Pace Initial Shareholders have registration rights pursuant to a registration rights agreement with Pace, and that in connection with the Business Combination, the Pace Initial Shareholders will enter into the Registration Rights Agreement;

 

   

the Pace Affiliate has entered into a Subscription Agreement with Pace, pursuant to which the Pace Affiliate will purchase an aggregate of 1,399,212 Class A-1 Shares for a purchase price of $10.22 per share; and

 

63


Table of Contents
   

none of the Pace officers or directors are required to commit his or her full time to Pace’s affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities.

Since Pace Sponsor and officers and directors of Pace will lose their entire investment in Pace if an initial business combination is not completed, a conflict of interest may arise in determining whether a particular business combination, including the Business Combination, is appropriate for an initial business combination.

The Pace Initial Shareholders hold in the aggregate 11,250,000 Founder Shares, representing 20% of the total outstanding Pace Ordinary Shares upon completion of the Pace IPO. The Founder Shares will be worthless if Pace does not complete an initial business combination by [●], 2019. In addition, Pace Sponsor holds an aggregate of 7,333,333 Private Placement Warrants, each exercisable to purchase one Public Share that will also be worthless if Pace does not complete an initial business combination by [●], 2019.

The Founder Shares are identical to the Public Shares, except that (i) holders of the Founder Shares have the exclusive right to vote on the election of Pace directors prior to an initial business combination, (ii) the Founder Shares are subject to certain transfer restrictions, and (iii) the Pace Initial Shareholders, officers and directors have entered into the Sponsor Letter Agreement with Pace, pursuant to which they have agreed (A) to waive their redemption rights with respect to their Founder Shares and any Public Shares owned in connection with the completion of a business combination and (B) to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if Pace fails to complete the Business Combination by [●], 2019 (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if Pace fails to complete the Business Combination by [●], 2019), (iv) the Founder Shares are subject to registration rights and (v) the Founder Shares are automatically convertible into Public Shares at the time of a business combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment pursuant to anti-dilution rights, as described herein. In connection with the Business Combination and pursuant to the Waiver Agreement, the holders of the Founder Shares have agreed to waive such conversion adjustment.

The personal and financial interests of Pace’s officers and directors may have influenced their motivation in identifying and selecting Accel, completing the Business Combination and may influence their operation of Pace following the Business Combination.

Since Pace Sponsor and Pace’s executive officers and directors will not be eligible to be reimbursed for their out-of-pocket expenses if a business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target, including the Business Combination, is appropriate for an initial business combination.

At the closing of Pace’s initial business combination, Pace Sponsor and Pace’s executive officers and directors, and any of their respective affiliates, will be reimbursed for any reasonable out-of-pocket expenses incurred in connection with activities on Pace’s behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of reasonable out-of-pocket expenses incurred in connection with activities on Pace’s behalf. These financial interests of Pace Sponsor and Pace’s executive officers and directors may influence their motivation in identifying and selecting a target business combination and completing the Business Combination.

Pace’s public shareholders will not have the right to elect directors prior to the consummation of the Business Combination.

There is no requirement under the Companies Law of the Cayman Islands for Pace to hold annual or general meetings or elect directors. In addition, the holders of Founder Shares have the exclusive right prior to Pace’s initial business combination to elect Pace’s directors. Accordingly, holders of Public Shares will not have the right to vote on the election of directors prior to consummation of the Business Combination.

 

64


Table of Contents

The Pace Initial Shareholders will control the election of the Pace Board until consummation of a business combination and hold a substantial interest in Pace. As a result, they will elect all of Pace’s directors and may exert a substantial influence on actions requiring shareholder vote, potentially in a manner that you do not support.

The Pace Initial Shareholders own 20% of the issued and outstanding Pace Ordinary Shares. In addition, the Founder Shares, all of which are held by the Pace Initial Shareholders, entitle the holders thereof to elect all of Pace’s directors prior to the initial business combination. Holders of Public Shares will have no right to vote on the election of directors during such time. These provisions of the Articles may only be amended by a special resolution passed by a majority of at least 90% of the issued and outstanding Pace Ordinary Shares voting in a general meeting. As a result, holders of Public Shares will not have any influence over the election of directors of Pace prior to an initial business combination.

In addition, as a result of their substantial ownership in Pace, the Pace Initial Shareholders may exert a substantial influence on other actions requiring a shareholder vote, potentially in a manner that Pace shareholders do not support, including amendments to the Articles and approval of major corporate transactions, including the Business Combination. If the Pace Initial Shareholders purchase any additional Public Shares in the aftermarket or in privately negotiated transactions, this would increase their influence over these actions. Accordingly, the Pace Initial Shareholders will exert significant influence over actions requiring a shareholder vote at least until the completion of a business combination.

Pace Sponsor and Pace’s other directors, executive officers, advisors and their affiliates may elect to purchase Public Shares from Pace public shareholders, which may influence a vote on the Business Combination.

Pace Sponsor or Pace’s other directors, executive officers, advisors or their affiliates may purchase, in privately negotiated transactions or in the open market, Public Shares prior to the Business Combination, although they are under no obligation to do so. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of such Public Shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that Pace Sponsor or Pace’s other directors, executive officers, advisors or their affiliates purchase Public Shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their Public Shares. The purpose of such purchases would be to vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining shareholder approval of the Business Combination or to satisfy the closing condition in the Transaction requiring that the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem Public Shares, plus (ii) an amount determined by Pace prior to closing which shall not exceed proceeds available under the Credit Agreement and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be $22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) equaling or exceeding the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel, where it appears that such requirement would otherwise not be met. This may result in the completion of the Business Combination that may not otherwise have been possible.

During the pre-closing period, Pace is prohibited from entering and the Sellers have agreed to cause Accel not to enter into certain transactions that might otherwise be beneficial to Pace, Accel or their respective stockholders.

Until the earlier of consummation of the Business Combination or termination of the Transaction Agreement, Pace is subject to certain limitations on the operations of its business and the Sellers have agreed to cause Accel to be subject to certain limitations on the operations of its business, each as summarized under the “The Transaction Agreement and Related Agreements — Covenants of the Parties,” including, subject to specified exceptions, limitations on:

 

   

soliciting, negotiating or entering into transactions alternative to the Business Combination;

 

65


Table of Contents
   

acquiring other entities and assets (whether by merger, asset purchase or other methods) that, in the case of Pace, are not pursuant to the Transaction Agreement, and, in the case of Accel, would result in costs in excess of certain thresholds or that would be outside the ordinary course of business and, in the case of Accel, disposing of any assets by any means (including through licenses) that would be outside the ordinary course of business or not pursuant to certain agreements in existence as of the date of the Transaction Agreement;

 

   

amending governing documents;

 

   

operating outside the ordinary course of business;

 

   

paying dividends;

 

   

reclassifying, repurchasing and, issuing securities; and

 

   

certain other business activities.

The limitations on Pace’s and Accel’s conduct of their businesses during this period could have the effect of delaying or preventing other strategic transactions and may, in some cases, make it impossible to pursue business opportunities that are available only for a limited time.

The need to obtain required regulatory approvals may delay or prevent consummation of the Business Combination or reduce the estimated benefits of the Business Combination.

Consummation of the Business Combination is conditioned upon, among other things, the receipt of any material governmental authorizations, consents, orders and approvals, as further described under “Regulatory Approvals Related to the Business Combination.” These regulatory conditions may not be satisfied for an extended period of time after the Extraordinary General Meeting, which may delay or prevent consummation of the Business Combination. If governmental bodies seek to impose conditions, lengthy negotiations may ensue among such governmental bodies, Pace and Accel. Such negotiations may delay or prevent consummation of the Business Combination and could result in additional costs.

Litigation may delay or prevent the completion of the Business Combination.

Although the Clairvest Litigation, which Pace believes has no merit, has been dismissed, additional litigation challenging the Business Combination could delay consummation of the Business Combination, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin the consummation of the Business Combination. For more information about the Clairvest Litigation, see “Business of Accel and Certain Information About Accel — Legal Proceedings — Clairvest Litigation.” The existence of litigation relating to the Business Combination could also adversely impact the likelihood of obtaining approval for the Business Combination Proposal. Moreover, any future litigation could be time consuming and expensive and could divert Pace and Accel’s respective management’s attention away from their regular business.

Uncertainties about the Business Combination during the pre-closing period may cause a loss of key management personnel and other key employees.

Accel is dependent on the experience and industry knowledge of its key management personnel and other key employees to operate their businesses and execute their business plans. Pace’s success following the Business Combination will depend in part upon its ability to retain Pace’s existing key management personnel and other key employees and attract new management personnel and other key employees. During the pre-closing period, current and prospective employees of Accel may experience uncertainty about their roles with Accel after the Business Combination, which may adversely affect the ability of Accel to retain or attract management personnel and other key employees.

 

66


Table of Contents

Uncertainties about the Business Combination during the pre-closing period may cause suppliers to delay or defer decisions concerning Accel or seek to change existing arrangements.

There may be uncertainty regarding whether the Business Combination will occur. This uncertainty may cause suppliers to delay or defer decisions concerning Accel, which could negatively affect Accel’s business. Suppliers may seek to change existing agreements with Accel as a result of the Business Combination for these or other reasons.

Currently, the rights of Pace shareholders arise under Cayman Islands law as well as Pace’s existing organizational documents. Following the Pace Domestication, the rights of Pace’s shareholders will arise under Delaware law, which has anti-takeover implications or increase the likelihood that Pace is involved in costly litigation, as well as the proposed organizational documents of Pace, which could differ from the rights Pace shareholders currently possess.

In connection with the Pace Domestication, Pace’s organizational documents will change and it and its organizational documents will be governed by Delaware law rather than Cayman Islands law. The application of Delaware law to Pace as a result of the Pace Domestication may have the effect of deterring hostile takeover attempts or a change in control. Section 203 of the DGCL restricts certain “business combinations” with “interested shareholders” for three years following the date that a person becomes an interested shareholder unless: (1) the “business combination” or the transaction which caused the person or entity to become an interested shareholder is approved by the board of directors prior to such business combination or transactions; (2) upon the completion of the transaction in which the person or entity becomes an “interested shareholder,” such interested shareholder holds at least 85% of the voting stock of Pace not including (x) shares held by officers and directors and (y) shares held by employee benefit plans under certain circumstances; or (3) at or after the person or entity becomes an “interested shareholder,” the “business combination” is approved by the board of directors and holders of at least 66 2/3% of the outstanding voting stock, excluding shares held by such interested shareholder. A Delaware corporation may elect not to be governed by Section 203. Pace has not made such an election in its Proposed Charter. Further, while class actions are generally not available to shareholders under Cayman Islands law, such actions are generally available under the DGCL. This change could increase the likelihood that Pace becomes involved in costly litigation, which could have a material adverse effect on Pace.

The Proposed Charter and the DGCL contain provisions that differ in some respects from those in the existing organizational documents and Cayman Islands law and, therefore, some rights of Pace shareholders following the Pace Domestication and the Business Combination could differ from the rights that Pace shareholders currently possess. For a more detailed description of the rights of Pace’s shareholders prior to the Pace Domestication and Business Combination and how they may differ from their rights following the Pace Domestication and Business Combination, please see the section entitled “Comparison of Shareholder Rights.”

Provisions in the Proposed Charter to be adopted in connection with the Business Combination designate the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain times of actions and proceedings that may be initiated by Pace shareholders, which could limit the ability of Pace shareholders to obtain a favorable judicial forum for disputes with Pace or with directors, officers or employees of Pace and may discourage stockholders from bringing such claims.

The Proposed Charter that will be in effect following completion of the Business Combination, provide that, to the fullest extent permitted by law, unless Pace consents to the selection of an alternative forum, and subject to the Court of Chancery of the State of Delaware having personal jurisdiction over the parties named as defendants therein, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for:

 

   

any derivative action or proceeding brought on behalf of Pace;

 

   

any action asserting a claim of breach of a fiduciary duty owed by any of Pace’s directors or officers to Pace or Pace’s stockholders, creditors or other constituents;

 

67


Table of Contents
   

any action asserting a claim against Pace or any of Pace’s directors or officers arising pursuant to any provision of the DGCL or the Proposed Charter or post-Business Combination bylaws (as either may be amended and/or restated from time to time); or

 

   

any action asserting a claim against Pace that is governed by the internal affairs doctrine.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Pace or any of Pace’s directors, officers, or other employees, which may discourage lawsuits with respect to such claims. However, stockholders will not be deemed to have waived Pace’s compliance with the federal securities laws and the rules and regulations thereunder and this provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act, which provides for the exclusive jurisdiction of the federal courts with respect to all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Furthermore, this provision applies to Securities Act claims and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such provision with respect to suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. If a court were to find the choice of forum provision contained in the Proposed Charter to be inapplicable or unenforceable in an action, Pace may incur additional costs associated with resolving such action in other jurisdictions, which could harm Pace’s business, results of operations and financial condition.

The Pace Domestication may result in taxes imposed on shareholders.

In connection with the Pace Domestication, Pace will reincorporate in the State of Delaware. The transaction may require a shareholder to recognize taxable income in the jurisdiction in which the shareholder is a tax resident or in which its members are resident if the shareholder is a tax transparent entity. Pace does not intend to make any cash distributions to shareholders to pay such taxes. Shareholders may be subject to withholding taxes or other taxes with respect to their ownership of Pace after the Pace Domestication.

Pace is likely a passive foreign investment company (“PFIC”), which could result in adverse U.S. federal income tax consequences to U.S. investors.

Because it is likely is a PFIC for the 2017, 2018 and 2019 taxable years, if the 2017, 2018 and 2019 taxable year is included in the holding period of a beneficial owner of the Public Securities who or that is for U.S. federal income tax purposes (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source or (iv) trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons (as defined in the U.S. Tax Code) have authority to control all substantial decisions of the trust or (b) it has a valid election in effect under Treasury Regulations to be treated as a U.S. person (a “U.S. Holder”), such U.S. Holder may be subject to certain adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Moreover, Pace did not provide a PFIC annual information statement for 2017 or 2018 and does not expect to provide such statement for 2019. Please see the section entitled “Material Tax Considerations — Material U.S. Federal Income Tax Considerations — U.S. Holders” for a more detailed discussion with respect to Pace’s PFIC status. U.S. Holders are urged to consult their tax advisors regarding the possible application of the PFIC rules to holders of the Public Securities.

An investor may be subject to adverse U.S. federal income tax consequences in the event the Internal Revenue Service (“IRS”) were to disagree with the U.S. federal income tax consequences described herein.

Pace has not sought a ruling from the IRS as to any U.S. federal income tax consequences described herein. The IRS may disagree with the descriptions of U.S. federal income tax consequences contained herein, and its

 

68


Table of Contents

determination may be upheld by a court. Any such determination could subject an investor or Pace to adverse U.S. federal income tax consequences that would be different than those described herein.

Accordingly, each prospective investor is urged to consult a tax advisor with respect to the specific tax consequences of the acquisition, ownership and disposition of Public Securities, including the applicability and effect of state, local, or non-U.S. tax laws, as well as U.S. federal tax laws.

Pace will incur significant transaction and transition costs in connection with the Business Combination, which raises substantial doubt about Pace’s ability to continue as a going concern.

Pace has incurred and expects to incur significant, non-recurring costs in connection with consummating the Business Combination. All expenses incurred in connection with the Transaction Agreement and the transactions contemplated thereby (including the Business Combination), including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring such fees, expenses and costs. Pace’s transaction expenses as a result of the Business Combination are estimated at approximately $24,635,301 as of August 15, 2019, including $15,750,000 in deferred underwriting compensation to the underwriters of the Pace IPO.

As of June 30, 2019, Pace had current liabilities of $4,283,400 and negative working capital of $3,591,303 largely due to amounts owed for professional fees associated with the Business Combination. Pace has the ability to use annually up to $750,000 of interest earned from the Trust Account to fund working capital. Pace’s ability to continue as a going concern is dependent upon its ability to consummate an initial business combination or have access to sufficient interest income from the Trust Account to fund expenses and negative working capital balances. If there is insufficient interest income available to pay such amounts in full or if an initial business combination does not occur, Pace will need to obtain additional funds to meet its liabilities. Management’s options for obtaining additional working capital, to the extended needed, include potentially requesting loans from Pace Sponsor, affiliates of Pace Sponsor or certain of Pace’s executive officers or directors. Additional funds could also be raised through a private offering of debt or equity. There can be no assurance that Pace will be able to raise such funds if they are needed. In addition, the successful completion of the Business Combination is contingent on customary closing conditions, including, but not limited to, approval by Pace’s public shareholders.

Pace will issue additional Pace Shares to complete the Business Combination. Such issuance will dilute the interest of Pace’s public shareholders and likely present other risks.

The issuance of the Pace Shares in connection with the Business Combination will dilute the equity interest of existing Pace shareholders and may adversely affect prevailing market prices for the Class A-1 Shares and/or Public Warrants.

Pace is not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance from an independent source that the price Pace is paying for Accel is fair to Pace from a financial point of view.

Pace is not required to, and did not, obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority (“FINRA”), or from an independent accounting firm, that the price Pace is paying under the Transaction Agreement is fair to Pace from a financial point of view. Pace’s public shareholders are therefore relying on the judgment of the Pace Board, who determined fair market value based generally accepted by the financial community.

Pace may waive one or more of the conditions to the Business Combination.

Pace may agree to waive, in whole or in part, one or more of the conditions to Pace’s obligations to complete the Business Combination, to the extent permitted by the Articles and applicable laws. For example,

 

69


Table of Contents

each party’s obligations to close the Business Combination is conditioned on the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem Public Shares, plus (ii) an amount determined by Pace prior to closing which shall not exceed proceeds available under the Credit Agreement and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be $22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) equaling or exceeding the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel. However, if Pace determines that a breach of this obligation is not material, then Pace may elect to waive that condition and close the Business Combination. Pace may not waive the condition that Pace public shareholders approve the Business Combination. Please see the section entitled “The Transaction Agreement and Related Agreements — Conditions to Closing of the Stock Purchase” for additional information.

Pace shareholders may have limited remedies if their shares suffer a reduction in value following the Business Combination.

Any shareholders who choose to remain shareholders following the Business Combination could suffer a reduction in the value of their shares. 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 Pace’s 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 proxy statement relating to a business combination contained an actionable material misstatement or material omission.

You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your Public Shares or Public Warrants, potentially at a loss.

Pace’s public shareholders will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) the completion of an initial business combination; (ii) the redemption of any Public Shares properly submitted in connection with a shareholder vote to amend the Articles to modify the substance or timing of Pace’s obligation to redeem 100% of the Public Shares if Pace does not complete a business combination by [●], 2019; and (iii) the redemption of all of the Public Shares if Pace is unable to complete a business combination by [●], 2019, subject to applicable law and as further described herein. In no other circumstances will a public shareholder have any right or interest of any kind in the Trust Account. Accordingly, to liquidate your investment, you may be forced to sell your Public Shares or Public Warrants, potentially at a loss.

The exercise of discretion by Pace’s directors and officers in agreeing to changes to the terms of or waivers of closing conditions in the Transaction Agreement may result in a conflict of interest when determining whether such changes to the terms of the Transaction Agreement or waivers of conditions are appropriate and in the best interests of the public shareholders of Pace.

In the period leading up to the consummation of the Business Combination, other events may occur that, pursuant to the Transaction Agreement, would require Pace to agree to amend the Transaction Agreement, to consent to certain actions or to waive rights that Pace is entitled to under those agreements. Such events could arise because of changes in the course of Accel’s business, a request by the Accel shareholders or Accel to undertake actions that would otherwise be prohibited by the terms of the Transaction Agreement or the occurrence of other events that would have a material adverse effect on Accel’s business and would entitle Pace to terminate the Transaction Agreement. In any of such circumstances, it would be in the discretion of Pace, acting through the Pace Board, to grant its consent or waive its rights. The existence of the financial and personal interests of Pace’s directors described elsewhere in this proxy statement/prospectus may result in a conflict of interest on the part of one or more of the directors between what he or she may believe is best for Pace and the public shareholders of Pace and what he or she may believe is best for himself or herself or his or her affiliates in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, Pace

 

70


Table of Contents

does not believe there will be any changes or waivers that Pace’s directors and officers would be likely to make after shareholder approval of the Business Combination has been obtained. While certain changes could be made without further shareholder approval, if there is a change to the terms of the Business Combination that would have a material impact on the shareholders, Pace will be required to circulate a new or amended proxy statement/prospectus or supplement thereto and resolicit the vote of the Pace public shareholders with respect to the Business Combination Proposal.

If Pace fails to maintain an effective system of internal control over financial reporting, Pace may not be able to accurately report its financial results or prevent fraud. As a result, shareholders could lose confidence in Pace’s financial and other public reporting, which is likely to negatively affect Pace’s business and the market price of the Class A-1 Shares.

Effective internal control over financial reporting is necessary for Pace to provide reliable financial reports and prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in Pace’s implementation could cause Pace to fail to meet its reporting obligations. In addition, any testing conducted by Pace, or any testing conducted by Pace’s independent registered public accounting firm, may reveal deficiencies in Pace’s internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to Pace’s financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in Pace’s reported financial information, which is likely to negatively affect Pace’s business and the market price of Class A-1 Shares.

Pace will be required to disclose changes made in its internal controls and procedures on a quarterly basis and its management will be required to assess the effectiveness of these controls annually. However, for as long as Pace is an “emerging growth company” under the JOBS Act, its independent registered public accounting firm will not be required to attest to the effectiveness of Pace’s internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. Pace could be an “emerging growth company” for up to five years. An independent assessment of the effectiveness of Pace’s internal controls could detect problems that Pace’s management’s assessment might not. Undetected material weaknesses in Pace’s internal controls could lead to financial statement restatements and require Pace to incur the expense of remediation.

If third parties bring claims against Pace, 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 Public Share.

Pace’s placing of funds in the Trust Account may not protect those funds from third-party claims against Pace. Although Pace will seek to have all third parties, service providers (other than Pace’s independent auditors), prospective target businesses or other entities with which Pace does business execute agreements with Pace waiving any right, title, interest or claim of any kind in or to any funds held in the Trust Account for the benefit of Pace’s public shareholders, such parties may not execute such agreements, or even if they execute such agreements they may not 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 Pace’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the funds held in the Trust Account, Pace’s 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 Pace than any alternative.

Examples of possible instances where Pace 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

 

71


Table of Contents

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 Pace and will not seek recourse against the Trust Account for any reason. Upon redemption of the Public Shares, if Pace is unable to complete an initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with the Business Combination, Pace will be required to provide for payment of claims of creditors that were not waived that may be brought against Pace within the ten years following redemption. Accordingly, the per-share redemption amount received by Pace’s public shareholders could be less than the $10.00 per Public Share initially held in the Trust Account, due to claims of such creditors.

Pace Sponsor has agreed that it will be liable to Pace if and to the extent any claims by a third party (other than Pace’s independent auditors) for services rendered or products sold to Pace, or a prospective target business with which Pace has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to fund Pace’s working capital requirements, subject to an annual limit of $750,000, and/or pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under Pace’s indemnity of the underwriters of the Pace IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, Pace Sponsor will not be responsible to the extent of any liability for such third-party claims. Pace has not independently verified whether Pace Sponsor has sufficient funds to satisfy its indemnity obligations and believes that Pace Sponsor’s only assets are securities of Pace. Pace Sponsor may not have sufficient funds available to satisfy those obligations. Pace has not asked Pace Sponsor to reserve for such eventuality, and therefore, no funds are currently set aside to cover any such obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for a business combination and redemptions could be reduced to less than $10.00 per Public Share. In such event, Pace may not be able to complete a business combination, and Pace shareholders would receive such lesser amount per share in connection with any redemption of Public Shares.

Pace’s directors may decide not to enforce the indemnification obligations of Pace Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to Pace’s public shareholders.

In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per Public Share or (ii) other than due to the failure to obtain such waiver, such lesser amount per share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and Pace Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, Pace’s independent directors would determine whether to take legal action against Pace Sponsor to enforce its indemnification obligations. While Pace currently expects that its independent directors would take legal action on its behalf against Pace Sponsor to enforce its indemnification obligations to Pace, it is possible that Pace’s independent directors in exercising their business judgment may choose not to do so in any particular instance. If Pace’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to Pace’s public shareholders may be reduced below $10.00 per Public Share.

If, before distributing the proceeds in the Trust Account to Pace public shareholders, Pace files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pace that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of Pace’s shareholders and the per-share amount that would otherwise be received by Pace’s shareholders in connection with Pace’s liquidation may be reduced.

If, before distributing the proceeds in the Trust Account to Pace public shareholders, Pace files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pace that is not dismissed, the proceeds held in the

 

72


Table of Contents

Trust Account could be subject to applicable bankruptcy law, and may be included in Pace’s bankruptcy estate and subject to the claims of third parties with priority over the claims of Pace’s shareholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by Pace’s shareholders in connection with its liquidation may be reduced.

Pace has no operating or financial history and its results of operations may differ significantly from the unaudited pro forma financial data included in this proxy statement/prospectus.

Pace is a blank check company and has no operating history and no revenues. This proxy statement/prospectus includes unaudited pro forma condensed combined financial statements for Pace. The unaudited pro forma condensed combined statement of operations of Pace combines the historical audited results of operations of Pace for the year ended December 31, 2018 and unaudited results of Pace for the six months ended June 30, 2019 with the historical audited results of operations of Accel for the year ended December 31, 2018 and the unaudited results of Accel for the six months ended June 30, 2019, respectively, and gives pro forma effect to the Business Combination as if it had been consummated as of January 1, 2019. The unaudited pro forma condensed combined balance sheet of Pace combines the historical balance sheets of Pace and Accel as of June 30, 2019 and gives pro forma effect to the Business Combination as if it had been consummated on such date.

The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only, are based on certain assumptions, address a hypothetical situation and reflect limited historical financial data. Therefore, the unaudited pro forma condensed combined financial statements are not necessarily indicative of the results of operations and financial position that would have been achieved had the Business Combination been consummated on the dates indicated above, or the future consolidated results of operations or financial position of Pace. Accordingly, Pace’s business, assets, cash flows, results of operations and financial condition may differ significantly from those indicated by the unaudited pro forma condensed combined financial statements included in this proxy statement/prospectus. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

Pace’s public shareholders may be held liable for claims by third parties against Pace to the extent of distributions received by them upon redemption of their Public Shares.

If Pace is forced to enter into an insolvent liquidation, any distributions received by public shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, Pace was unable to pay its debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by Pace’s shareholders. Furthermore, Pace’s directors may be viewed as having breached their fiduciary duties to Pace or its creditors and/or may have acted in bad faith, and thereby exposing themselves and Pace to claims, by paying public shareholders from the Trust Account prior to addressing the claims of creditors. Pace cannot assure you that claims will not be brought against it for these reasons. Pace and its directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of Pace’s share premium account while it was unable to pay its debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of $15,000 and to imprisonment for five years in the Cayman Islands.

If, after Pace distributes the proceeds in the Trust Account to its public shareholders, Pace files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pace that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of the Pace Board may be viewed as having breached their fiduciary duties to Pace’s creditors, thereby exposing the members of the Pace Board and Pace to claims of punitive damages.

If, after Pace distributes the proceeds in the Trust Account to its public shareholders, Pace files a bankruptcy petition or an involuntary bankruptcy petition is filed against Pace that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a

 

73


Table of Contents

“preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Pace’s shareholders. In addition, the Pace Board may be viewed as having breached its fiduciary duty to Pace’s creditors and/or having acted in bad faith, thereby exposing itself and Pace to claims of punitive damages, by paying public shareholders from the Trust Account prior to addressing the claims of creditors.

Prior to the Pace Domestication, because Pace is incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.

Prior to the Pace Domestication, Pace is an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for Pace public shareholders to effect service of process within the United States upon Pace’s directors or executive officers, or enforce judgments obtained in the United States courts against Pace’s directors or officers. If the Domestication Proposal is approved pursuant to this proxy statement/prospectus, Pace will be a Delaware corporation following the closing.

Prior to the Pace Domestication, Pace’s corporate affairs will be governed by the Articles, the Companies Law of the Cayman Islands (as may be supplemented or amended from time to time) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of Pace’s directors to Pace under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of Pace’s shareholders and the fiduciary responsibilities of Pace’s directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, shareholders of Cayman Islands companies may not have standing to initiate a shareholders derivative action in a federal court of the United States.

The courts of the Cayman Islands are unlikely (i) to recognize or enforce against Pace judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state, and (ii) in original actions brought in the Cayman Islands, to impose liabilities against Pace predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

As a result of all of the above, prior to the Pace Domestication, Pace public shareholders may have more difficulty in protecting their interests in the face of actions taken by Pace management, members of the Pace Board or controlling shareholders of Pace than they would as public shareholders of a United States company.

 

74


Table of Contents

Risks Related to Ownership of Pace Shares

Following the Business Combination, Pace will be a holding company and will depend on the ability of its subsidiaries to pay dividends.

Pace has never declared or paid any cash dividends, nor does it intend to pay cash dividends prior to the completion of the Business Combination. Following the Business Combination, Pace will be a holding company without any direct operations and will have no significant assets other than its ownership interest in Surviving NewCo. Accordingly, its ability to pay dividends will depend upon the financial condition, liquidity and results of operations of, and Pace’s receipt of dividends, loans or other funds from, Surviving NewCo and its subsidiaries. Pace’s subsidiaries are separate and distinct legal entities and have no obligation to make funds available to Pace. In addition, there are various statutory, regulatory and contractual limitations and business considerations on the extent, if any, to which Pace’s subsidiaries may pay dividends, make loans or otherwise provide funds to Pace. For example, the ability of Surviving NewCo and its subsidiaries to make distributions, loans and other payments to Pace for the purposes described above and for any other purpose will be limited by the terms of the Credit Agreement.

The market price and trading volume of Class A-1 Shares may be volatile and could decline significantly following the Business Combination.

The stock markets, including the NYSE on which Pace intends to list the Class A-1 Shares to be issued in the Business Combination under the symbol “ACEL” have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for the Class A-1 Shares following the Business Combination, the market price of Class A-1 Shares may be volatile and could decline significantly. In addition, the trading volume in Class A-1 Shares may fluctuate and cause significant price variations to occur. If the market price of Class A-1 Shares declines significantly, you may be unable to resell your shares at or above the market price of Class A-1 Shares as of the date of the consummation of the Business Combination. Pace cannot assure you that the market price of Class A-1 Shares will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:

 

   

the realization of any of the risk factors presented in this proxy statement/prospectus;

 

   

actual or anticipated differences in Pace’s estimates, or in the estimates of analysts, for Pace’s revenues, Adjusted EBITDA, results of operations, level of indebtedness, liquidity or financial condition;

 

   

additions and departures of key personnel;

 

   

failure to comply with the requirements of the NYSE;

 

   

failure to comply with the Sarbanes-Oxley Act or other laws or regulations;

 

   

changes to gaming laws, regulations or enforcement policies of applicable gaming authorities;

 

   

future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of Pace Shares;

 

   

publication of research reports about Pace or Surviving NewCo, its licensed establishments, the video gaming terminal industry generally;

 

   

the performance and market valuations of other similar companies;

 

   

commencement of, or involvement in, litigation involving Pace, Accel or Surviving NewCo;

 

   

broad disruptions in the financial markets, including sudden disruptions in the credit markets;

 

   

speculation in the press or investment community;

 

   

actual, potential or perceived control, accounting or reporting problems; and

 

   

changes in accounting principles, policies and guidelines.

 

75


Table of Contents

In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert Pace’s management’s attention and resources, which could have a material adverse effect on Pace.

If securities or industry analysts do not publish research, publish inaccurate or unfavorable research or cease publishing research about Pace, its share price and trading volume could decline significantly.

The market for Class A-1 Shares will depend in part on the research and reports that securities or industry analysts publish about Pace or its business, including Surviving NewCo. Securities and industry analysts do not currently, and may never, publish research on Pace, Accel or Surviving NewCo. If no securities or industry analysts commence coverage of Pace, the market price and liquidity for Class A-1 Shares could be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover Pace downgrade their opinions about Class A-1 Shares, publish inaccurate or unfavorable research about Pace, or cease publishing about Pace regularly, demand for Class A-1 Shares could decrease, which might cause its share price and trading volume to decline significantly.

Future issuances of debt securities and equity securities may adversely affect Pace, including the market price of Pace Shares and may be dilutive to existing shareholders.

In the future, Pace may incur debt or issue equity ranking senior to Pace Shares. Those securities will generally have priority upon liquidation. Such securities also may be governed by an indenture or other instrument containing covenants restricting its operating flexibility. Additionally, any convertible or exchangeable securities that Pace issues in the future may have rights, preferences and privileges more favorable than those of Pace Shares. Because Pace’s decision to issue debt or equity in the future will depend on market conditions and other factors beyond Pace’s control, it cannot predict or estimate the amount, timing, nature or success of Pace’s future capital raising efforts. As a result, future capital raising efforts may reduce the market price of Pace Shares and be dilutive to existing shareholders.

The NYSE may delist Pace’s securities from trading on its exchange, which could limit investors’ ability to make transactions in Pace’s securities and subject Pace to additional trading restrictions.

The Public Shares, Public Warrants and Public Units are listed on the NYSE and Pace intends to list the Class A-1 Shares to be issued in connection with the Business Combination on the NYSE. There is no guarantee that Pace’s existing securities will remain listed on the NYSE or that the Class A-1 Shares to be issued in connection with the Business Combination will be listed or subsequently remain listed on the NYSE. Although Pace currently meet the minimum initial listing standards set forth in the NYSE listing standards, there can be no assurance that Pace’s securities will continue to be listed on the NYSE in the future or following the Business Combination. In order to continue listing Pace’s securities on the NYSE, Pace must maintain certain financial, distribution and share price levels. For instance, Pace must maintain a minimum number of holders of the Public Shares (300 round lot holders). On October 3, 2018, Pace received written notice from the NYSE that a NYSE Regulation review of the then-current distribution of Public Shares showed that Pace had fewer than 300 public shareholders and were therefore non-compliant with the relevant section of the NYSE Listed Company Manual. In accordance with the procedures set forth in the NYSE Listed Company Manual, Pace submitted a business plan demonstrating how Pace expected to return to compliance with the minimum public stockholders’ requirement within 18 months. In July 2019, Pace received a letter from the NYSE certifying its compliance as Pace now has more than 300 public shareholders. Additionally, in connection with an initial business combination, Pace will be required to demonstrate round lot compliance with the NYSE’s initial listing requirements, which are more rigorous than the NYSE’s continued listing requirements, in order to continue to maintain the listing of Pace’s securities on the NYSE. For instance, the Public Shares (or Class A-1 Shares, as applicable) would generally be required to be at least $4.00 per share. There is no guarantee that Pace will be able to meet these initial listing requirements.

 

76


Table of Contents

If the NYSE delists Pace’s securities from trading on its exchange and Pace is not able to list its securities on another national securities exchange, Pace expects its securities could be quoted on an over-the-counter market. If this were to occur, Pace could face significant material adverse consequences, including:

 

   

a limited availability of market quotations for the Class A-1 Shares;

 

   

reduced liquidity for Class A-1 Shares;

 

   

a determination that Class A-1 Shares are a “penny stock” which will require brokers trading in Class A-1 Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for Pace’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.” The Public Shares, Public Warrants and Public Units are listed on the NYSE, and, as a result, are covered securities and as Pace intends to list the Class A-1 Shares to be issued in connection with the Business Combination on the NYSE, and when so listed on the NYSE, they will, as a result, be covered securities. Although the states are preempted from regulating the sale of Pace’s securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While Pace is not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if Pace were no longer listed on the NYSE, Pace’s securities would not be covered securities and Pace would be subject to regulation in each state in which it offers its securities.

Pace is an “emerging growth company,” and it cannot be certain if the reduced SEC reporting requirements applicable to emerging growth companies will make the Pace Shares less attractive to investors, which could have a material and adverse effect on Pace, including its growth prospects.

Pace is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Pace will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following June 30, 2022, the fifth anniversary of the Pace IPO, (b) in which Pace has total annual gross revenue of at least $1.0 billion or (c) in which Pace is deemed to be a large accelerated filer, which means the market value of Pace Shares that is held by non-affiliates exceeds $700 million as of the last business day of the prior second fiscal quarter, and (ii) the date on which Pace has issued more than $1.0 billion in non-convertible debt during the prior three-year period. Pace intends to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as “emerging growth companies,” including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requiring that Pace’s independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting and reduced disclosure obligations regarding executive compensation in its 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. The JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in the Securities Act for complying with new or revised accounting standards. Pace has not chosen to “opt out” of this extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, Pace, 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 Pace’s financial statements with another public company which is neither an emerging growth

 

77


Table of Contents

company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used. Pace cannot predict if investors will find Pace Shares less attractive because Pace intends to rely on certain of these exemptions and benefits under the JOBS Act. If some investors find Pace Shares less attractive as a result, there may be a less active, liquid and/or orderly trading market for Pace Shares and the market price and trading volume of Pace Shares may be more volatile and decline significantly.

Risks Related to Pace’s Business Following the Business Combination

Unless the context requires otherwise, references to “Accel” in this section are to the business and operations of Accel prior to the Business Combination and the business and operations of Pace as directly or indirectly affected by Accel and its subsidiaries by virtue of Pace’s ownership of the business of Accel and its subsidiaries through its ownership of Surviving NewCo and its subsidiaries following the Business Combination.

If Accel fails to manage its growth effectively, Accel may be unable to execute its business plan or maintain high levels of service and customer satisfaction.

Accel has experienced, and expects to continue to experience, rapid growth, which has placed, and may continue to place, significant demands on its management and its operational and financial resources. Since its inception, Accel has acquired 8 distributed gaming operators adding more than 480 licensed establishments to its portfolio of 1,762 total licensed establishments as of June 30, 2019. In addition, on August 26, 2019, Accel entered into an agreement to acquire 100% of the outstanding membership interests of Grand River Jackpot, LLC (“Grand River”) for approximately $100 million in cash. Grand River is a terminal operator in Illinois that operates over 1,800 video gaming terminals (“VGTs”) in over 450 licensed establishments. Accel has also experienced significant growth in the number of licensed establishment partners and players, and in the amount of data that it supports. Additionally, Accel’s organizational structure will become more complex as it scales its operational, financial and management controls to support additional jurisdictions as well as its reporting systems and procedures.

To manage growth in operations and personnel, Accel will need to continue to grow and improve its operational, financial, and management controls and reporting systems and procedures. Accel may require significant capital expenditures and the allocation of valuable management resources to grow and change in these areas without undermining its culture, which has been central to growth so far. Accel’s expansion has placed, and expected future growth will continue to place, a significant strain on management, customer experience, data analytics, sales and marketing, administrative, financial, and other resources. If Accel fails to manage its anticipated growth and change in a manner consistent with its reputation, the quality of its services may suffer, which could negatively affect its brand and reputation and harm its ability to attract licensed establishment partners and players.

Accel’s success depends on its ability to offer new and innovative products and services that respond to the demand of licensed establishment partners and create strong and sustained player appeal.

Accel’s success depends upon its ability to respond to the demands of licensed establishment partners and players by offering new and innovative products and services on a timely basis. Consumer preferences for games are usually cyclical and difficult to predict, and even the most successful content remains popular for only limited periods of time, unless refreshed with new content or otherwise enhanced. If Accel fails to accurately anticipate the needs of licensed establishments and player preferences, it could lose business to competitors, which would adversely affect Accel’s results of operations, cash flows and financial condition following the Business Combination. Accel may not have the financial resources needed to introduce new products or services on a timely basis or at all.

Accel’s business depends on content for VGTs, stand-alone ATMs, redemption devices, amusement devices that is developed by third-party suppliers. Accel believes that creative and appealing game content results in

 

78


Table of Contents

more players visiting its licensed establishment partners, which offers more revenue for licensed establishment partners and provides them with a competitive advantage, which in turn enhances Accel’s revenue and ability to attract new business and to retain existing business. The success of such content is dependent on these suppliers’ ability to anticipate changes in consumer tastes, preferences and requirements and deliver to Accel in sufficient quantities and on a timely basis a desirable, high-quality and price-competitive mix of products. Accel’s suppliers’ products may fail to meet the expectations of licensed establishment partners due to changes in consumer preference or Accel’s suppliers may be unable to maintain a sufficient inventory to satisfy the demands of licensed establishment partners. In addition, suppliers must obtain regulatory approvals for new products, and such approvals may be delayed or denied. Accordingly, Accel may not be able to sustain the success of its existing game content or effectively obtain from third parties products and services that will be widely accepted both by licensed establishment partners and players.

Accel’s suppliers may also increase their prices due to increasing demand for their products from Accel’s competitors. Further, because there exists a limited number of suppliers in the distributed gaming business, an increase in supplier pricing may limit Accel’s ability to seek alternate sources of gaming content, and may result in increased operating expenses. See “— Accel is dependent on relationships with key manufacturers, developers and third parties to obtain VGTs, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms” for more information.

Accel is dependent on relationships with key manufacturers, developers and third parties to obtain VGTs, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms.

The supply of Accel’s VGTs, stand-alone ATMs, redemption devices and amusement devices depends upon the manufacture, development, assembly, design, maintenance and repair of such products by certain key providers, as well as regulatory approval for these products. Accel’s operating results could be adversely affected by an interruption or cessation in the supply of these items, a serious quality assurance lapse, including as a result of the insolvency of any key provider, or regulatory issues related to key providers’ products or required licenses. Accel has achieved significant cost savings through centralized purchasing of equipment and non-equipment. However, as a result, Accel is exposed to the credit and other risks of having a small number of key suppliers. While Accel makes every effort to evaluate counterparties prior to entering into long-term and other significant procurement contracts, it cannot predict the impact on suppliers of the current economic environment and other developments in their respective businesses. Insolvency, financial difficulties, supply chain delays, regulatory issues or other factors may result in Accel’s suppliers not being able to fulfill the terms of their agreements. Further, such factors may render suppliers unwilling to extend contracts that provide favorable terms to Accel, or may force them to seek to renegotiate existing contracts.

Failure of key suppliers to meet their delivery commitments could result in Accel being in breach of and subsequently losing contracts with key licensed establishment partners. Although Accel believes it has alternative sources of supply for the equipment and other supplies used in its business, the limited number of suppliers in the distributed gaming business could lead to delays in the delivery of products or components, and possible resultant breaches of contracts that it is party to with licensed establishment partners, increases in the prices it must pay for products or components, problems with product quality or components coming to the end of their life and other concerns. Accel may be unable to find adequate replacements for suppliers within a reasonable time frame, on favorable commercial terms or at all.

Certain of Accel’s products and services, including a Player Rewards Program that Accel intends to implement, include know-your-customer programs or technologies supplied by third parties. These programs and technologies could be an important aspect of products and services because they can confirm certain information with respect to players and prospective players, such as age, identity and location. Payment processing programs and technologies, typically provided by third parties, are also a necessary feature of Accel’s products and services. In the event that these products and technologies are not made available to Accel on acceptable terms, or in the event that they are defective, Accel’s results of operations, cash flows and financial condition may be materially adversely affected.

 

79


Table of Contents

Accel’s future results of operations may be negatively impacted by slow growth in demand for VGTs and by the slow growth of new gaming jurisdictions.

Slow growth or declines in the demand for VGTs could reduce the demand for Accel’s services and negatively impact results of operations, cash flows and financial condition. Moreover, even with the expansion of gaming into new jurisdictions, the opening of new licensed establishments and the addition of new VGTs and amusement machines in existing licensed establishments, demand for Accel’s services could decline due to the desires of licensed establishment partners, unfavorable economic conditions, failure to obtain regulatory approvals and the availability of financing. Accordingly, Accel may not be successful in placing additional VGTs or amusement machines with additional licensed establishments.

Accel depends heavily on its ability to win, maintain and renew contracts with licensed establishment partners, and it could lose substantial revenue if it is unable to renew certain of its contracts on substantially similar terms or at all.

Accel’s contracts with its licensed establishment partners generally contain initial multi-year terms. Contracts entered into prior to February 2018 typically contain automatic renewal provisions that provide the individual partner with an option to terminate within a specified time frame. As a result of the Illinois Gaming Board (the “IGB”) rule changes, contracts entered into after February 2018 do not contain renewal provisions, automatic or otherwise. At the end of a contract term, licensed establishment partners may choose to extend their engagement by signing a new contract or may sign with a competitor terminal operator, in their sole discretion.

While Accel has historically experienced high rates of contract extension or renewal, these rule changes may lead to declines in contract extension or renewal. The termination, expiration or failure to renew one or more of its contracts with its licensed establishment partners could cause it to lose substantial revenue, which could have an adverse effect on its ability to win or renew other contracts or pursue growth initiatives.

In addition, Accel may not be able to obtain new or renewed contracts with licensed establishment partners that contain terms that are as favorable as Accel’s current terms in its current contracts, and any less favorable contract terms or diminution in scope could negatively impact Accel’s business.

Additionally, Accel’s revenue, business, result of operations, cash flows and financial condition could be negatively affected if its licensed establishment partners sell or merge themselves or their licensed establishments with other entities. Upon the sale or merger of such licensed establishments, Accel’s licensed establishment partners could choose to no longer partner with Accel and decide to contract with its competitors.

Unfavorable economic conditions, or decreased discretionary spending or travel due to other factors such as terrorist activity or threat thereof, civil unrest or other economic or political uncertainties, may adversely affect Accel’s business, results of operations, cash flows and financial condition.

Unfavorable economic conditions, including recession, economic slowdown, decreased liquidity in the financial markets, decreased availability of credit and relatively high rates of unemployment, could have a negative effect on Accel’s business. Unfavorable economic conditions could cause licensed establishment partners to shut down or ultimately declare bankruptcy, which could adversely affect Accel’s business. Unfavorable economic conditions may also result in volatility in the credit and equity markets. The difficulty or inability of licensed establishment partners to generate or obtain adequate levels of capital to finance their ongoing operations may cause some to close or ultimately declare bankruptcy. Accel cannot fully predict the effects that unfavorable social, political and economic conditions and economic uncertainties and decreased discretionary spending or travel could have on its business.

Accel’s revenue is largely driven by players’ disposable incomes and level of gaming activity. Unfavorable economic conditions may reduce the disposable incomes of players at licensed establishment partners and may

 

80


Table of Contents

result in fewer players visiting licensed establishment partners, reduced play levels, and lower amounts spent per visit, adversely affecting Accel’s results of operations and cash flows. Adverse changes in discretionary consumer spending or consumer preferences, which may result in fewer players visiting licensed establishment partners and reduced frequency of visits and play levels, could also be driven by an unstable job market, outbreaks of contagious diseases or other factors. Socio-political factors such as terrorist activity or threat thereof, civil unrest or other economic or political uncertainties that contribute to consumer unease may also result in decreased discretionary spending or travel by players and have a negative effect on Accel.

Accel’s revenue growth and future success depends on its ability to expand into new markets, including Pennsylvania, which may not occur as anticipated or at all.

Accel’s future success and growth depend in large part on the successful addition of new licensed establishments as partners (whether through organic growth, conversion from competitors or partner relationships) and on the entry into new markets, including other licensed jurisdictions such as Pennsylvania, where Accel was recently granted a conditional license as a VGT terminal operator. These markets are new to Accel and its success depends in part on displacing entrenched competitors who are familiar with these markets and are known to players. In many cases, Accel is attempting to enter into or expand its presence in these new markets and where the appeal and success of VGTs and other forms of entertainment has not yet been proven. In some cases, Accel may need to develop or expand its sales channels and leverage the relationships with its licensed establishment partners in order to execute this strategy. There can be no assurance that video gaming will have success with new licensed establishment partners or in new markets, or that it will succeed in capturing a significant or even acceptable market share in any new markets, including Pennsylvania. In addition, it is possible that Accel will not be able to enter the Pennsylvania market at all, due to regulatory or other concerns. See “— Accel is subject to strict government regulations that are constantly evolving and may be amended, repealed, or subject to new interpretations, which may limit existing operations, have an adverse impact on the ability to grow or may expose Accel to fines or other penalties.” If Accel fails to successfully expand into these markets, it may have difficulty growing its business and may lose business to its competitors.

Accel’s business is geographically concentrated, which subjects it to greater risks from changes in local or regional conditions.

Accel currently supplies VGTs and amusement devices to licensed establishments solely in Illinois. Due to this geographic concentration, Accel’s results of operations, cash flows and financial condition are subject to greater risks from changes in local and regional conditions, such as:

 

   

changes in local or regional economic conditions and unemployment rates;

 

   

changes in local and state laws and regulations, including gaming laws and regulations;

 

   

a decline in the number of residents in or near, or visitors to, licensed establishment partners;

 

   

changes in the local or regional competitive environment; and

 

   

adverse weather conditions and natural disasters (including weather or road conditions that limit access to licensed establishments).

Licensed establishment partners largely depend on local markets for players. Local competitive risks and the failure of licensed establishment partners to attract a sufficient number of guests, players and other visitors in these locations could adversely affect Accel’s business. As a result of the geographic concentration of Accel’s businesses, it faces a greater risk of a negative impact on its results of operations, cash flows and financial condition in the event that Illinois is more severely impacted by any such adverse condition, as compared to other areas in the United States. If Accel is successful in expanding its operations into Pennsylvania or other gaming jurisdictions, it may face similar concentration risk there.

 

81


Table of Contents

If Accel fails to offer a high-quality customer experience, its business and reputation may suffer.

Once Accel places VGTs and amusement machines with licensed establishment partners, those licensed establishment partners rely on support services to resolve any related issues. High-quality user and partner education and customer experience have been key to Accel’s brand and is important for the successful marketing and sale of its products and services and to increase the number of VGTs and amusement machines at licensed establishments. The importance of high-quality customer experience will increase as Accel expands its business and pursues new licensed establishment partners and potentially expands into new jurisdictions. For instance, if Accel does not help its licensed establishment partners quickly resolve issues, whether those issues are regulatory, technical, or data related, and provide an effective ongoing customer experience, its ability to retain or renew contracts with its licensed establishment partners could suffer and its reputation with existing or potential licensed establishment partners may be harmed. In some cases, Accel depends on third-parties to resolve such issues, the performance of which is out of Accel’s control. Further, Accel’s success is highly dependent on business reputation and positive recommendations from existing licensed establishment partners. Any failure to maintain high-quality customer experience, or a market perception that Accel does not maintain a high-quality customer experience, could harm its reputation, its ability to market or sell its services to existing and prospective licensed establishment partners, and Accel’s results of operations, cash flows and financial condition.

In addition, as Accel continues to grow its operations and expand into additional jurisdictions, Accel needs to be able to provide efficient customer support that meets the needs of its licensed establishment partners. The number of licensed establishments with Accel’s products has grown significantly and that may place additional pressure on its support organization. As Accel’s base of licensed establishment partners continues to grow, it may need to increase the number of relationship managers, customer service and other personnel it employs to provide personalized account management, assistance to its licensed establishment partners in navigating regulatory applications and ongoing compliance concerns, and customer service, training, and revenue optimization. If Accel is not able to continue to provide high levels of customer service, its reputation, as well as Accel’s results of operations, cash flows and financial condition, could be harmed.

Accel’s revenue growth and ability to achieve and sustain profitability will depend, in part on being able to expand its sales force and increase the productivity of its sales force.

As of June 30, 2019, most of Accel’s revenue has been attributable to the efforts of its sales force, which consists of both in-house personnel and independent agents. In order to increase Accel’s revenue and achieve and sustain profitability, Accel intends to increase the size of its sales force to generate additional revenue from new and existing licensed establishment partners.

Accel’s ability to achieve significant revenue growth will depend, in large part, on its success in recruiting, training, and retaining sufficient numbers of in-house and independent sales personnel to support growth. New sales personnel require significant training and can take a number of months to achieve full productivity. Accel’s recent hires and planned hires may not become productive as quickly as expected and if new sales employees and agents do not become fully productive on the timelines that have been projected or at all, Accel’s revenue may not increase at anticipated levels and its ability to achieve long-term projections may be negatively impacted. In addition, as Accel continues to grow, a larger percentage of its sales force will be new to Accel and its business, which may adversely affect Accel’s sales if it cannot train its sales force quickly or effectively. Attrition rates may increase, and Accel may face integration challenges as it continues to seek to expand its sales force. Accel also believes that there is significant competition for sales personnel with the skills that it requires in the industries in which it operates, and may be unable to hire or retain sufficient numbers of qualified individuals in the markets where it operates or plans to operate. If Accel is unable to hire and train sufficient numbers of effective sales personnel or agents, or if the sales personnel or agents are not successful in obtaining new licensed establishment partners or increasing sales to Accel’s existing licensed establishment partners, Accel’s business may be adversely affected.

 

82


Table of Contents

Accel periodically changes and adjusts its sales organization in response to market opportunities, competitive threats, management changes, product and service introductions or enhancements, acquisitions, sales performance, increases in sales headcount, cost levels, and other internal and external considerations. Any future sales organization changes may result in a temporary reduction of productivity, which could negatively affect Accel’s rate of growth. In addition, any significant change to the way Accel structures the compensation of its sales organization may be disruptive and may affect revenue growth.

Accel’s inability to complete acquisitions and integrate acquired businesses successfully could limit its growth or disrupt its plans and operations.

Accel continues to pursue expansion and acquisition opportunities in gaming and related businesses. Accel’s ability to succeed in implementing its strategy will depend to some degree upon its ability to identify and complete commercially viable acquisitions. Accel may not be able to find acquisition opportunities on acceptable terms or at all, or obtain necessary financing or regulatory approvals to complete potential acquisitions.

Accel may not be able to successfully integrate any businesses that it acquires or do so within intended timeframes. Accel could face significant challenges in managing and integrating its acquisitions and combined operations, including acquired assets, operations and personnel. In addition, the expected cost synergies associated with such acquisitions may not be fully realized in the anticipated amounts or within the contemplated timeframes or cost expectations, which could result in increased costs and have an adverse effect on Accel’s results of operations, cash flows and financial condition. Accel expects to incur incremental costs and capital expenditures related to its contemplated integration activities.

Acquisition transactions may disrupt Accel’s ongoing business. The integration of acquisitions will require significant time and focus from management and may divert attention from the day-to-day operations of the combined business or delay the achievement of strategic objectives. Accel’s business may be negatively impacted following the acquisitions if it is unable to effectively manage expanded operations.

Accel faces significant competition from other gaming and entertainment operations, and Accel’s success in part relies on maintaining Accel’s competitive advantages and market share in key markets.

Accel faces significant competition from suppliers and other operators of VGTs and dartboards, pool tables, pinball and other related non-gaming equipment at licensed establishment partners. Accel competes on the basis of the responsiveness of its services, and the popularity, content, features, quality, functionality, accuracy, reliability of its products. In order to remain competitive and maintain Accel’s existing market share, Accel must continuously offer popular, high-quality games in a timely manner and new services or enhancements to its existing services. These services or enhancements may not be well received by licensed establishment partners or consumers, even if well reviewed and of high quality. In addition, some of Accel’s current and future competitors may enjoy substantial competitive advantages over it, such as greater name recognition, longer operating histories, or greater financial, technical, and other resources. These companies may use these advantages to offer services that respond better to the needs of licensed establishment partners, spend more on advertising and brand marketing, expand their operations, or respond more quickly and effectively than Accel does or can to new or changing opportunities, technologies, standards, regulatory conditions or requirements, or player preferences. These competitors could use these advantages to capture additional market share to Accel’s detriment in key markets. Additionally, Accel could lose some or all of the competitive advantages that it currently enjoys over its current and potential competitors. Accel also faces high levels of competition in the supply of services for newly legalized gaming jurisdictions and for openings of new or expanded licensed establishments. Accel’s success depends on its ability to successfully enter new markets and compete successfully for new business, which is not certain to occur. Any of these developments could have an adverse effect on Accel’s results of operations, cash flows and financial condition and could result in a loss of market share in key markets.

 

83


Table of Contents

Accel operates in the highly competitive gaming industry, and Accel’s success depends on its ability to effectively compete with numerous types of businesses in a rapidly evolving, and potentially expanding, gaming environment.

While Accel’s operations face competition from many forms of leisure and entertainment activities, including shopping, athletic events, television and movies, concerts, and travel, Accel faces particularly robust competition from other forms of gaming. The gaming industry is characterized by an increasingly high degree of competition among a large number of participants on both a local and national level, including casinos, internet gaming, sports betting, sweepstakes and poker machines not located in casinos, horse racetracks, including those featuring slot machines and/or table games, fantasy sports, real money iGaming, and other forms of gaming, such as, Internet-based lotteries, sweepstakes, and fantasy sports, and internet-based or mobile-based gaming platforms, which allow their players to wager on a wide variety of sporting events and/or play casino games from home or in non-casino settings. This could divert players from using Accel’s products in licensed establishment partners, and adversely affect its business. Even internet wagering services that are illegal under federal and state law but operate from overseas locations, may nevertheless be accessible to domestic gamblers and divert players from visiting licensed establishment partners to play on Accel’s VGTs.

The availability of competing gaming activities could increase substantially in the future. Voters and state legislatures may seek to supplement traditional tax revenue sources of state governments by authorizing or expanding gaming in Illinois, adjacent states or jurisdictions where Accel plans to operate in the future, such as Pennsylvania. For example, on June 2, 2019, the Illinois legislature passed a significant gaming expansion bill authorizing the addition of multiple casinos to the state, including a casino in Chicago, permitting slot and table games at three horse racetracks, adding slot machines to two airports and creating licensing criteria for those eligible to provide sports betting services. In addition, other jurisdictions are considering or have already recently legalized, implemented and expanded gaming, and there are proposals across the country that would legalize internet poker and other varieties of internet gaming in a number of states and at the federal level. For example, Pennsylvania recently enacted legislation allowing regulated online poker and casino-style games within the commonwealth and legalizing sports betting in casinos. In addition, established gaming jurisdictions could award additional gaming licenses or permit the expansion or relocation of existing gaming operations (including VGTs). See “— Accel’s revenue growth and future success depends on its ability to expand into new markets, including Pennsylvania, which may not occur as anticipated or at all” for more information. While Accel believes it is well positioned to take advantage of certain of these opportunities, expansion of gaming in other jurisdictions (both legal and illegal) could further compete with Accel’s VGTs, which could have an adverse impact on Accel’s results of operations, cash flows and financial condition.

The concentration and evolution of the VGT manufacturing industry could impose additional costs on Accel.

A majority of Accel’s revenue is attributable to VGTs and related systems supplied by it at licensed establishment partners. A substantial majority of the VGTs sold in the U.S. in recent years have been manufactured by a few select companies, and there has been extensive consolidation within the gaming equipment sector in recent years, including the acquisitions of Bally Technologies, Inc. (which had acquired SHFL Entertainment, Inc.) and WMS Industries, Inc. by Scientific Games Corporation (“Scientific Games”) and International Game Technology PLC by GTECH S.p.A, respectively.

Consolidation may force Accel to enter into purchase arrangements for new VGTs that are more expensive to operate than its existing VGTs. If the newer VGTs do not result in sufficient incremental revenues to offset the potential increased investment and costs, it could damage Accel’s profitability. In the event that Accel loses a supplier, it may be unable to replace such supplier, and Accel’s remaining suppliers may increase fees and costs. See “— An increase in Accel’s borrowing costs would negatively affect its financial condition, cash flow and results of operations”.

 

84


Table of Contents

Accel’s operations are largely dependent on the skill and experience of its management and key personnel. The loss of management and other key personnel could significantly harm Accel’s business, and it may not be able to effectively replace members of management who may leave Accel.

Accel’s success and competitive position are largely dependent upon, among other things, the efforts and skills of its senior executives and management team, which is expected to include Andrew H. Rubenstein as the Chief Executive Officer and President, Karl Peterson as Chairman of the Board, Brian Carroll as Chief Financial Officer and Derek Harmer as Secretary following the consummation of the Business Combination. Although Accel has entered into employment agreements with senior executives and key personnel, there can be no assurance that these individuals will remain employed. If Accel loses the services of any members of its management team or other key personnel following the Business Combination, its business may be significantly impaired.

Accel relies on assumptions and estimates to calculate certain key metrics, and real or perceived inaccuracies in such metrics may harm its reputation and negatively affect its business.

Accel regularly reviews metrics, including the number of players and other measures, to evaluate growth trends, measure performance and make strategic decisions. Additionally, Accel commits significant amounts of resources and employee time to understanding the inherent historical patterns of gaming results within individual licensed establishment partners. Accel uses this pattern recognition process to recommend more optimal gaming layouts for licensed establishment partners, with the goal of generating increased gaming revenue.

Certain of Accel’s key metrics, including the average post-acquisition net video gaming revenue per VGT per day (“hold-per-day”) and a number of other measures to evaluate growth trends and the quality of marketing and player behaviors, are calculated using data from Scientific Games, a contractor of the IGB. Scientific Games and the IGB may calculate certain metrics differently, which could limit the comparability of Accel’s key metrics and those of its competitors, who may use a different methodology to calculate similar metrics. For example, the IGB calculates average hold-per-day and other metrics using the number of VGTs that are active at the end of a given month, while Scientific Games uses the number of VGTs that are active at least one day during a month. See “Accel Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Business Metrics” for more information. While Accel believe these figures to be reasonable and that its reliance on them is justified, there can be no assurance that such figures are reliable or accurate. Should Accel decide to review these or other figures following the Business Combination, it may discover material inaccuracies, including unexpected errors in its internal data that result from technical or other errors. If Accel determines that any of its metrics are not accurate, they may be required to revise or cease reporting such metrics and such changes may harm Accel’s reputation and business.

Accel is subject to strict government regulations that are constantly evolving and may be amended, repealed, or subject to new interpretations, which may limit existing operations, have an adverse impact on the ability to grow or may expose Accel to fines or other penalties.

Accel is subject to the rules, regulations, and laws applicable to gaming, including, but not limited to, the Illinois Video Gaming Act and amendments thereto enacted by the Illinois state legislature (the “Illinois Gaming Act”), and the Pennsylvania Race Horse Development and Gaming Act and amendments thereto enacted by the Pennsylvania legislature (the “Pennsylvania Gaming Act”). These gaming laws and related regulations are administered by the IGB and Pennsylvania Gaming Control Board (the “PA Board”), respectively, which are regulatory boards with broad authority to create and interpret gaming regulations and to regulate gaming activities. These gaming authorities are authorized to:

 

   

adopt additional rules and regulations under the implementing statutes;

 

   

investigate violations of gaming regulations;

 

   

enforce gaming regulations and impose disciplinary sanctions for violations of such laws, including fines, penalties and revocation of gaming licenses;

 

85


Table of Contents
   

review the character and fitness of manufacturers, distributors and operators of gaming services and equipment and make determinations regarding their suitability or qualification for licensure;

 

   

review and approve transactions (such as acquisitions, material commercial transactions, securities offerings and debt transactions); and

 

   

establish and collect related fees and/or taxes.

Although Accel plans to maintain compliance with applicable laws as they evolve and to generally maintain good relations with regulators, there can be no assurance that Accel will do so, and that law enforcement or gaming regulatory authorities will not seek to restrict Accel’s business in their jurisdictions or institute enforcement proceedings if Accel is not compliant. There can be no assurance that any instituted enforcement proceedings will be favorably resolved, or that such proceedings will not have an adverse effect on its ability to retain and renew existing licenses or to obtain new licenses in other jurisdictions. Gaming authorities may levy fines against Accel or seize certain assets if Accel violates gaming regulations. Accel’s reputation may also be damaged by any legal or regulatory investigation, regardless of whether Accel is ultimately accused of, or found to have committed, any violation. A negative regulatory finding or ruling in one jurisdiction could have adverse consequences in other jurisdictions, including with gaming regulators.

In addition to regulatory compliance risk, Illinois, Pennsylvania or any other states or other jurisdiction in which Accel operates or may operate (including jurisdictions at the county, district, municipal, town or borough level), certain jurisdictions may amend or repeal gaming enabling legislation or regulations. Changes to gaming enabling legislation or new interpretations of existing gaming laws may hinder or prevent Accel from continuing to operate in the jurisdictions where it currently conducts business, which could increase operating expenses and compliance costs or decrease the profitability of operations. Repeal of gaming enabling legislation could result in losses of capital investments and revenue, limit future growth opportunities and have an adverse effect on Accel’s results of operations, cash flows and financial condition. If any jurisdiction in which Accel operates were to repeal gaming enabling legislation, there could be no assurance that Accel could sufficiently increase revenue in other markets to maintain operations or service existing indebtedness. In particular, the enactment of unfavorable legislation or government efforts affecting or directed at VGT manufacturers or gaming operators, such as referendums to increase gaming taxes or requirements to use local distributors, would likely have a negative impact on operations. For example, the Illinois legislature has recently approved a gaming expansion bill that, in addition to providing for an increased number of possible gaming venues, also increases Illinois state tax on gaming revenue. Additionally, membership changes within regulatory agencies could impact operations. The IGB in particular has experienced significant personnel changes since the commencement of Accel’s VGT operations in 2012. Changes in the composition of the IGB can impact current rules, regulations, policies, enforcement trends and overall agendas of the Board.

Accel’s ability to operate in existing markets or expand into new jurisdictions could be adversely affected by difficulties, delays, or failures by Accel or its stakeholders in obtaining or maintaining required licenses or approvals.

Accel operates only in jurisdictions where gaming is legal. The gaming industry is subject to extensive governmental regulation by federal, state, and local governments, which customarily includes some form of licensing or regulatory screening of operators, suppliers, manufacturers and distributors and their applicable affiliates, their major shareholders, officers, directors and key employees. In addition, certain gaming products and technologies must be certified or approved in certain jurisdictions in which Accel operates, and these regulatory requirements vary from jurisdiction to jurisdiction. The scope of the approvals required can be extensive. Regulators review many facets of an applicant or holder of a license, including its financial stability, integrity and business experience. While the regulatory requirements vary by jurisdiction, most require:

 

   

licenses and/or permits;

 

   

documentation of qualifications, including evidence of financial stability;

 

86


Table of Contents
   

other required approvals for companies who design, assemble, supply or distribute gaming equipment and services; and

 

   

individual suitability of officers, directors, major equity holders, lenders, key employees and business partners

Accel may not be able to obtain or maintain all necessary registrations, licenses, permits or approvals, or could experience delays related to the licensing process which could adversely affect its operations and ability to retain key employees. If Accel fails to obtain a license required in a particular jurisdiction for games and VGTs, hardware or software or have such license revoked, it will not be able to expand into, or continue doing business in, such jurisdiction. Any delay, difficulty or failure by Accel to obtain or retain a required license or approval in one jurisdiction could negatively impact the ability to obtain or retain required licenses and approvals in other jurisdictions, or affect eligibility for a license in other jurisdictions, which can negatively affect opportunities for growth. For example, if Accel’s license to operate in Illinois is not renewed as a result of a failure to satisfy suitability requirements or otherwise, its ability to obtain or maintain a license in Pennsylvania may be harmed. Unexpected changes or concessions required by local, state or federal regulatory authorities could involve significant additional costs and delay. The necessary permits, licenses and approvals may not be obtained within the anticipated time frames, or at all. Additionally, licenses, approvals or findings of suitability may be revoked, suspended or conditioned at any time. If a license, approval or finding of suitability is required by a regulatory authority and Accel fails to seek or does not receive the necessary approval, license or finding of suitability, or if it is granted and subsequently revoked, it could have an adverse effect on Accel’s results of operations, cash flows and financial condition.

While Accel has received a conditional terminal operator license from the PA Board, there can be no assurance that the final license will be obtained on terms necessary to achieve its objectives, or at all. While Accel does not expect that the composition of the PA Board will change prior to the next Pennsylvania gubernatorial election in 2022, there can be no assurances with respect thereto, and any changes in composition to the PA Board could alter existing interpretations or enforcement of the Pennsylvania Gaming Act, or otherwise affect the status of Accel’s pending final license before the PA Board. In Illinois, Accel was granted its original license to conduct business as a terminal operator of VGTs by the IGB in 2012, and have most recently had its license renewed in April 2019, retroactive to March 2019 for a period of one year. Renewal is subject to, among other things, continued satisfaction of suitability requirements.

In addition to any licensing requirements, all of Accel’s licensed establishment partners are required to be licensed, and delays in or failure to obtain approvals of these licenses may adversely affect results of operations, cash flows and financial condition.

Accel and certain of its affiliates, major stockholders (generally persons and entities beneficially owning a specified percentage (typically 5% or more) of equity securities), directors, officers and key employees are subject to extensive background investigations, personal and financial disclosure obligations and suitability standards in its businesses. Certain jurisdictions may require the same from Accel’s lenders or key business partners. The failure of these individuals and business entities to submit to such background checks and provide required disclosure, or delayed review or denial of application resulting from such submissions, could jeopardize Accel’s ability to obtain or maintain licensure in such jurisdictions. Any delay, difficulty, or failure any of Accel’s major stockholders, directors, officers, key employees, products or technology, to obtain or retain a required license or approval in one jurisdiction could negatively impact its licensure in other jurisdictions, which can ultimately negatively affect opportunities for growth. In addition, the failure of Accel’s officers, directors, key employees or business partners, equity holders, or lenders to obtain or maintain licenses in one or more jurisdictions may require Accel to modify or terminate its relationship with such officers, directors, key employees or business partners, equity holders, or lenders, or forego doing business in such jurisdiction. The licensing procedures and background investigations of the authorities that regulate Accel’s businesses may inhibit potential investors from becoming significant stockholders, inhibit existing stockholders from retaining or

 

87


Table of Contents

increasing their ownership, or inhibit existing stockholders from selling their shares to potential investors who are found unsuitable to hold Accel stock by gaming authorities or whose stock ownership may adversely affect Accel’s ability to obtain, maintain, renew or qualify for a license, contract, franchise or other regulatory approval from a gaming authority.

Failure to maintain adequate internal control over financial reporting could adversely affect Accel’s reputation and business.

Accel is responsible for establishing and maintaining adequate internal control over financial reporting. If Accel cannot maintain and execute adequate internal control over financial reporting or when necessary implement new or improved controls that provide reasonable assurance of the reliability of the financial reporting and preparation of its financial statements for external use, Accel may suffer harm to its reputation, fail to meet its public reporting requirements on a timely basis or be unable to properly report on its business and results of operations, cash flows and financial condition. Additionally, the inherent limitations of internal controls over financial reporting may not prevent or detect all misstatements or fraud, regardless of the adequacy of those controls. In addition, the adoption of any new accounting standards may require Accel to add new or change existing internal controls, which may not be successful. Each of the preceding changes could materially impact Accel’s internal control over financial reporting. Accel has identified three material weaknesses in its internal control over financial reporting as of December 31, 2018, each of which remains unremediated. While efforts are underway to remediate these identified material weaknesses, these efforts will take time. While these material weaknesses remain unremediated, an increased risk of material misstatement of the consolidated financial statements exists.

Following the consummation of the Business Combination, Accel will be obligated to develop and maintain proper and effective internal control over financial reporting. Accel has identified three material weaknesses in its internal control over financial reporting as of December 31, 2018, and if remediation of these material weaknesses is not effective, or if Accel fails to develop and maintain an effective system of disclosure controls and internal control over financial reporting, its ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired. In addition, the presence of material weaknesses increases the risk of material misstatement of the consolidated financial statements.

Pace is currently a public company and is required, pursuant to Section 404(a) of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of its internal control over financial reporting on its annual report on Form 10-K. Following the Business Combination, Accel will be subject to the same requirements. Effective internal control over financial reporting is necessary for reliable financial reports and, together with adequate disclosure controls and procedures, such internal controls are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause Accel to fail to meet its reporting obligations. Ineffective internal controls could also cause investors to lose confidence in reported financial information, which could have a negative effect on the trading price of Class A-1 Shares.

The report by management will need to include disclosure of any material weaknesses identified in internal control over financial reporting. However, for as long as Accel is an “emerging growth company” under the JOBS Act following the consummation of the Business Combination, its independent registered public accounting firm will not be required to attest to the effectiveness of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. Management’s assessment of internal controls, when implemented, could detect problems with internal controls, and an independent assessment of the effectiveness of internal controls by Accel’s auditors could detect further problems that management’s assessment might not, and could result in the identification of material weaknesses that were not otherwise identified. Undetected material weaknesses in internal controls could lead to financial statement restatements and require Accel to incur the expense of remediation. Accel is required to disclose changes made in its internal control and procedures on a quarterly basis. To comply with the public company requirements, Accel may need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff.

 

88


Table of Contents

In connection with the preparation of its consolidated financial statements, Accel has identified a number of adjustments to its consolidated financial statements that resulted in a restatement of previously issued financial statements. These adjustments relate to accounting for business acquisitions and subsequent accounting, accounting for route and customer acquisition costs and related liabilities, classification of items on the consolidated statements of stockholders’ equity and cash flows, accounting for income taxes, and other miscellaneous adjustments. Accel identified the cause of these adjustments was due to three material weaknesses in internal controls. A material weakness is a deficiency or combination of deficiencies in its internal control over financial reporting such that there is a reasonable possibility that a material misstatement of its consolidated financial statements would not be prevented or detected on a timely basis. This deficiency could result in additional misstatements to its consolidated financial statements that would be material and would not be prevented or detected on a timely basis.

The following three material weaknesses in internal control over financial reporting have been identified, which are not remediated as of December 31, 2018, or currently:

 

   

A material weakness related to review of the consolidated financial statements and certain of the associated accounting analyses, journal entries and accounting reconciliations due, in part, to the lack of formally documented accounting policies and procedures, as well as headcount necessary to support consistent, timely and accurate financial reporting in accordance with U.S. GAAP;

 

   

A material weakness in the design and implementation of internal controls relating to business combination accounting and route and customer acquisition cost accounting due to the absence of formalized internal controls surrounding the determination of the fair value for assets acquired and liabilities assumed in business combinations, the accounting for initial route and customer acquisition costs and the accounting for such assets; and

 

   

A material weakness related to general information technology controls including the design and implementation of access and change management internal controls.

Accel has begun evaluating and implementing additional procedures in order to remediate these material weaknesses, however, it cannot assure you that these or other measures will fully remediate the material weaknesses in a timely manner. As part of the remediation plan to address the material weakness identified above, Accel has hired additional accounting and finance employees with the specific technical accounting and financial reporting experience necessary for a public company. Accel has hired these personnel after considering the appropriateness of each individual’s experience and believe that these personnel are qualified to serve in their current respective roles. As of June 30, 2019, Accel had 11 accounting and finance employees. In addition, Accel has begun to implement more formal accounting policies and procedures to support timely and accurate financial reporting in accordance with GAAP. Accel will continue to assess the adequacy of its accounting and finance personnel and resources, and will add additional personnel, as well as adjust its resources, as necessary, commensurate with any increase in the size and complexity of its business. Accel also increased the depth and level of review procedures with regard to financial reporting and internal control procedures. If Accel is unable to remediate these material weaknesses, or otherwise maintain effective internal control over financial reporting, it may not be able to report its financial results accurately, prevent fraud or file its periodic reports in a timely manner. If Accel’s remediation of these material weaknesses is not effective, or if it experiences additional material weaknesses or otherwise fail to maintain an effective system of internal controls in the future, it may not be able to accurately or timely report its financial condition or results of operations, which may adversely affect investor confidence in Accel and, as a result, the value of Class A-1 Shares. There can be no assurance that all existing material weaknesses have been identified, or that additional material weaknesses will not be identified in the future.

Accel is in the early stages of developing the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. It may not be able to complete its evaluation, testing, and any required remediation in a timely fashion. During the evaluation and testing process, if it identifies material weaknesses in its internal control over financial reporting, it will be unable to assert that its internal control over financial reporting is effective.

 

89


Table of Contents

If Accel is unable to assert that its internal control over financial reporting is effective, or if Accel’s independent registered public accounting firm is unable to express an opinion on the effectiveness of its internal control, including as a result of the material weaknesses described above, Accel could lose investor confidence in the accuracy and completeness of its financial reports, which would cause the price of its common stock to decline, and Accel may be subject to investigation or sanctions by the SEC. In addition, if Accel is unable to continue to meet these requirements following the consummation of the Business Combination, it may not be able to remain listed on the NYSE.

Accel’s products and services may be subject to complex revenue recognition standards, which could materially affect its financial results.

Accel’s products and services may be subject to complex revenue recognition standards and Accel may enter into transactions to acquire new products and services that may include multiple performance obligations, and applicable accounting principles or regulatory approval delays could impact when Accel recognizes revenue with respect to such products and services and could adversely affect financial results for any given period. For example, the IGB has approved “progressive” games (i.e., games where the jackpot continues to increase until someone wins), but such games have not yet been implemented by licensed establishments and it remains unclear how payouts from such games will be accounted for under applicable accounting principles. See “Accel Management’s Discussion and Analysis of Financial Condition and Reality of Operations — Critical Accounting Policies and Estimates — Revenue Recognition” elsewhere in this proxy statement/prospectus.

Accel may be liable for product defects or other claims relating to its products that it provides to its licensed establishment partners.

The products that Accel provides to its licensed establishment partners could be defective, fail to perform as designed or otherwise cause harm to players or licensed establishment partners. If any of the products Accel provides are defective, Accel may be required to recall the products and/or repair or replace them, which could result in substantial expenses and affect profitability. In the event of any repair or recall, Accel could be dependent on the services, responsiveness or product stock of key suppliers, and any delay in their ability to resupply or assist in servicing key products could affect its ability to service licensed establishment partners. Any problem with the performance of Accel’s products could harm its reputation, which could result in a loss of existing or potential licensed establishment partners. In addition, the occurrence of errors in, or fraudulent manipulation of, Accel’s products or software may give rise to claims by licensed establishment partners or by players, including claims by licensed establishment partners for lost revenues and related litigation that could result in significant liability. Any claims brought against Accel by licensed establishment partners or players may result in the diversion of management’s time and attention, expenditure of large amounts of cash on legal fees and payment of damages, lower demand for products or services, or injury to reputation. Accel’s insurance or recourse against other parties may not sufficiently cover a judgment against it or a settlement payment, and any insurance payment is subject to customary deductibles, limits and exclusions. In addition, a judgment against Accel or a settlement could make it difficult for it to obtain insurance in the coverage amounts necessary to adequately insure its businesses, or at all, and could materially increase insurance premiums and deductibles. Software bugs or malfunctions, errors in distribution or installation of Accel’s software, failure of products to perform as approved by the appropriate regulatory bodies or other errors or malfunctions, may subject Accel to investigation or other action by gaming regulatory authorities, including fines.

Accel may incur impairment charges.

Accel reviews its amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may indicate a change in circumstances, such that the carrying value of Accel’s assets may not be recoverable, include a decline in stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in the gaming industry. Accel may be required to record a significant charge in its consolidated financial statements during the period in which any impairment is determined, which could negatively affect its results of operations.

 

90


Table of Contents

Accel’s results of operations fluctuate due to seasonality and other factors and, therefore, its periodic operating results are not guarantees of future performance.

Accel’s results of operations can fluctuate due to seasonal trends and other factors. VGT play at licensed establishment partners is generally strongest in the spring and slowest in the summer. Certain other seasonal trends and factors that may cause Accel’s results to fluctuate include the geographies where it operates, holiday and vacation seasons, climate, weather, economic and political conditions, changes in applicable legislation and/or the rules and policies of governing regulatory bodies, timing of the release of new products, significant equipment sales or the introduction of gaming activities in new jurisdictions or to new licensed establishment partners, and other factors. In light of the foregoing, results for any quarter are not necessarily indicative of the results that may be achieved in another quarter or for the full fiscal year.

Litigation may adversely affect Accel’s business, results of operations, cash flows and financial condition.

Accel may become subject to litigation claims in the operation of its business, including, but not limited to, with respect to employee matters, alleged product and system malfunctions, alleged intellectual property infringement and claims relating to contracts, licenses and strategic investments. Accel may incur significant expense defending or settling any such litigation. Additionally, adverse judgments that may be decided against Accel could result in significant monetary damages or injunctive relief that could adversely affect Accel’s ability to conduct business, its results of operations, cash flows and financial condition. See “Business — Legal Proceedings” for more information.

Accel’s results of operations, cash flows and financial condition could be affected by natural events in the locations in which it or its licensed establishment partners, suppliers or regulators operate.

Accel may be impacted by severe weather and other geological events, including hurricanes, tornados, earthquakes, floods or tsunamis that could disrupt operations or the operations of its licensed establishment partners, suppliers, data service providers and regulators. Natural disasters or other disruptions at any of Accel’s facilities or suppliers’ facilities may impair or delay the operation, development, provisions or delivery of its products and services. Additionally, disruptions experienced by Accel’s regulators due to natural disasters or otherwise could delay the introduction of new products or entry into new jurisdictions where regulatory approval is necessary. While Accel insures against certain business interruption risks, there can be no assurance that such insurance will adequately compensate for any losses incurred as a result of natural or other disasters. Any serious disruption to Accel’s operations, or those of its licensed establishment partners, suppliers, data service providers, or regulators, could have an adverse effect on Accel’s results of operations, cash flows and financial condition.

If Accel’s estimates or judgments relating to critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, its operating results could be adversely affected.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in its consolidated financial statements and accompanying notes. Accel bases its estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances, as provided in “Accel Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity as of the date of the financial statements, and the amount of revenue and expenses, during the periods presented, that are not readily apparent from other sources. Significant assumptions and estimates used in preparing consolidated financial statements include among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the initial selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, contingencies, and the expected term of share-based compensation awards, stock price volatility and estimated stock prices when computing share-based

 

91


Table of Contents

compensation expense. Accel’s operating results may be adversely affected if assumptions change or if actual circumstances differ from assumed circumstances, which could cause its operating results to fall below the expectations of industry or financial analysts and investors, resulting in a decline in the trading price of its common stock.

Additionally, Accel regularly monitors compliance with applicable financial reporting standards and reviews relevant new accounting pronouncements and drafts thereof. As a result of new standards, changes to existing standards, and changes in interpretation, Accel may be required to change accounting policies, alter operational policies and implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or it may be required to restate published financial statements. Such changes to existing standards or changes in their interpretation may cause an adverse deviation from Accel’s revenue and operating profit target, which may negatively impact results of operations, cash flows and financial condition.

Accel may not have adequate insurance for potential liabilities.

In the ordinary course of business, Accel has, and in the future may become the subject of, various claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters. Accel maintains insurance to cover these and other potential losses, and is subject to various self-retentions, deductibles and caps under its insurance. Accel faces the following risks with respect to insurance coverage:

 

   

Accel may not be able to continue to obtain insurance on commercially reasonable terms;

 

   

Accel may incur losses from interruptions of business that exceed insurance coverage;

 

   

Accel may be faced with types of liabilities that will not be covered by insurance;

 

   

Accel’s insurance carriers may not be able to meet their obligations under the policies; or

 

   

the dollar amount of any liabilities may exceed policy limits.

Even a partially uninsured claim, if successful and of significant size, could have an adverse effect on Accel’s results of operations, cash flows and financial condition. Even in cases where Accel maintains insurance coverage, its insurers may raise various objections and exceptions to coverage that could make uncertain the timing and amount of any possible insurance recovery.

Accel’s business depends on the protection of intellectual property and proprietary information.

Accel believes that its success depends, in part, on protecting its intellectual property. Accel’s intellectual property includes certain trademarks and copyrights relating to its products and services, and proprietary or confidential information that is not subject to patent or similar protection. As of June 30, 2019, Accel owned five registered trademarks and 83 registered domain names. Accel’s success may depend, in part, on its ability to obtain protection for the trademarks, trade dress, names, logos or symbols under which it markets products and to obtain copyright and patent protection for proprietary technologies, designs, software and innovations. There can be no assurance that Accel will be able to build and maintain consumer value in its trademarks, obtain patent, trademark or copyright protection or that any patent, trademark or copyright will provide competitive advantages.

Accel’s intellectual property protects the integrity of its systems, products and services. Competitors may independently offer similar or superior products, software or systems, which could negatively impact results of operations, cash flows and financial condition. In cases where Accel’s technology or product is not protected by enforceable intellectual property rights, such independent development may result in a significant diminution in the value of such technology or product.

 

92


Table of Contents

Accel also relies on trade secrets and proprietary knowledge and enters into confidentiality agreements with employees and independent contractors regarding trade secrets and proprietary information, however, there can be no assurance that the obligation to maintain the confidentiality of trade secrets and proprietary information will be honored.

Accel may, in the future, make claims of infringement, invalidity or enforceability against third parties. This could:

 

   

cause Accel to incur greater costs and expenses in the protection of intellectual property;

 

   

potentially negatively impact its intellectual property rights;

 

   

cause one or more of its patents, trademarks, copyrights or other intellectual property interests to be ruled or rendered unenforceable or invalid; or

 

   

divert management’s attention and resources.

Gaming opponents persist in their efforts to curtail the expansion of legalized gaming, which, if successful, could limit the growth of operations.

There is significant debate over, and opposition to, the gaming industry. There can be no assurance that this opposition will not succeed in preventing the legalization of gaming in jurisdictions where it is presently prohibited, prohibiting or limiting the expansion of gaming where it is currently permitted or causing the repeal of legalized gaming in any jurisdiction. Such opposition could also lead these jurisdictions to adopt legislation or impose a regulatory framework to govern gaming that restricts Accel’s ability to advertise games or substantially increases costs to comply with these regulations. Accel continues to devote significant attention to monitoring these developments, however, Accel cannot accurately predict the likelihood, timing, scope or terms of any state or federal legislation or regulation relating to its business. Any successful effort to curtail the expansion of, or limit or prohibit, legalized gaming could have an adverse effect on Accel’s results of operations, cash flows and financial condition.

For example, the Illinois legislature has recently approved a gaming expansion bill that, in addition to providing for an increased number of possible gaming venues, also increases Illinois state tax on gaming revenue. Any tax increase by the state of Illinois, whether levied on licensed establishments or Accel, could have an adverse effect on Accel’s results of operations, cash flows and financial condition. Current and future appointees to the IGB may enact, change or rescind other rules and regulations in a way that negatively affects business.

Accel may not be able to capitalize on the expansion of gaming or other trends and changes in the gaming industries, including due to laws and regulations governing these industries, and other factors.

Accel participates in new and evolving aspects of the gaming industries. These industries involve significant risks and uncertainties, including legal, business and financial risks. The fast-changing environment in these industries can make it difficult to plan strategically and can provide opportunities for competitors to grow their businesses at Accel’s expense. Consequently, future results of operations, cash flows and financial condition are difficult to predict and may not grow at expected rates.

Part of Accel’s strategy is to take advantage of the liberalization of regulations covering these industries on a municipality and state basis, which can be a protracted process. To varying degrees, governments have taken steps to change the regulation of VGTs through the implementation of new or revised licensing and taxation regimes. For example, in addition to the State-issued gaming licenses, gaming licenses are also governed on a municipality-level in Illinois. While Accel has contracted for exclusive rights to operate in licensed establishments in over 600 different municipalities in Illinois, all of which have no prohibition or restriction with respect to gaming, there are many other municipalities that have “opt out” or “anti-gambling” ordinances which prohibit a range of activities

 

93


Table of Contents

characterized from “devices of chance” to “any gambling”. While a number of these municipalities have removed the ordinance or introduced an amendment to permit gaming activities germane to Accel’s business, they or other municipalities may choose to prohibit or limit gambling in the future. Additionally, Pennsylvania currently only permits the operation of VGTs at truck stops. While there are currently efforts to permit the expansion of VGTs into additional types of establishments, there can be no assurance that such efforts will succeed. Accel cannot predict the timing, scope or terms of the implementation or revision of any such state, federal or local laws or regulations, or the extent to which any such laws and regulations may facilitate or hinder its strategy.

Accel’s success depends on the security and integrity of the systems and products offered, and security breaches or other disruptions could compromise certain information and expose Accel to liability, which could cause Accel’s business and reputation to suffer.

Accel believes that success depends, in large part, on providing secure products, services and systems to licensed establishment partners, and on the ability to avoid, detect, replicate and correct software and hardware anomalies and fraudulent manipulation of products and services. Accel’s business sometimes involves the storage, processing and transmission of proprietary, confidential and personal information, and any future player program it may institute will also involve such information. Accel also maintains certain other proprietary and confidential information relating to its business and personal information of its personnel. All of Accel’s products, services and systems are designed with security features to prevent fraudulent activity. Despite these security measures, Accel’s products, services and systems may be vulnerable to attacks by licensed establishment partners, players, retailers, vendors or employees, or breaches due to cyber-attacks, viruses, malicious software, computer hacking, security breaches or other disruptions. Expanded use of the internet and other interactive technologies may result in increased security risks for Accel and its licensed establishment partners because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not foreseeable or recognized until launched against a target and Accel may be unable to anticipate these techniques or to implement adequate preventative measures. Furthermore, hackers and data thieves are becoming increasingly sophisticated and could operate large-scale and complex automated attacks. Any security breach or incident could result in unauthorized access to, misuse of, or unauthorized acquisition of certain data, the loss, corruption or alteration of this data, interruptions in operations or damage to computers or systems or those of certain players or third-party platforms. Any of these incidents could expose Accel to claims, litigation, fines and potential liability. Accel’s ability to prevent anomalies and monitor and ensure the quality and integrity of its products and services is periodically reviewed and enhanced, and Accel regularly assesses the adequacy of security systems, including the security of its games and software, to protect against any material loss to licensed establishment partners and players, as well as the integrity of its products and services and its games. However, these measures may not be sufficient to prevent future attacks, breaches or disruptions.

There is a risk that Accel’s products, services or systems may be used to defraud, launder money or engage in other illegal activities at licensed establishments. Accel’s gaming machines have experienced anomalies in the past. Games and gaming machines may be replaced by licensed establishment partners and other gaming machine operators if they do not perform according to expectations, or they may be shut down by regulators. The occurrence of anomalies in, or fraudulent manipulation of, Accel’s gaming machines or other products and services, may give rise to claims from players or licensed establishment partners, may lead to claims for lost revenue and profits and related litigation by licensed establishment partners and may subject Accel to investigation or other action by regulatory authorities, including suspension or revocation of licenses or other disciplinary action. Additionally, in the event of the occurrence of any such issues with Accel’s products and services, substantial resources may be diverted from other projects to correct these issues, which may delay other projects and the achievement of strategic objectives.

Further, third party hosted solution providers that provide services to Accel, such as Rackspace or Salesforce, could also be a source of security risk in the event of a failure of their own security systems and infrastructure.

 

94


Table of Contents

Accel’s level of indebtedness could adversely affect results of operations, cash flows and financial condition.

As of June 30, 2019, Accel had total indebtedness of $224 million, all of which was borrowed by Accel Entertainment Gaming, LLC, an Illinois limited liability company formed in 2009 for the purposes of providing video gaming services in Illinois (the “IL Operating Subsidiary”) and guaranteed by Accel. This indebtedness is governed by a Loan and Security Agreement with a bank group led by CIBC Bank USA, Fifth Third Bank and US Bank. As of June 30, 2019, there remained approximately $64 million of availability under Accel’s credit facility.

Accel’s level of indebtedness could affect its ability to obtain financing or refinance existing indebtedness; require Accel to dedicate a significant portion of its cash flow from operations to interest and principal payments on indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures and other general corporate purposes, increase its vulnerability to adverse general economic, industry or competitive developments or conditions and limit its flexibility in planning for, or reacting to, changes in its businesses and the industries in which it operates or in pursuing its strategic objectives. In addition, Accel is exposed to the risk of higher interest rates as a significant portion of its borrowings are at variable rates of interest. If interest rates increase, the interest payment obligations would increase even if the amount borrowed remained the same, and results of operations, cash flows and financial condition could be negatively impacted. All of these factors could place Accel at a competitive disadvantage compared to competitors that may have less debt.

An increase in Accel’s borrowing costs could negatively affect its financial condition, cash flow and results of operations.

Certain of Accel’s VGTs and amusement machines acquisitions are financed using revolving credit facilities and bank loans. Accel’s financing agreements include variable interest rates and regular required interest, fee and amortization payments. If Accel is unable to generate sufficient revenue to offset the required payments, it could have an adverse effect on Accel’s results of operations, cash flows and financial condition. In addition, Accel is not currently involved in any interest rate hedging activities. Any such hedging activities could require Accel to incur additional costs, and there can be no assurance that Accel would be able to successfully protect itself from any or all negative interest rate fluctuations at a reasonable cost.

Accel may not have sufficient cash flows from operating activities, cash on hand and available borrowings under its credit agreement to finance required capital expenditures under new contracts and meet other cash needs.

Accel’s business generally requires significant upfront capital expenditures for VGTs and amusement machines, software customization and implementation, systems and equipment installation and telecommunications configuration. In connection with the signing or renewal of a gaming or amusement contract, a licensed establishment may seek to obtain new equipment or impose new service requirements, which may require additional capital expenditures in order to enter into or retain the contract. Historically, Accel has funded these upfront costs through cash flows generated from operations, available cash on hand and borrowings under the Credit Agreement.

In addition, since Accel is compensated based on a share of licensed establishment partners’ revenue rather than payment for expenses and services, Accel may incur upfront costs (which may be significant) prior to receipt of any revenue under such arrangements. Accel’s ability to generate revenue and to continue to procure new contracts will depend on, among other things, its then present liquidity levels or its ability to obtain additional financing on commercially reasonable terms.

If Accel does not have adequate liquidity or is unable to obtain financing for these upfront costs and other cash needs on favorable terms or at all, it may not be able to pursue certain contracts, which could result in the loss of business or restrict the ability to grow. Moreover, Accel may not realize the return on investment that it

 

95


Table of Contents

anticipates on new or renewed contracts due to a variety of factors, including lower than anticipated retail sales or amounts wagered, higher than anticipated capital or operating expenses and unanticipated regulatory developments or litigation. Accel may not have adequate liquidity to pursue other aspects of its strategy, including bringing products and services to new licensed establishment partners or new or underpenetrated geographies (including through equity investments) or pursuing strategic acquisitions. In the event Accel pursues significant acquisitions or other expansion opportunities, conducts significant repurchases of outstanding securities, or refinances or repays existing debt, it may need to raise additional capital either through the public or private issuance of equity or debt securities or through additional borrowings under its existing financing arrangements, which sources of funds may not necessarily be available on acceptable terms, if at all.

Accel may not have sufficient cash flows from operating activities to service all of its indebtedness and other obligations, and may be forced to take other actions to satisfy obligations, which may not be successful.

Accel’s ability to make payments on and to refinance indebtedness and other obligations depends on its results of operations, cash flows and financial condition, which in turn are subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. Accel may not be able to maintain a level of cash flows from operating activities sufficient to pay the principal, premium, if any, and interest on its indebtedness and other obligations.

Accel is required to make scheduled payments of principal in respect of the term loan under the Credit Agreement. Accel may also, from time to time, repurchase, or otherwise retire or refinance debt, through subsidiaries or otherwise. Such activities, if any, will depend on prevailing market conditions, contractual restrictions and other factors, and the amounts involved may or may not be material. If Accel needs to refinance all or part of its indebtedness at or before maturity, there can be no assurance that Accel will be able to obtain new financing or to refinance any of its indebtedness on commercially reasonable terms or at all.

Accel’s lenders, including the lenders participating in its revolving credit facilities under the Credit Agreement, may become insolvent or tighten their lending standards, which could make it more difficult for Accel to borrow under its revolving credit facilities or to obtain other financing on favorable terms or at all. Following the Business Combination, Pace’s results of operations, cash flows and financial condition could be adversely affected if Accel is unable to draw funds under its revolving credit facilities because of a lender default or to obtain other cost-effective financing. Any default by a lender in its obligation to fund its commitment under the revolving credit facilities (or its participation in letters of credit) could limit Accel’s liquidity to the extent of the defaulting lender’s commitment. If Accel is unable to generate sufficient cash flow in the future to meet commitments, it may be required to adopt one or more alternatives, such as refinancing or restructuring indebtedness, selling material assets or operations or seeking to raise additional debt or equity capital. In addition, borrowings under Accel’s existing revolving credit facilities may be subject to capacity under an available borrowing base.

Agreements governing Accel’s indebtedness impose certain restrictions that may affect the ability to operate its business. Failure to comply with any of these restrictions could result in the acceleration of the maturity of indebtedness and require Accel to make payments on indebtedness. Were this to occur, Accel would not have sufficient cash to pay accelerated indebtedness.

Agreements governing Accel’s indebtedness impose, and future financing agreements are likely to impose, operating and financial restrictions on activities that may adversely affect its ability to finance future operations or capital needs or to engage in new business activities. In some cases, these restrictions require Accel to comply with or maintain certain financial tests and ratios. Subject to certain exceptions, Accel’s credit facilities restrict its ability to, among other things:

 

   

declare dividends or redeem or repurchase capital stock;

 

   

prepay, redeem or purchase other debt;

 

96


Table of Contents
   

grant liens;

 

   

make loans, guarantees, acquisitions and investments;

 

   

incur or guaranty additional indebtedness;

 

   

amend or otherwise alter debt and other material agreements;

 

   

engage in mergers, acquisitions or asset sales;

 

   

engage in transactions with affiliates;

 

   

make loans or transfer assets; and

 

   

alter the business as currently conducted.

In addition, the Credit Agreement contains financial covenants that are tested at the end of each calendar quarter and require Accel to:

 

   

maintain a ratio of (a) (1) EBITDA minus (2) (A) taxes, (B) unfinanced capital expenditures, (C) operator earnout payments, (D) dividends and distributions and (E) certain equity redemptions to (b) (1) scheduled payments of principal with respect to debt for borrowed money and capitalized lease obligations and (2) scheduled payments of cash interest with respect to debt for borrowed money, including capital lease obligations, plus fees owing in connection with any letter of credit of least 1.10 to 1.00,

 

   

maintain a ratio of (i) total debt (less certain vault cash) to (ii) EBITDA of not more than 3.50 (subject to periodic step-downs) to 1.00 and

 

   

maintain minimum EBITDA during for each trailing 12-month period ending on the last day of any calendar quarter of not less than $35 million.

Failure to comply with any of the covenants in Accel’s existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. Such a default would permit lenders to accelerate the maturity of the debt under these agreements and other agreements containing cross-default provisions and to foreclose upon any collateral securing the debt. Under these circumstances, Accel might not have, or be able to obtain, sufficient funds or other resources to satisfy all of its obligations. In addition, the limitations imposed by financing agreements on Accel’s ability to incur additional debt, cause subsidiaries to guarantee certain debt, pay dividends or make other distributions, or take other actions might significantly impair its ability to obtain other financing.

There can be no assurance that Accel will be granted waivers or amendments to these agreements if for any reason it is unable to comply with these obligations or that it will be able to refinance its debt on terms acceptable or at all.

Risks Related to the Redemption

Pace does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for Pace to complete a business combination with which a substantial majority of its shareholders do not agree.

The Articles do not provide a specified maximum redemption threshold, except that in no event will Pace redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001, such that Pace is not subject to the SEC’s “penny stock” rules. This minimum net tangible asset amount is also required as an obligation to each party’s obligation to consummate the Business Combination under the Transaction Agreement. In addition, the Transaction Agreement provides that each party’s obligation to consummate the Business Combination is conditioned on the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem Public Shares, plus (ii) an amount determined by Pace prior to closing which

 

97


Table of Contents

shall not exceed proceeds available under the Credit Agreement and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be $22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) equaling or exceeding the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel. As a result, Pace may be able to complete the Business Combination even though a substantial portion of its public shareholders do not agree with the transaction and have redeemed their Public Shares or have entered into privately negotiated agreements to sell their Public Shares to Pace Sponsor or Pace’s officers, directors, advisors or their affiliates.

In the event the aggregate cash consideration Pace would be required to pay for all Public Shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the Transaction Agreement exceed the aggregate amount of cash available to Pace, Pace will not complete the Business Combination or redeem any Public Shares, all Public Shares submitted for redemption will be returned to the holders thereof, and Pace instead may search for an alternate business combination.

If you or a “group” of shareholders of which you are a part are deemed to hold an aggregate of more than fifteen percent (15%) of the Public Shares issued in the Pace IPO, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares in excess of 15% of the Public Shares issued in the Pace IPO.

A public shareholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 15% of the Public Shares included in the Public Units sold in the Pace IPO. In order to determine whether a shareholder is acting in concert or as a group with another shareholder, Pace will require each public shareholder seeking to exercise redemption rights to certify to Pace whether such shareholder is acting in concert or as a group with any other shareholder. Such certifications, together with other public information relating to share ownership available to Pace at that time, such as Section 13D, Section 13G and Section 16 filings under the Exchange Act, will be the sole basis on which Pace makes the above-referenced determination. Your inability to redeem any such excess Public Shares will reduce your influence over Pace’s ability to consummate the Business Combination and you could suffer a material loss on your investment in Pace if you sell such excess Public Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to such excess shares if Pace consummates the Business Combination. As a result, you will continue to hold that number of shares aggregating to more than 15% of the shares sold in the Pace IPO and, in order to dispose of such excess shares, would be required to sell your Public Shares (or Class A-1 Shares, as applicable) in open market transactions, potentially at a loss. There is no assurance that the value of such excess shares will appreciate over time following the Business Combination or that the market price of the Public Shares (or Class A-1 Shares, as applicable) will exceed the per-share redemption price. Notwithstanding the foregoing, shareholders may challenge Pace’s determination as to whether a shareholder is acting in concert or as a group with another shareholder in a court of competent jurisdiction.

However, Pace’s shareholders’ ability to vote all of their shares (including such excess shares) for or against the Business Combination is not restricted by this limitation on redemption.

There is no guarantee that a shareholder’s decision whether to redeem its shares for a pro rata portion of the Trust Account will put the shareholder in a better future economic position.

There is no assurance as to the price at which a Pace shareholder may be able to sell its Public Shares (or Class A-1 Shares, as applicable) in the future following the completion of the Business Combination or any alternative business combination. Certain events following the consummation of any initial business combination, including the Business Combination, may cause an increase in the share price, and may result in a lower value realized now than a shareholder of Pace might realize in the future had the shareholder not redeemed

 

98


Table of Contents

its shares. Similarly, if a shareholder does not redeem its shares, the shareholder will bear the risk of ownership of the Public Shares (or Class A-1 Shares, as applicable) after the consummation of any initial business combination, and there can be no assurance that a shareholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement/prospectus. A shareholder should consult the shareholder’s tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.

Shareholders of Pace who wish to redeem their Public Shares for a pro rata portion of the Trust Account must comply with specific requirements for redemption, which may make it difficult for them to exercise their redemption rights prior to the deadline. If shareholders fail to comply with the redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their Public Shares for a pro rata portion of the funds held in the Trust Account.

Pace public shareholders who wish to redeem their Public Shares for a pro rata portion of the Trust Account must, among other things (i) submit a request in writing and (ii) tender their certificates to the Transfer Agent or deliver their Public Shares to the Transfer Agent electronically through the DWAC system at least two business days prior to the Extraordinary General Meeting. In order to obtain a physical stock certificate, a shareholder’s broker and/or clearing broker, DTC and the Transfer Agent will need to act to facilitate this request. Shareholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, because Pace does not have any control over this process or over the brokers, which is referred to herein as “DTC,” it may take significantly longer than two weeks to obtain a physical stock certificate. If it takes longer than anticipated to obtain a physical certificate, shareholders who wish to redeem their Public Shares may be unable to obtain physical certificates by the deadline for exercising their redemption rights and thus will be unable to redeem their Public Shares.

Shareholders electing to redeem their Public Shares will receive their pro rata portion of the Trust Account less franchise and income taxes payable, calculated as of two business days prior to the anticipated consummation of the Business Combination. Please see the section entitled “Extraordinary General Meeting of Pace — Redemption Rights” for additional information on how to exercise your redemption rights.

If a public shareholder fails to receive notice of Pace’s offer to redeem its Public Shares in connection with the Business Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.

Pace will comply with the proxy rules when conducting redemptions in connection with the Business Combination. Despite Pace’s compliance with these rules, if a public shareholder fails to receive Pace’s tender offer or proxy materials, as applicable, such shareholder may not become aware of the opportunity to redeem its Public Shares. In addition, the proxy materials, as applicable, that Pace will furnish to holders of its Public Shares in connection with the Business Combination will describe the various procedures that must be complied with in order to validly redeem Public Shares. In the event that a shareholder fails to comply with these procedures, its Public Shares may not be redeemed.

The ability of Pace’s public shareholders to exercise redemption rights with respect to a large number of Public Shares could increase the probability that the Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your Public Shares.

Each party’s obligation to consummate the Business Combination is conditioned on the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem Public Shares, plus (ii) an amount determined by Pace prior to closing which shall not exceed proceeds available under the Credit Agreement and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be $22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) equaling or exceeding the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel. In the event that Pace’s

 

99


Table of Contents

public shareholders exercise redemption rights with respect to a number of Public Shares such that this minimum cash condition is not met, the Business Combination is not likely to be successful. If the Business Combination is not completed in the required time set forth in the Transaction Agreement and Pace is unable to complete an initial business combination by [●], 2019, you would not receive your pro rata portion of the Trust Account until the Trust Account is liquidated. If you are in need of immediate liquidity, you could attempt to sell your Public Shares in the open market; however, at such time such Public Shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with the redemption until Pace liquidates or you are able to sell your Public Shares in the open market.

If Pace is unable to consummate an initial business combination by [], 2019 the public shareholders may be forced to wait beyond such date before redemption from the Trust Account.

If Pace is unable to consummate an initial business combination by [●], 2019, Pace will distribute the aggregate amount then on deposit in the Trust Account (less up to $100,000 of the earned interest, net of taxes, thereon to pay dissolution expenses), pro rata to the public shareholders by way of redemption and cease all operations except for the purposes of winding up of Pace’s affairs, as further described herein. Any redemption of public shareholders from the Trust Account shall be effected automatically by function of the Articles prior to any voluntary winding up. If Pace is required to windup, liquidate the Trust Account and distribute such amount therein, pro rata, to the public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Law of the Cayman Islands. In that case, Pace shareholders may be forced to wait beyond [●], 2019 before the redemption proceeds of the Trust Account become available to them and they receive the return of their pro rata portion of the proceeds from the Trust Account. Pace has no obligation to return funds to shareholders prior to the date of the redemption or liquidation unless it consummates a business combination prior thereto and only then in cases where shareholders have sought to redeem their Public Shares. Only upon the redemption or any liquidation will public shareholders be entitled to distributions if Pace is unable to complete a business combination.

 

100


Table of Contents

GENERAL INFORMATION

Presentation of Financial Information

This proxy statement/prospectus contains:

 

   

the audited consolidated financial statements of Pace as of and for the fiscal year ended December 31, 2018 and the period from February 14, 2017 (inception) to December 31, 2017, prepared in accordance with U.S. GAAP;

 

   

the unaudited condensed consolidated financial statements of Pace as of and for the six months ended June 30, 2019 and for the six months ended June 30, 2018, prepared in accordance with U.S. GAAP;

 

   

the audited consolidated financial statements of Accel as of and for the fiscal years ended December 31, 2018, December 31, 2017 and for the fiscal year ended December 31, 2016, prepared in accordance with U.S. GAAP;

 

   

the unaudited condensed consolidated financial statements of Accel as of and for the six months ended June 30, 2019 and for the six months ended June 30, 2018, prepared in accordance with U.S. GAAP; and

 

   

the unaudited pro forma condensed combined financial statements of Pace post-Business Combination for the year ended December 31, 2018 and as of and for the six months ended June 30, 2019, prepared in accordance with U.S. GAAP.

Unless indicated otherwise, financial data presented in this document has been taken from the audited and unaudited consolidated financial statements of Pace included in this document, and the audited and unaudited consolidated financial statements of Accel included in this document. Where information is identified as “unaudited,” it has not been subject to an audit.

Cautionary Note Regarding Forward-Looking Statements

Some of the statements contained in this proxy statement/prospectus constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Forward-looking statements reflect Pace’s current views with respect to, among other things, Pace’s capital resources, portfolio performance and results of operations. Likewise, Pace’s consolidated financial statements and all of Pace’s statements regarding anticipated growth in its operations, anticipated market conditions, demographics and results of operations are forward-looking statements. In some cases, you can identify these forward-looking statements by the use of terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words or phrases.

The forward-looking statements contained in this proxy statement/prospectus reflect Pace’s current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause its actual results to differ significantly from those expressed in any forward-looking statement. Pace does not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

 

   

possible delays in closing the Business Combination, whether due to the inability to obtain Pace shareholder or regulatory approval, litigation relating to the Business Combination, the failure of the condition requiring the aggregate of (i) the amount in the Trust Account net of any amounts used to redeem Public Shares, plus (ii) an amount determined by Pace prior to closing which shall not exceed

 

101


Table of Contents
 

proceeds available under the Credit Agreement and subject to certain limitations and exceptions described in the Transaction Agreement, plus (iii) the proceeds from the Investment Private Placement, minus (iv) the Pace transaction expenses (which shall be deemed to be $22,500,000) and the Accel transaction expenses (which shall be deemed to be $17,000,000) to equal or exceed the lesser of (x) $350,000,000 and (y) the aggregate Cash Elections of all the shareholders of Accel, or failure to satisfy any of the other conditions to closing the Business Combination, as set forth in the Transaction Agreement;

 

   

any waivers of the conditions to closing the Business Combination as may be permitted in the Transaction Agreement;

 

   

any failures of Pace to manage its growth effectively or to respond to the demand of licensed establishment partners following the consummation of the Business Combination;

 

   

any inability to complete acquisitions and integrate acquired businesses;

 

   

strict government regulation that is subject to frequent amendment, repeal or new interpretation;

 

   

general economic uncertainty and the effect of general economic conditions on the gaming industry in particular;

 

   

changes in personnel and availability of qualified personnel;

 

   

environmental uncertainties and risks related to adverse weather conditions and natural disasters;

 

   

the volatility of the market price and liquidity of Pace Shares and other securities of Pace; and

 

   

the increasingly competitive environment in which Pace will operate.

While forward-looking statements reflect Pace’s good faith beliefs, they are not guarantees of future performance. Pace disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this proxy statement/prospectus, except as required by applicable law. For a further discussion of these and other factors that could cause Pace’s future results, performance or transactions to differ significantly from those expressed in any forward-looking statement, please see the section entitled “Risk Factors.” You should not place undue reliance on any forward-looking statements, which are based only on information currently available to Pace (or to third parties making the forward-looking statements).

 

102


Table of Contents

EXTRAORDINARY GENERAL MEETING OF PACE

IN LIEU OF THE 2019 ANNUAL GENERAL MEETING OF PACE

This proxy statement/prospectus is being provided to Pace shareholders as part of a solicitation of proxies by the Pace Board for use at the Extraordinary General Meeting of Pace in lieu of the 2019 annual general meeting of Pace to be held on [●], 2019, and at any adjournment thereof. This proxy statement/prospectus contains important information regarding the Extraordinary General Meeting, the proposals on which you are being asked to vote and information you may find useful in determining how to vote and voting procedures.

This proxy statement/prospectus is being first mailed on or about [●], 2019 to all shareholders of record of Pace as of [●], 2019, the record date for the Extraordinary General Meeting. Shareholders of record who owned Pace Ordinary Shares at the close of business on the record date are entitled to receive notice of, attend and vote at the Extraordinary General Meeting. On the record date, there were [●] Pace Ordinary Shares outstanding.

Date, Time and Place of Extraordinary General Meeting

The Extraordinary General Meeting will be held at [●], on [●], 2019 at [●], or such other date, time and place to which such meeting may be adjourned, to consider and vote upon the proposals.

Proposals at the Extraordinary General Meeting

At the Extraordinary General Meeting, Pace shareholders will vote on the following proposals:

 

1.

Business Combination Proposal — To consider and vote upon a proposal to adopt the Transaction Agreement and approve the transactions contemplated thereby, including the Business Combination (Proposal No. 1);

 

2.

Domestication Proposal — To consider and vote upon a proposal to approve the Pace Domestication, to occur immediately prior to the Stock Purchase (Proposal No. 2);

 

3.

NYSE Proposal — To consider and vote upon a proposal to approve, for purposes of complying with applicable provisions of NYSE Listing Rule 312.03, the issuance of more than 20% of Pace’s issued and outstanding common stock following the Pace Domestication to Accel shareholders in connection with the Business Combination (Proposal No. 3);

 

4.

Charter Proposal — To consider and vote upon a proposal to adopt the Proposed Charter, to be effective following the Pace Domestication and immediately prior to the Stock Purchase (Proposal No. 4);

 

5.

Governance Proposals — To consider and vote upon, on a non-binding advisory basis, separate proposals to approve certain aspects of the provisions of the Proposed Charter that materially affect stockholder rights, which are being separately presented in accordance with SEC requirements (Proposal No. 5); and

 

6.

Adjournment Proposal — To consider and vote upon a proposal to approve the adjournment of the Extraordinary General Meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Pace shareholders or, if as of the time for which the Extraordinary General Meeting is scheduled, there are insufficient Pace Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the Extraordinary General Meeting, (ii) in order to solicit additional proxies from Pace shareholders in favor of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or (iii) if Pace shareholders redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied. The Adjournment Proposal will only be presented to Pace shareholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Domestication Proposal, the NYSE Proposal or the Charter Proposal, or in the event that Pace shareholders

 

103


Table of Contents
  redeem an amount of Public Shares such that the minimum proceeds condition to Pace’s obligation to consummate the Business Combination would not be satisfied (Proposal No. 6).

THE PACE BOARD UNANIMOUSLY RECOMMENDS

THAT YOU VOTE “FOR” EACH OF THESE PROPOSALS.

Voting Power; Record Date

As a shareholder of Pace, you have a right to vote on certain matters affecting Pace. The proposals that will be presented at the Extraordinary General Meeting and upon which you are being asked to vote are summarized above and fully set forth in this proxy statement/prospectus. You will be entitled to vote or direct votes to be cast at the Extraordinary General Meeting if you owned Pace Ordinary Shares at the close of business on [●], 2019, which is the record date for the Extraordinary General Meeting. You are entitled to one vote for each Pace Ordinary Share that you owned as of 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, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there were [●] Pace Ordinary Shares outstanding, of which [●] are Public Shares and [●] are Founder Shares held by the Pace Initial Shareholders.

Vote of the Pace Initial Shareholders and Pace’s Other Directors and Officers

Prior to the Pace IPO, Pace entered into agreements with the Pace Initial Shareholders and the other current directors and officers of Pace, pursuant to which each agreed to vote any Pace Ordinary Shares owned by them in favor of an initial business combination. These agreements apply to the Pace Initial Shareholders, including the Pace Sponsor, as it relates to the Founder Shares and the requirement to vote all of the Founder Shares in favor of the Business Combination. As of the record date, the Pace Initial Shareholders and the other current directors and officers own [●] Founder Shares, representing [●]% of the Pace Ordinary Shares then outstanding and entitled to vote at the Extraordinary General Meeting.

The Pace Initial Shareholders and the other current directors and officers of Pace have waived any redemption rights, including with respect to Public Shares purchased in the Pace IPO or in the aftermarket, in connection with Business Combination. The Founder Shares held by the Pace Initial Shareholders have no redemption rights upon the liquidation of Pace and will be worthless if no business combination is effected by Pace by [●], 2019. However, the Pace Initial Shareholders, officers and directors are entitled to redemption rights upon the liquidation of Pace with respect to any Public Shares they may own.

Quorum and Required Vote for Proposals for the Extraordinary General Meeting

The approval of the Business Combination Proposal requires an ordinary resolution as a matter of Cayman Islands law, being the affirmative vote of holders of a majority of Pace Ordinary Shares that are entitled to vote and are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Business Combination Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established, but will have no effect on the Business Combination Proposal. The holders of a majority of the Pace Ordinary Shares being present in person or by proxy shall be a quorum. The Pace Initial Shareholders have agreed to vote their Founder Shares and any Public Shares purchased by them during or after the Pace IPO in favor of the Business Combination Proposal.

The approval of the Domestication Proposal requires a special resolution as a matter of Cayman Islands law, being the affirmative vote of holders of at least two-thirds of Pace Ordinary Shares that are entitled to vote and

 

104


Table of Contents

are voted at the Extraordinary General Meeting. Accordingly, a Pace shareholder’s failure to vote by proxy or to vote in person at the Extraordinary General Meeting will not be counted towards the number of Pace Ordinary Shares required to validly establish a quorum, and if a valid quorum is otherwise established, such failure to vote will have no effect on the outcome of any vote on the Domestication Proposal. Abstentions will be counted in connection