S-4 1 tv506956_s4.htm FORM S-4

 

As filed with the United States Securities and Exchange Commission on November 13, 2018

Registration No. 333-[__]

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

PLATINUM EAGLE ACQUISITION CORP.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Cayman Islands

(State or other jurisdiction of

incorporation or organization)

6770

(Primary Standard Industrial

Classification Code Number)

98-1378631

(I.R.S. Employer

Identification Number)

 

2121 Avenue of the Stars, Suite 2300

Los Angeles, CA 90067

(310) 209-7280

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

 

 

 

Eli Baker

President, Chief Financial Officer and Secretary

2121 Avenue of the Stars, Suite 2300

Los Angeles, California 90067

(310) 209-7280

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

 

 

 

Copies to:

 

Joel L. Rubinstein

Jonathan P. Rochwarger

Elliott M. Smith

Winston & Strawn LLP

200 Park Avenue

New York, New York 10166

(212) 294-6700

William F. Schwitter

Jeffrey J. Pellegrino

Allen & Overy LLP

1221 Avenue of the Americas

New York, New York 10020

(212) 610-6300

 

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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) ¨

 

CALCULATION OF REGISTRATION FEE

 

Title of each class of securities to be
registered
  Amount to be
Registered (1)
    Proposed maximum
offering price per
share
    Proposed maximum
aggregate offering
price
    Amount of
registration fee
 
Units, each consisting of one share of Class A Common Stock, $0.0001 par value, and one-third of one Warrant(2)(12)     16,391,623     $ 10.30 (3)   $ 168,833,717 (3)   $ 20,462.65  
Common Stock(4)(5)(12)     16,391,623                 $ (6)
Warrants(7)(13)     5,463,874                   (6)
Common Stock(5)(8)(12)     32,733,377     $ 9.90 (9)     324,060,432 (9)   $ 39,276.12  
Warrants(10)(12)     10,702,786     $ 1.48 (11)   $ 15,840,123 (11)   $ 1,919.82  
Total                     508,734,272       61,658.59  

 

(1)Prior to the consummation of the business combination described in the proxy statement/prospectus forming part of this registration statement, Platinum Eagle Acquisition Corp., a Cayman Islands exempted company (“Platinum Eagle”), intends to effect a deregistration under the Cayman Islands Companies Law (2018 Revision) and a domestication under Section 388 of the Delaware General Corporation Law, pursuant to which Platinum Eagle’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “domestication”). All securities being registered will be issued by Platinum Eagle Acquisition Corp. (after its domestication as a corporation incorporated in the State of Delaware), the continuing entity following the domestication (which will be renamed Target Hospitality Corp. immediately after consummation of the business combination described herein) (referred to, both upon the domestication and subsequent to such change of name, as “Target Hospitality”).

 

(2)The number of units of Target Hospitality being registered represents the number of units of Platinum Eagle that were sold by Platinum Eagle pursuant to the Registration Statement on Form S-1 (File No. 333-222279) in connection with its initial public offering, less the number of units that have been separated, upon the request of the holder thereof, into the underlying public shares (as defined below) and the underlying public warrants (as defined below) as of the date of the initial filing of this registration statement. The units will automatically convert by operation of law into units of Target Hospitality in the domestication (the “units”).

 

(3)Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the units of Platinum Eagle on The Nasdaq Capital Market on November 9, 2018 ($10.30 per unit), in accordance with Rule 457(f)(1).

 

(4)The number of shares of common stock of Target Hospitality being registered represents the number of public shares that, as of the date of the initial filing of this registration statement, remain included in the units. See (2) above.

 

(5)Pursuant to Rule 416(a), 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.

 

(6)Pursuant to Rule 457(g), no registration fee is payable.

 

(7)The number of warrants to acquire Target Hospitality common stock being registered represents the number of public warrants that, as of the date of the initial filing of this registration statement, remain included in the units. See (2) above.

 

(8)The number of shares of common stock of Target Hospitality being registered represents (i) the number of Class A ordinary shares of Platinum Eagle that were sold as part of the units in Platinum Eagle’s initial public offering (the “public shares”), less the number of public shares that remain included in the units (see (2) above) as of the date of the initial filing of this registration statement, all of which public shares will automatically convert by operation of law into shares of common stock of Target Hospitality in the domestication, plus (ii) 8,125,000 shares of common stock representing 8,125,000 Class B ordinary shares of Platinum Eagle (“Class B ordinary shares”) that will automatically convert by operation of law into Class A ordinary shares in connection with the domestication, plus (iii) 8,500,000 shares of common stock representing up to 8,500,000 Class A ordinary shares that will be issued to certain institutions and accredited investors in private placements immediately prior to the domestication pursuant to the terms of those certain subscription agreements, all such shares will convert into shares of common stock of Target Hospitality in connection with the domestication.

 

(9)Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the Class A ordinary shares of Platinum Eagle on The Nasdaq Capital Market on November 9, 2018 ($9.90 per ordinary share), in accordance with Rule 457(f)(1).

  

(10)The number of warrants being registered represents (i) the number of warrants to acquire Class A ordinary shares of Platinum Eagle that were sold as part of the units by Platinum Eagle in its initial public offering (the “public warrants”), less the public warrants that remain included in the units plus (ii) 5,333,334 warrants to purchase Class A ordinary shares of Platinum Eagle that were issued in a private placement concurrently with Platinum Eagle’s initial public offering (the “private placement warrants” and together with the public warrants, the “warrants”). The warrants will automatically convert by operation of law into warrants to acquire Target Hospitality common stock in the domestication.

 

(11)Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the warrants of Platinum Eagle on The Nasdaq Capital Market on November 9, 2018 ($1.48 per warrant), in accordance with Rule 457(f)(1).

 

(12)As described in the proxy statement/prospectus forming a part of this registration statement, on the effective date of the domestication and pursuant to the terms of the certificate of incorporation of Target Hospitality to be filed with the Secretary of State of the State of Delaware (the “Proposed Charter”), following the conversion of all Class B ordinary shares into Class A ordinary shares in accordance with the terms of the Proposed Charter, all Class A ordinary shares of Platinum Eagle will convert on a one-for-one basis into shares of common stock of Target Hospitality and each outstanding unit will be separated into its component share of common stock and warrant.

 

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 United States Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 

 

 

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

 

PRELIMINARY PROXY STATEMENT/PROSPECTUS SUBJECT TO COMPLETION, DATED NOVEMBER 13, 2018

 

PROXY STATEMENT FOR EXTRAORDINARY GENERAL MEETING OF

PLATINUM EAGLE ACQUISITION CORP.

 

 

 

PROSPECTUS FOR

16,391,623 UNITS (EACH UNIT COMPRISING ONE SHARE OF COMMON STOCK AND ONE-THIRD OF ONE

WARRANT TO PURCHASE ONE SHARE OF COMMON STOCK),

32,733,377 SHARES OF COMMON STOCK AND 10,702,786 WARRANTS TO PURCHASE SHARES OF COMMON STOCK, IN EACH CASE, OF PLATINUM EAGLE ACQUISITION CORP. (AFTER ITS DOMESTICATION AS A CORPORATION INCORPORATED IN THE STATE OF DELAWARE), THE CONTINUING ENTITY FOLLOWING THE DOMESTICATION (WHICH WILL BE RENAMED TARGET HOSPITALITY CORP. IMMEDIATELY AFTER CONSUMMATION OF THE BUSINESS COMBINATION)

 

 

 

The board of directors of Platinum Eagle Acquisition Corp., a Cayman Islands exempted company (“Platinum Eagle,” the “Company,” “we,” “us” or “our”), has unanimously approved (i) the agreement and plan of merger, dated as of November 13, 2018, as may be amended from time to time (the “Target Merger Agreement”), by and among the Company, Topaz Holdings Corp., a Delaware corporation and a wholly owned subsidiary of the Company (the “Holdco Acquiror,” and, together with the Company and Signor Merger Sub (defined below), the “Acquirors”), and Algeco Investments B.V., a Netherlands besloten vennotschap (“Algeco Seller”), pursuant to which the Holdco Acquiror will purchase all of the issued and outstanding equity interests of Algeco US Holdings, LLC, a Delaware limited liability company (“Target Parent”), the owner of Target Logistics Management, LLC, a Massachusetts limited liability company (“Target”), from Algeco Seller, and (ii) the agreement and plan of merger, dated as of November 13, 2018, as may be amended from time to time (the “Signor Merger Agreement” and, together with the Target Merger Agreement, the “Merger Agreements”), by and among the Company, Signor Merger Sub Inc. (“Signor Merger Sub”), a Delaware corporation, wholly owned subsidiary of the Company and sister company to Holdco Acquiror, and Arrow Holdings S.a. r.l., a Luxembourg société à responsabilité limitée (“Arrow Seller”), pursuant to which the Holdco Acquiror will purchase all of the issued and outstanding equity interests of Arrow Parent Corp., a Delaware corporation (“Signor Parent”), the owner Arrow Bidco, LLC, a Delaware limited liability company (“Arrow Bidco”) and owner of RL Signor Holdings, LLC, a Delaware limited liability company (“Signor”), from Signor Parent (the transactions contemplated by the Merger Agreements, the “business combination”). Upon consummation of the business combination, Holdco Acquiror will be the sole parent of Arrow Bidco, which will be the sole parent of each of Target and Signor and a wholly owned subsidiary of Platinum Eagle.

 

As described in this proxy statement/prospectus, Platinum Eagle’s shareholders are being asked to consider and vote upon (among other things) the business combination, which includes the change of Platinum Eagle’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “domestication”). The continuing entity following the domestication will be renamed Target Hospitality Corp. (“Target Hospitality”).

 

Under the Merger Agreements, the total amount payable by us will be $1.311 billion (which amount is inclusive of the amounts required to pay third party and intercompany indebtedness at the closing of the business combination and net of transaction expenses), of which (A) $562 million will be paid in cash (the “Cash Consideration”) and (B) the remaining $749 million will be paid to the Sellers in the form of shares of common stock, par value $0.0001, of Target Hospitality, with (i) 25,800,000 such shares delivered to the Algeco Seller pursuant to the Target Merger Agreement and (ii) 49,100,000 such shares delivered to the Arrow Seller pursuant to the Signor Merger Agreement. The Cash Consideration will come from the following sources: (1) proceeds available from the trust account, after giving effect to any and all redemptions; (2) the gross proceeds from new debt financing of at least $340 million; and (3) the proceeds from private placements of Class A ordinary shares (as defined below) (the “Equity Offering”) or other equity offering to fund any shortfall of proceeds from the trust account after taking into account the Equity Offering (the “Backstop Offering”). The Cash Consideration payable to the Algeco Seller will be increased to the extent any cash on the balance sheet of the combined business of Signor and Target, after giving effect to the business combination, the redemptions from the Trust Account, the proceeds from the Equity Offering and the proceeds from the Backstop Offering, if any, exceeds $5.0 million. In the event the Cash Consideration is increased, the Stock Consideration paid to Algeco Seller will be decreased on a dollar for dollar basis. Notwithstanding the foregoing, in no event shall the Cash Consideration be less than $562.0 million, but depending upon the amount of redemptions and additional equity raised through the Equity Offering and Backstop Offering, if any, the Cash Consideration and Stock Consideration will be adjusted accordingly.

 

On the effective date of the domestication, the currently issued and outstanding Class B ordinary shares, par value $0.0001 per share, of Platinum Eagle (“Class B ordinary shares”) will automatically convert by operation of law, on a one-for-one basis (subject to adjustment pursuant to Platinum Eagle’s amended and restated memorandum and articles of association), into Class A ordinary shares, par value $0.0001 per share, of Platinum Eagle (“Class A ordinary shares”). Immediately thereafter, the currently issued and outstanding Class A ordinary shares will automatically convert by operation of law, on a one-for-one basis, into shares of common stock, par value $0.0001 per share, of Target Hospitality (“Target Hospitality common stock”) in accordance with the terms of the certificate of incorporation of Target Hospitality to be filed with the Secretary of State of the State of Delaware (the “Proposed Charter”).

 

 

 

 

This proxy statement/prospectus covers the following securities of Target Hospitality to be issued in the domestication: (i) 16,391,623 units (each unit including one share of Target Hospitality common stock and one-third of one warrant to purchase one share of Target Hospitality common stock), representing the units that were registered in our initial public offering less those that have been separated into their underlying public shares (as defined herein) and public warrants (as defined herein), (ii) 32,733,377 shares of Target Hospitality common stock, representing our currently issued and outstanding Class A ordinary shares and Class B ordinary shares and the Class A ordinary shares that will be issued immediately prior to the domestication pursuant to the Equity Offering and Backstop Offering, if any, less the number of public shares that are represented by the aforementioned units and (iii) 10,702,786 warrants to acquire shares of Target Hospitality common stock, representing our currently issued and outstanding warrants less the number of public warrants that are represented by the aforementioned units.

 

Platinum Eagle’s units, Class A ordinary shares and public warrants are currently listed on The Nasdaq Capital Market (“Nasdaq”) under the symbols “EAGLU,” “EAGL” and “EAGLW,” respectively. Platinum Eagle has applied to continue the listing of the Target Hospitality common stock and public warrants effective upon the consummation of the business combination, on Nasdaq under the proposed symbols “TH” and “THW,” respectively.

 

This proxy statement/prospectus provides you with detailed information about the business combination and other matters to be considered at the general meeting. We urge you to carefully read this entire document and the documents incorporated herein by reference. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 39 of this proxy statement/prospectus.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the transactions described in this proxy statement/prospectus, passed upon the fairness of either of the Merger Agreements or the transactions contemplated thereby, or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

 

This proxy statement/prospectus is dated     , 2019, and is first being mailed to Platinum Eagle shareholders on or about     , 2019.

 

 

 

 

PLATINUM EAGLE ACQUISITION CORP.

 

A Cayman Islands Exempted Company
(Company Number 324737)
2121 Avenue of the Stars, Suite 2300
Los Angeles, California 90067

 

NOTICE OF EXTRAORDINARY GENERAL MEETING

TO BE HELD ON    , 2019

 

TO THE SHAREHOLDERS OF PLATINUM EAGLE ACQUISITION CORP.:

 

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “general meeting”) of Platinum Eagle Acquisition Corp., a Cayman Islands exempted company, company number 324737 (“Platinum Eagle,” the “Company,” “we,” “us” or “our”), will be held at     a.m., Eastern Time, on    , 2019, at the offices of Winston & Strawn LLP, at 200 Park Avenue, New York, New York 10166. You are cordially invited to attend the meeting, which will be held for the following purposes:

 

(a)Proposal No. 1 — The Business Combination Proposal — to consider and vote upon a proposal to approve by ordinary resolution and adopt (i) the agreement and plan of merger, dated as of November 13, 2018, as may be amended from time to time (the “Target Merger Agreement”), by and among the Company, Topaz Holdings Corp., a Delaware corporation and a wholly owned subsidiary of the Company (the “Holdco Acquiror,” and, together with the Company and Signor Merger Sub (defined below), the “Acquirors”), and Algeco Investments B.V., a Netherlands besloten vennotschap (“Algeco Seller”), pursuant to which the Holdco Acquiror will purchase all of the issued and outstanding equity interests of Algeco US Holdings, LLC, a Delaware limited liability company (“Target Parent”), the owner of Target Logistics Management, LLC, a Massachusetts limited liability company (“Target”), from Algeco Seller and (ii) the agreement and plan of merger, dated as of November 13, 2018, as may be amended from time to time (the “Signor Merger Agreement” and, together with the Target Merger Agreement, the “Merger Agreements”), by and among the Acquirors, and Arrow Holdings S.a. r.l., a Luxembourg société à responsabilité limitée (“Arrow Seller”), pursuant to which the Holdco Acquiror will purchase all of the issued and outstanding equity interests of Arrow Parent Corp., a Delaware corporation (“Signor Parent”), the owner Arrow Bidco, LLC, a Delaware limited liability company (“Arrow Bidco”) and owner of RL Signor Holdings, LLC, a Delaware limited liability company (“Signor”), from Arrow Seller (the transactions contemplated by the Merger Agreements, the “business combination,” and such proposal, the “business combination proposal”);

 

(b)Proposal No. 2 — The Domestication Proposal — to consider and vote upon a proposal to approve by special resolution, assuming the business combination proposal is approved and adopted, the change of Platinum Eagles jurisdiction of incorporation from the Cayman Islands to the State of Delaware by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the domestication and such proposal, the domestication proposal);

 

(c)The Organizational Documents Proposals — to consider and vote upon three separate proposals (which we refer to, collectively, as the organizational documents proposals) to approve by special resolution, assuming the domestication proposal is approved and adopted, the following material differences between the current amended and restated memorandum and articles of association of Platinum Eagle (the Existing Organizational Documents) and the proposed new certificate of incorporation (the Proposed Charter) and bylaws (the Proposed Bylaws, and, together with the Proposed Charter, the Proposed Organizational Documents) of Target Hospitality Corp., the post-domestication company (Target Hospitality):

 

(1)Proposal No. 3 — Organizational Documents Proposal A — to approve the provision in the Proposed Charter changing the authorized share capital from $40,100 divided into 380,000,000 Class A ordinary shares, par value $0.0001 per share (“Class A ordinary shares”), 20,000,000 Class B ordinary shares, par value $0.0001 per share (“Class B ordinary shares”), and 1,000,000 preferred shares, par value $0.0001 per share (“preferred shares”), to authorized capital stock of 401,000,000 shares, consisting of (x) 400,000,000 shares of common stock, par value $0.0001 per share “Target Hospitality common stock”) and (y) 1,000,000 shares of preferred stock (we refer to this as “organizational documents proposal A”);

 

 

 

 

(2)Proposal No. 4 — Organizational Documents Proposal B — to approve the provision in the Proposed Bylaws authorizing that only the board of directors, chairperson of the board of directors or the chief executive officer may call a meeting of stockholders (we refer to this as “organizational documents proposal B”);

 

(3)Proposal No. 5 — Organizational Documents Proposal C — to approve all other changes in connection with the replacement of the current amended and restated memorandum and articles of association of Platinum Eagle with the proposed new certificate of incorporation and bylaws of Target Hospitality as part of the domestication, including, among other things, (i) changing the post-domestication corporate name from “Platinum Eagle Acquisition Corp.” to “Target Hospitality Corp.” and making Target Hospitality’s corporate existence perpetual, (ii) adopting Delaware as the exclusive forum for certain stockholder litigation, (iii) granting a waiver regarding corporate opportunities to Target Hospitality’s non-employee directors and (iv) removing certain provisions related to our status as a blank check company that will no longer apply upon consummation of the business combination, all of which Platinum Eagle’s board of directors believe are necessary to adequately address the needs of Target Hospitality after the business combination (we refer to this as “organizational documents proposal C”).

 

(d)Proposal No. 6 — The Stock Issuance Proposal — to consider and vote upon a proposal to approve by ordinary resolution, assuming the business combination proposal, the domestication proposal and the organizational documents proposals are approved and adopted, for the purposes of complying with the applicable listing rules of The Nasdaq Stock Market (Nasdaq), the issuance of (x) shares of Target Hospitality common stock to (i) Algeco Seller pursuant to the terms of the Target Merger Agreement, (ii) Arrow Seller pursuant to the terms of the Signor Merger Agreement, and (y) Class A ordinary shares to certain institutions and accredited investors in connection with the Equity Offering in each case as described below (we refer to this proposal as the stock issuance proposal);

 

(e)Proposal No. 7 — The Incentive Award Plan Proposal — to consider and vote upon a proposal to approve by ordinary resolution, assuming the business combination proposal, the domestication proposal, the organizational documents proposals and stock issuance proposal are approved and adopted, the Target Hospitality Corp. 2019 Incentive Award Plan (we refer to this proposal as the incentive award plan proposal and, collectively with the business combination proposal, the domestication proposal, the organizational documents proposals and the stock issuance proposal, the condition precedent proposals); and

 

(f)Proposal No. 8 — The Adjournment Proposal — to consider and vote upon a proposal to approve by ordinary resolution the adjournment of the general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the general meeting, any of the condition precedent proposals would not be duly approved and adopted by our shareholders or we determine that one or more of the closing conditions under the Merger Agreements is not satisfied or waived (we refer to this proposal as the adjournment proposal).

 

Only holders of record of Platinum Eagle’s Class A ordinary shares and Class B ordinary shares (collectively, “ordinary shares”) at the close of business on     , 2019 are entitled to notice of and to vote and have their votes counted at the general meeting and any adjournment of the general meeting.

 

We will provide you with the proxy statement/prospectus and a proxy card in connection with the solicitation of proxies to be voted at the general meeting and at any adjournment of the general meeting. Whether or not you plan to attend the general meeting, we urge you to read when available the proxy statement/prospectus (and any documents incorporated into the proxy statement/prospectus by reference) carefully. Please pay particular attention to the section entitled “Risk Factors.”

 

After careful consideration, Platinum Eagle’s board of directors has determined that each of the business combination proposal, the domestication proposal, the organizational documents proposals, the stock issuance proposal, the incentive award plan proposal and the adjournment proposal are in the best interests of Platinum Eagle and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.

 

The existence of financial and personal interests of Platinum Eagle’s directors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of Platinum Eagle and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal — Interests of Platinum Eagle’s Directors and Officers in the Business Combination” in the proxy statement/prospectus when it becomes available for a further discussion.

 

 

 

 

Under the Merger Agreements, the approval of each of the condition precedent proposals is a condition to the consummation of the business combination. The adoption of each condition precedent proposal is conditioned on the approval of all of the condition precedent proposals. The adjournment proposal is not conditioned on the approval of any other proposal. If our shareholders do not approve each of the condition precedent proposals, the business combination may not be consummated.

 

In connection with our initial public offering, our initial shareholders (consisting of Platinum Eagle Acquisition LLC, a Delaware limited liability company (our “Sponsor”) and Harry E. Sloan) and our independent directors at the time of our initial public offering entered into letter agreements to vote their Class B ordinary shares purchased prior to our initial public offering (“founder shares”), as well as any Class A ordinary shares sold by us in our initial public offering (“public shares”) purchased by them during or after our initial public offering, in favor of the business combination proposal and we also expect them to vote their shares in favor of all other proposals being presented at the general meeting. As of the date hereof, our initial shareholders own 20.0% of our total outstanding ordinary shares.

 

Pursuant to Platinum Eagle’s Existing Organizational Documents, a holder of public shares (“public shareholder”) may request that Platinum Eagle redeem all or a portion of its public shares (which would become shares of Target Hospitality common stock in the domestication) for cash if the business combination is consummated. For the purposes of Article 49.3 of the Existing Organizational Documents and the Cayman Islands Companies Law (2018 Revision), the exercise of redemption rights shall be treated as an election to have such public shares repurchased for cash and references in the proxy statement/prospectus relating to the business combination shall be interpreted accordingly. You will be entitled to receive cash for any public shares to be redeemed only if you:

 

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

 

(ii)prior to           p.m., Eastern Time, on           , 2019, (a) submit a written request to Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent (the “transfer agent”), that Platinum Eagle redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through Depository Trust Company (“DTC”).

 

Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent, directly and instruct it to do so. Public shareholders may elect to redeem all or a portion of their public shares even if they vote for the business combination proposal. If the business combination is not consummated, the public shares will not be redeemed for cash. If a public shareholder properly exercises its right to redeem its public shares and timely delivers its shares to the transfer agent, we will redeem each public share for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account established in connection with our initial public offering (the “trust account”), calculated as of two business days prior to the consummation of the business combination, including interest, less income taxes payable, divided by the number of then issued and outstanding public shares. For illustrative purposes, as of June 30, 2018, this would have amounted to approximately $10.0691 per public share. If a public shareholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. See “Extraordinary General Meeting — Redemption Rights” in the proxy statement/prospectus when it becomes available for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

 

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

 

Under the Merger Agreements, the total amount payable by the Holdco Acquiror will be $1.311 billion (which amount is inclusive of the amounts required to pay third party and intercompany indebtedness at the closing of the business combination and net of transaction expenses), of which (A) $562 million will be paid in cash (the “Cash Consideration”) and (B) the remaining $749 million will be paid to the Sellers in the form of shares of common stock, par value $0.0001, of Target Hospitality, with (i) 25,800,000 such shares delivered to the Algeco Seller pursuant to the Target Merger Agreement and (ii) 49,100,000 such shares delivered to the Arrow Seller pursuant to the Signor Merger Agreement. The Cash Consideration will come from the following sources: (1) proceeds available from the trust account, after giving effect to any and all redemptions; (2) the gross proceeds from new debt financing of at least $340 million; and (3) subject to the prior consent of the Sellers: the proceeds from private placements of Class A ordinary shares (the “Equity Offering”). The Cash Consideration payable to the Algeco Seller will be increased to the extent any cash on the balance sheet of the combined business of Signor and Target, after giving effect to the business combination, the redemptions from the Trust Account, the proceeds from the Equity Offering and the proceeds from the Backstop Offering, if any, exceeds $5.0 million. In the event the Cash Consideration is increased, the Stock Consideration paid to Algeco Seller will be decreased on a dollar for dollar basis. Notwithstanding the foregoing, except to the extent reduced by the working capital adjustment, in no event shall the Cash Consideration be less than $562.0 million, but depending upon the amount of redemptions and additional equity raised through the Equity Offering and Backstop Offering, if any, the Cash Consideration and Stock Consideration will be adjusted accordingly.

 

 

 

 

The consummation of the business combination is conditioned upon, among other things, (i) the Company (or its applicable subsidiaries) receiving gross proceeds of at least $340 million from new debt financing, (ii) approval by the Company’s shareholders of the Merger Agreements, the business combination and certain other actions related thereto, (iii) the availability of at least $225 million of cash in the Company’s trust account (and/or from other specified sources, if necessary), after giving effect to redemptions of public shares, if any (the “Minimum Proceeds”) and (iv) the receipt of consent from the existing lenders of Algeco and certain of its affiliates. Unless waived, if any of these conditions are not satisfied, the business combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001.

 

In order to finance a portion of the Cash Consideration payable in the business combination and the costs and expenses incurred in connection therewith, (i) the Company entered into subscription agreements with certain institutions and accredited investors (the “Subscription Agreements”) and (ii) the Holdco Acquiror entered into a debt commitment letter (the “Debt Commitment Letter”) with                 ,                   ,              and                     (collectively, the “Commitment Parties”). Pursuant to the terms of the Subscription Agreements, the investors party thereto have agreed to purchase an aggregate of up to 8,500,000 Class A ordinary shares immediately prior to the closing of the business combination (the “Closing”) at a cash purchase price of $10.00 per share. In addition, pursuant to the terms of the Debt Commitment Letter, the Commitment Parties committed to make available to the Holdco Acquiror, at Closing, a senior secured asset-based revolving credit facility in the aggregate principal amount of $125 million (the “New ABL Facility”) and, to the extent the Holdco Acquiror does not receive at least $300 million of gross proceeds from the issuance of second-lien senior secured notes on the date of the Closing (the “Closing Date”), $300 million (minus the amount of gross proceeds from the issuance of second-lien senior secured notes on or prior to the Closing Date) in aggregate principal amount of senior secured increasing rate loans (the “Bridge Facility”).

 

Our Sponsor and Harry E. Sloan (together with the Sponsor, the “Founders”) will deposit into escrow certain of their founder shares pursuant to an earnout agreement (the “Earnout Agreement”) and an escrow agreement (the “Escrow Agreement”) to be entered into at the Closing. Pursuant to the Earnout Agreement, the founder shares will be released from escrow to the Founders and/or transferred to Arrow Seller upon the achievement of certain earnout targets. Upon the expiration of the three year earnout period, any founder shares remaining in escrow that were not released in accordance with the Earnout Agreement will be transferred to the Company for cancellation. The founders, Algeco Seller, Arrow Seller, the Company and certain other parties named therein will enter into an amended and restated registration rights agreement providing the parties thereto with certain demand, shelf and piggyback registration rights covering all shares of Target Hospitality common stock owned by each holder.

 

All Platinum Eagle shareholders are cordially invited to attend the general meeting in person. To ensure your representation at the general meeting, however, you are urged to complete, sign, date and return the proxy card accompanying the proxy statement/prospectus as soon as possible. If you are a shareholder of record holding ordinary shares, you may also cast your vote in person at the general meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the general meeting and vote in person, obtain a proxy from your broker or bank. If you do not vote or do not instruct your broker or bank how to vote, it will have no effect on the proposals because such action would not count as a vote cast at the general meeting.

 

Your vote is important regardless of the number of shares you own. Whether you plan to attend the general meeting or not, please sign, date and return the proxy card accompanying the proxy statement/prospectus as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

 

If you have any questions or need assistance voting your ordinary shares, please contact Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing     . This notice of general meeting is and the proxy statement/prospectus relating to the business combination will be available at     .

 

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

 

                     , 2019 By Order of the Board of Directors,
   
   
  Jeff Sagansky
  Chief Executive Officer and Chairman

 

 

 

 

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (I) IF YOU HOLD CLASS A ORDINARY SHARES THROUGH UNITS, ELECT TO SEPARATE YOUR UNITS INTO THE UNDERLYING CLASS A ORDINARY SHARES AND PUBLIC WARRANTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES, (II) SUBMIT A WRITTEN REQUEST TO THE TRANSFER AGENT, THAT YOUR PUBLIC SHARES BE REDEEMED FOR CASH, AND (III) DELIVER YOUR CLASS A ORDINARY SHARES TO THE TRANSFER AGENT, PHYSICALLY OR ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE IN ACCORDANCE WITH THE PROCEDURES AND DEADLINES DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, THEN THE PUBLIC 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. SEE “EXTRAORDINARY GENERAL MEETING —  REDEMPTION RIGHTS” IN THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE FOR MORE SPECIFIC INSTRUCTIONS.

 

This notice was mailed by Platinum Eagle on      , 2019.

 

 

 

 

TABLE OF CONTENTS

 

  Page
   
REFERENCES TO ADDITIONAL INFORMATION 1
   
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 2
   
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS 4
   
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS 16
   
SELECTED HISTORICAL FINANCIAL INFORMATION OF PLATINUM EAGLE 28
   
SELECTED HISTORICAL FINANCIAL INFORMATION OF TARGET PARENT 29
   
SELECTED HISTORICAL FINANCIAL INFORMATION OF SIGNOR 32
   
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 35
   
COMPARATIVE PER SHARE DATA 37
   
TICKER SYMBOL AND DIVIDEND INFORMATION 38
   
RISK FACTORS 39
   
EXTRAORDINARY GENERAL MEETING 63
   
THE BUSINESS COMBINATION PROPOSAL 69
   
THE DOMESTICATION PROPOSAL 90
   
THE ORGANIZATIONAL DOCUMENTS PROPOSALS 93
   
THE STOCK ISSUANCE PROPOSAL 97
   
THE ADJOURNMENT PROPOSAL 103
   
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 104
   
COMPARISON OF CORPORATE GOVERNANCE AND SHAREHOLDER RIGHTS 114
   
OTHER INFORMATION RELATED TO PLATINUM EAGLE 116
   
PLATINUM EAGLE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 122
   
BUSINESS OF TARGET HOSPITALITY 125
   
TARGET PARENT’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 140
   
SIGNOR’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 158
   
INDEBTEDNESS 170
   
MANAGEMENT OF Target Hospitality FOLLOWING THE BUSINESS COMBINATION 173
   
BENEFICIAL OWNERSHIP OF SECURITIES 181
   
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 183
   
DESCRIPTION OF SECURITIES 187
   
SECURITIES ACT RESTRICTIONS ON RESALE OF COMMON STOCK 195
   
U.S. FEDERAL INCOME TAX CONSIDERATIONS 196
   
APPRAISAL RIGHTS 204
   
SHAREHOLDER PROPOSALS AND NOMINATIONS 204
   
SHAREHOLDER COMMUNICATIONS 206
   
LEGAL MATTERS 206
   
EXPERTS 206
   
DELIVERY OF DOCUMENTS TO SHAREHOLDERS 206
   
ENFORCEABILITY OF CIVIL LIABILITY 206
   
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE 206

 

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INFORMATION NOT REQUIRED IN PROSPECTUS 208
   
SIGNATURES 211
   
POWER OF ATTORNEY 211
   
EXHIBIT INDEX 208

 

ANNEXES

 

A — Target Merger Agreement A-1
B — Signor Merger Agreement B-1
C — Existing Organizational Documents of Platinum Eagle C-1
D — Proposed Charter of Target Hospitality D-1
E — Proposed Bylaws of Target Hospitality E-1
F — Target Hospitality Corp. 2019 Incentive Award Plan F-1
G — Form of Certificate of Domestication of Platinum Eagle Acquisition Corp. G-1
H — Form of Earnout Agreement H-1
I — Form of Escrow Agreement I-1
J — Form of Subscription Agreement J-1

  

 ii 

 

 

REFERENCES TO ADDITIONAL INFORMATION

 

This proxy statement/prospectus incorporates important information that is not included in or delivered with this proxy statement/prospectus. This information is available for you to review at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and through the SEC’s website at www.sec.gov.

 

You may request copies of this proxy statement/prospectus and any of the documents incorporated by reference into this proxy statement/prospectus or other information concerning Platinum Eagle, without charge, by written request to Eli Baker, Platinum Eagle Acquisition Corp., 2121 Avenue of the Stars, Suite 2300, Los Angeles, CA 90067, or by telephone request at (310) 209-7280; or Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing        , or from the SEC through the SEC website at the address provided above.

 

In order for you to receive timely delivery of the documents in advance of the general meeting of Platinum Eagle to be held on         , 2019, you must request the information no later than four business days prior to the date of the general meeting, by         , 2019.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

The statements contained in this proxy statement/prospectus and in any document incorporated by reference herein that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. The information included in this proxy statement/prospectus in relation to Target has been provided by Target and its management team, and the information included in this proxy statement/prospectus in relation to Signor has been provided by Signor and its management. Forward-looking statements include statements relating to each of Target’s and Signor’s management teams’ expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement/prospectus and in any document incorporated by reference herein may include, for example, statements about:

 

·our ability to complete the business combination, or, if we do not consummate the business combination, any other initial business combination;

 

·satisfaction of conditions to the business combination, including satisfaction of conditions to the business combination, including the Company (or its applicable subsidiaries) receiving gross proceeds of at least $340 million from debt financing and the availability of at least $225 million of cash in the Company’s trust account (and/or from other specified sources, if necessary), after giving effect to redemptions of public shares, if any;

 

·the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreements;

 

·the ability to obtain and/or maintain the listing of our common stock on Nasdaq following the business combination;

 

·our ability to raise financing in the future;

 

·our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;

 

·our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving the business combination, as a result of which they would then receive expense reimbursements;

 

·our potential ability to obtain financing to complete the business combination;

 

·our public securities’ potential liquidity and trading;

 

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

 

·factors relating to the business, operations and financial performance of Target Hospitality, including:

 

·its ability to effectively compete in the specialty rental accommodations and hospitality services industry;

 

·its reliance on third party manufacturers and suppliers;

 

·its ability to successfully acquire and integrate new operations;

 

·its inability to recognize deferred tax assets and tax loss carryforwards;

 

·its ability to meet its debt service requirements and obligations;

 

·market conditions and global and economic factors beyond Target Hospitality’s control;

 

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·factors relating to the business, operations and financial performance of Target Hospitality, including:

 

·market conditions and global and economic conditions and other factors beyond Target Hospitality’s control;

 

·intense competition and competitive pressures from other companies worldwide in the industries in which Target Hospitality operates;

 

·litigation and the ability to adequately protect Target Hospitality’s intellectual property rights; and

 

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

 

The forward-looking statements contained in this proxy statement/prospectus and in any document incorporated by reference herein are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in this proxy statement/prospectus and in our Annual Report on Form 10-K for the year ended December 31, 2017. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

Before you grant your proxy or instruct how your vote should be cast or vote on the proposals to be put to the general meeting, you should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect Platinum Eagle, Target, Signor or, following the consummation of the business combination, Target Hospitality.

 

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

 

Q:Why am I receiving this proxy statement/prospectus?

 

A:Platinum Eagle is proposing to consummate a business combination with Target and Signor. Platinum Eagle, Algeco and Arrow Seller have entered into the Merger Agreements, the terms of which are described in this proxy statement/prospectus. Copies of each of the Merger Agreements, as amended, are attached to this proxy statement/prospectus as Annex A and B. Platinum Eagle urges its shareholders to read each of the Merger Agreements in their entirety. The Merger Agreements, among other things, provide for the purchase by Platinum Eagle, through its wholly-owned subsidiary, the Holdco Acquiror, of all of the issued and outstanding equity interests of Target Parent and Signor Parent from the Algeco Seller and the Arrow Seller, respectively; these transactions, along with the other transactions contemplated by the Merger Agreements, are referred to as the “business combination.”

 

Consummation of the business combination requires the approval of shareholders holding a majority of the ordinary shares voting at a general meeting that is being called by Platinum Eagle.

 

Under the Merger Agreements, Platinum Eagle will domesticate as a Delaware corporation. On the effective date of the domestication, the Class B ordinary shares will automatically convert by operation of law, on a one-for-one basis, into Class A ordinary shares. Immediately thereafter, the Class A ordinary shares will automatically convert by operation of law, on a one-for-one basis, into shares of Target Hospitality common stock in accordance with the terms of the Proposed Charter.

 

The provisions of the Proposed Charter will differ materially from those of Platinum Eagle’s Existing Organizational Documents. Please see “Questions and Answers About the Proposals — What amendments will be made to the Existing Organizational Documents of Platinum Eagle” below.

 

After the effectiveness of the domestication and before the closing of the business combination, each outstanding unit of Target Hospitality (each of which consists of one share of Target Hospitality common stock and one-third of one warrant to purchase one share of Target Hospitality common stock) will be separated into its component common stock and warrant.

 

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

 

Q:Why is Platinum Eagle proposing the business combination?

 

A:Platinum Eagle was organized to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities.

 

Target is the largest vertically integrated specialty rental and hospitality services company in the U.S, providing high-quality and cost-effective specialty rental accommodations, culinary services, and hospitality solutions to a diverse client base. With 778 employees and operations across the U.S., Target serves the country’s highest producing shale oil and gas basins and owns and operates the largest Family Residential Center in the U.S. The company’s services include site design, construction, operations, security, housekeeping, catering, concierge services, and health and recreation facilities for temporary workforce lodging.

 

Signor is a large regional accommodations provider that delivers quality accommodations and limited facilities services to U.S. energy and natural resource companies operating in Texas. Target delivers end-to-end essential facilities and hospitality services across several end markets in the U.S. and is known for its high quality accommodations and integrated hospitality services.

 

Target has established a leadership position in providing a fully integrated service offering to its customers. Its customers include major and independent oil producers, oilfield service companies and government service providers.

 

See “The Business Combination Proposal — Platinum Eagle’s Board of Directors’ Reasons for Approval of the Business Combination.”

 

Q:What will Target Parent’s equity holders receive in return for the acquisition of Target Parent by Platinum Eagle?

 

A:In accordance with the terms and subject to the conditions of the Target Merger Agreement, upon completion of the business combination, Platinum Eagle, through its wholly-owned subsidiary, the Holdco Acquiror, will purchase all of the issued and outstanding equity interests of Target Parent from Algeco Seller. The total amount payable by the Holdco Acquiror will be $820 million (which amount is inclusive of amounts required to pay third party and intercompany indebtedness as of the closing), of which (i) $562 million will be paid in cash and (ii) $258 million will be paid to Algeco Seller in the form of 25,800,000 shares of Target Hospitality common stock. The Cash Consideration payable to the Algeco Seller will be increased to the extent any cash on the balance sheet of the combined business of Signor and Target, after giving effect to the business combination, the redemptions from the Trust Account, the proceeds from the Equity Offering and the proceeds from the Backstop Offering, if any, exceeds $5.0 million. In the event the Cash Consideration is increased, the Stock Consideration paid to Algeco Seller will be decreased on a dollar for dollar basis. Notwithstanding the foregoing, in no event shall the Cash Consideration be less than $562 million, but depending upon the amount of redemptions and additional equity raised through the Equity Offering and Backstop Offering, if any, the Cash Consideration and Stock Consideration will be adjusted accordingly.

 

4

 

 

Q:What will Signor’s equity holders receive in return for the acquisition of Signor by Platinum Eagle?

 

A:In accordance with the terms and subject to the conditions of the Signor Merger Agreement, upon completion of the business combination, Platinum Eagle, through its wholly-owned subsidiary, the Holdco Acquiror, will purchase all of the issued and outstanding equity interests of Signor Parent from Arrow Seller. The total amount payable by the Holdco Acquiror for the equity interests of Signor Parent under the Signor Merger Agreement, is $491 million (which amount is inclusive of amounts required to pay third party and intercompany indebtedness as of the closing), which will be paid to Arrow Seller in the form of 49,100,000 shares of Target Hospitality common stock.

 

Q:What equity stake will current Platinum Eagle shareholders hold in Target Hospitality immediately after the consummation of the business combination?

 

AAssuming (i) that no public shareholders exercise their redemption rights (no redemptions scenario based on $327,246,119 held in trust as of June 30, 2018 and no additional equity raised through the Equity Offering or Backstop Offering), (ii) that 17,775,388 shares of Target Hospitality common stock are issued to Algeco Seller, and (iii) that 49,100,000 shares of Target Hospitality common stock are issued to Arrow Seller, then upon the closing of the business combination our public shareholders would own approximately 30.8%, the Algeco Seller would own approximately 16.9% and the Arrow Seller would own approximately 46.6% of the total of 105,455,388 shares of issued and outstanding shares of Target Hospitality common stock (excluding 5,045,000 shares of Target Hospitality common stock to be held in escrow as of the closing and subject to release to Platinum Eagle Acquisition LLC, a Delaware limited liability company (our “Sponsor”), Harry E. Sloan (together with the Sponsor, the “Founders”) and Arrow Seller in accordance with the terms of the Earnout Agreement (the “Earnout Shares”)).

 

Assuming (i) that holders of 10,154,445 public shares exercise their redemption rights (based on $327,246,119 held in trust as of June 30, 2018 and a redemption price of $10.0691 per share) (maximum redemptions scenario based on $327,246,119 held in trust as of June 30, 2018 and no additional equity raised through the Equity Offering or Backstop Offering), (ii) that 25,800,000 shares of Target Hospitality common stock are issued to Algeco Seller, and (iii) that 49,100,000 shares of Target Hospitality common stock are issued to Arrow Seller, then upon the closing of the business combination our public shareholders would own approximately 22.3%, Algeco Seller would own approximately 25.7% and Arrow Seller would own approximately 48.9% of the total of 100,325,555 issued and outstanding shares of Target Hospitality common stock (excluding the 8,045,000 Earnout Shares).

 

There are currently outstanding an aggregate of 16,166,667 warrants to acquire our Class A ordinary shares, which comprise 5,333,334 private placement warrants held by our initial shareholders, Platinum Eagle’s independent directors (and/or one or more of their estate planning vehicles) and 10,833,333 public warrants. Each of our outstanding whole warrants is exercisable commencing 30 days following the closing of the business combination for one Class A ordinary share and, following the domestication, will entitle the holder thereof to purchase one share of Target Hospitality common stock in accordance with its terms. Therefore, as of the date of this proxy statement/prospectus, if we assume that each outstanding whole warrant is exercised and one share of Target Hospitality common stock is issued as a result of such exercise, with payment to the Company of the exercise price of $11.50 per share, our fully-diluted share capital would increase by a total of 16,166,167 shares, with $185,910,920 paid to the company to exercise the warrants.

 

Q:Why is Platinum Eagle proposing the domestication?

 

A:Our board of directors believes that there are significant advantages to Target Hospitality that will arise as a result of a change of domicile to Delaware.

 

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

 

To effect the domestication, Platinum Eagle will file a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and will file a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which Platinum Eagle will be domesticated and continue as a Delaware corporation, at which time Platinum Eagle will change its name, in connection with the effectiveness of the business combination, to “Target Hospitality Corp.”

 

The approval of the domestication proposal is a condition to the closing of the transactions contemplated by the Merger Agreement. The approval of the domestication proposal requires a special resolution under the Cayman Islands Companies Law, being the affirmative vote of the holders of at least two-thirds of the ordinary shares who, being present and entitled to vote at the general meeting, vote at the general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the general meeting.

 

Q:What happens to the funds deposited in the trust account after consummation of the business combination?

 

A:A total of $325,000,000, comprised of approximately $317,000,000 of the proceeds from our initial public offering, including approximately $11,375,000 of underwriters’ deferred discount, and $8,000,000 of the proceeds of the sale of the private placement warrants were placed in a trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee. As of June 30, 2018, there were investments and cash held in the trust account of $327,246,119. These funds will not be released until the earlier of the completion of our initial business combination or the redemption of our public shares if we are unable to complete a business combination by January 17, 2020, although we may withdraw the interest earned on the funds held in the trust account to pay income taxes.

 

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Q:What happens if a substantial number of the public shareholders vote in favor of the business combination proposal and exercise their redemption rights?

 

A:Platinum Eagle’s public shareholders may vote in favor of the business combination and exercise their redemption rights. Accordingly, the business combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders.

 

However, the consummation of the business combination is conditioned upon, among other things, the items described below.

 

In addition, with fewer public shares and public shareholders, the trading market for Target Hospitality common stock may be less liquid than the market for Platinum Eagle’s ordinary shares was prior to consummation of the business combination and Target Hospitality may not be able to meet the listing standards for Nasdaq or another national securities exchange. In addition, with less funds available from the trust account, the working capital infusion from the trust account into Target Hospitality’s business will be reduced.

 

Q:What conditions must be satisfied to complete the business combination?

 

A:Unless waived by the parties to the Merger Agreements, and subject to applicable law, the consummation of the business combination is subject to a number of conditions set forth in the Merger Agreements including, among others, (i) the Company (or its applicable subsidiaries) receiving gross proceeds of at least $340 million from debt financing, (ii) approval by the Company’s shareholders of the Merger Agreements, the business combination and certain other actions related thereto, (iii) the availability of the Minimum Proceeds from the Company’s trust account (and/or from other specified sources, if necessary), after giving effect to redemptions of public shares, if any, and (iv) the receipt of consent from the existing lenders of Algeco and certain of its affiliates. Unless waived, if any of these conditions are not satisfied, the business combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. See “The Business Combination Proposal — The Merger Agreements.”

 

Q:What happens if the business combination is not consummated?

 

A:If we are not able to complete our business combination by January 17, 2020, we will cease all operations except for the purpose of winding up and redeem our public shares and liquidate the trust account, in which case our public shareholders may only receive approximately $10.00 per share and our warrants will expire worthless.

 

Q:When do you expect the business combination to be completed?

 

A:It is currently anticipated that the business combination will be consummated as soon as practicable following the Platinum Eagle general meeting, which is set for           , 2019; however, such meeting could be adjourned if the adjournment proposal is adopted by our shareholders at the general meeting and we elect to adjourn the general meeting to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the general meeting, each of the condition precedent proposals has not been approved. For a description of the conditions for the completion of the business combination, see “The Merger Agreements — Conditions to the Closing of the Business Combination.”

 

Q:What proposals are shareholders being asked to vote upon?

 

A:Under the Merger Agreements, the approval of the business combination proposal, the domestication proposal, the organizational documents proposals, the stock issuance proposal and the incentive award plan proposal (which we sometimes refer to as the “condition precedent proposals”) are conditions to the consummation of the business combination. If our public shareholders do not approve each of the condition precedent proposals, then the business combination may not be consummated.

 

In addition to the foregoing proposals, the shareholders also may be asked to consider and vote upon a proposal to adjourn the general meeting to a later date or dates to permit further solicitation and vote of proxies if (i) based upon the tabulated vote at the time of the general meeting, each of the condition precedent proposals has not been approved and/or (ii) Platinum Eagle determines that one or more of the closing conditions under the Merger Agreements has not been satisfied. See “The Adjournment Proposal.”

 

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Platinum Eagle will hold the general meeting of its shareholders to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the business combination and the other matters to be acted upon at the general meeting. Shareholders should read it carefully.

 

After careful consideration, Platinum Eagle’s board of directors has determined that the business combination proposal, the domestication proposal, each of the organizational documents proposals, the stock issuance proposal, the incentive award plan proposal and the adjournment proposal are in the best interests of Platinum Eagle and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.

 

The existence of financial and personal interests of Platinum Eagle’s directors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of Platinum Eagle and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal —  Interests of Platinum Eagle’s Directors and Officers in the Business Combination” for a further discussion.

 

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

 

Q:What amendments will be made to the Existing Organizational Documents of Platinum Eagle?

 

A:The consummation of the business combination is conditioned, among other things, on the domestication of Platinum Eagle to Delaware. Accordingly, in addition to voting on the business combination, Platinum Eagle’s shareholders also are being asked to consider and vote upon a proposal to (i) approve a change of Platinum Eagle’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware 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, which is referred to as the “domestication,” and replace the current amended and restated memorandum and articles of association (the “Existing Organizational Documents”) of Platinum Eagle under the Cayman Islands Companies Law (2018 Revision) (the “Cayman Islands Companies Law”) with a new certificate of incorporation (the “Proposed Charter”) and bylaws (the “Proposed Bylaws” and, together with the Proposed Charter, the “Proposed Organizational Documents”) of Target Hospitality, in each case, under the Delaware General Corporation Law (the “DGCL”), which differ materially from the Existing Organizational Documents in the following respects:

 

    Existing Organizational Documents   Proposed Organizational Documents
         
Authorized Capital Stock
(Organizational Documents Proposal A)
 

The Existing Organizational Documents provide for share capital of $40,100 divided into 380,000,000 Class A ordinary shares of a par value of $0.0001 each, 20,000,000 Class B ordinary shares of a par value of $0.0001 each and 1,000,000 preferred shares of a par value of $0.0001 each.

 

See paragraph 5 of the Existing Organizational Documents.

 

The Proposed Organizational Documents provide for authorization to issue 401,000,000 shares, consisting of (x) 400,000,000 shares of Target Hospitality common stock, par value $0.0001 per share, and (y) 1,000,000 shares of preferred stock, par value $0.0001 per share.

 

See Article 5 of the Proposed Charter.

         
Ability of Stockholder to Call a Special Meeting
(Organizational Documents Proposal B)
 

The Existing Organizational Documents provide that the board of directors shall, on a shareholders’ requisition, proceed to convene an extraordinary general meeting of Platinum Eagle, provided that the requesting shareholder holds not less than 10% in par value of the issued shares entitled to vote at a general meeting.

 

See Article 20.4 of the Existing Organizational Documents.

 

The Proposed Organizational Documents do not permit the stockholders of Target Hospitality to call a special meeting.

 

See Article 1.3 of the Proposed Bylaws.

         
Corporate Name
(Organizational Documents Proposal C)
 

The Existing Organizational Documents provide the name of the company is “Platinum Eagle Acquisition Corp.”

 

See paragraph 1 of the Existing Organizational Documents.

 

The Proposed Organizational Documents provide the new name of the corporation to be “Target Hospitality Corp.”

 

See Article 1 of the Proposed Charter.

         
Perpetual Existence
(Organizational Documents Proposal C)
 

The Existing Organizational Documents provide that if we do not consummate a business combination (as defined in our Existing Organizational Documents) by January 17, 2020, Platinum Eagle shall cease all operations except for the purposes of winding up and shall redeem the shares issued in our initial public offering and liquidate our trust account.

 

See Article 49.4 of the Existing Organizational Documents.

  The Proposed Organizational Documents do not include any provisions relating to Target Hospitality’s ongoing existence, under the DGCL, Target Hospitality’s existence will be perpetual.

 

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    Existing Organizational Documents   Proposed Organizational Documents
         
Exclusive Jurisdiction
(Organizational Documents Proposal C)
  The Existing Organizational Documents do not contain a provision adopting an exclusive forum for certain stockholder litigation.  

The Proposed Organizational Documents adopt Delaware as the exclusive forum for certain stockholder litigation.

 

See Article 9.1 of the Proposed Charter

         
Corporate Opportunities
(Organizational Documents Proposal C)
 

The Existing Organizational Documents contain certain allowances in relation to entering into a business combination (as defined in such documents) with an affiliate of our Sponsor or our own directors or executive officers.

 

See Article 49.11 of the Existing Articles.

 

The Proposed Organizational Documents grant a waiver regarding corporate opportunities to Target Hospitality’s non-employee directors, or their affiliates (although Target Hospitality does not renounce any interest or expectancy in business opportunities presented to a non-employee director solely in his or her capacity as a director).

 

See Article 11 of the Proposed Charter.

         
Provisions Related to Status as Blank Check Company
(Organizational Documents Proposal C)
 

The Existing Organizational Documents set forth various provisions related to our status as a blank check company prior to the consummation of a business combination.

 

See Article 49 of the Existing Organizational Documents.

  The Proposed Organizational Documents do not include such provisions related to our status as a blank check company, which no longer will apply upon consummation of the business combination, as we will cease to be a blank check company at such time.

 

Q:What material negative factors did Platinum Eagle’s board of directors consider in connection with the business combination?

 

A:Although the Platinum Eagle board of directors believes that the acquisition of Target and Signor will provide Platinum Eagle shareholders with an opportunity to participate in a combined company with significant growth potential, market share and well-known brands, the board of directors did consider certain potentially material negative factors in arriving at that conclusion, such as the risk that shareholders would not approve the business combination and the risk that significant numbers of shareholders would exercise their redemption rights. These factors are discussed in greater detail in the section entitled “The Business Combination Proposal — Platinum Eagle’s Board of Director’s Reasons for Approval of the Business Combination,” as well as in the section entitled “Risk Factors — Risks Relating to Target Hospitality’s Business.”

 

Q:How will the domestication affect my public shares, public warrants and units?

 

A:On the effective date of the domestication, the currently issued and outstanding Class B ordinary shares will automatically convert by operation of law, on a one-for-one basis, into Class A ordinary shares. Immediately thereafter, the currently issued and outstanding Class A ordinary shares will automatically convert by operation of law, on a one-for-one basis, into shares of Target Hospitality common stock in accordance with the terms of the Proposed Charter. After the effectiveness of the domestication and before the closing of the business combination, each outstanding unit of Target Hospitality (each of which consists of one share of Target Hospitality common stock and one-third of one warrant to purchase one share of Target Hospitality common stock) will be separated into its component common stock and warrant. Such warrants will become exercisable any time after 30 days following the closing of the business combination.

 

Q:Do I have redemption rights?

 

A:If you are a holder of public shares, you have the right to request that Platinum Eagle redeem all or a portion of your public shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus. Public shareholders may elect to redeem all or a portion of their public shares even if they vote for the business combination proposal. We sometimes refer to these rights to elect to redeem all or a portion of the public shares into a pro rata portion of the cash held in the trust account as “redemption rights.” If you wish to exercise your redemption rights, please see the answer to the next question: “How do I exercise my redemption rights?”

 

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Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

 

Our initial shareholders and our independent directors entered into the insider letter agreement, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of a business combination.

 

The consummation of the business combination is conditioned upon, among other things, (i) the Company (or its applicable subsidiaries) receiving gross proceeds of at least $340 million from debt financing, (ii) approval by the Company’s shareholders of the Merger Agreements, the business combination and certain other actions related thereto, (iii) the availability of the Minimum Proceeds from the Company’s trust account (and/or from other specified sources, if necessary), after giving effect to redemptions of public shares, if any, and (iv) the receipt of consent from the existing lenders of Algeco and certain of its affiliates. Unless waived, if any of these conditions are not satisfied, the business combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. See “The Business Combination Proposal — The Merger Agreements.”

 

Q:How do I exercise my redemption rights?

 

A:If you are a holder of public shares and wish to exercise your right to redeem your public shares, you must:

 

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

 

(ii)prior to            a.m., Eastern Time, on        , 2019, (a) submit a written request to Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent (the “transfer agent”), that Target Hospitality redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through The Depository Trust Company (“DTC”).

 

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

 

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

 

Any holder of public shares will be entitled to request that their public shares (which would become shares of Target Hospitality common stock in the domestication) be redeemed for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the business combination, including interest, less income taxes payable, divided by the number of then issued and outstanding public shares. For illustrative purposes, as of June 30, 2018, this would have amounted to approximately $10.07 per public share. However, the proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public shareholders, regardless of whether such public shareholders vote for or against the business combination proposal. Therefore, the per-share distribution from the trust account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal other than the business combination proposal will have no impact on the amount you will receive upon exercise of your redemption rights. It is anticipated that the funds to be distributed to public shareholders electing to redeem their public shares will be distributed promptly after the consummation of the business combination.

 

If you are a holder of public shares, you may exercise your redemption rights by submitting your request in writing to Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent, at the address listed at the end of this section.

 

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the time the vote is taken with respect to the business combination proposal at the general meeting. If you deliver your shares for redemption to Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent, and later decide prior to the general meeting not to elect redemption, you may request that Platinum Eagle instruct its transfer agent to return the shares (physically or electronically). You may make such request by contacting Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent, at the phone number or address listed at the end of this section.

 

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Any corrected or changed written exercise of redemption rights must be received by Platinum Eagle’s secretary prior to the vote taken on the business combination proposal at the general meeting. No request for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent, by               a.m., Eastern time, on     , 2019.

 

If a holder of public shares properly makes a request for redemption and the public shares are delivered as described above, then, if the business combination is consummated, Target Hospitality will redeem public shares for a pro rata portion of funds deposited in the trust account, calculated as of two business days prior to the consummation of the business combination.

 

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

 

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

 

A:No. Holders of outstanding units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If you hold your units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent, directly and instruct them to do so. If you fail to cause your public shares to be separated and delivered to Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent, by          a.m., Eastern Time, on          , 2019 you will not be able to exercise your redemption rights with respect to your public shares.

 

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

 

A:We expect that a U.S. Holder that exercises its redemption rights to receive cash from the trust account in exchange for its public shares will generally be treated as selling such public shares resulting in the recognition of capital gain or capital loss. There may be certain circumstances in which the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of public shares that a U.S. Holder owns or is deemed to own (including through the ownership of Target Hospitality warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, see “U.S. Federal Income Tax Considerations”.

 

Additionally, because the domestication will occur immediately prior to the redemption of U.S. Holders that exercise redemption rights, U.S. Holders exercising redemption rights will be subject to the potential tax consequences of Section 367 of the Code as a result of the domestication. The tax consequences of Section 367 of the Code are discussed more fully below under “U.S. Federal Income Tax Considerations.”

 

Q:Do I have appraisal rights in connection with the proposed business combination and the proposed domestication?

 

A:No. Neither Platinum Eagle shareholders nor Platinum Eagle warrantholders have appraisal rights in connection with the business combination or the domestication under the Cayman Islands Companies Law or under the DGCL.

 

Q:What are the U.S. federal income tax consequences of the domestication?

 

A:As discussed more fully under “U.S. Federal Income Tax Considerations” below, we believe the domestication will constitute a tax-free reorganization within the meaning of Section 368(a)(l)(F) of the Code. Assuming that the domestication so qualifies, U.S. Holders (as defined in “U.S. Federal Income Tax Considerations” below) of Platinum Eagle ordinary shares will be subject to Section 367(b) of the Code and, as a result:

 

·A U.S. Holder of Platinum Eagle ordinary shares whose Platinum Eagle ordinary shares have a fair market value of less than $50,000 at the time of the domestication will not recognize any gain or loss and will not be required to include any part of Platinum Eagle’s earnings in income;

 

·A U.S. Holder of Platinum Eagle ordinary shares whose Platinum Eagle ordinary shares have a fair market value of $50,000 or more, but who at the time of the domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Platinum Eagle ordinary shares entitled to vote will generally recognize gain (but not loss) as a result of the domestication. As an alternative to recognizing gain, such U.S. Holders may file an election to include in income as a dividend earnings and profits (as defined in the Treasury Regulations under Section 367) attributable to its Platinum Eagle ordinary shares provided certain other requirements are satisfied. Platinum Eagle does not expect that Platinum Eagle’s cumulative earnings and profits will be material at the time of the domestication.

 

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·A U.S. Holder of Platinum Eagle ordinary shares whose Platinum Eagle ordinary shares have a fair market value of $50,000 or more, and who at the time of the domestication owns (actually and constructively) 10% or more of the total combined voting power of all classes of Platinum Eagle ordinary shares entitled to vote will generally be required to include in income as a dividend earnings and profits (as defined in the Treasury Regulations under Section 367) attributable to its Platinum Eagle ordinary shares provided certain other requirements are satisfied. Platinum Eagle does not expect that Platinum Eagle’s cumulative earnings and profits will be greater than zero at the time of the domestication.

 

As discussed further under “U.S. Federal Income Tax Considerations” below, Platinum Eagle believes that it is likely treated as a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes. In the event that Platinum Eagle is considered a PFIC then, notwithstanding the foregoing U.S. federal income tax consequences of the domestication, proposed Treasury Regulations under Section 1291(f) of the Code (which have a retroactive effective date), if finalized in their current form, generally would require a U.S. Holder to recognize gain as a result of the domestication. The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on a complex set of rules. However, it is difficult to predict whether, in what form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code will be adopted. Importantly, however, U.S. Holders that make or have made certain elections discussed further under “U.S. Federal Income Tax Considerations — Impact of PFIC Rules on Certain U.S. Holders” with respect to their Platinum Eagle ordinary shares are generally not subject to the same gain recognition rules under the currently proposed Treasury Regulations under Section 1291(f) of the Code. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the domestication, see “U.S. Federal Income Tax Considerations”.

 

Additionally, the domestication may cause non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations” below) to become subject to U.S. federal income withholding taxes on any dividends in respect of such non-U.S. Holder’s Target Hospitality common stock subsequent to the domestication.

 

The tax consequences of the domestication are complex and will depend on a holder’s particular circumstances. All holders are strongly urged to consult their tax advisor for a full description and understanding of the tax consequences of the domestication, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws. For a more complete discussion of the U.S. federal income tax considerations of the domestication, see “U.S. Federal Income Tax Considerations”.

 

Q:What do I need to do now?

 

A:Platinum Eagle urges you 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 and/or warrant holder of Platinum Eagle. Shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

 

Q:How do I vote?

 

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

 

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

 

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

 

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Q:When and where will the general meeting be held?

 

A:The general meeting will be held at the offices of Winston & Strawn LLP, at 200 Park Avenue, New York, New York 10166 on       , 2019, at       a.m., Eastern Time, unless the general meeting is adjourned.

 

Q:Who is entitled to vote at the general meeting?

 

A:Platinum Eagle has fixed       , 2019 as the record date. If you were a shareholder of Platinum Eagle at the close of business on the record date, you are entitled to vote on matters that come before the general meeting. However, a shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the general meeting.

 

Q:How many votes do I have?

 

A:Platinum Eagle shareholders are entitled to one vote at the general meeting for each ordinary share held of record as of the record date. As of the close of business on the record date, there were outstanding 40,625,000 ordinary shares, of which 32,500,000 were issued and outstanding public shares.

 

Q:What constitutes a quorum?

 

A:A quorum of Platinum Eagle shareholders is necessary to hold a valid meeting. A quorum will be present at the Platinum Eagle general meeting if the holders of a majority of issued and outstanding shares entitled to vote at the general meeting are represented in person or by proxy. As of the record date for the general meeting, 20,312,501 ordinary shares would be required to achieve a quorum.

 

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

 

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

 

·Business combination proposal: The approval of the business combination proposal requires an ordinary resolution being the affirmative vote for the proposal by the holders of a majority of ordinary shares who, being present and entitled to vote at the general meeting to approve the business combination proposal, vote at the general meeting.

 

·Domestication proposal: The approval of the domestication proposal requires a special resolution under Cayman Islands Companies Law, being the affirmative vote for the proposal by the holders of at least two-thirds of the ordinary shares who, being present and entitled to vote at the general meeting to approve the domestication proposal, vote at the general meeting.

 

·Organizational documents proposals: The separate approval of each of the organizational documents proposals requires a special resolution under the Cayman Islands Companies Law, being the affirmative vote for each of the organizational documents proposals by the holders of at least two-thirds of the ordinary shares who, being present and entitled to vote at the general meeting to approve each such organizational documents proposal, vote at the general meeting.

 

·Stock issuance proposal: The approval of the stock issuance proposal requires an ordinary resolution being the affirmative vote for the proposal by the holders of a majority of the ordinary shares who, being present and entitled to vote at the general meeting to approve the stock issuance proposal, vote at the general meeting.

 

·Incentive award plan proposal: The approval of the incentive award plan proposal requires an ordinary resolution being the affirmative vote for the proposal by the holders of a majority of the ordinary shares who, being present and entitled to vote at the general meeting to approve the incentive award plan proposal, vote at the general meeting.

 

·Adjournment proposal: The approval of the adjournment proposal requires an ordinary resolution being the affirmative vote for the proposal by the holders of a majority of the ordinary shares who, being present and entitled to vote at the general meeting to approve the adjournment proposal, vote at the general meeting.

 

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Q:What are the recommendations of Platinum Eagle’s board of directors?

 

A:Platinum Eagle’s board of directors believes that the business combination proposal and the other proposals to be presented at the general meeting are in the best interest of Platinum Eagle’s shareholders and unanimously recommends that its shareholders vote “FOR” the business combination proposal, “FOR” the domestication proposal, “FOR” each of the separate organizational documents proposals, “FOR” the stock issuance proposal, “FOR” the incentive award plan proposal and “FOR” the adjournment proposal, in each case, if presented to the general meeting.

 

The existence of financial and personal interests of Platinum Eagle’s directors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of Platinum Eagle and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. These conflicts of interest include, among others, that if we do not consummate a business combination by January 17, 2020, we may be forced to liquidate and the 8,125,000 founder shares and 5,333,334 private placement warrants owned by our initial shareholders and independent directors would be worthless. See the section entitled “The Business Combination Proposal — Interests of Platinum Eagle’s Directors and Officers in the Business Combination” for a further discussion.

 

Q:How do our Sponsor and the other initial shareholders intend to vote their shares?

 

A:In connection with our initial public offering, our initial shareholders entered into letter agreements to vote their founder shares, as well as any public shares purchased during or after our initial public offering, in favor of our initial business combination and we also expect them to vote their shares in favor of all other proposals being presented at the general meeting. As of the date of this proxy statement/prospectus, our initial shareholders own an aggregate of 8,125,000 ordinary shares, which in the aggregate represents 20% of our total outstanding shares on the date of this proxy statement/prospectus.

 

Q:May our Sponsor and the other initial shareholders purchase public shares or warrants prior to the general meeting?

 

A:At any time prior to the general meeting, during a period when they are not then aware of any material nonpublic information regarding Platinum Eagle or its securities, the Platinum Eagle initial shareholders, Target and/or its affiliates and Signor and/or its affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Platinum Eagle’s ordinary shares or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of that (i) the proposals presented to shareholders for approval at the general meeting are approved and/or (ii) that Platinum Eagle satisfy the minimum cash condition. Any such stock purchases and other transactions may thereby increase the likelihood of obtaining shareholder approval of the business combination. This may result in the completion of our business combination that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by the Platinum Eagle initial shareholders for nominal value.

 

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

 

If such transactions are effected, the consequence could be to cause the business combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the general meeting and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Platinum Eagle will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the general meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

Q:What happens if I sell my ordinary shares before the general meeting?

 

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

 

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

 

A:Yes. Shareholders may send a later-dated, signed proxy card to Platinum Eagle’s secretary at the address set forth below so that it is received by Platinum Eagle’s secretary prior to the vote at the general meeting (which is scheduled to take place on       , 2019) or attend the general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to Platinum Eagle’s secretary, which must be received by Platinum Eagle’s secretary prior to the vote at the general meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.

 

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

 

A:If you fail to take any action with respect to the general meeting and the business combination is approved by shareholders and consummated, you will become a shareholder and/or warrantholder of Target Hospitality. If you fail to take any action with respect to the general meeting and the business combination is not approved, you will remain a shareholder and/or warrantholder of Platinum Eagle. However, if you fail to take any action with respect to the general meeting, you will nonetheless be able to elect to redeem your public shares in connection with the business combination, provided you follow the instructions in this proxy statement/prospectus for redeeming your shares.

 

Q:What should I do with my stock certificates, warrant certificates and/or unit certificates?

 

A:Platinum Eagle shareholders who exercise their redemption rights must deliver their stock certificates to Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent, (either physically or electronically) prior to        a.m., Eastern Time, on       , 2019.

 

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

 

On the effective date of the domestication, holders of Platinum Eagle units, common stock and warrants will receive units, common stock and warrants of Target Hospitality without needing to take any action and accordingly such holders should not submit the certificates relating to their units, common stock and warrants. In addition, after the effectiveness of the domestication and before the closing of the business combination, each outstanding unit of Target Hospitality (each of which consists of one share of Target Hospitality common stock and one-third of one warrant to purchase one share of Target Hospitality common stock) will be separated into its component common stock and warrant.

 

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

 

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

 

Q:Who can help answer my questions?

 

A:If you have questions about the business combination or if you need additional copies of the proxy statement/prospectus, any document incorporated by reference herein or the enclosed proxy card you should contact:

 

Morrow Sodali LLC

470 West Avenue, Suite 3000

Stamford CT 06902

Tel: (800) 662-5200

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

E-mail:       

 

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You also may obtain additional information about Platinum Eagle from documents filed with the Securities and Exchange Commission (“SEC”) by following the instructions in the section entitled “Where You Can Find More Information; Incorporation by Reference.” If you are a holder of public shares and you intend to seek redemption of your shares, you will need to deliver your ordinary shares (either physically or electronically) to Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent, at the address below prior to        a.m., Eastern Time, on       , 2019. If you have questions regarding the certification of your position or delivery of your stock, please contact:

 

Mark Zimkind

Continental Stock Transfer & Trust Company

One State Street Plaza, 30th Floor

New York, New York 10004

E-mail: mzimkind@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

 

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the general meeting, including the business combination, you should read this entire document carefully, including each of the Merger Agreements, which are attached as Annex A and B to this proxy statement/prospectus. The Merger Agreements are the legal documents that govern the business combination and the other transactions that will be undertaken in connection therewith. The Merger Agreements are also described in detail in this proxy statement/prospectus in the section entitled “The Merger Agreements.”

 

The Parties to the Business Combination

 

Platinum Eagle Acquisition Corp.

 

Platinum Eagle is a blank check company incorporated on July 12, 2017 as a Cayman Islands exempted company incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. We have neither engaged in any operations nor generated any revenue to date. Based on our business activities, Platinum Eagle is a “shell company” as defined under the Exchange Act because we have no operations and nominal assets consisting almost entirely of cash.

 

Platinum Eagle’s units, ordinary shares and warrants are listed on Nasdaq under the symbols “EAGLU,” “EAGL,” and “EAGLW,” respectively.

 

The mailing address of Platinum Eagle’s principal executive office is 2121 Avenue of the Stars, Suite 2300, Los Angeles, CA 90067. Its telephone number is (310) 209-7280.

 

The Holdco Acquiror

 

The Holdco Acquiror is a wholly-owned subsidiary of Platinum Eagle formed solely for the purpose of effecting a business combination. The Holdco Acquiror was incorporated under the laws of the State of Delaware on November 8, 2018. The Holdco Acquiror has no material assets and does not operate any business. Pursuant to the terms of the Merger Agreements, and subject to the satisfaction or waiver of certain conditions set forth therein, the Holdco Acquiror will acquire all of the issued and outstanding equity interests of Target Parent and Signor Parent in the business combination.

 

Target Parent

 

Target Parent was established in 2017 to hold the Algeco Group (as defined below)’s investment in Target after its sale of Williams Scotsman, and to effect the payment of certain costs associated with the sale of Williams Scotsman. In addition, employees of the Algeco Group’s U.S. headquarters were transferred to Target Parent from an entity that was sold in connection with the Williams Scotsman sale. The remaining functions of the Algeco Group’s US headquarters have now been transitioned to the Algeco Group’s European headquarters. Target Parent will have no employees after January 2019.

 

Signor

 

Founded in 1990, Signor is a limited liability company formed under the laws of the State of Delaware to own, develop, manage, and operate workforce lodging facilities located in Oklahoma, New Mexico, and Texas.

 

Summary of the Merger Agreements

 

On November 13, 2018, the Company and the Holdco Acquiror entered into the respective Merger Agreements with each of the Algeco Seller and the Arrow Seller, to effect the business combination transactions. Pursuant to the terms of the Merger Agreements, and subject to the satisfaction or waiver of certain conditions set forth therein, Platinum Eagle, through its wholly-owned subsidiaries, the Holdco Acquiror and Signor Merger Sub, will acquire all of the issued and outstanding equity interests of Target Parent and Signor Parent, respectively.

 

The closing of the business combination is subject to certain conditions, including, among others, (i) the Company (or its applicable subsidiaries) receiving gross proceeds of at least $340 million from debt financing, (ii) approval by the Company’s shareholders of the Merger Agreements, the business combination and certain other actions related thereto, (iii) the availability of at least $225 million of cash in the Company’s trust account (and/or from other specified sources, if necessary), after giving effect to redemptions of public shares, if any, and (iv) the receipt of consent from the existing lenders of Algeco and certain of its affiliates.

 

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The Merger Agreements may be terminated by the Acquirors, Algeco Seller or Arrow Seller (together with Algeco Seller, the “Sellers”) under certain circumstances, including, among others, (i) by mutual written consent of the Sellers and the Acquirors, (ii) by either Seller or the Acquirors if the closing of the business combination has not occurred on or before such date that is 120 days from the closing date, subject to extension by mutual agreement of the parties, and (iii) by the Sellers or the Acquirors if the Company has not obtained the required approval of its shareholders. For additional information about the Merger Agreement and the business combination and other transactions contemplated thereby, see “The Business Combination Proposal — The Merger Agreement.”

 

Prior to and as a condition of the business combination, Platinum Eagle will change its jurisdiction of incorporation by effecting a deregistration under the Cayman Islands Companies Law and a domestication under Section 388 of the DGCL, pursuant to which Platinum Eagle’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. The business combination will follow the domestication.

 

Business Combination Consideration

 

Under the Merger Agreements, the total amount payable by the Holdco Acquiror will be $1.311 billion (which amount is inclusive of the amounts required to pay third party and intercompany indebtedness at the closing of the business combination and net of transaction expenses), of which (A) $562 million will be paid in cash (the “Cash Consideration”) and (B) the remaining $749 million will be paid to the Sellers in the form of shares of common stock, par value $0.0001, of Target Hospitality, with (i) 25,800,000 of such shares delivered to the Algeco Seller pursuant to the Target Merger Agreement and (ii) 49,100,000 of such shares delivered to the Arrow Seller pursuant to the Signor Merger Agreement. The Cash Consideration shall come from the following sources: (1) proceeds available from the trust account, after giving effect to any and all redemptions; (2) the gross proceeds from new debt financing of at least $340 million; and (3) subject to the prior consent of the Sellers, the proceeds from the Equity Offering and Backstop Offering, if any. The Cash Consideration payable to the Algeco Seller will be increased to the extent any cash on the balance sheet of the combined business of Signor and Target, after giving effect to the business combination, the redemptions from the Trust Account, the proceeds from the Equity Offering and the proceeds from the Backstop Offering, if any, exceeds $5.0 million. In the event the Cash Consideration is increased, the Stock Consideration paid to Algeco Seller will be decreased on a dollar for dollar basis. Notwithstanding the foregoing, in no event shall the Cash Consideration be less than $562.0 million, but depending upon the amount of redemptions and additional equity raised through the Equity Offering and Backstop Offering, if any, the Cash Consideration and Stock Consideration will be adjusted accordingly.

 

The portion of the purchase price funded from the trust account will be adjusted by an amount equal to the aggregate amount paid to each eligible shareholder of Platinum Eagle who has elected to redeem all or a portion of such shareholder’s Platinum Eagle ordinary shares at a per-share price, payable in cash, as calculated based on such shareholder’s pro rata share of the funds held in the trust account (the “Platinum Eagle Redemption Shares”). Prior to the closing of the business combination (the “Closing”), none of the funds held in the trust account may be used or released except for the withdrawal of interest to fund Platinum Eagle’s working capital requirements (subject to an annual limit of $250,000) and/or to pay Platinum Eagle’s taxes and to effectuate a share redemption of the Platinum Eagle Redemption Shares.

 

Related Agreements

 

The Founders will deposit certain founder shares held by them into escrow pursuant to the Earnout Agreement and the Escrow Agreement at the closing of the business combination. The founder shares will be released from escrow to the Founders and/or transferred to the Arrow Seller upon the achievement of certain earnout targets. Target Hospitality, Arrow Seller, Algeco Seller and certain other parties named therein will enter into an amended and restated registration rights agreement providing the parties with certain demand, shelf and piggyback registration rights covering all shares of Target Hospitality common stock owned by each holder. See “The Business Combination Proposal — Related Agreements” for additional information about the agreements related to the Merger Agreements.

 

Prior to Closing, the Founders, the Company, Algeco Seller and Arrow Seller shall negotiate an amended and restated registration rights agreement (the “Registration Rights Agreement”), which shall amend and restate in its entirety that certain Registration Rights Agreement, dated January 11, 2018, by and among the Company and the initial investors named on the signature pages thereto, and shall be entered into and effective as of the Closing in form and substance reasonably satisfactory to the parties. The Registration Rights Agreement shall contain certain lock-up provisions and customary joinder provisions, pursuant to which each other person who is issued or receives shares of common stock of Target Hospitality in connection with the business combination shall become party thereto.

 

Debt Financing

 

A portion of the business combination consideration will be financed with at least $340 million from secured debt financing made available to Arrow Bidco pursuant to commitments obtained by Holdco Acquiror for an aggregate amount of $425 million (the “Debt Financing”). For more information regarding the Debt Financing, see “The Business Combination Proposal — Related Agreements — Debt Commitment Letter.”

 

Equity Investment

 

In order to finance a portion of the Cash Consideration, the Company entered into subscription agreements (the “Subscription Agreements”), each dated as of November 13, 2018, with certain institutions and accredited investors (the “Investors”), pursuant to which, among other things, the Company agreed to issue and sell in private placements an aggregate of up to 8,500,000 Class A ordinary shares to the Investors for $10.00 per share (the “Equity Offering”). The Equity Offering is expected to close immediately prior to the Closing. For more information regarding the Equity Offering, see “The Business Combination Proposal — Related Agreements — Subscription Agreements.”

 

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Employment Agreements

 

Prior to the completion of the business combination, Target Hospitality expects to enter into employment agreements with certain of its key executive officers. For descriptions of the employment agreements, see the section entitled “Management of Target Hospitality Following the Business Combination.”

 

Equity Ownership Upon Closing

 

As of the date of this proxy statement/prospectus, there are 40,625,000 ordinary shares outstanding, comprised of 32,500,000 Class A ordinary shares and 8,125,000 Class B ordinary shares, of which our Sponsor owns 4,143,750 Class B ordinary shares and Harry E. Sloan owns 3,981,250 Class B ordinary shares. On the effective date of the domestication, the currently issued and outstanding Class B ordinary shares will automatically convert by operation of law, on a one-for-one basis, into Class A ordinary shares. Immediately thereafter, the currently issued and outstanding Class A ordinary shares will automatically convert by operation of law, on a one-for-one basis, into shares of Target Hospitality common stock in accordance with the terms of the Proposed Charter.

 

Assuming (i) that no public shareholders exercise their redemption rights (no redemptions scenario based on $327,246,119 held in trust as of June 30, 2018 and no additional equity raised through the Equity Offering or Backstop Offering), (ii) that 17,775,388 shares of Target Hospitality common stock are issued to Algeco Seller, and (iii) that 49,100,000 shares of Target Hospitality common stock are issued to Arrow Seller, then upon the closing of the business combination our public shareholders would own approximately 30.8%, the Algeco Seller would own approximately 16.9% and the Arrow Seller would own approximately 46.6% of the total of 105,455,388 shares of issued and outstanding shares of Target Hospitality common stock (excluding 2,045,000 shares of Target Hospitality common stock to be held in escrow as of the closing and subject to release to Platinum Eagle Acquisition LLC, a Delaware limited liability company (our “Sponsor”), Harry E. Sloan (together with the Sponsor, the “Founders”) and Arrow Seller in accordance with the terms of the Earnout Agreement (the “Earnout Shares”)).

 

Assuming (i) that holders of 10,154,445 public shares exercise their redemption rights (based on $327,246,119 held in trust as of June 30, 2018 and a redemption price of $10.0691 per share) (maximum redemptions scenario based on $327,246,119 held in trust as of June 30, 2018 and no additional equity raised through the Equity Offering or Backstop Offering), (ii) that 25,800,000 shares of Target Hospitality common stock are issued to Algeco Seller, and (iii) that 49,100,000 shares of Target Hospitality common stock are issued to Arrow Seller, then upon the closing of the business combination our public shareholders would own approximately 22.3%, Algeco Seller would own approximately 25.7% and Arrow Seller would own approximately 48.9% of the total of 100,325,555 issued and outstanding shares of Target Hospitality common stock (excluding the 8,045,000 Earnout Shares).

 

There are currently outstanding an aggregate of 16,166,667 warrants to acquire our Class A ordinary shares, which comprise 5,333,334 private placement warrants held by our initial shareholders and our independent directors (and/or one or more of their estate planning vehicles) and 10,833,333 public warrants. Each of our outstanding whole warrants is exercisable commencing 30 days following the closing of the business combination for one Class A ordinary share and, following the domestication, will entitle the holder thereof to purchase one share of Target Hospitality common stock in accordance with its terms. Therefore, as of the date of this proxy statement/prospectus, if we assume that each outstanding whole warrant is exercised and one share of Target Hospitality common stock is issued as a result of such exercise, with payment to the company of the exercise price of $11.50 per warrant for one whole share, our fully-diluted share capital would increase by a total of 16,166,167 shares, with approximately $185,910,920 paid to the company to exercise the warrants.

 

In addition to the restrictions set forth in the Earnout Agreement, subject to certain limited exceptions, the founder shares will not be transferred, assigned or sold until the date that is one year after the date of the consummation of our initial business combination or earlier if, subsequent to our business combination, (i) the last sale price of our ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (ii) we consummate a subsequent liquidation, merger, share exchange or other similar transaction which results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or other property.

 

Proposals to be put to the General Meeting

 

The following is a summary of the proposals to be put to the general meeting.

 

The Business Combination Proposal

 

Under the Merger Agreements, the total amount payable by the Holdco Acquiror will be $1.311 billion (which amount is inclusive of the amounts required to pay third party and intercompany indebtedness at the closing of the business combination and net of transaction expenses), of which (A) $562 million will be paid in cash (the “Cash Consideration”) and (B) the remaining $749 million will be paid to the Sellers in the form of shares of common stock, par value $0.0001, of Target Hospitality, with (i) 25,800,000 of such shares delivered to the Algeco Seller pursuant to the Target Merger Agreement and (ii) 49,100,000 of such shares delivered to the Arrow Seller pursuant to the Signor Merger Agreement. The Cash Consideration payable to the Algeco Seller will be increased to the extent any cash on the balance sheet of the combined business of Signor and Target, after giving effect to the business combination, the redemptions from the Trust Account, the proceeds from the Equity Offering and the proceeds from the Backstop Offering, if any, exceeds $5.0 million. In the event the Cash Consideration is increased, the Stock Consideration paid to Algeco Seller will be decreased on a dollar for dollar basis. Notwithstanding the foregoing, in no event shall the Cash Consideration be less than $562.0 million, but depending upon the amount of redemptions and additional equity raised through the Equity Offering and Backstop Offering, if any, the Cash Consideration and Stock Consideration will be adjusted accordingly. The Cash Consideration shall come from the following sources: (1) proceeds available from the trust account, after giving effect to any and all redemptions; (2) the gross proceeds from new debt financing of to at least $340 million; and (3) subject to the prior consent of the Sellers, the proceeds from the Equity Offering and Backstop Offering, if any.

 

After consideration of the factors identified and discussed in the section entitled “The Business Combination Proposal — Platinum Eagle’s Board of Directors’ Reasons for Approval of the Business Combination,” Platinum Eagle’s board of directors concluded that the business combination met all of the requirements disclosed in the prospectus for its initial public offering, including that the business of Target Hospitality had a fair market value of at least 80% of the balance of the funds in the trust account at the time of execution of the Merger Agreements.

 

If any proposal is not approved by Platinum Eagle’s shareholders at the general meeting, the Platinum Eagle board of directors may submit the adjournment proposal for a vote.

 

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For additional information, see “The Business Combination Proposal” section of this proxy statement/prospectus.

 

The Domestication Proposal

 

If the business combination proposal is approved, then Platinum Eagle is asking its shareholders to approve the domestication proposal. Under the Merger Agreements, the approval of the domestication proposal is also a condition to the consummation of the business combination. If, however, the domestication proposal is approved, but the business combination proposal is not approved, then neither the domestication nor the business combination will be consummated.

 

As a condition to closing the business combination pursuant to the terms of the Merger Agreements, the board of directors of Platinum Eagle has unanimously approved a change of Platinum Eagle’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware 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 effect the domestication, Platinum Eagle will file a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and will file a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which Platinum Eagle will be domesticated and continue as a Delaware corporation, at which time Platinum Eagle will change its name to “Target Hospitality Corp.”

 

On the effective date of the domestication, the currently issued and outstanding Class B ordinary shares will automatically convert by operation of law, on a one-for-one basis, into Class A ordinary shares. Immediately thereafter, the currently issued and outstanding Class A ordinary shares will automatically convert by operation of law, on a one-for-one basis, into shares of Target Hospitality common stock in accordance with the terms of the Proposed Charter. Similarly, our outstanding warrants will become warrants to acquire the corresponding shares of Target Hospitality common stock and no other changes will be made to the terms of any outstanding warrants as a result of the domestication. In addition, our outstanding units will become units of Target Hospitality and after the effectiveness of the domestication and before the closing of the business combination, each outstanding unit of Target Hospitality (each of which consists of one share of Target Hospitality common stock and one-third of one warrant to purchase one share of Target Hospitality common stock) will be separated into its component common stock and warrant.

 

The domestication proposal, if approved, will approve a change of Platinum Eagle’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware. Accordingly, while Platinum Eagle is currently governed by the Cayman Islands Companies Law, upon domestication, Target Hospitality will be governed by the DGCL. Accordingly, we urge shareholders to carefully consult the information set out below under “Comparison of Corporate Governance and Shareholder Rights.” Additionally, we note that if the domestication proposal is approved, then Platinum Eagle will also ask its shareholders to approve the organizational documents proposals (discussed below) and we urge shareholders to carefully consult the section entitled “The Organizational Documents Proposals” (including the chart of material differences included therein) and the Proposed Organizational Documents of Target Hospitality, attached hereto as Annexes D and E.

 

For additional information, see “The Domestication Proposal” section of this proxy statement/prospectus.

 

The Organizational Documents Proposals

 

If the domestication proposal is approved and the business combination is to be consummated, Platinum Eagle will replace its current amended and restated memorandum and articles of association (the “Existing Organizational Documents”) under the Cayman Islands Companies Law, with a new certificate of incorporation (the “Proposed Charter”) and bylaws (the “Proposed Bylaws” and, together with the Proposed Charter, the “Proposed Organizational Documents”) of Target Hospitality, in each case, under the Delaware General Corporation Law.

 

The Proposed Organizational Documents differ in certain material respects from the Existing Organizational Documents and we urge shareholders to carefully consult the information set out in the Section “The Organizational Documents Proposals” (including the chart of material differences included therein) and the full text of the Proposed Organizational Documents of Target Hospitality, attached hereto as Annexes D and E.

 

Platinum Eagle’s shareholders are asked to consider and vote upon and to approve by special resolution three separate proposals (collectively, the “organizational documents proposals”) in connection with the replacement of the Existing Organizational Documents with the Proposed Organizational Documents. The organizational documents proposals are conditioned on the approval of the domestication proposal, and, therefore, also conditioned on approval of the business combination proposal. Therefore, if the business combination proposal and the domestication proposal are not approved, the organizational documents proposals will have no effect, even if approved by our public shareholders. A brief summary of each of the organizational documents proposals is set forth below. These summaries are qualified in their entirety by reference to the complete text of the Proposed Organizational Documents of Target Hospitality.

 

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Organizational Documents Proposal A — Authorized Capital Stock

 

Assuming the business combination proposal and the domestication proposal are approved, our shareholders are also being asked to approve organizational documents proposal A, which is, in the judgment of our board of directors, necessary to adequately address the needs of Target Hospitality after the business combination. Under the Merger Agreements, the approval of each of the organizational documents proposals is a condition to the consummation of the business combination and therefore approval of this organizational documents proposal A is a condition to the consummation of the business combination.

 

Organizational documents proposal A is a proposal to approve the provision in the Proposed Charter changing the authorized share capital from $40,100 divided into 380,000,000 Class A ordinary shares of a par value of $0.0001 each, 20,000,000 Class B ordinary shares of a par value of $0.0001 each and 1,000,000 preferred shares of a par value of $0.0001 each, to authorized capital stock of 401,000,000 shares, consisting of (x) 400,000,000 shares of Target Hospitality common stock and (y) 1,000,000 shares of preferred stock.

 

For additional information, see “The Organizational Documents Proposals” section in this proxy statement/prospectus.

 

Organizational Documents Proposal B — Approval of Proposal Relating to the Ability of Stockholders to Call a Special Meeting

 

Assuming the business combination proposal and the domestication proposal are approved, our shareholders are also being asked to approve organizational documents proposal B, which is, in the judgment of our board of directors, necessary to adequately address the needs of Target Hospitality after the business combination. Under the Merger Agreements, the approval of each of the organizational documents proposals is a condition to the consummation of the business combination and therefore approval of this organizational documents proposal B is a condition to the consummation of the business combination.

 

The Proposed Organizational Documents stipulate that, unless required by law, special meetings of stockholders may only be called by (i) the board of directors, (ii) the chairperson of the board of directors or (iii) the chief executive officer of Target Hospitality. Under the Proposed Organizational Documents, Target Hospitality’s stockholders have no power to call a special meeting.

 

For additional information, see “The Organizational Documents Proposals” section in this proxy statement/prospectus.

 

Organizational Documents Proposal C — Approval of Other Changes in Connection with Adoption of the Proposed Organizational Documents

 

Assuming the business combination proposal and the domestication proposal are approved, our shareholders are also being asked to approve organizational documents proposal C, which is, in the judgment of our board of directors, necessary to adequately address the needs of Target Hospitality after the business combination. Under the Merger Agreements, the approval of each of the organizational documents proposals is a condition to the consummation of the business combination and therefore approval of this organizational documents proposal C is a condition to the consummation of the business combination.

 

Organizational documents proposal C is a proposal to approve all other changes in connection with the replacement of the Existing Organizational Documents with the Proposed Organizational Documents as part of the domestication, including (i) changing the post-domestication corporate name from “Platinum Eagle Acquisition Corp.” to “Target Hospitality Corp.” and making Target Hospitality’s corporate existence perpetual, (ii) adopting Delaware as the exclusive forum for certain stockholder litigation, (iii) granting a waiver regarding corporate opportunities to Target Hospitality’s non-employee directors and (iv) removing certain provisions related to our status as a blank check company that will no longer apply upon consummation of the business combination, all of which Platinum Eagle’s board of directors believe are necessary to adequately address the needs of Target Hospitality after the business combination.

 

For additional information, see “The Organizational Documents Proposal” section of this proxy statement/prospectus.

 

The Stock Issuance Proposal

 

Assuming the business combination proposal, the domestication proposal and each of the organizational documents proposals are approved, our shareholders are also being asked to approve, by ordinary resolution, the stock issuance proposal.

 

Platinum Eagle’s units, ordinary shares and public warrants are listed on Nasdaq and, as such, we are seeking shareholder approval of the issuance of (x) shares of Target Hospitality common stock to (i) Algeco Seller pursuant to the terms of the Target Merger Agreement and (ii) Arrow Seller pursuant to the terms of the Signor Merger Agreement, and (y) Class A ordinary shares to certain institutions and accredited investors in connection with the Equity Offering in order to comply with the applicable listing rules of Nasdaq.

 

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The number of shares of Target Hospitality common stock that may be issued in connection with the stock issuance proposal is expected to be approximately 25,800,000 shares to Algeco Seller and 49,100,000 shares to Arrow Seller.

 

For additional information, see “The Stock Issuance Proposal” section of this proxy statement/prospectus.

 

The Incentive Award Plan Proposal

 

Assuming the business combination proposal, the domestication proposal, each of the organizational documents proposals and the stock issuance proposal are approved, our shareholders are also being asked to approve, by ordinary resolution, the incentive award plan proposal.

 

We expect that, prior to the consummation of the business combination, our board of directors will approve and adopt the Target Hospitality Corp. 2019 Incentive Award Plan, referred to as the Plan, and assuming the business combination proposal, the domestication proposal, each of the organizational documents proposals and the stock issuance proposal are approved, we expect that our shareholders will be asked to approve the Plan. Our shareholders should carefully read the entire Plan, a copy of which is attached to this proxy statement/prospectus as Annex F, before voting on this proposal.

 

For additional information, see “The Incentive Award Plan Proposal” section of this proxy statement/prospectus.

 

The Adjournment Proposal

 

If based on the tabulated vote, there are not sufficient votes at the time of the general meeting to authorize Platinum Eagle to consummate the business combination (because any of the condition precedent proposals have not been approved (including as a result of the failure of any other cross-conditioned condition precedent proposals to be approved)) or Platinum Eagle determines that one or more of the closing conditions under the Merger Agreements has not been satisfied, Platinum Eagle’s board of directors may submit a proposal to adjourn the general meeting to a later date or dates, if necessary, to permit further solicitation of proxies.

 

For additional information, see “The Adjournment Proposal” section of this proxy statement/prospectus.

 

Date, Time and Place of General Meeting of Platinum Eagle’s Shareholders

 

The general meeting will be held at      a.m., Eastern Time, on    , 2019, at the offices of Winston & Strawn LLP at 200 Park Avenue, New York, New York 10166, to consider and vote upon the proposals to be put to the general meeting, including if necessary, the adjournment proposal.

 

Voting Power; Record Date

 

Shareholders will be entitled to vote or direct votes to be cast at the general meeting if they owned ordinary shares at the close of business on     , 2019, which is the record date for the general meeting. Shareholders will have one vote for each ordinary share owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. Our warrants do not have voting rights. On the record date, there were 40,625,000 ordinary shares outstanding, of which 32,500,000 were public shares, with the rest being held by our initial shareholders.

 

Quorum and Vote of Platinum Eagle Shareholders

 

A quorum of Platinum Eagle shareholders is necessary to hold a valid meeting. A quorum will be present at the Platinum Eagle general meeting if the holders of a majority of the issued and outstanding shares entitled to vote at the general meeting are represented in person or by proxy. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the general meeting.

 

As of the record date for the general meeting, 20,312,501 ordinary shares would be required to achieve a quorum.

 

In connection with our initial public offering, our initial shareholders (consisting of our Sponsor and Harry E. Sloan) and our independent directors at the time of our initial public offering entered into letter agreements to vote their founder shares, as well as any public shares purchased during or after our initial public offering, in favor of the business combination proposal and we also expect them to vote their shares in favor of all other proposals being presented at the general meeting. As of the date hereof, our Sponsor and our independent directors own 20.0% of our total outstanding common shares.

 

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

 

·Business combination proposal: The approval of the business combination proposal requires an ordinary resolution being the affirmative vote for the proposal by the holders of a majority of the ordinary shares who, being present and entitled to vote at the general meeting to approve the business combination proposal, vote at the general meeting.

 

·Domestication proposal: The approval of the domestication proposal requires a special resolution under Cayman Islands Companies Law, being the affirmative vote for the proposal by the holders of at least two-thirds of the ordinary shares who, being present and entitled to vote at the general meeting to approve the domestication proposal, vote at the general meeting.

 

·Organizational documents proposals: The separate approval of each of the organizational documents proposals requires a special resolution under the Cayman Islands Companies Law, being the affirmative vote for each of the organizational documents proposals by the holders of at least two-thirds of the ordinary shares who, being present and entitled to vote at the general meeting to approve each such organizational documents proposal, vote at the general meeting.

 

·Stock issuance proposal: The approval of the stock issuance proposal requires an ordinary resolution being the affirmative vote for the proposal by the holders of a majority of the ordinary shares who, being present and entitled to vote at the general meeting to approve the stock issuance proposal, vote at the general meeting.

 

·Incentive award plan proposal: The approval of the incentive award plan proposal requires an ordinary resolution being the affirmative vote for the proposal by the holders of a majority of the ordinary shares who, being present and entitled to vote at the general meeting to approve the incentive award plan proposal, vote at the general meeting.

 

·Adjournment proposal: The approval of the adjournment proposal requires an ordinary resolution being the affirmative vote for the proposal by the holders of a majority of the ordinary shares who, being present and entitled to vote at the general meeting to approve the adjournment proposal, vote at the general meeting.

 

Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the general meeting.

 

Redemption Rights

 

Pursuant to Platinum Eagle’s Existing Organizational Documents, a public shareholder may request that Platinum Eagle redeem all or a portion of their public shares (which would become shares of Target Hospitality common stock in the domestication) for cash if the business combination is consummated. You will be entitled to receive cash for any public shares to be redeemed only if you:

 

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

 

(ii)prior to            a.m., Eastern Time, on            , 2019, (a) submit a written request to the transfer agent that Target Hospitality redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.

 

As noted above, holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. Holders may instruct their broker to do so, or if a holder holds units registered in its own name, the holder must contact the transfer agent, directly and instruct them to do so. Public shareholder may elect to redeem all or a portion of their public shares even if they vote for the business combination proposal. If the business combination is not consummated, the public shares will not be redeemed for cash. If a public shareholder properly exercises its right to redeem its public shares and timely delivers its public shares to Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent, Platinum Eagle will redeem each Class A share into which such public share converted upon the domestication for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the business combination, including interest, less income taxes payable, divided by the number of then issued and outstanding public shares. If a public shareholder exercises its redemption rights, then it will be exchanging its redeemed ordinary shares for cash and will no longer own such shares. See “Extraordinary General Meeting — Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

 

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Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

 

In order for public shareholders to exercise their redemption rights in respect of the proposed business combination, public shareholders must properly exercise their right to redeem the public shares that you will hold upon the domestication no later than the close of the vote on the business combination proposal and deliver their ordinary shares (either physically or electronically) to Continental Stock Transfer & Trust Company, Platinum Eagle’s transfer agent, prior to       a.m., Eastern Time, on     , 2019. Therefore, the exercise of redemption rights occurs prior to the domestication. For the purposes of Article 49.3 of the amended and restated memorandum and articles of association of Platinum Eagle and the Cayman Islands Companies Law, the exercise of redemption rights shall be treated as an election to have such public shares repurchased for cash and references in this proxy statement/prospectus shall be interpreted accordingly. Immediately following the domestication and the consummation of the business combination, Target Hospitality shall satisfy the exercise of redemption rights by redeeming the public shares issued to the public shareholders that validly exercised their redemption rights.

 

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

 

Appraisal Rights

 

Neither Platinum Eagle shareholders nor Platinum Eagle warrantholders have appraisal rights in connection with the business combination or the domestication under the Cayman Islands Companies Law or under the DGCL.

 

Proxy Solicitation

 

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

 

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

 

Interests of Platinum Eagle’s Directors and Officers in the Business Combination

 

When you consider the recommendation of Platinum Eagle’s board of directors in favor of approval of the business combination proposal, you should keep in mind that Platinum Eagle’s initial shareholders, including its directors and executive officers, have interests in such proposal that are different from, or in addition to those of Platinum Eagle shareholders and warrant holders generally. These interests include, among other things, the interests listed below:

 

·If we do not consummate a business combination transaction by January 17, 2020, we will cease all operations except for the purpose of winding up, redeem all of the issued and outstanding public shares for cash and, subject to the approval of our remaining shareholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under the Cayman Islands Companies Law to provide for claims of creditors and the requirements of other applicable law. In such event, the 8,125,000 founder shares owned by our initial shareholders would be worthless because following the redemption of the public shares, we would likely have few, if any, net assets and because our initial shareholders have agreed to waive their rights to liquidating distributions from the trust account with respect to the founder shares if we fail to complete a business combination within the required period. Our initial shareholders purchased the founder shares prior to our initial public offering for an aggregate purchase price of $25,000. Upon the Closing, such founder shares will convert into 8,125,000 shares of Target Hospitality common stock, and such securities, if unrestricted and freely tradable would be valued at approximately $80,437,500, based on the closing price of $9.90 per share of our Class A ordinary shares on Nasdaq on November 9, 2018.

 

·Simultaneously with the closing of our initial public offering, Platinum Eagle consummated the sale of 5,333,334 private placement warrants at a price of $11.50 per warrant in a private placement to our initial shareholders, including our independent directors (and/or one or more of their estate planning vehicles). The warrants are each exercisable commencing 30 days following the closing of the business combination for one Class A ordinary share at $11.50 per share. If we do not consummate a business combination transaction by January 17, 2020, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public shareholders and the warrants held by our initial shareholders will be worthless. The warrants held by our initial shareholders had an aggregate market value of $7,946,668 based upon the closing price of $1.49 per warrant on Nasdaq on November 9, 2018.

 

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·Our Sponsor, officers and directors will lose their entire investment in us if we do not complete our business combination by January 17, 2020.

 

·                   and                    will continue to be directors of Target Hospitality after the consummation of the business combination. As such, in the future they will receive any cash fees, stock options or stock awards that the Target Hospitality board of directors determines to pay to its directors.

 

·Our initial shareholders and our officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if Platinum Eagle fails to complete an initial our business combination by January 17, 2020.

 

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

 

·Following the consummation of the business combination, our Sponsor would be entitled to the repayment of any working capital loan and advances that have been made to Platinum Eagle and remain outstanding. As of the date of this proxy statement/prospectus, our Sponsor has not made any advances to us for working capital expenses. If we do not complete an initial business combination within the required period, we may use a portion of our working capital held outside the trust account to repay the working capital loans, but no proceeds held in the trust account would be used to repay the working capital loans.

 

·Following the consummation of the business combination, we will continue to indemnify our existing directors and officers and will maintain our directors’ and officers’ liability insurance.

 

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

 

At any time prior to the general meeting, during a period when they are not then aware of any material nonpublic information regarding Platinum Eagle or its securities, the Platinum Eagle initial shareholders, Target and/or its affiliates and Signor and/or its affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Platinum Eagle’s ordinary shares or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of that (i) the proposals presented to shareholders for approval at the general meeting are approved and/or (ii) that Platinum Eagle satisfy the minimum cash condition. Any such stock purchases and other transactions may thereby increase the likelihood of obtaining shareholder approval of the business combination. This may result in the completion of our business combination that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by the Platinum Eagle initial shareholders for nominal value.

 

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

 

If such transactions are effected, the consequence could be to cause the business combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the general meeting and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Platinum Eagle will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the general meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

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The existence of financial and personal interests of the Platinum Eagle directors may result in a conflict of interest on the part of one or more of them between what he may believe is best for Platinum Eagle and what he may believe is best for him in determining whether or not to grant a waiver in a specific situation. See the sections entitled “Risk Factors” and “The Business Combination Proposal — Interests of Platinum Eagle’s Directors and Officers in the Business Combination” for a further discussion of this and other risks.

 

Recommendation to Shareholders

 

Platinum Eagle’s board of directors believes that the business combination proposal and the other proposals to be presented at the general meeting are in the best interest of Platinum Eagle’s shareholders and unanimously recommends that its shareholders vote “FOR” the business combination proposal, “FOR” the domestication proposal, “FOR” each of the separate organizational documents proposals, “FOR” the stock issuance proposal, “FOR” the incentive award plan proposal and “FOR” the adjournment proposal, in each case, if presented to the general meeting.

 

The existence of financial and personal interests of Platinum Eagle’s directors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of Platinum Eagle and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal — Interests of Platinum Eagle’s Directors and Officers in the Business Combination” for a further discussion.

 

Conditions to the Closing of the Business Combination

 

Unless waived by the parties to the Merger Agreements, and subject to applicable law, the consummation of the business combination is subject to a number of conditions set forth in the Merger Agreements including, among others, receipt of gross proceeds of at least $340 million from debt financing and the requisite shareholder approvals contemplated by this proxy statement/prospectus. For more information about conditions to the consummation of the business combination, see “The Business Combination Proposal — The Merger Agreements — Conditions to the Closing of the Business Combination.”

 

Sources and Uses of Funds for the Business Combination

 

The following table summarizes the sources and uses for funding the business combination. Where actual amounts are not known or knowable, the figures below represent Platinum Eagle’s good faith estimate of such amounts assuming a closing as of the indicated date.

 

(U.S. dollars in thousands)                
Sources         Uses      
Debt Financing(1)   $ 340,000     Purchase of Target Parent (5)   $ 820,000  
Private Placement   $ 85,000              
Trust Account(2)   $ 327,246     Purchase of Signor   $ 491,000  
Equity Issued to Algeco Seller(3)   $ 92,754              
Equity Issued to Arrow Seller(4)   $ 491,000     Fees and expenses   $ 25,000  
Total sources   $ 1,336,000     Total uses   $ 1,336,000  

 

 

 

(1) Consists of $425 million committed by the Commitment Parties (as defined herein), including the New ABL Facility of $125 million, of which $40 million will be funded at the Closing, and a $300 million bridge facility.

 

(2) Assumes none of the ordinary shares are redeemed in connection with the business combination.

 

(3) Consists of 17,775,388 ordinary shares issued to the Algeco Seller as partial consideration in the business combination.

 

(4) Consists of 49,100,000 ordinary shares issued to the Arrow Seller as consideration in the business combination.

 

(5) Proceeds from the Equity Offering will increase the amount of cash consideration and reduce the amount of stock consideration payable to the Algeco Seller under the Target Merger Agreement.

 

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U.S. Federal Income Tax Considerations

 

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

 

Anticipated Accounting Treatment

 

The Business Combination

 

The business combination will be accounted for as a reverse acquisition under the purchase method of accounting, with Target Parent being treated as the accounting acquirer. Consequently, Target Parent’s consolidated financial statements will become the historical financial statements of the registrant following consummation of the business combination, with the transaction treated as a recapitalization.

 

The Domestication

 

There will be no accounting effect or change in the carrying amount of the consolidated assets and liabilities of Platinum Eagle as a result of domestication. The business, capitalization, assets and liabilities and financial statements of Target Hospitality immediately following the domestication will be the same as those of Platinum Eagle immediately prior to the domestication.

 

Comparison of Corporate Governance and Shareholder Rights

 

The domestication will change Platinum Eagle’s jurisdiction of incorporation from the Cayman Islands to Delaware and, as a result, Platinum Eagle’s organizational documents will change and will be governed by the DGCL rather than Cayman Islands Companies Law. There are differences between Cayman Islands corporate law, which currently governs Platinum Eagle, and Delaware corporate law, which will govern Target Hospitality following the domestication. Additionally, there are differences between the new organizational documents of Target Hospitality and the current constitutional documents of Platinum Eagle.

 

For a summary of the material differences among the rights of holders of Target Hospitality common stock and holders of ordinary shares, see “Comparison of Corporate Governance and Shareholder Rights.”

 

Regulatory Matters

 

The business combination is not subject to any additional federal or state regulatory requirements or approvals, except for filings with the Cayman Islands and the State of Delaware necessary to effectuate the transactions contemplated by the Merger Agreements.

 

Risk Factors

 

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

 

Sources of Industry and Market Data

 

Where information has been sourced from a third party, the source of such information has been identified.

 

Unless otherwise indicated, the information contained in this document on the market environment, market developments, growth rates, market trends and competition in the markets in which Platinum Eagle, Target and Signor operate is taken from publicly available sources, including third-party sources, or reflects Platinum Eagle’s, Target’s or Signor’s estimates that are principally based on information from publicly available sources.

 

Emerging Growth Company

 

Platinum Eagle is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“SOX”), 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.

 

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Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. Platinum Eagle intends to take advantage of the benefits of this extended transition period. This may make comparison of Platinum Eagle’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

 

Platinum Eagle will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of its initial public offering, (b) in which it has total annual gross revenue of at least $1.0 billion, or (c) in which it is deemed to be a large accelerated filer, which means the market value of its Class A ordinary shares that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which it has issued more than $1.0 billion in non-convertible debt during the prior three-year period.

 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF PLATINUM EAGLE

 

Platinum Eagle is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the business combination.

 

Platinum Eagle’s statement of operations data the period from July 12, 2017 (date of inception) to December 31, 2017 and balance sheet data as of December 31, 2017 are derived from Platinum Eagle’s audited financial statements included elsewhere in this proxy statement/prospectus. Platinum Eagle’s statement of operations data for the six months ended June 30, 2018 and balance sheet data as of June 30, 2018 are derived from Platinum Eagle’s unaudited financial statements included elsewhere in this proxy statement/prospectus.

 

The information is only a summary and should be read in conjunction with Platinum Eagle’s consolidated financial statements and related notes and “Platinum Eagle’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere herein. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of Platinum Eagle.

 

   Platinum Eagle Acquisition Corp. 
   For the six months ended   Year ended 
   June 30,   December 31, 
In thousands except units  2018   2017 
         
Revenue  $-   $- 
General and administrative expenses   327    9 
Loss from operations   (327)   (9)
Other income - interest on Trust Account   2,246    - 
Net income (loss)  $1,919   $(9)
Balance sheet data (at period end):          
Property, plant and equipment, net  $-   $- 
Total assets   328,008    242 
Debt, non-current   -    - 
Total liabilities   11,582    226 
Statements of cash flows data:          
Net cash provided by (used in):          
Operating activities   (246)   - 
Investing activities   (325,000)   - 
Financing activities   325,886    - 
Other financial data:          
Weighted average number of ordinary shares outstanding (basic and diluted)          
Class A   32,500,000    - 
Class B   8,125,000    8,625,000 

  

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SELECTED HISTORICAL FINANCIAL INFORMATION OF TARGET PARENT

 

The following table shows selected historical financial information of Target Parent for the periods and as of the dates indicated.

 

The selected historical financial information of Target Parent as of and for the years ended December 31, 2017 and 2016 was derived from the audited historical consolidated financial statements of Target Parent included elsewhere in this proxy statement/prospectus. The selected historical interim financial information of Target Parent as of June 30, 2018 and for the six months ended June 30, 2018 and 2017 was derived from the unaudited interim consolidated financial statements of Target Parent included elsewhere in this proxy statement/prospectus.

 

The following selected historical financial information should be read together with the consolidated financial statements and accompanying notes and “Target Parent’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this proxy statement/prospectus. The selected historical financial information in this section is not intended to replace Target Parent’s consolidated financial statements and the related notes. Target Parent’s historical results are not necessarily indicative of Target Parent’s future results, and Target Parent’s results as of and for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

 

As explained elsewhere in this proxy statement/prospectus, the financial information contained in this section relates to Target Parent, prior to and without giving pro-forma effect to the impact of the business combination and, as a result, the results reflected in this section may not be indicative of the results Target Hospitality will see going forward or that Target would have seen as a standalone business during the periods presented. See “Summary of the Proxy Statement/Prospectus — The Parties to the Business Combination — Target Parent” and “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this proxy statement/prospectus.

 

   For the six months ended   Year ended 
   June 30,   December 31, 
In thousands except units  2018   2017   2017   2016 
         
Revenue:                    
Services Income  $53,175   $29,988   $75,422   $69,510 
Specialty Rental Income   30,947    28,577    58,813    79,957 
Total revenue   84,122    58,565    134,235    149,467 
Costs:                    
Services   27,854    20,128    46,630    42,245 
Specialty Rental   5,028    4,893    10,095    9,785 
Depreciation of accommodation assets   13,395    12,542    24,464    36,300 
Gross Profit   37,845    21,002    53,046    61,137 
Selling, general, and administrative   18,180    7,726    24,337    15,793 
Other depreciation and amortization   2,402    2,508    5,681    5,029 
Restructuring costs   7,414    770    2,180    - 
Currency (gain) loss, net   68    (50)   (91)   - 
Other income (net)   (965)   110    (519)   (392)
Operating income   10,796    9,938    21,458    40,707 
Interest expense (income), net   9,615    (2,829)   (5,107)   (3,512)
Income before income tax   1,131    12,767    26,565    44,219 
Income tax expense   (901)   (5,528)   (25,584)   (17,310)
Net income (loss)   230    7,239    981    26,909 
Other comprehensive income (loss)                    
Foreign currency translation   (291)   285    618    205 
Comprehensive income (loss)  $(61)  $7,524   $1,599   $27,114 
Balance sheet data (at period end):                    
Specialty rental and other PPE   230,058    199,389    199,389    193,907 
Total assets   385,776    363,125    363,125    424,276 
Notes due to affiliate                     
Long-term debt   15,027    2,793    2,793    17,591 
Total liabilities   361,349    338,221    338,121    113,702 
Statements of cash flows data:                    
Net cash provided by (used in):                    
Operating activities   7,044    21,151    40,774    44,728 
Investing activities   (40,592)   (17,795)   (130,246)   (5,125)
Financing activities   26,952    (4,258)   98,059    (39,942)

 

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Non-GAAP Financial Measures

 

Target Parent has included Adjusted gross profit, EBITDA and Adjusted EBITDA, which are measurements not calculated in accordance with US generally accepted accounting principles (“GAAP”), in the discussion of its financial results because they are key metrics used by management to assess financial performance. Target Parent’s business is capital-intensive and these additional metrics allow management to further evaluate its operating performance.

 

Target Parent defines Adjusted gross profit as gross profit plus depreciation of accommodation assets.

 

Target Parent defines EBITDA as net income (loss) before income tax expense (benefit), interest expense, depreciation of specialty rental assets, and other depreciation and amortization.

 

Adjusted EBITDA reflects further adjustments to EBITDA to exclude certain items and the effect of what Target Parent considers transactions or events not related to its core business operations.

 

The following provides a discussion of these items and what Target Parent considers transactions or events not related to its core business operations that are excluded to arrive at Adjusted EBITDA:

 

Currency (gains) losses, net:  Target Parent incurred currency gains and losses on monetary assets and liabilities denominated in foreign currencies other than the functional currency. Substantially all such currency gains (losses) are unrealized and attributable to financings due to and from affiliated companies.

 

Restructuring costs:  Target Parent incurred costs associated with restructuring plans designed to streamline operations and reduce costs, which are considered non-routine.

 

Selling, general and administrative costs:  Target Parent incurred nonrecurring costs in the form of legal and professional fees as well as transaction bonus amounts, primarily associated with a restructuring transaction in 2017.

 

Other expense:  Other expense includes consulting expenses related to certain non-routine projects, financing costs not classified as interest expense, gains and losses on disposals of property, plant, and equipment, and other immaterial charges. Other expense also includes non-routine transactions related to casualty losses on certain fixed assets.

 

EBITDA, a financial measure that is not required by, or presented in accordance with GAAP reflects net income excluding the impact of interest expense, provision for income taxes, depreciation and amortization. We believe that EBITDA is a meaningful indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use EBITDA, as do analysts, lenders, investors, and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels, and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization expense, because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

 

We also believe that Adjusted EBITDA, another non-GAAP financial measure, is a meaningful indicator of operating performance. Our Adjusted EBITDA reflects adjustments to exclude the effects of additional items, including non-routine items, that are not reflective of the ongoing operating results of the Target Parent.

 

Adjusted gross profit is another non-GAAP financial measure that is used by management to evaluate the operating performance of its business segments and allocate resources to those business segments.

 

EBITDA, Adjusted EBITDA, and Adjusted gross profit have limitations and should not be considered in isolation or as substitutes for performance measures calculated under GAAP. These non-GAAP measures exclude certain cash expenses that we are obligated to make. In addition, other companies in our industry may calculate EBITDA, Adjusted gross profit, and in particular Adjusted EBITDA differently than we do or may not calculate them at all, limiting the usefulness of EBITDA, Adjusted gross profit, and Adjusted EBITDA as comparative measures.

 

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The following table presents a reconciliation of Target Parent’s consolidated gross profit to Adjusted gross profit:

 

   Six months ended June 30,   Year ended December 31, 
   2018   2017   2017   2016 
                 
Gross profit  $37,845   $21,002   $53,046   $61,137 
Depreciation of accommodation assets   13,395    12,542    24,464    36,300 
Adjusted gross profit  $51,240   $33,544   $77,510   $97,437 

 

The following table presents a reconciliation of Target Parent’s consolidated net loss to EBITDA and Adjusted EBITDA:

 

   Six months ended June 30,   Year ended December 31, 
   2018   2017   2017   2016 
Net Income (loss)  $230   $7,239   $981   $26,909 
Income tax expense   901    5,528    25,584    17,310 
Interest expense (income), net   9,615    (2,829)   (5,107)   (3,512)
Other depreciation and amortization   2,402    2,508    5,681    5,029 
Depreciation of accommodation assets   13,395    12,542    24,464    36,300 
EBITDA   26,543    24,988    51,603    82,036 
Currency (gains) losses, net   68    (50)   (91)   - 
Restructuring costs   7,414    770    2,180    - 
Holdings selling, general and administrative costs   7,585    -    8,771    - 
Other expense (income), net   (965)   110    (519)   (392)
Adjusted EBITDA  $40,645   $25,818   $61,944   $81,644 

 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF SIGNOR

 

The following table shows selected historical financial information of Signor for the periods and as of the dates indicated.

 

The selected historical financial information of Signor as of and for the years ended December 31, 2017 and 2016 was derived from the audited historical consolidated financial statements of Signor included elsewhere in this proxy statement/prospectus. The selected historical interim financial information of Signor as of June 30, 2018 and for the six months ended June 30, 2018 and 2017 was derived from the unaudited interim consolidated financial statements of Signor included elsewhere in this proxy statement/prospectus.

 

The following selected historical financial information should be read together with the consolidated financial statements and accompanying notes and “Signor Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this proxy statement/prospectus. The selected historical financial information in this section is not intended to replace Signor’s consolidated financial statements and the related notes. Signor’s historical results are not necessarily indicative of Signor’s future results, and Signor’s results as of and for the six months ended June 30, 2018are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

 

As explained elsewhere in this proxy statement/prospectus, the financial information contained in this section relates to Signor, prior to and without giving pro-forma effect to the impact of the business combination and, as a result, the results reflected in this section may not be indicative of the results Target Hospitality will see going forward or that Signor would have seen as a standalone business during the periods presented. See “Summary of the Proxy Statement/Prospectus — The Parties to the Business Combination — Signor” and “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this proxy statement/prospectus.

 

   Signor 
   For the six months ended   Year ended 
   June 30,   December 31, 
In thousands except units  2018   2017   2017   2016 
         
Revenue:  $44,284   $11,387   $38,737   $13,497 
Costs of Revenue   17,854    5,706    17,241    6,974 
Depreciation & accretion   2,776    1,180    3,279    1,971 
Gross profit   23,654    4,501    18,217    4,552 
Selling, general, and administrative   2,353    1,486    3,524    2,799 
Net (loss) gain on sale and disposal of property and equipment   -    -    (9)   1,478 
Operating Income   21,301    3,015    14,684    3,231 
Interest (expense) and other income, net   (132)   (57)   (132)   (128)
Net income  $21,169   $2,958   $14,552   $3,103 
Balance sheet data (at period end):                    
Property and equipment, net   50,426    27,234    44,708    20,470 
Total assets   101,997    57,364    81,661    50,300 
Debt, non-current   2,734    298    3,136    475 
Total liabilities   12,820    4,698    13,597    3,827 
Statements of cash flows data:                    
Net cash provided by (used in):                    
Operating activities   21,364    4,351    13,451    2,106 
Investing activities   (10,787)   (7,609)   (23,261)   (6,111)
Financing activities   (751)   2,695    11,015    2,232 

 

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Reconciliation Non-GAAP Financial Measures

 

Signor has included Adjusted gross profit, EBITDA, Adjusted EBITDA, which are measurements not calculated in accordance with US generally accepted accounting principles (“GAAP”), in the discussion of its financial results because they are key metrics used by management to assess financial performance. Signor’s business is capital-intensive and these additional metrics allow management to further evaluate its operating performance.

 

Signor defines Adjusted gross profit, as gross profit plus depreciation and accretion.

 

Signor defines EBITDA as net income (loss) before income tax expense (benefit), interest expense, depreciation and accretion, and amortization.

 

Adjusted EBITDA reflects further adjustments to EBITDA to exclude certain items and the effect of what Signor considers transactions or events not related to its core business operations.

 

The following provides a discussion of these items and what Signor considers transactions or events not related to its core business operations that are excluded to arrive at Adjusted EBITDA:

 

Other expense:  Other expense includes consulting expenses related to certain one-time projects, financing costs not classified as interest expense, gains and losses on disposals of property, plant, and equipment, and other immaterial non-cash charges.

 

EBITDA, a financial measure that is not required by, or presented in accordance with GAAP reflects net income excluding the impact of interest expense, provision for income taxes, depreciation and amortization. We believe that EBITDA is a meaningful indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use EBITDA, as do analysts, lenders, investors, and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels, and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization expense, because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

 

We also believe that Adjusted EBITDA, another non-GAAP financial measure, is a meaningful indicator of operating performance. Our Adjusted EBITDA reflects adjustments to exclude the effects of additional items, including non-routine items, that are not reflective of the ongoing operating results of the Signor.

 

Adjusted gross profit is another non-GAAP financial measure that is used by management to evaluate the operating performance of its business allocate resources as appropriate.

 

EBITDA, Adjusted EBITDA, and Adjusted gross profit have limitations and should not be considered in isolation or as substitutes for performance measures calculated under GAAP. These non-GAAP measures exclude certain cash expenses that we are obligated to make. In addition, other companies in our industry may calculate EBITDA, Adjusted gross profit, and in particular Adjusted EBITDA differently than we do or may not calculate them at all, limiting the usefulness of EBITDA, Adjusted gross profit, and Adjusted EBITDA as comparative measures.

 

The following table presents a reconciliation of Signor’s consolidated gross profit to Adjusted gross profit:

 

   Six months ended June 30,   Year ended December 31, 
   2018   2017   2017   2016 
Gross profit  $23,654   $4,501   $18,217   $4,552 
Depreciation and accretion   2,776    1,180    3,279    1,971 
Adjusted gross profit  $26,430   $5,681   $21,496   $6,523 

 

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The following table presents a reconciliation of Signor’s consolidated net loss to EBITDA and Adjusted EBITDA:

 

   Six months ended June 30,   Year ended December 31, 
   2018   2017   2017   2016 
Net income  $21,169   $2,958   $14,552   $3,103 
Interest expense (income), net   135    48    132    128 
Depreciation and accretion   2,776    1,180    3,279    1,971 
EBITDA   24,080    4,186    17,963    5,202 
Other expense (income), net   (3)   9    9    (1,478)
Adjusted EBITDA  $24,077   $4,195   $17,972   $3,724 

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

The following selected unaudited pro forma condensed combined financial information (the “selected pro forma data”) gives effect to the acquisition of Signor, the reverse acquisition of Target Parent and Signor Parent by Platinum Eagle, and the debt financing and extinguishment of existing debt as described in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The Business Combination will be accounted for as a reverse merger, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, Platinum Eagle 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 the Sellers issuing stock for the net assets of Platinum Eagle, accompanied by a recapitalization. The net assets of Platinum Eagle will be stated at historical cost, with no goodwill or other intangible assets recorded. The selected unaudited pro forma condensed combined balance sheet data as of June 30, 2018 gives effect to the business combination and financing activities described above as if they had occurred on June 30, 2018. The selected unaudited pro forma condensed combined statement of operations data for the six months ended June 30, 2018 and for the year ended December 31, 2017 give effect to the business combination and financing activities described above as if they had occurred on January 1, 2017.

 

The selected pro forma data have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information (the “pro forma financial statements”) of Platinum Eagle, Target Parent, and Signor (the Entities) appearing elsewhere in this proxy statement/prospectus and the accompanying notes to the pro forma financial statements. In addition, the pro forma financial statements were based on, and should be read in conjunction with, the historical consolidated financial statements and related notes of the Entities for the applicable periods included in this proxy statement/prospectus. The selected pro forma data have been presented for informational purposes only and are not necessarily indicative of what the combined financial position or results of operations actually would have been had the business combination been completed as of the dates indicated. In addition, the selected pro forma data do not purport to project the future financial position or operating results of the Entities.

 

   Assuming no redemption   Assuming maximum redemption 
   For the
six months ended
June 30, 2018
   For the year ended
December 31, 2017
   For the
six months ended
June 30, 2018
   For the year ended
December 31, 2017
 
   (in thousands, except per share data) 
Selected Unaudited Pro Forma Condensed Combined Statement of Operations                    
Revenue  $128,406   $172,972   $128,406   $172,972 
Net income (loss) per share – basic and diluted  $0.11   $(0.18)  $0.11   $(0.19)
Weighted average shares outstanding – basic and diluted   105,455,000    105,455,000    105,076,000    105,076,000 

 

 

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   As of June 30, 2018 
   No
Redemption
   Maximum
Redemption
 
   (in thousands) 
Selected Unaudited Pro Forma Combined Balance Sheet Data          
Total assets  $533,648   $533,648 
Total liabilities  $433,243   $455,243 
Total equity  $100,405   $78,405 

 

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COMPARATIVE PER SHARE DATA

 

The following table sets forth selected historical equity ownership information for Platinum Eagle, Target Parent and Signor and unaudited pro forma condensed consolidated combined per share ownership information of Platinum Eagle, Target Parent and Signor after giving effect to the business combination, assuming two redemption scenarios as follows:

 

Assuming No Redemptions:  This presentation assumes that no Platinum Eagle shareholders exercise redemption rights with respect to their public shares for a pro rata portion of the trust account.

 

Assuming Maximum Redemption:  This presentation gives effect to Platinum Eagle public shareholders redeeming approximately 10.2 million shares for aggregate redemption payments of $102.2 million. Aggregate redemption payments of $102.2 million calculated as $327.2 million in trust account per the pro forma condensed combined balance sheet less $225 million required available cash from the trust account plus an additional $22.0 million additional funded by the debt financing which is $102.2 million per the pro forma balance sheet. Public redemption shares of approximately 10.2 million shares calculated as $102.2 million redemption payments divided by estimated per share redemption value of approximately $10.07 ($327.2 million in trust account divided by 32.5 million outstanding Platinum Eagle public shares).

 

The book value per share reflects the business combination as if it had occurred on June 30, 2018. The net income (loss) per share information reflects the business combination as if it had occurred at the beginning of the period.

 

The historical information should be read in conjunction with the sections entitled “Selected Historical Financial Information of Platinum Eagle,” “Selected Historical Financial Information of Target Parent” and “Selected Historical Financial Information of Signor” and the historical consolidated and combined financial statements of Platinum Eagle, Target and Signor and the related notes thereto included in this proxy statement/prospectus. The unaudited pro forma condensed consolidated 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 date indicated or will be realized upon the completion of the business combination. The historical information contained in the following table for the six months ended June 30, 2018 should be read in conjunction with Platinum Eagle’s, Target Parent and Signor’s unaudited condensed consolidated statement of operations for the six months ended June 30, 2018 and the related notes included elsewhere herein. The historical information contained in the following table for the year ended December 31, 2017 should be read in conjunction with Platinum Eagle’s, Target Parent’s and Signor’s audited consolidated statement of operations for the year ended December 31, 2017 and the related notes included elsewhere herein.

 

   Historical (1)   Combined Pro Forma 
   Platinum Eagle (3)   Signor (3)   Assuming No
Redemptions
   Assuming
Maximum
Redemptions
 
                 
As of and for the Six Months Ended June 30, 2018 (Unaudited)                    
Book value per share(2)  $0.12   $1.67   $0.95   $0.76 
Weighted average number of Class A ordinary shares outstanding – basic and diluted   32,500,000    51,003,049    105,455,000    105,076,000 
Weighted average number of Class B ordinary shares outstanding – basic and diluted   8,125,000    2,240,000           
Net income per ordinary share, Class A - basic and diluted  $0.04   $0.40    0.11   $0.11 
Net income (loss) per ordinary share, Class B - basic and diluted  $(0.01)  $0.40           
As of and for the Year Ended December 31, 2017                    
Book value per share(2)  $0.67   $1.39   $N/A(4)  $N/A(4)
Weighted average number of Class A ordinary shares outstanding – basic and diluted   7,500,000    46,915,805    105,455,000    105,076,000 
Weighted average number of Class B ordinary shares outstanding – basic and diluted        2,240,000           
Net income per ordinary share, Class A - basic and diluted  $(0.00)  $0.30   $(0.18)  $(0.19)
Net income per ordinary share, Class B - basic and diluted       $0.29           

 

(1) No Historical comparative data shown for Algeco US as the entity is a one member LLC and no such data is disclosed in the historical financials. Refer to the historical financial statements included elsewhere in this proxy statement/prospectus.

(2) Book value per share = Total Shareholders' (Members') Equity (Deficit) excluding Preferred Equity / Total Basic (or Diluted) Outstanding Shares

(3) Signor is an LLC and as such has units versus shares whereas Platinum Eagle has shares.

(4) Pro forma balance sheet for year ended December 31, 2017 not required and as such, no such calculation included in this table.

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TICKER SYMBOL AND DIVIDEND INFORMATION

Platinum Eagle

 

Ticker Symbol Units, Ordinary Shares and Warrants

 

Platinum Eagle’s units, ordinary shares and public warrants are currently listed on The Nasdaq Capital Market under the symbols “EAGLU,” “EAGL” and “EAGLW,” respectively.

 

Holders

 

As of November 9, 2018, there was one holder of record of our units, one holder of record of our Class A ordinary shares, two holders of record of our Class B ordinary shares and one holder of record of our public warrants. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose units, Class A ordinary shares and warrants are held of record by banks, brokers and other financial institutions.

 

Dividend Policy

 

Platinum Eagle has not paid any cash dividends on its ordinary shares to date and does not intend to pay any cash dividends prior to the completion of the business combination. The payment of cash dividends in the future will be dependent upon Target Hospitality’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the business combination. The payment of any cash dividends subsequent to a business combination will be within the discretion of Target Hospitality’s board of directors at such time.

 

Target

 

Ticker Symbol of Common Stock

 

There is no public market for Target’s shares of common stock. See “Target Parent’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

 

Signor

 

Ticker Symbol of Common Stock

 

There is no public market for Signor’s shares of common stock. See “Signor Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

 

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RISK FACTORS

 

Shareholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement/prospectus. These risks could have a material adverse effect on the business, results of operations or financial condition of Target Hospitality and could adversely affect the trading price of its common stock.

 

Risks Relating to Target Hospitality’s Business

 

Operational Risks

 

Target Hospitality’s operations are and its operations will be exposed to operational, economic, political and regulatory risks.

 

Target Hospitality’s operations could be affected by economic, political and regulatory risks. These risks include:

 

·multiple regulatory requirements that are subject to change and that could restrict Target Hospitality’s ability to build and operate its communities and other sites;
·inflation, recession, fluctuations in interest rates;
·compliance with applicable export control laws and economic sanctions laws and regulations;
·trade protection measures, including increased duties and taxes, and import or export licensing requirements;
·price controls;
·ownership regulations;
·compliance with applicable antitrust and other regulatory rules and regulations relating to potential future acquisitions;
·different local product preferences and product requirements;
·pressures on management time and attention due to the complexities of overseeing diverse operations;
·challenges in maintaining, staffing and managing national operations;
·different labor regulations;
·potentially adverse consequences from changes in or interpretations of tax laws;
·political and economic instability;
·enforcement of remedies in various jurisdictions;
·the risk that the business partners upon whom Target Hospitality depend for technical assistance or management and acquisition expertise will not perform as expected;
·the potential impact of collective bargaining or other union activities if Target Hospitality’s employees were to unionize in the future; and
·differences in business practices that may result in violation of Target Hospitality policies including but not limited to bribery and collusive practices.

 

These and other risks could have a material adverse effect on Target Hospitality’s business, results of operations and financial condition.

 

Target Hospitality faces significant competition as a provider of accommodation and hospitality services in the specialty rental sector. If it is unable to compete successfully, Target Hospitality could lose customers and its revenue and profitability could decline.

 

Although Target Hospitality’s competition varies significantly by market, the accommodation and hospitality services industry, in general, is highly competitive. Target Hospitality competes on the basis of a number of factors, including equipment availability, quality, price, service, reliability, appearance, functionality, and delivery terms. Target Hospitality may experience pricing pressures in its operations in the future as some of its competitors seek to obtain market share by reducing prices. Target Hospitality may also face reduced demand for its products and services if its competitors are able to provide new or innovative products or services that better appeal to its potential customers. In each of Target Hospitality’s current markets, it faces competition from national, regional and local companies who have an established market position in the specific service area. Target Hospitality expects to encounter similar competition in any new markets that it may enter. Some of its competitors may have greater market share, less indebtedness, greater pricing flexibility, more attractive product or service offerings, or superior marketing and financial resources. Increased competition could result in lower profit margins, substantial pricing pressure, and reduced market share. Price competition, together with other forms of competition, may materially adversely affect Target Hospitality’s business, results of operations, and financial condition.

 

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Target Hospitality depends on several significant customers. The loss of one or more such customers or the inability of one or more such customers to meet their obligations could adversely affect Target Hospitality’s results of operations.

 

Target Hospitality depends on several significant customers. The majority of Target Hospitality’s customers operate in the energy industry. For a more detailed explanation of Target Hospitality’s customers, see “Business of Target Hospitality” section of this proxy statement/prospectus. The loss of any one of Target Hospitality’s largest customers in any of Target Hospitality’s business segments or a sustained decrease in demand by any of such customers could result in a substantial loss of revenues and could have a material adverse effect on Target Hospitality’s results of operations. In addition, the concentration of customers in the industries in which it operates may impact Target Hospitality’s overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions.

 

As a result of Target Hospitality’s customer concentration, risks of nonpayment and nonperformance by its counterparties are a concern in its business. Target Hospitality is subject to risks of loss resulting from nonpayment or nonperformance by its customers. Many of its customers finance their activities through cash flow from operations, the incurrence of debt, or the issuance of equity. Additionally, many of Target Hospitality’s customers’ equity values have declined and could decline further. The combination of lower cash flow due to commodity prices, a reduction in borrowing bases under reserve-based credit facilities, and the lack of available debt or equity financing may continue to result in a significant reduction in Target Hospitality’s customers’ liquidity and could impair their ability to pay or otherwise perform on their obligations to it. Furthermore, some of Target Hospitality’s customers may be highly leveraged and subject to their own operating and regulatory risks, which increases the risk that they may default on their obligations to Target Hospitality. The inability or failure of Target Hospitality’s significant customers to meet their obligations to it or their insolvency or liquidation may adversely affect Target Hospitality’s financial results.

 

Target Hospitality’s business depends on the quality and reputation of the company and its communities, and any deterioration in such quality or reputation could adversely impact its market share, business, financial condition, or results of operations.

 

Events that may be beyond Target Hospitality’s control could affect the reputation of one or more of its communities or more generally impact the reputation of the company, including protests directed at government immigration policies, violent incidents at one or more communities or other sites, or criminal activity. Many other factors can also influence its reputation and the value of its communities, including service, food quality and safety, availability and management of scarce natural resources, supply chain management, diversity, human rights, and support for local communities. Reputational value is also based on perceptions, and broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of Target Hospitality and its communities, and it may be difficult to control or effectively manage negative publicity, regardless of whether it is accurate. While reputations may take decades to build, negative incidents can quickly erode trust and confidence, particularly if they result in adverse mainstream and social media publicity, governmental investigations or penalties, or litigation. Negative incidents could lead to tangible adverse effects on Target Hospitality’s business, including customer boycotts, lost sales, loss of development opportunities, or employee retention and recruiting difficulties. A decline in the reputation or perceived quality of Target Hospitality’s communities or corporate image could negatively affect its market share, reputation, business, financial condition, or results of operations.

 

Target Hospitality derives a substantial portion of its revenue from the operation of the South Texas Family Residential Center for the U.S. government through a subcontract with a government contractor. The loss of, or a significant decrease in revenues from, this customer could seriously harm Target Hospitality’s financial condition and results of operations.

 

Target currently derives, and Target Hospitality expects to continue to derive, a significant portion of its revenues from its subcontract with a government contractor for the operation of the South Texas Family Residential Center for the U.S. government. These revenues depend on the U.S. government and its contractors receiving sufficient funding and providing it with timely payment under the terms of Target Hospitality’s contract. If the applicable government entity does not receive sufficient appropriations to cover its contractual obligations, it may delay or reduce payment to its contractors and, as a result, Target Hospitality’s government contractor customer may delay or reduce payments to or terminate its contract with Target Hospitality. Any future impasse or struggle impacting the federal government’s ability to reach agreement on the federal budget, debt ceiling or any future federal government shut downs could result in material payment delays, payment reductions or contract terminations. Additionally, Target Hospitality’s current and potential future government contractor customers may request in the future that Target Hospitality reduce its contract rates or forego increases to those rates as a way for those contractors to control costs and help their government customers to control their spending and address their budgetary shortfalls. For additional information regarding our operation of the South Texas Family Residential Center, see “Business of Target Hospitality – Business Operations – Government Services” elsewhere in this proxy statement/prospectus.

 

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The U.S. government and, by extension, Target Hospitality’s U.S. government contractor customer, may also from time to time adopt, implement or modify certain policies or directives that may adversely affect Target Hospitality’s business. For example, while the U.S. government is currently using private immigration detention sites like the South Texas Family Residential Center, federal, state or local governmental partners may in the future choose to undertake a review of their utilization of privately operated facilities, or may cancel or decide not to renew existing contracts with their government contractors, who may, in turn, cancel or decide not to renew their contracts with Target Hospitality. Changes in government policy, the election of a new administration or other changes in the political landscape relating to immigration policies may similarly result in a decline in Target Hospitality’s revenues in its Government Services segment. In addition, lawsuits, to which Target Hospitality is not a party, have challenged the U.S. government's policy of detaining migrant families, and government policies with respect to family immigration may impact the demand for the South Texas Family Residential Center and any facilities that Target Hospitality may operate in the future. Any court decision or government action that impacts Target Hospitality’s existing contract for the South Texas Family Residential Center or any future contracts for similar facilities could materially affect its cash flows, financial condition, and results of operations.

 

Target Hospitality’s oil and gas customers are exposed to a number of unique operating risks and challenges which could also adversely affect it.

 

Target Hospitality could be materially adversely affected by disruptions to its clients’ operations caused by, among other things, any one of or all of the following singularly or in combination:

 

·U.S. and international pricing and demand for the natural resources being produced at a given project (or proposed project);
·unexpected problems, higher costs and delays during the development, construction, and project start-up which may delay the commencement of production;
·unforeseen and adverse geological, geotechnical, and seismic conditions;
·lack of availability of sufficient water or power to maintain their operations;
·lack of availability or failure of the required infrastructure necessary to maintain or to expand their operations;
·the breakdown or shortage of equipment and labor necessary to maintain their operations;
·risks associated with the natural resource industry being subject to various regulatory approvals. Such risks may include a government agency failing to grant an approval or failing to renew an existing approval, or the approval or renewal not being provided by the government agency in a timely manner or the government agency granting or renewing an approval subject to materially onerous conditions;
·risks to land titles and use thereof as a result of native title claims;
·interruptions to the operations of Target Hospitality’s customers caused by industrial accidents or disputes; and
·delays in or failure to commission new infrastructure in timeframes so as not to disrupt customer operations.

 

Target Hospitality may be adversely affected if customers reduce their accommodations and hospitality services outsourcing.

 

Target Hospitality’s business and growth strategies depend in large part on customers outsourcing some or all of the services that it provides. Target Hospitality cannot be certain that these customer preferences for outsourcing will continue or that customers that have outsourced accommodations will not decide to perform these functions themselves or only outsource accommodations during the development or construction phases of their projects. In addition, labor unions representing customer employees and contractors may oppose outsourcing accommodations to the extent that the unions believe that third-party accommodations negatively impact union membership and recruiting. The reversal or reduction in customer outsourcing of accommodations could negatively impact Target Hospitality’s financial results and growth prospects.

 

Target Hospitality’s operations could be subject to natural disasters and other business disruptions, which could materially adversely affect its future revenue and financial condition and increase its costs and expenses.

 

Target Hospitality’s operations could be subject to natural disasters and other business disruptions such as fires, floods, hurricanes, earthquakes, and terrorism, which could adversely affect its future revenue and financial condition and increase its costs and expenses. For example, extreme weather, particularly periods of high rainfall, tornadoes, or extreme cold, in any of the areas in which Target Hospitality operates may cause delays in its community construction activities or result in the cessation of customer operations at one or more communities for an extended period of time. See “Risk Factors—Risks Relating Target Hospitality’s Business—Target Hospitality is exposed to various possible claims relating to Target Hospitality’s business and Target Hospitality’s insurance may not fully protect it.” See “Target Parent’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Results of Operations — Natural Disasters or Other Significant Disruption.” In addition, the occurrence and threat of terrorist attacks may directly or indirectly affect economic conditions, which could in turn adversely affect demand for Target Hospitality’s communities and services. In the event of a major natural or man-made disaster, Target Hospitality could experience loss of life of its employees, destruction of its communities or other sites, or business interruptions, any of which may materially adversely affect Target Hospitality’s business. If any of Target Hospitality’s communities were to experience a catastrophic loss, it could disrupt Target Hospitality’s operations, delay services, staffing, and revenue recognition, and result in expenses to repair or replace the damaged facility not covered by asset, liability, business continuity, or other insurance contracts. Also, Target Hospitality could face significant increases in premiums or losses of coverage due to the loss experienced during and associated with these and potential future natural or man-made disasters that may materially adversely affect Target Hospitality’s business. In addition, attacks or armed conflicts that directly impact one or more of Target Hospitality’s properties or facilities could significantly affect Target Hospitality’s ability to operate those properties or communities and thereby impair Target Hospitality’s results of operations.

 

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More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the global economy and worldwide financial markets. Any of these occurrences could have a material adverse effect on Target Hospitality’s business, results of operations and financial condition.

 

Construction risks exist which may adversely affect Target Hospitality’s results of operations.

 

There are a number of general risks that might impinge on companies involved in the development, construction and installation of facilities as a prerequisite to the management of those assets in an operational sense. Target Hospitality is exposed to the following risks in connection with its construction activities:

 

·the construction activities of Target Hospitality’s accommodations are partially dependent on the supply of appropriate construction and development opportunities;
·development approvals, slow decision making by counterparties, complex construction specifications, changes to design briefs, legal issues, and other documentation changes may give rise to delays in completion, loss of revenue, and cost over-runs which may, in turn, result in termination of accommodation supply contracts;
·other time delays that may arise in relation to construction and development include supply of labor, scarcity of construction materials, lower than expected productivity levels, inclement weather conditions, land contamination, cultural heritage claims, difficult site access, or industrial relations issues;
·objections to Target Hospitality’s activities or those of Target Hospitality’s customers aired by aboriginal or community interests, environment and/or neighborhood groups which may cause delays in the granting or approvals and/or the overall progress of a project;
·where Target Hospitality assumes design responsibility, there is a risk that design problems or defects may result in rectification and/or costs or liabilities which Target Hospitality cannot readily recover; and
·there is a risk that Target Hospitality may fail to fulfill Target Hospitality’s statutory and contractual obligations in relation to the quality of Target Hospitality’s materials and workmanship, including warranties and defect liability obligations.

 

Due to the nature of the natural resources industry, Target Hospitality’s business may be adversely affected by periods of low oil, or natural gas prices or unsuccessful exploration results may decrease customers’ spending and therefore Target Hospitality’s results.

 

Commodity prices have been and are expected to remain volatile. This volatility causes oil and gas companies to change their strategies and expenditure levels. Prices of oil and natural gas can be influenced by many factors, including reduced demand due to lower global economic growth, surplus inventory, improved technology such as the hydraulic fracturing of horizontally drilled wells in shale discoveries, access to potential productive regions, and availability of required infrastructure to deliver production to the marketplace.

 

The carrying value of Target Hospitality’s communities could be reduced by extended periods of limited or no activity by its customers, which would require us to record impairment charges equal to the excess of the carrying value of the communities over fair value. There were no impairment losses recorded for the year ended December 31, 2017. Target Hospitality may incur asset impairment charges in the future, which charges will affect negatively Target Hospitality’s results of operations and financial condition.

 

Demand for Target Hospitality’s products and services is sensitive to changes in demand within a number of key industry end-markets and geographic regions.

 

Target Hospitality’s financial performance is dependent on the level of demand for Target Hospitality’s facilities and services, which is sensitive to the level of demand within various sectors, in particular, the energy and natural resources and government end-markets. Each of these sectors is influenced not only by the state of the general global economy but by a number of more specific factors as well. For example, demand for workforce accommodations within the energy and resources sector may be materially adversely affected by a decline in global energy prices. Demand for Target Hospitality’s facilities and services may also vary among different localities or regions. The levels of activity in these sectors and geographic regions may also be cyclical, and Target Hospitality may not be able to predict the timing, extent or duration of the activity cycles in the markets in which Target Hospitality or its key customers operate. A decline or slowed growth in any of these sectors or geographic regions could result in reduced demand for its products and services, which may materially adversely affect Target Hospitality’s business, results of operations, and financial condition.

 

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Decreased customer expenditure levels could adversely affect Target Hospitality’s results of operations.

 

Demand for Target Hospitality’s services is sensitive to the level of exploration, development and production activity of, and the corresponding capital spending by, oil and gas companies. The oil and gas industries’ willingness to explore, develop, and produce depends largely upon the availability of attractive resource prospects and the prevailing view of future commodity prices. Prices for oil and gas are subject to large fluctuations in response to changes in the supply of and demand for these commodities, market uncertainty, and a variety of other factors that are beyond Target Hospitality’s control. Accordingly, a sudden or long-term decline in commodity pricing would have a material adverse effect on Target Hospitality’s results of operations.

 

Additionally, significant new regulatory requirements, including climate change legislation, could have an impact on the demand for and the cost of producing oil and natural gas in the regions where Target Hospitality operates. Many factors affect the supply of and demand for oil, natural gas and other resources and, therefore, influence product prices, including:

 

·the level of activity in US shale development;
·the availability of economically attractive oil and natural gas field prospects, which may be affected by governmental actions or environmental activists which may restrict development;
·the availability of transportation infrastructure for oil and natural gas, refining capacity and shifts in end-customer preferences toward fuel efficiency and the use of natural gas;
·global weather conditions and natural disasters;
·worldwide economic activity including growth in developing countries, such as China and India;
·national government political requirements, including the ability of the Organization of Petroleum Exporting Companies (“OPEC”) to set and maintain production levels and prices for oil and government policies which could nationalize or expropriate oil and natural gas exploration, production, refining or transportation assets;
·the level of oil and gas production by non-OPEC countries;
·rapid technological change and the timing and extent of energy resource development, including liquid natural gas or other alternative fuels;
·environmental regulation; and
·U.S. and foreign tax policies.

 

Target Hospitality’s failure to retain its current customers, renew its existing customer contracts, and obtain new customer contracts, or the termination of existing contracts, could adversely affect its business.

 

Target Hospitality’s success depends on Target Hospitality’s ability to retain its current customers, renew or replace its existing customer contracts, and obtain new business. Target Hospitality’s ability to do so generally depends on a variety of factors, including overall customer expenditure levels and the quality, price and responsiveness of its services, as well as its ability to market these services effectively and differentiate itself from its competitors. Target Hospitality cannot assure you that it will be able to obtain new business, renew existing customer contracts at the same or higher levels of pricing, or at all, or that Target Hospitality’s current customers will not turn to competitors, cease operations, elect to self-operate, or terminate contracts with it. In the context of a potential depressed commodity price environment, Target Hospitality’s customers may not renew contracts on terms favorable to it or, in some cases, at all, and Target Hospitality may have difficulty obtaining new business. Additionally, several contracts have clauses that allow termination upon the payment of a termination fee. As a result, Target Hospitality’s customers may choose to terminate their contracts. The likelihood that a customer may seek to terminate a contract is increased during periods of market weakness. Further, certain of Target Hospitality’s customers may not reach positive final investment decisions on projects with respect to which Target Hospitality has been awarded contracts to provide related accommodation, which may cause those customers to terminate the contracts. Customer contract cancellations, the failure to renew a significant number of Target Hospitality’s existing contracts, or the failure to obtain new business would have a material adverse effect on Target Hospitality’s business and results of operations.

 

Target Hospitality’s business is contract intensive and may lead to customer disputes or delays in receipt of payments.

 

Target Hospitality’s business is contract intensive and Target Hospitality is party to many contracts with customers. Target Hospitality periodically reviews its compliance with contract terms and provisions. If customers were to dispute Target Hospitality’s contract determinations, the resolution of such disputes in a manner adverse to Target Hospitality’s interests could negatively affect sales and operating results. In the past, Target Hospitality’s customers have withheld payment due to contract or other disputes, which has delayed Target Hospitality’s receipt of payments. While Target Hospitality does not believe any reviews, audits, delayed payments, or other such matters should result in material adjustments, if a large number of Target Hospitality’s customer arrangements were modified or payments withheld in response to any such matter, the effect could be materially adverse to Target Hospitality’s business or results of operations.

 

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Certain of Target Hospitality’s major communities are located on land subject to leases. If Target Hospitality is unable to renew a lease, Target Hospitality could be materially and adversely affected.

 

Certain of Target Hospitality’s major communities are located on land subject to leases. Accordingly, while Target Hospitality owns the accommodations assets, Target Hospitality only owns a leasehold interest in those properties. If Target Hospitality is found to be in breach of a lease, Target Hospitality could lose the right to use the property. In addition, unless Target Hospitality can extend the terms of these leases before their expiration, as to which no assurance can be given, Target Hospitality will lose Target Hospitality’s right to operate Target Hospitality’s facilities located on these properties upon expiration of the leases. In that event, Target Hospitality would be required to remove Target Hospitality’s accommodations assets and remediate the site. Generally, Target Hospitality’s leases have an average term of three years and generally contain unilateral renewal provisions for up to seven additional years. Target Hospitality can provide no assurances that it will be able to renew its leases upon expiration on similar terms, or at all. If Target Hospitality is unable to renew leases on similar terms, it may have an adverse effect on Target Hospitality’s business.

 

Third parties may fail to provide necessary services and materials for Target Hospitality’s communities and other sites.

 

Target Hospitality is often dependent on third parties to supply services and materials for its communities and other sites. Target Hospitality typically does not enter into long-term contracts with third-party suppliers. Target Hospitality may experience supply problems as a result of financial or operating difficulties or the failure or consolidation of Target Hospitality’s suppliers. Target Hospitality may also experience supply problems as a result of shortages and discontinuations resulting from product obsolescence or other shortages or allocations by suppliers. Unfavorable economic conditions may also adversely affect Target Hospitality’s suppliers or the terms on which Target Hospitality purchases products. In the future, Target Hospitality may not be able to negotiate arrangements with third parties to secure products and services that Target Hospitality requires in sufficient quantities or on reasonable terms. If Target Hospitality cannot negotiate arrangements with third parties to produce its products or if the third parties fail to produce Target Hospitality’s products to its specifications or in a timely manner, Target Hospitality’s business, results of operations, and financial condition may be materially adversely affected.

 

Failure to retain key personnel could impede Target Hospitality’s ability to execute its business plan and growth strategy.

 

One of the most important factors in Target Hospitality’s ability to profitably execute its business plan is its ability to attract, develop, and retain qualified personnel. Many of Target Hospitality’s key executives, managers, and employees have knowledge and an understanding of Target Hospitality’s business and its industry that cannot be readily duplicated and they are the key individuals that interface with customers. In addition, the ability to attract and retain qualified personnel is dependent on the availability of qualified personnel, the impact on the labor supply due to general economic conditions, and the ability to provide a competitive compensation package. Failure to retain key personnel may materially adversely affect Target Hospitality’s business, results of operations, and financial condition.

 

In addition, labor shortages, the inability to hire or retain qualified employees nationally, regionally, or locally or increased labor costs could have a material adverse effect on Target Hospitality’s ability to control expenses and efficiently conduct operations. Target Hospitality may not be able to continue to hire and retain the sufficiently skilled labor force necessary to operate efficiently and to support its operating strategies. Labor expenses could also increase as a result of continuing shortages in the supply of personnel.

 

Significant increases in raw material and labor costs could increase Target Hospitality’s operating costs significantly and harm its profitability.

 

Target Hospitality incurs labor costs and purchases raw materials, including steel, lumber, siding and roofing, fuel and other products to construct and perform periodic repairs, modifications and refurbishments to maintain physical conditions of Target Hospitality’s facilities as well as the construction of Target Hospitality’s communities and other sites. The volume, timing, and mix of such work may vary quarter-to-quarter and year-to-year. Generally, increases in labor and raw material costs will increase the acquisition costs of new facilities and also increase the construction, repair, and maintenance costs of Target Hospitality’s facilities. During periods of rising prices for labor or raw materials, and in particular, when the prices increase rapidly or to levels significantly higher than normal, Target Hospitality may incur significant increases in Target Hospitality’s costs for new facilities and incur higher operating costs that Target Hospitality may not be able to recoup from customers through changes in pricing, which could have a material adverse effect on Target Hospitality’s business, results of operations and financial condition.

 

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The estimates and assumptions on which Signor’s and Target’s financial projections for the Target Hospitality business are based may prove to be inaccurate, which may cause Target Hospitality’s future actual results to differ materially from such projections, which may adversely affect Target Hospitality’s future profitability, cash flows and stock price.

 

In connection with the transactions contemplated by this proxy statement/prospectus, Target and Signor prepared, and the Board of Directors of Platinum Eagle considered, financial forecasts for the Target Hospitality business prepared by company management. These projections are dependent on certain estimates and assumptions related to, among other things, growth and development of the business, market share, service pricing, volume and service mix, commodity prices, distribution, cost savings, accruals for estimated liabilities and Target Hospitality’s ability to generate sufficient cash to reinvest in its existing business, fund internal growth, make acquisitions and meet debt obligations. While the financial projections are based on historical experience and on various other assumptions that Target and Signor management believe to be reasonable under the circumstances and at the time they are made, Target Hospitality’s actual results may differ materially from these financial projections. The financial projections speak only as of the date prepared and have not been, and will not be, updated. The financial projections are subject to significant economic, competitive, industry and other uncertainties and may not be achieved in full, at all or within projected timeframes. Any material variation between Target’s and Signor’s financial projections and Target Hospitality’s actual results may adversely affect the future profitability, cash flows and stock price of Target Hospitality.

 

If Target Hospitality determines that its goodwill and intangible assets have become impaired, it may incur impairment charges, which would negatively impact its operating results.

 

Target Hospitality has goodwill, which represents the excess of the total purchase price of Target Hospitality’s acquisitions over the fair value of the assets acquired, and other intangible assets. As of June 30, 2018, on a pro forma basis, Target Hospitality had approximately $24 million and $36 million of goodwill and other intangible assets, net, respectively, in Target Hospitality’s statement of financial position, which would represent approximately 2.3% and 3.4% of total assets, respectively. Target Hospitality is required to review goodwill and intangible assets at least annually for impairment. In the event impairment is identified, a charge to earnings would be recorded. Impairment may result from significant changes in the manner of use of the acquired asset, negative industry or economic trends and significant underperformance relative to historic or projected operating results.

 

Any impairment charges following the Business Combination could adversely affect Target Hospitality’s business, results of operations, and financial condition.

 

Target Hospitality may be unable to recognize deferred tax assets and, as a result, lose future tax savings, which could have a negative impact on Target Hospitality’s liquidity and financial position.

 

Target Hospitality recognizes deferred tax assets primarily related to deductible temporary differences based on its assessment that the item will be utilized against future taxable income and the benefit will be sustained upon ultimate settlement with the applicable taxing authority. Such deductible temporary differences primarily relate to tax loss carryforwards and deferred interest expense deductions. Tax loss carryforwards arising in a given tax jurisdiction may be carried forward to offset taxable income in future years from such tax jurisdiction and reduce or eliminate income taxes otherwise payable on such taxable income, subject to certain limitations. Target Hospitality may have to write down, via a valuation allowance, the carrying amount of certain of the deferred tax assets to the extent Target Hospitality determines it is not probable such deferred tax assets will continue to be recognized.

 

In the event that Target Hospitality does not have sufficient taxable income in future years to use the tax benefits before they expire, the benefit may be permanently lost. In addition, the taxing authorities could challenge Target Hospitality’s calculation of the amount of its tax attributes, which could reduce certain of its recognized tax benefits. In addition, tax laws in certain jurisdictions may limit the ability to use carryforwards upon a change in control.

 

It may become difficult for Target Hospitality to find and retain qualified employees.

 

Target Hospitality’s ability to provide reliable and quality services is dependent on its ability to hire and retain a dedicated and quality pool of employees. The competition for qualified personnel in the industries in which Target Hospitality operates is intense and there can be no assurance that Target Hospitality will be able to continue to attract and retain all personnel necessary for the development and operation of its business. In periods of higher activity, it may become more difficult to find and retain qualified employees which could limit growth, increase operating costs, or have other material adverse effects on the Target Hospitality’s operations.

 

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Increased operating costs and obstacles to cost recovery due to the pricing and cancellation terms of Target Hospitality’s specialty rental and hospitality services contracts may constrain its ability to make a profit.

 

Target Hospitality’s profitability can be adversely affected to the extent it is faced with cost increases for food, wages and other labor related expenses, insurance, fuel and utilities, especially to the extent Target Hospitality is unable to recover such increased costs through increases in the prices for its services, due to one or more of general economic conditions, competitive conditions, or contractual provisions in Target Hospitality’s customer contracts. Substantial increases in the cost of fuel and utilities have historically resulted in cost increases in Target Hospitality’s communities. From time to time Target Hospitality has experienced increases in its food costs. While Target Hospitality believes a portion of these increases were attributable to fuel prices, Target Hospitality believes the increases also resulted from rising global food demand. In addition, food prices can fluctuate as a result of foreign exchange rates and temporary changes in supply, including as a result of incidences of severe weather such as droughts, heavy rains, and late freezes. Target Hospitality may be unable to fully recover costs, and such increases would negatively impact its profitability on contracts that do not contain such inflation protections.

 

Target Hospitality may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls.

 

The ability of Target Hospitality to manage growth effectively will require it to continue to implement and improve its operational and financial systems and to expand, train, and manage its employee base. The inability of Target Hospitality to deal with this growth may have a material adverse effect on its business, financial condition, results of operations, and cash flows.

 

Target Hospitality’s future operating results may fluctuate, fail to match past performance, or fail to meet expectations.

 

Target Hospitality’s operating results may fluctuate, fail to match past performance, or fail to meet the expectations of analysts and investors. Target Hospitality’s financial results may fluctuate as a result of a number of factors, some of which are beyond Target Hospitality’s control, including but not limited to:

 

·general economic conditions in the geographies and industries where Target Hospitality owns or operates communities;
·legislative policies where Target Hospitality provides its services;
·the budgetary constraints of Target Hospitality’s customers;
·the success of Target Hospitality’s strategic growth initiatives;
·the costs associated with the launching or integrating new or acquired businesses;
·the cost, type, and timing of customer orders;
·the nature and duration of the needs of Target Hospitality’s customers;
·the raw material or labor costs of servicing Target Hospitality’s facilities;
·the timing of new product or service introductions by Target Hospitality, Target Hospitality’s suppliers, and Target Hospitality’s competitors;
·changes in end-user demand requirements;
·the mix, by state and region, of Target Hospitality’s revenue, personnel, and assets;
·movements in interest rates, or tax rates;
·changes in, and application of, accounting rules;
·changes in the regulations applicable to Target Hospitality;
·litigation matters;
·the success of large scale capital intensive projects;
·liquidity, including the impact of Target Hospitality’s debt service costs; and
·attrition and retention risk.

 

As a result of these factors, Target Hospitality’s historical financial results are not necessarily indicative of Target Hospitality’s future results.

 

Target Hospitality is exposed to various possible claims relating to its business, and Target Hospitality’s insurance may not fully protect it.

 

Target Hospitality is exposed to various possible claims relating to its business. These possible claims include those relating to: (i) personal injury or death caused by accidents or other events at a facility owned and/or operated by it; (ii) motor vehicle accidents involving Target Hospitality’s vehicles and Target Hospitality’s employees; (iii) employment-related claims; (iv) property damage; and (v) commercial claims. Target Hospitality’s insurance policies have deductibles or self-insured retentions which would require it to expand amounts prior to taking advantage of coverage limits. Target Hospitality believes that it has adequate insurance coverage for the protection of Target Hospitality’s assets and operations. However, Target Hospitality’s insurance may not fully protect it for certain types of claims such as dishonest, fraudulent, criminal or malicious acts; terrorism, war, hostile or warlike action during a time of peace; automobile physical damage; natural disasters; and cyber-crime.

 

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Target Hospitality may not have adequate insurance for potential liabilities and insurance may not cover certain liabilities, including litigation.

 

Target Hospitality’s operations are subject to many hazards. In the ordinary course of business, Target Hospitality may become the subject of various claims, lawsuits, and administrative proceedings seeking damages or other remedies concerning Target Hospitality’s commercial operations, products, employees, and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of Target Hospitality’s products or operations. Some of these claims relate to the activities of businesses that Target Hospitality has acquired, even though these activities may have occurred prior to Target Hospitality’s acquisition of such businesses. Target Hospitality maintains insurance to cover many of Target Hospitality’s potential losses, and Target Hospitality is subject to various self-retentions and deductibles under Target Hospitality’s insurance policies. It is possible, however, that a judgment could be rendered against Target Hospitality in cases in which Target Hospitality could be uninsured and beyond the amounts that it currently has reserved or anticipate incurring for such matters. Even a partially uninsured or underinsured claim, if successful and of significant size, could have a material adverse effect on Target Hospitality’s results of operations or consolidated financial position. The specifications and insured limits under those policies, however, may be insufficient for such claims. Target Hospitality also faces the following other risks related to Target Hospitality’s insurance coverage:

 

·Target Hospitality may not be able to continue to obtain insurance on commercially reasonable terms;
·the counterparties to Target Hospitality’s insurance contracts may pose credit risks; and
·Target Hospitality may incur losses from interruption of its business that exceed its insurance coverage.

 

Social, Political, and Regulatory Risks

 

A failure to maintain food safety or comply with government regulations related to food and beverages may subject Target Hospitality to liability.

 

Claims of illness or injury relating to food quality or food handling are common in the food service industry, and a number of these claims may exist at any given time. Because food safety issues could be experienced at the source or by food suppliers or distributors, food safety could, in part, be out of Target Hospitality’s control. Regardless of the source or cause, any report of food-borne illness or other food safety issues such as food tampering or contamination at one of Target Hospitality’s locations could adversely impact Target Hospitality’s reputation, hindering its ability to renew contracts on favorable terms or to obtain new business, and have a negative impact on Target Hospitality’s sales. Future food product recalls and health concerns associated with food contamination may also increase Target Hospitality’s raw materials costs and, from time to time, disrupt its business.

 

A variety of regulations at various governmental levels relating to the handling, preparation, and serving of food (including, in some cases, requirements relating to the temperature of food), and the cleanliness of food production facilities and the hygiene of food-handling personnel are enforced primarily at the local public health department level. Target Hospitality cannot assure you that it is in full compliance with all applicable laws and regulations at all times or that it will be able to comply with any future laws and regulations. Furthermore, legislation and regulatory attention to food safety is very high. Additional or amended regulations in this area may significantly increase the cost of compliance or expose Target Hospitality to liabilities. If Target Hospitality is unable to maintain food safety or comply with government regulations related to food and beverages, the effect could be materially adverse to its business or results of operations.

 

Target Parent, owned by Algeco Seller, and Signor, currently owned by Arrow Seller do not yet operate together as Target Hospitality. Target’s and Signor’s historical financial information is not representative of the results Target Hospitality would have achieved as a separate, publicly-traded company and may not be a reliable indicator of Target Hospitality’s future results.

 

The historical information of Signor and Target Parent refers to their respective businesses prior to the Business Combination. Accordingly, the historical financial information does not necessarily reflect the financial condition, results of operations or cash flows that Target Hospitality would have achieved as a separate, publicly-traded company during the periods presented or those that Target Hospitality will achieve in the future primarily as a result of the factors described below:

 

·Signor’s and Target Parent’s businesses are currently owned by Algeco Seller and Arrow Seller, respectively, as part of broader corporate organizations, rather than as an independent company. As such, these broader organizations performed various corporate functions for each entity such as legal, treasury, accounting, auditing, human resources, corporate affairs and finance. Target Hospitality’s and Signor’s historical financial results reflect allocations of corporate expenses from such functions and are likely to be less than the expenses Target would have incurred had it operated as a separate publicly-traded company. Following the Business Combination, Target Hospitality will be responsible for the cost related to such functions previously performed by each entity’s previous corporate group;
·Decisions regarding capital raising and major capital expenditures for Signor or Target Parent are currently done through Algeco Seller or Arrow Seller, respectively;

 

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·Following the Business Combination, Target Hospitality may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements; and
·Signor’s and Target Parent’s historical financial information prior to the Business Combination does not reflect the debt or the associated expenses that Target Hospitality has incurred as part of the Business Combination.

 

Other significant changes may occur in Target Hospitality’s cost structure, management, financing and business operations as a result of operating as a company separate from Algeco Seller and Arrow Seller. For additional information about the past financial performance of Target Hospitality, without giving effect to the Business Combination and the basis of presentation of the historical consolidated financial statements of Target Hospitality, see “Target Parent’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Signor’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as the financial statements and accompanying notes included elsewhere in this proxy statement/prospectus.

 

Target Hospitality will incur significantly increased costs as a result of operating as a public company, and its management will be required to devote substantial time to compliance efforts.

 

Target Hospitality will incur significant legal, accounting, insurance, and other expenses as a result of being a public company. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended (the “Dodd-Frank Act”) and SOX, as well as related rules implemented by the SEC, have required changes in corporate governance practices of public companies. In addition, rules that the SEC is implementing or is required to implement pursuant to the Dodd-Frank Act are expected to require additional change. Target Hospitality expects that compliance with these and other similar laws, rules and regulations, including compliance with Section 404 of SOX, will substantially increase its expenses, including legal and accounting costs, and make some activities more time-consuming and costly. It is possible that these expenses will exceed the increases projected by management. These laws, rules, and regulations may also make it more expensive to obtain director and officer liability insurance, and Target Hospitality may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage, which may make it more difficult for Target Hospitality to attract and retain qualified persons to serve on its board of directors or as officers. Although the JOBS Act may, for a limited period of time, somewhat lessen the cost of complying with these additional regulatory and other requirements, Target Hospitality nonetheless expects a substantial increase in legal, accounting, insurance, and certain other expenses in the future, which will negatively impact its results of operations and financial condition.

 

As a result of being a public company, Target Hospitality will be subject to additional reporting and corporate governance requirements that will require additional management time, resources and expense.

 

As a public company, Target Hospitality will be obligated to file with the SEC annual and quarterly information and other reports that are specified in the Exchange Act. Target Hospitality will also be subject to other reporting and corporate governance requirements under SOX, and the rules and regulations promulgated thereunder, all of which impose significant compliance and reporting obligations upon us and require us to incur additional expense in order to fulfill such obligations.

 

Unanticipated changes in Target Hospitality’s tax obligations, the adoption of a new tax legislation, or exposure to additional income tax liabilities could affect profitability.

 

Target Hospitality is subject to income taxes in the United States. Target Hospitality’s tax liabilities are affected by the amounts charged for inventory, services, funding, and other intercompany transactions. Tax authorities may disagree with Target Hospitality’s intercompany charges, cross-jurisdictional transfer pricing or other tax positions and assess additional taxes. Target Hospitality regularly assesses the likely outcomes of examinations in order to determine the appropriateness of its tax provision. However, there can be no assurance that Target Hospitality will accurately predict the outcomes of potential examinations, and the amounts ultimately paid upon resolution of examinations could be materially different from the amounts previously included in Target Hospitality’s income tax provision and, therefore, could have a material impact on its results of operations and cash flows. In addition, Target Hospitality’s future effective tax rate could be adversely affected by changes to its operating structure, changes in the mix of earnings in countries and/or states with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws, and the discovery of new information in the course of Target Hospitality’s tax return preparation process.

 

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Act”). The Act makes broad and complex changes to the U.S. tax code, including, but not limited to: (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a tax on global intangible low-taxed income (“GILTI”) which is a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax ("AMT") and changing how existing AMT credits can be realized; (6) creating the base erosion anti-abuse tax ("BEAT"), a new minimum tax; (7) creating a new limitation on deductible interest expense; and (8) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017. Target Hospitality continues to examine the impact this tax reform legislation may have on it at the federal and state level. Target Hospitality will continue to refine its calculations as additional analysis is completed. Target Hospitality expects to finalize its assessment during the one-year measurement period as prescribed by the Staff Accounting Bulletin 118. Changes in tax laws or regulations may increase tax uncertainty and adversely affect Target Hospitality’s results of operations and effective tax rate.

 

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Target Hospitality’s ability to use its net operating loss carryforwards and other tax attributes may be limited.

 

As of December 31, 2017, on a pro forma basis, Target Hospitality together with its predecessor parent Algeco US Holding, LLC had U.S. net operating loss (“NOL”) carryforwards of approximately $21,878,000 for U.S. federal and state income tax purposes, available to offset future taxable income, prior to consideration of annual limitations that may be imposed under Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”). The NOL carryforwards begin to expire in 2022 if not utilized.

 

Target Hospitality’s NOL could expire unused and be unavailable to offset future income tax liabilities. Under Section 382 and corresponding provisions of U.S. state law, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other applicable pre-change tax attributes, such as research and development tax credits, to offset its post-change income may be limited. Target Hospitality has not completed a Section 382 analysis and therefore cannot forecast or otherwise determine Target Hospitality’s ability to derive any benefit from Target Hospitality’s various federal or state tax attribute carryforwards at this time. As a result, if Target Hospitality earns net taxable income, Target Hospitality’s ability to use Target Hospitality’s pre-change NOL carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

 

Lastly, Target Hospitality may experience ownership changes in the future as a result of subsequent shifts in its share ownership, including this offering, some of which may be outside of Target Hospitality’s control. If Target Hospitality determines that an ownership change has occurred and Target Hospitality’s ability to use Target Hospitality’s historical NOL is materially limited, it may result in increased future tax obligations.

 

Target Hospitality is subject to various laws and regulations including those governing government contracts, corruption, and the environment. Obligations and liabilities under these laws and regulations may materially harm Target Hospitality’s business.

 

United States Government Contract Laws and Regulations

 

Target Hospitality’s customers include U.S. government contractors, which means that Target Hospitality may, indirectly, be subject to various statutes and regulations applicable to doing business with the U.S. government. These types of contracts customarily contain provisions that give the U.S. government substantial rights and remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors, including provisions that allow the government to unilaterally terminate or modify Target Hospitality’s customers’ federal government contracts, in whole or in part, at the government’s convenience. Under general principles of U.S. government contracting law, if the government terminates a contract for convenience, the terminated party may generally recover only its incurred or committed costs and settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for default, the defaulting party may be liable for any extra costs incurred by the government in procuring undelivered items from another source. In addition, Target Hospitality’s or its customers’ failure to comply with these laws and regulations might result in administrative penalties or the suspension of its customers’ government contracts or debarment and, as a result, the loss of the related revenue which would harm Target Hospitality’s business, results of operations and financial condition. Target Hospitality is not aware of any action contemplated by any regulatory authority related to any possible non-compliance by or in connection with Target Hospitality’s operations.

 

Target Hospitality’s operations are subject to an array of governmental regulations in each of the jurisdictions in which Target Hospitality operates. Target Hospitality’s activities are subject to regulation by several federal and state government agencies, including the Occupational Safety and Health Administration (“OSHA”) and by federal and state laws. Target Hospitality’s operations and activities in other jurisdictions are subject to similar governmental regulations. Similar to conventionally constructed buildings, the workforce housing industry is also subject to regulations by multiple governmental agencies in each jurisdiction relating to, among others, environmental, zoning and building standards, and health, safety and transportation matters. Noncompliance with applicable regulations, implementation of new regulations or modifications to existing regulations may increase costs of compliance, require a termination of certain activities or otherwise have a material adverse effect on Target Hospitality’s business, results of operations, and financial condition.

 

In addition, U.S. government contracts and grants normally contain additional requirements that may increase Target Hospitality’s costs of doing business, reduce Target Hospitality’s profits, and expose it to liability for failure to comply with these terms and conditions. These requirements include, for example:

 

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·specialized disclosure and accounting requirements unique to U.S. government contracts;
·financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government;
·public disclosures of certain contract and Target Hospitality information; and
·mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements.

 

If Target Hospitality fails to maintain compliance with these requirements, its contracts may be subject to termination, and Target Hospitality may be subject to financial and/or other liability under its contracts or under the Federal Civil False Claims Act (the “False Claims Act”). The False Claims Act’s “whistleblower” provisions allow private individuals, including present and former employees, to sue on behalf of the U.S. government. The False Claims Act statute provides for treble damages and other penalties and, if Target Hospitality’s operations are found to be in violation of the False Claims Act, Target Hospitality could face other adverse action, including suspension or prohibition from doing business with the United States government. Any penalties, fines, suspension or damages could adversely affect Target Hospitality’s financial results as well as its ability to operate its business.

 

Anti-Corruption Laws and Regulations

 

Target Hospitality is subject to various anti-corruption laws that prohibit improper payments or offers of payments to foreign governments and their officials by a U.S. person for the purpose of obtaining or retaining business. Target Hospitality’s activities create the risk of unauthorized payments or offers of payments by one of Target Hospitality’s employees or agents that could be in violation of various laws, including the U.S. Foreign Corrupt Practices Act (the “FCPA”). Target Hospitality has implemented safeguards and policies to discourage these practices by its employees and agents. However, existing safeguards and any future improvements may prove to be ineffective and employees or agents may engage in conduct for which Target Hospitality might be held responsible.

 

If employees violate Target Hospitality’s policies or Target Hospitality fails to maintain adequate record-keeping and internal accounting practices to accurately record its transactions, Target Hospitality may be subject to regulatory sanctions. Violations of the FCPA or other anti-corruption laws may result in severe criminal or civil sanctions and penalties, including suspension or debarment from U.S. government contracting, and Target Hospitality may be subject to other liabilities which could have a material adverse effect on its business, results of operations and financial condition. Target Hospitality is also subject to similar anti-corruption laws in other jurisdictions.

 

Environmental Laws and Regulations

 

Target Hospitality is subject to a variety of national, state, regional and local environmental laws and regulations. Among other things, these laws and regulations impose limitations and prohibitions on the discharge and emission of, and establish standards for the use, disposal and management of, regulated materials and waste, and impose liabilities for the costs of investigating and cleaning up, and damages resulting from, present and past spills, disposals or other releases of hazardous substances or materials. In the ordinary course of business, Target Hospitality uses and generates substances that are regulated or may be hazardous under environmental laws. Target Hospitality has an inherent risk of liability under environmental laws and regulations, both with respect to ongoing operations and with respect to contamination that may have occurred in the past on Target Hospitality’s properties or as a result of its operations. From time to time, Target Hospitality’s operations or conditions on properties that Target Hospitality has acquired have resulted in liabilities under these environmental laws. Target Hospitality may in the future incur material costs to comply with environmental laws or sustain material liabilities from claims concerning noncompliance or contamination. Target Hospitality has no reserves for any such liabilities.

 

Target Hospitality cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted, or what environmental conditions may be found to exist at Target Hospitality’s facilities or at third party sites for which Target Hospitality may be liable. Enactment of stricter laws or regulations, stricter interpretations of existing laws and regulations or the requirement to undertake the investigation or remediation of currently unknown environmental contamination at sites Target Hospitality own or third party sites may require us to make additional expenditures, some of which could be material.

 

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Target Hospitality may be subject to environmental laws and regulations that may require it to take actions that will adversely affect its results of operations.

 

All of Target Hospitality’s and its customers’ operations may be affected by federal, state and local laws and regulations governing the discharge of substances into the environment or otherwise relating to environmental protection. Environmental laws and regulations are subject to change in the future, possibly resulting in more stringent requirements. Target Hospitality’s or any of its customers’ failure to comply with applicable environment laws and regulations may result in any of the following:

 

·issuance of administrative, civil and criminal penalties;
·denial or revocation of permits or other authorizations;
·reduction or cessation of operations; and
·performance of site investigatory, remedial or other corrective actions

 

While it is not possible at this time to predict how environmental legislation may change or how new regulations that may be adopted would impact Target Hospitality’s business, any such future laws and regulations could result in increased compliance costs or additional operating restrictions for Target Hospitality or its oil and gas and natural resource company customers and could have a material adverse effect on Target Hospitality’s business or demand for its services. See “Business of Target Hospitality—Regulatory and Environmental Compliance” in this proxy statement/prospectus for a more detailed description of Target Hospitality’s risks associated with environmental laws and regulations.

 

Target Hospitality may be subject to litigation, judgments, orders or regulatory proceedings that could materially harm Target Hospitality’s business.

 

Target Hospitality is subject to claims arising from disputes with customers, employees, vendors and other third parties in the normal course of business. The risks associated with any such disputes may be difficult to assess or quantify and their existence and magnitude may remain unknown for substantial periods of time. If the plaintiffs in any suits against Target Hospitality were to successfully prosecute their claims, or if Target Hospitality were to settle such suits by making significant payments to the plaintiffs, Target Hospitality’s business, results of operations and financial condition would be harmed. Even if the outcome of a claim proves favorable to Target Hospitality, litigation can be time consuming and costly and may divert management resources. To the extent that Target Hospitality’s senior executives are named in such lawsuits, Target Hospitality’s indemnification obligations could magnify the costs.

 

Failure to maintain positive relationships with the indigenous people in the areas where Target Hospitality operates could adversely affect its business.

 

A component of Target Hospitality’s business strategy is based on developing and maintaining positive relationships with the indigenous people and communities in the areas where it operates. These relationships are important to Target Hospitality’s operations and customers who desire to work on traditional Native American lands. The inability to develop and maintain relationships and to be in compliance with local requirements could have an adverse effect on Target Hospitality’s business, results of operations, or financial condition.

 

Target Hospitality may be exposed to certain regulatory and financial risks related to climate change.

 

Climate change is receiving increasing attention from scientists and legislators alike. The debate is ongoing as to the extent to which the climate is changing, the potential causes of any change and its potential impacts. Some attribute global warming to increased levels of greenhouse gases, including carbon dioxide, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions. Significant focus is being made on companies that are active producers of depleting natural resources.

 

There are a number of legislative and regulatory proposals to address greenhouse gas emissions, which are in various phases of discussion or implementation. The outcome of U.S. federal, regional, provincial, and state actions to address global climate change could result in a variety of regulatory programs including potential new regulations, additional charges to fund energy efficiency activities, or other regulatory actions. These actions could:

 

·result in increased costs associated with Target Hospitality’s operations and Target Hospitality’s customers’ operations;
·increase other costs to Target Hospitality’s business;
·reduce the demand for carbon-based fuels; and
·reduce the demand for Target Hospitality’s services.

 

Any adoption of these or similar proposals by U.S. federal, regional, provincial, or state governments mandating a substantial reduction in greenhouse gas emissions could have far-reaching and significant impacts on the energy industry. Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address greenhouse gas emissions would impact Target Hospitality’s business, any such future laws and regulations could result in increased compliance costs or additional operating restrictions, and could have a material adverse effect on Target Hospitality’s business or demand for Target Hospitality’s services. See “Business of Target Hospitality—Regulatory and Environmental Compliance” in this proxy statement/prospectus for a more detailed description of Target Hospitality’s climate-change related risks.

 

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Growth Development and Financing Risks

 

Target Hospitality may not be able to successfully acquire and integrate new operations, which could cause Target Hospitality’s business to suffer.

 

Target Hospitality may not be able to successfully complete potential strategic acquisitions for various reasons. Target Hospitality anticipates that it will consider acquisitions in the future that meet its strategic growth plans. Target Hospitality cannot predict whether or when acquisitions will be completed, and Target Hospitality may face significant competition for certain acquisition targets. Acquisitions that are completed involve numerous risks, including the following:

 

·difficulties in integrating the operations, technologies, products and personnel of the acquired companies;
·diversion of management’s attention from normal daily operations of the business;
·difficulties in entering markets in which Target Hospitality have no or limited direct prior experience and where Target Hospitality’s competitors in such markets have stronger market positions;
·difficulties in complying with regulations, such as environmental regulations, and managing risks related to an acquired business;
·an inability to timely complete necessary financing and required amendments, if any, to existing agreements;
·an inability to implement uniform standards, controls, procedures and policies;
·undiscovered and unknown problems, defects, liabilities or other issues related to any acquisition that become known to us only after the acquisition, particularly relating to rental equipment on lease that are unavailable for inspection during the diligence process; and
·potential loss of key customers or employees.

 

In connection with acquisitions Target Hospitality may assume liabilities or acquire damaged assets, some of which may be unknown at the time of such acquisitions; record goodwill and non-amortizable intangible assets that will be subject to future impairment testing and potential periodic impairment charges; or incur amortization expenses related to certain intangible assets.

 

The condition and regulatory certification of any facilities or operations acquired is assessed as part of the acquisition due diligence. In some cases, facility condition or regulatory certification may be difficult to determine due to that facility being on lease at the time of acquisition and/or inadequate certification records. Facility acquisitions may therefore result in a rectification cost which may not have been factored into the acquisition price, impacting deployability and ultimate profitability of the facility acquired.

 

Acquisitions are inherently risky, and no assurance can be given that Target Hospitality’s future acquisitions will be successful or will not materially adversely affect Target Hospitality’s business, results of operations, and financial condition. If Target Hospitality does not manage new markets effectively, some of Target Hospitality’s new branches and acquisitions may lose money or fail, and Target Hospitality may have to close unprofitable branches. Closing a branch in such circumstances would likely result in additional expenses that would cause Target Hospitality’s operating results to suffer. To successfully manage growth, Target Hospitality will need to continue to identify additional qualified managers and employees to integrate acquisitions within Target Hospitality’s established operating, financial and other internal procedures and controls. Target Hospitality will also need to effectively motivate, train and manage Target Hospitality’s employees. Failure to successfully integrate recent and future acquisitions and new branches into existing operations could materially adversely affect Target Hospitality’s results of operations and financial condition.

 

Global or local economic movements could have a material adverse effect on Target Hospitality’s business.

 

Target Hospitality operates in the United States, but its business may be negatively impacted by economic movements or downturns in that market or in global markets generally, including those that could be caused by policy changes by the U.S. administration in areas such as trade and immigration. These adverse economic conditions may reduce commercial activity, cause disruption and volatility in global financial markets, and increase rates of default and bankruptcy. Reduced commercial activity has historically resulted in reduced demand for Target Hospitality’s products and services. For example, reduced commercial activity in the energy and natural resource sectors in certain markets in which Target Hospitality operates may negatively impact its business. U.S. federal spending cuts or further limitations that may result from presidential or congressional action or inaction may also negatively impact Target Hospitality’s arrangements with government contractor customers. Disruptions in financial markets could negatively impact the ability of Target Hospitality’s customers to pay their obligations to it in a timely manner and increase Target Hospitality’s counterparty risk. If economic conditions worsen, Target Hospitality may face reduced demand and an increase, relative to historical levels, in the time it takes to receive customer payments. If Target Hospitality is not able to adjust its business in a timely and effective manner to changing economic conditions, its business, results of operations and financial condition may be materially adversely affected.

 

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Global capital and credit markets conditions could materially adversely affect Target Hospitality’s ability to access the capital and credit markets or the ability of key counterparties to perform their obligations to it.

 

Although Target Hospitality believes the banks participating in the New ABL Facility have adequate capital and resources, it can provide no assurance that all of those banks will continue to operate as a going concern in the future. If any of the banks in Target Hospitality’s lending group were to fail, it is possible that the borrowing capacity under the New ABL Facility would be reduced. Further, practical, legal, and tax limitations may also limit Target Hospitality’s ability to access the cash available to certain businesses within its group to service the working capital needs of other businesses within its group. In the event that the availability under the New ABL Facility were reduced significantly, Target Hospitality could be required to obtain capital from alternate sources in order to finance Target Hospitality’s capital needs. The options for addressing such capital constraints would include, but would not be limited to, obtaining commitments from the remaining banks in the lending group or from new banks to fund increased amounts under the terms of the New ABL Facility, and accessing the public capital markets. In addition, Target Hospitality may delay certain capital expenditures to ensure that Target Hospitality maintain appropriate levels of liquidity. If it became necessary to access additional capital, any such alternatives could have terms less favorable than those terms under the New ABL Facility, which could have a material adverse effect on Target Hospitality’s business, results of operations, financial condition, and cash flows.

 

In addition, in the future Target Hospitality may need to raise additional funds to, among other things, refinance existing indebtedness, fund existing operations, improve or expand its operations, respond to competitive pressures or make acquisitions. If adequate funds are not available on acceptable terms, Target Hospitality may be unable to achieve its business or strategic objectives or compete effectively. Target Hospitality’s ability to pursue certain future opportunities may depend in part on its ongoing access to debt and equity capital markets. Target Hospitality cannot assure you that any such financing will be available on terms satisfactory to it or at all. If Target Hospitality is unable to obtain financing on acceptable terms, it may have to curtail its growth.

 

Economic disruptions affecting key counterparties could also have a material adverse effect on Target Hospitality’s business. Target Hospitality monitors the financial strength of its larger customers, derivative counterparties, lenders, and insurance carriers on a periodic basis using publicly-available information in order to evaluate its exposure to those who have or who it believes may likely experience significant threats to their ability to adequately perform their obligations to it. The information available will differ from counterparty to counterparty and may be insufficient for Target Hospitality to adequately interpret or evaluate its exposure and/or determine appropriate or timely responses.

 

Target Hospitality may increase its debt or issue equity in the future, which could affect its financial condition, may decrease its profitability or could dilute its shareholders.

 

Target Hospitality may increase its debt or issue equity in the future, subject to restrictions in Target Hospitality’s debt agreements. If Target Hospitality’s cash flow from operations is less than it anticipates, or if Target Hospitality’s cash requirements are more than it expects, Target Hospitality may require more financing. However, debt or equity financing may not be available to it on terms acceptable to it, if at all. If Target Hospitality incurs additional debt or raises equity through the issuance of its preferred shares, the terms of the debt or its preferred shares issued may give the holders rights, preferences, and privileges senior to those of holders of Target Hospitality’s common shares, particularly in the event of liquidation. The terms of the debt may also impose additional and more stringent restrictions on Target Hospitality’s operations than Target Hospitality currently has. If Target Hospitality raises funds through the issuance of additional equity, your ownership in Target Hospitality would be diluted. If Target Hospitality is unable to raise additional capital when needed, it could affect Target Hospitality’s financial health, which could negatively affect your investment in Target Hospitality.

 

If Target Hospitality does not effectively manage its credit risk or collect on its accounts receivable, it could have a material adverse effect on its business, financial condition, and results of operations.

 

Failure to manage Target Hospitality’s credit risk and receive timely payments on Target Hospitality’s customer accounts receivable may result in the write-off of customer receivables. If Target Hospitality is not able to manage credit risk, or if a large number of customers should have financial difficulties at the same time, Target Hospitality’s credit and equipment losses would increase above historical levels. If this should occur, Target Hospitality’s business, financial condition, and results of operations may be materially and adversely affected.

 

Where any forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, Target Hospitality cautions that, while it believes such assumptions or bases to be reasonable and makes them in good faith, assumed facts or bases almost always vary from actual results.

 

The differences between assumed facts or bases and actual results can be material, depending upon the circumstances. The factors identified in this proxy statement/prospectus are important factors (but not necessarily all of the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by Target Hospitality, or on its behalf.

 

In any forward-looking statement where Target Hospitality, or Target Hospitality’s management, express an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. Taking this into account, the following are identified as important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, Target Hospitality:

 

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·risks related to diverting management’s attention from Target Hospitality’s;
·the level of supply and demand for natural resources;
·failure by Target Hospitality’s customers to reach positive final investment decisions on, or otherwise not complete, projects with respect to which Target Hospitality has been awarded contracts to provide related accommodation, which may cause those customers to terminate or postpone the contracts;
·the availability of attractive oil and natural gas field assets, which may be affected by governmental actions or environmental activists;
·fluctuations in the current and future prices of natural resources;
·fluctuations in currency exchange rates;
·general global economic conditions and the pace of global economic growth;
·changes in tax laws, tax treaties. or tax regulations or the interpretation or enforcement thereof, including taxing authorities not agreeing with Target Hospitality’s assessment of the effects of such laws, treaties and regulations;
·global weather conditions and natural disasters;
·Target Hospitality’s ability to hire and retain skilled personnel;
·the availability and cost of capital; and
·the development of new projects, including whether such projects will continue in the future.

 

Such risks and uncertainties are beyond Target Hospitality’s ability to control, and in many cases, Target Hospitality cannot predict the risks and uncertainties that could cause Target Hospitality’s actual results to differ materially from those indicated by the forward-looking statements.

 

Information Technology and Privacy Risks

 

Any failure of Target Hospitality’s management information systems could disrupt Target Hospitality’s business and result in decreased revenue and increased overhead costs.

 

Target Hospitality depends on its management information systems to actively manage its facilities and provide facility information, and availability of Target Hospitality’s services. These functions enhance Target Hospitality’s ability to optimize facility utilization, occupancy, costs of goods sold, and average daily rate. The failure of Target Hospitality’s management information systems to perform as anticipated could damage its reputation with its customers, disrupt its business or result in, among other things, decreased revenue and increased overhead costs. For example, an inaccurate utilization rate could cause Target Hospitality to fail to have sufficient inventory to meet consumer demand, resulting in decreased sales. Any such failure could harm Target Hospitality’s business, results of operations and financial condition. In addition, the delay or failure to implement information system upgrades and new systems effectively could disrupt Target Hospitality’s business, distract management’s focus and attention from business operations and growth initiatives, and increase Target Hospitality’s implementation and operating costs, any of which could materially adversely affect Target Hospitality’s operations and operating results.

 

Like other companies, Target Hospitality’s information systems may be vulnerable to a variety of interruptions due to events beyond Target Hospitality’s control, including, but not limited to, telecommunications failures, computer viruses, security breaches (including cyber-attacks), and other security issues. In addition, because Target Hospitality’s systems contain information about individuals and businesses, the failure to maintain the security of the data Target Hospitality holds, whether the result of its own error or the malfeasance or errors of others, could harm Target Hospitality’s reputation or give rise to legal liabilities leading to lower revenue, increased costs, regulatory sanctions, and other potential material adverse effects on Target Hospitality’s business, results of operations, and financial condition.

 

Target Hospitality’s business could be negatively impacted by security threats, including cyber-security threats and other disruptions.

 

Target Hospitality faces various security threats, including cyber-security threats to gain unauthorized access to sensitive information or to render data or systems unusable; threats to the safety of Target Hospitality’s employees; threats to the security of Target Hospitality’s facilities and infrastructure or third-party facilities and infrastructure; and threats from terrorist acts. Although Target Hospitality utilizes various procedures and controls to monitor these threats and mitigate its exposure to such threats, there can be no assurance that these procedures and controls will be sufficient in preventing security threats from materializing. If any of these events were to materialize, they could lead to losses of sensitive information, critical infrastructure, personnel or capabilities essential to Target Hospitality’s operations and could have a material adverse effect on Target Hospitality’s reputation, financial position, results of operations or cash flows. Cyber-security attacks in particular are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data. See “Risk Factors—Risks Relating to Target Hospitality’s Business—Cyber-attacks could have a disruptive effect on Target Hospitality’s business.”

 

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Cyber-attacks could have a disruptive effect on Target Hospitality’s business.

 

From time to time Target Hospitality may experience cyber-attacks, attempted and actual breaches of its information technology systems and networks or similar events, which could result in a loss of sensitive business or customer information, systems interruption or the disruption of Target Hospitality’s operations. The techniques that are used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and are difficult to detect for long periods of time, and Target Hospitality is accordingly unable to anticipate and prevent all data security incidents.

 

Even if Target Hospitality is fully compliant with legal standards and contractual or other requirements, it still may not be able to prevent security breaches involving sensitive data. The sophistication of efforts by hackers to gain unauthorized access to information systems has continued to increase in recent years. Breaches, thefts, losses or fraudulent uses of customer, employee or company data could cause consumers to lose confidence in the security of Target Hospitality’s website, point of sale systems and other information technology systems and choose not to stay in our communities or contract with Target Hospitality in the future. Such security breaches also could expose Target Hospitality to risks of data loss, business disruption, litigation and other costs or liabilities, any of which could adversely affect its business.

 

Failure to keep pace with developments in technology could adversely affect our operations or competitive position.

 

The specialty rental and hospitality services industry demands the use of sophisticated technology and systems for community management, procurement, operation of services across communities and other facilities, distribution of community resources to current and future customers and amenities. These technologies may require refinements and upgrades. The development and maintenance of these technologies may require significant investment by Target Hospitality. As various systems and technologies become outdated or new technology is required, Target Hospitality may not be able to replace or introduce them as quickly as needed or in a cost-effective and timely manner. As a result, Target Hospitality may not achieve the benefits it may have been anticipating from any new technology or system.

 

Risks Relating to Target Hospitality’s Indebtedness

 

Target Hospitality’s leverage may make it difficult for Target Hospitality to service its debt and operate its business.

 

As of June 30, 2018, on a pro forma basis after giving effect to the business combination and the other transactions contemplated hereby, Target Hospitality would have had $340 million of indebtedness under a no redemption assumption and $362 million of indebtedness under a maximum redemption assumption.

 

The no redemption assumption would consist primarily of $40 million of borrowings under the New ABL Facility and $300 million of bridge loans and/or senior secured notes. The max redemption assumption would consist primarily of $62 million of borrowings under the New ABL Facility and $300 million of bridge loans and/or senior secured notes.

 

Target Hospitality’s leverage could have important consequences, including:

 

·making it more difficult to satisfy its obligations with respect to its various debt and liabilities;
·requiring Target Hospitality to dedicate a substantial portion of its cash flow from operations to debt payments, thus reducing the availability of cash flow to fund internal growth through working capital and capital expenditures on its existing fleet or a new fleet and for other general corporate purposes;
·increasing Target Hospitality’s vulnerability to a downturn in its business or adverse economic or industry conditions;
·placing Target Hospitality at a competitive disadvantage compared to its competitors that have less debt in relation to cash flow and that, therefore, may be able to take advantage of opportunities that Target Hospitality’s leverage would prevent it from pursuing;
·limiting Target Hospitality’s flexibility in planning for or reacting to changes in its business and industry;
·restricting Target Hospitality from pursuing strategic acquisitions or exploiting certain business opportunities or causing Target Hospitality to make non-strategic divestitures; and
·limiting, among other things, Target Hospitality’s ability to borrow additional funds or raise equity capital in the future and increasing the costs of such additional financings.

 

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Target Hospitality’s cash finance costs for the six months ended June 30, 2018 would have been approximately $27 million on a pro forma basis after giving effect to the business combination and debt financing. Target Hospitality’s ability to meet its debt service obligations, including those under the New ABL Facility and the bridge loans and/or senior secured notes, or to refinance its debt depends on Target Hospitality’s future operating and financial performance, which will be affected by Target Hospitality’s ability to successfully implement its business strategy as well as general economic, financial, competitive, regulatory and other factors beyond Target Hospitality’s control. If Target Hospitality’s business does not generate sufficient cash flow from operations, or if future borrowings are not available to Target Hospitality in an amount sufficient to enable Target Hospitality to pay its indebtedness or to fund its other liquidity needs, Target Hospitality may need to refinance all or a portion of its indebtedness on or before the maturity thereof, sell assets, reduce or delay capital investments or seek to raise additional capital, any of which could have a material adverse effect on Target Hospitality’s operations. In addition, Target Hospitality may not be able to affect any of these actions, if necessary, on commercially reasonable terms or at all. Any refinancing of Target Hospitality’s debt could be at higher interest rates and may require Target Hospitality to comply with more onerous covenants, which could further restrict its business operations. The terms of Target Hospitality’s existing or future debt instruments may limit or prevent Target Hospitality from taking any of these actions. If Target Hospitality defaults on the payments required under the terms of certain of its indebtedness, that indebtedness, together with debt incurred pursuant to other debt agreements or instruments that contain cross-default or cross-acceleration provisions, may become payable on demand, and Target Hospitality may not have sufficient funds to repay all of its debts. As a result, Target Hospitality’s inability to generate sufficient cash flow to satisfy its debt service obligations, or to refinance or restructure Target Hospitality’s obligations on commercially reasonable terms or at all, would have an adverse effect, which could be material, on Target Hospitality’s business, financial condition and results of operations, as well as on Target Hospitality’s ability to satisfy its debt obligations.

 

The Holdco Acquiror and its subsidiaries may be able to incur substantial additional indebtedness (including additional secured obligations) in the future following the business combination. Although the indenture governing the Notes and the New ABL Facility will contain restrictions on the incurrence of additional indebtedness, these restrictions will be subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. See “Indebtedness.” If new debt, including future additional secured obligations, is added to Target Hospitality’s and Target Hospitality’s subsidiaries’ existing debt levels, the related risks that Target Hospitality now faces would increase.

 

Target Hospitality is, and may in the future become, subject to covenants that limit its operating and financial flexibility and, if Target Hospitality defaults under its debt covenants, it may not be able to meet its payment obligations.

 

The New ABL Facility and the indenture governing the Notes, as well as any instruments that will govern any future debt obligations, will contain covenants that impose significant restrictions on the way Target Hospitality can operate, including restrictions on its ability to:

 

·incur or guarantee additional debt and issue certain types of stock;
·create or incur certain liens;
·make certain payments, including dividends or other distributions, with respect to its equity securities;
·prepay or redeem junior debt;
·make certain investments or acquisitions, including participating in joint ventures;
·engage in certain transactions with affiliates;
·create unrestricted subsidiaries;
·create encumbrances or restrictions on the payment of dividends or other distributions, loans or advances to, and on the transfer of, assets to the issuer or any restricted subsidiary;
·sell assets, consolidate or merge with or into other companies;
·sell or transfer all or substantially all its assets or those of its subsidiaries on a consolidated basis; and
·issue or sell share capital of certain subsidiaries.

 

Although these limitations will be subject to significant exceptions and qualifications, these covenants could limit Target Hospitality’s ability to finance future operations and capital needs and its ability to pursue acquisitions and other business activities that may be in its interest. Target Hospitality’s ability to comply with these covenants and restrictions may be affected by events beyond its control. These include prevailing economic, financial and industry conditions. If Target Hospitality defaults on its obligations under the New ABL Facility and the indenture governing the Notes, then the relevant lenders or holders could elect to declare the debt, together with accrued and unpaid interest and other fees, if any, immediately due and payable and proceed against any collateral securing that debt. If the debt under the New ABL Facility, the indenture governing the Notes or any other material financing arrangement that Target Hospitality enters into were to be accelerated, Target Hospitality’s assets may be insufficient to repay in full the New ABL Facility, the Notes and its other debt.

 

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The New ABL Facility will also require Target Hospitality’s subsidiaries to satisfy specified financial maintenance tests in the event that certain excess liquidity requirements are not satisfied. The ability to meet these tests could be affected by deterioration in Target Hospitality’s operating results, as well as by events beyond Target Hospitality’s control, including increases in raw materials prices and unfavorable economic conditions, and Target Hospitality cannot assure you that these tests will be met. If an event of default occurs under the New ABL Facility, the lenders could terminate their commitments and declare all amounts borrowed, together with accrued and unpaid interest and other fees, to be immediately due and payable. Borrowings under other debt instruments that contain cross-acceleration or cross-default provisions also may be accelerated or become payable on demand. In these circumstances, Target Hospitality’s assets may not be sufficient to repay in full that indebtedness and its other indebtedness then outstanding.

 

The amount of borrowings permitted at any time under the New ABL Facility will be subject to compliance with limits based on a periodic borrowing base valuation of the collateral thereunder. As a result, Target Hospitality’s access to credit under the New ABL Facility will potentially be subject to significant fluctuations depending on the value of the borrowing base of eligible assets as of any measurement date, as well as certain discretionary rights of the agent in respect of the calculation of such borrowing base value. As a result of any change in valuation, the availability under the New ABL Facility may be reduced, or Target Hospitality may be required to make a repayment of the New ABL Facility, which may be significant. The inability to borrow under the New ABL Facility or the use of available cash to repay the New ABL Facility as a result of a valuation change may adversely affect Target Hospitality’s liquidity, results of operations and financial position.

 

Restrictions in Target Hospitality’s existing and future debt agreements could limit its growth and its ability to respond to changing conditions.

 

The New ABL Facility will contain a number of significant covenants including covenants restricting the incurrence of additional debt. The credit agreement governing the New ABL Facility will require Target Hospitality, among other things, to maintain certain financial ratios or reduce its debt. These restrictions also limit Target Hospitality’s ability to obtain future financings to withstand a future downturn in its business or the economy in general, or to otherwise conduct necessary corporate activities. Target Hospitality may also be prevented from taking advantage of business opportunities that arise because of the limitations that the restrictive covenants under the New ABL Facility and the indenture governing the Notes will impose on it. In addition, complying with these covenants may also cause Target Hospitality to take actions that are not favorable to its securityholders and may make it more difficult for Target Hospitality to successfully execute its business strategy and compete against companies that are not subject to such restrictions.

 

Risks Relating to Platinum Eagle and the Business Combination

 

Directors of Platinum Eagle have potential conflicts of interest in recommending that securityholders vote in favor of approval of the business combination and approval of the other proposals described in this proxy statement/prospectus.

 

When considering Platinum Eagle’s board of directors’ recommendation that its shareholders vote in favor of the approval of the business combination, Platinum Eagle’s shareholders should be aware that directors and executive officers of Platinum Eagle have interests in the business combination that may be different from, or in addition to, the interests of Platinum Eagle’s shareholders. These interests include:

 

·the right of the Founders to receive common stock following the business combination in accordance with the Earnout Agreement;
·Ownership by the directors of ordinary shares and private placement warrants;
·the continuation of two directors of Platinum Eagle as independent members of the board of directors of Target Hospitality;
·the repayment of loans made by, and the reimbursement of out-of-pocket expenses incurred by, certain officers or directors or their affiliates in the aggregate amount of up to $1,500,000; and
·the continued indemnification of current directors and officers of Platinum Eagle and the continuation of directors’ and officers’ liability insurance after the business combination.

 

In addition, certain of Platinum Eagle’s Founders, directors and entities affiliated with certain of Platinum Eagle’s directors and executive officers, own shares of common stock that were issued prior to Platinum Eagle’s initial public offering. Such purchasers have waived their right to receive distributions with respect to the founder shares upon Platinum Eagle’s liquidation which will occur if we are unable to complete the business combination by January 17, 2020. Accordingly, the founder shares will be worthless if Platinum Eagle is forced to liquidate. In addition, in the event of Platinum Eagle’s liquidation, Platinum Eagle’s warrants, including the private placement warrants held by certain of Platinum Eagle’s directors and executive officers, will expire worthless. These financial interests of the Founders, officers and directors and entities affiliated with them may have influenced their decision to approve the business combination. You should consider these interests when evaluating the business combination and the recommendation of Platinum Eagle’s board of directors to vote in favor of the business combination proposal and other proposals to be presented to the shareholders.

 

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Subsequent to the consummation of the business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

 

Although Platinum Eagle has conducted due diligence on Target and Signor, Platinum Eagle cannot assure you that this diligence revealed all material issues that may be present in their respective businesses, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Platinum Eagle’s, Target’s or Signor’s control will not later arise. As a result, Target Hospitality may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in losses. Even if the due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that Target Hospitality reports charges of this nature could contribute to negative market perceptions about Target Hospitality or its securities. In addition, charges of this nature may cause Target Hospitality to violate net worth or other covenants to which it may be subject. Accordingly, 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 our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission.

 

Warrants will become exercisable for our common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our shareholders.

 

Following the business combination, Target Hospitality will have 10,833,333 outstanding public warrants to purchase 10,833,333 shares of common stock at an exercise price of $11.50 per share, which warrants will become exercisable 30 days following the closing of the business combination. In addition, there will be 5,333,334 private placement warrants outstanding exercisable for 5,333,334 shares of common stock at an exercise price of $11.50 per share. To the extent such warrants are exercised, additional shares of common stock will be issued, which will result in dilution to the holders of Target Hospitality common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our common stock.

 

If our shareholders fail to comply with the redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their shares of our common stock for a pro rata portion of the trust account.

 

Holders of public shares are not required to affirmatively vote against the business combination proposal in order to exercise their rights to redeem their shares for a pro rata portion of the trust account. In order to exercise their redemption rights, they are required to submit a request in writing and deliver their stock (either physically or electronically) to our transfer agent by           a.m. Eastern time on                , 2019. Shareholders electing to redeem their 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.

 

We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

 

Target Hospitality will have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of our common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption provided that on the date we give notice of redemption. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force holders (i) to exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) to sell the warrants at the then-current market price when the holder might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of the warrants. None of the warrants will be redeemable by us so long as they are held by their initial purchasers or their permitted transferees.

 

If the benefits of the business combination do not meet the expectations of investors or securities analysts, the market price of our securities may decline.

 

If the benefits of the business combination do not meet the expectations of investors or securities analysts, the market price of Platinum Eagle’s securities prior to the closing of the business combination may decline. The market values of Platinum Eagle’s securities at the time of the business combination may vary significantly from their prices on the date the Merger Agreements were executed, the date of this proxy statement/prospectus, or the date on which our shareholders vote on the business combination. Because the number of shares to be issued pursuant to the Merger Agreements will not be adjusted to reflect any changes in the market price of Platinum Eagle’s common stock, the market value of Target Hospitality common stock issued in the business combination may be higher or lower than the values of these shares on earlier dates.

 

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In addition, following the business combination, fluctuations in the price of Target Hospitality’s securities could contribute to the loss of all or part of your investment. Prior to the business combination, there has not been a public market for the stock of any of Target Hospitality and trading in the shares of Platinum Eagle’s common stock has not been active. Accordingly, the valuation ascribed to Target Hospitality in the business combination may not be indicative of the price that will prevail in the trading market following the business combination. If an active market for our securities develops and continues, the trading price of our securities following the business combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

 

Factors affecting the trading price of Target Hospitality’s securities may include:

 

·actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
·changes in the market’s expectations about our operating results;
·success of competitors;
·our operating results failing to meet the expectation of securities analysts or investors in a particular period;
·changes in financial estimates and recommendations by securities analysts concerning Target Hospitality or the industries in which Target Hospitality operates in general;
·operating and stock price performance of other companies that investors deem comparable to Target Hospitality;
·our ability to market new and enhanced products on a timely basis;
·changes in laws and regulations affecting our business;
·commencement of, or involvement in, litigation involving Target Hospitality;
·changes in Target Hospitality’s capital structure, such as future issuances of securities or the incurrence of additional debt;
·the volume of shares of our common stock available for public sale;
·any major change in our board or management;
·sales of substantial amounts of common stock by our directors, executive officers or significant shareholders or the perception that such sales could occur; and
·general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

 

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and Nasdaq have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to Target Hospitality could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

 

Platinum Eagle’s initial shareholders, directors, executive officers, advisors and their affiliates may elect to purchase shares or public warrants from public shareholders, which may influence a vote on the business combination and reduce the public “float” of our common stock.

 

Platinum Eagle’s initial shareholders, directors, executive officers, advisors or their affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of the business combination, although they are under no obligation to do so. However, other than as expressly stated herein, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions.

 

In the event that Platinum Eagle’s initial shareholders, directors, executive officers, advisors or their affiliates purchase 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 shares. The purpose of any such purchases of shares could 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 a closing condition in the Merger Agreements that requires us to have a certain amount of cash at the closing of the business combination, where it appears that such requirement would otherwise not be met. Any such purchases of our securities may result in the completion of the business combination that may not otherwise have been possible.

 

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In addition, if such purchases are made, the public “float” of our common stock and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.

 

Platinum Eagle’s initial shareholders have agreed to vote in favor of the business combination, regardless of how our public shareholders vote.

 

Our initial shareholders have agreed to vote their founder shares, as well as any public shares purchased during or after Platinum Eagle’s initial public offering, in favor of the business combination. The initial shareholders own on an as-converted basis, approximately 20% of our outstanding shares prior to the business combination. Accordingly, it is more likely that the necessary shareholder approval for the business combination will be received than would be the case if our initial shareholders agreed to vote their founder shares in accordance with the majority of the votes cast by our public shareholders.

 

Even if we consummate the business combination, there can be no assurance that the warrants will be in the money at the time they become exercisable, and they may expire worthless.

 

The exercise price for the outstanding warrants is $11.50 per share of common stock. There can be no assurance that the warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless.

 

Our shareholders will experience immediate dilution as a consequence of the issuance of common stock as consideration in the business combination. Having a minority share position may reduce the influence that our current shareholders have on the management of Target Hospitality.

 

Assuming (i) that no public shareholders exercise their redemption rights (no redemptions scenario based on $327,246,119 held in trust as of June 30, 2018 and no additional equity raised through the Equity Offering or Backstop Offering), (ii) that 17,775,388 shares of Target Hospitality common stock are issued to Algeco Seller, and (iii) that 49,100,000 shares of Target Hospitality common stock are issued to Arrow Seller, then upon the closing of the business combination our public shareholders would own approximately 30.8%, the Algeco Seller would own approximately 16.9% and the Arrow Seller would own approximately 46.6% of the total of 105,455,388 shares of issued and outstanding shares of Target Hospitality common stock (excluding 2,045,000 shares of Target Hospitality common stock to be held in escrow as of the closing and subject to release to Platinum Eagle Acquisition LLC, a Delaware limited liability company (our “Sponsor”) and Harry E. Sloan (together with the Sponsor, the “Founders”) and Arrow Seller in accordance with the terms of the Earnout Agreement (the “Earnout Shares”)).

 

Assuming (i) that holders of 10,154,445 public shares exercise their redemption rights (based on $327,246,119 held in trust as of June 30, 2018 and a redemption price of $10.0691 per share) (maximum redemptions scenario based on $327,246,119 held in trust as of June 30, 2018 and no additional equity raised through the Equity Offering or Backstop Offering), (ii) that 25,800,000 shares of Target Hospitality common stock are issued to Algeco Seller, and (iii) that 49,100,000 shares of Target Hospitality common stock are issued to Arrow Seller, then upon the closing of the business combination our public shareholders would own approximately 22.3%, Algeco Seller would own approximately 25.7% and Arrow Seller would own approximately 48.9% of the total of 100,325,555 issued and outstanding shares of Target Hospitality common stock (excluding the 8,045,000 Earnout Shares).

 

There are currently outstanding an aggregate of 16,166,667 warrants to acquire our Class A ordinary shares, which comprise 5,333,334 private placement warrants held by our initial shareholders and our independent directors (and/or one or more of their estate planning vehicles) and 10,833,333 public warrants. Each of our outstanding whole warrants is exercisable commencing 30 days following the closing of the business combination for one Class A ordinary share and, following the domestication, will entitle the holder thereof to purchase one share of Target Hospitality common stock in accordance with its terms. Therefore, as of the date of this proxy statement/prospectus, if we assume that each outstanding whole warrant is exercised and one share of Target Hospitality common stock is issued as a result of such exercise, with payment to the company of the exercise price of $11.50 per share, our fully-diluted share capital would increase by a total of 16,166,167 shares, with approximately $185,910,920 paid to the company to exercise the warrants.

 

Shares held by our Sponsor, Jeff Sagansky, Harry E. Sloan, Eli Baker and, depending upon amount of gross proceeds, Arrow Seller, will be subject to transfer and voting restrictions under the Earnout Agreement for three years, subject to early release in certain circumstances. Upon release, significant sales of founder shares could have a negative impact on the trading price of our stock.

 

Sales of substantial amounts of our common stock in the public market after the completion of the business combination, or the perception that such sales could occur, could adversely affect the market price of our common stock and could materially impair our future ability to raise capital through offerings of common stock or other equity securities.

 

Assuming no Platinum Eagle shareholders exercise their redemption rights, we will have 105,455,388 shares of common stock outstanding immediately after the business combination. The Founders have agreed that depending upon the amount of proceeds delivered at Closing from the trust account, Equity Offering and Backstop Offering, if any, up to 6,045,000 founder shares will be held in escrow and subject to transfer restrictions under the Earnout Agreement for a period of three years, subject to release to the Founders and Arrow Seller, if applicable, upon the occurrence of certain triggering events as described under “The Business Combination Proposal — Related Agreements — The Earnout Agreement.” In addition, our initial shareholders have agreed not to transfer, assign or sell any of their Class B ordinary shares until the earlier to occur of: (A) one year after the completion of our initial business combination or (B) the date on which we complete a liquidation, merger, share exchange or other similar transaction after our initial business combination that results in all of our shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property. However, assuming such shares are released to the Founders in accordance with the Earnout Agreement, following the termination of these transfer restrictions, we cannot predict what effect, if any, market sales of common stock held by our initial shareholders or any other shareholder or the availability of these shares for future sale will have on the market price of our common stock.

 

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Our directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public shareholders.

 

Our Sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, in each case less income taxes payable, 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 our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. While we currently expect that our independent directors would take legal action on our behalf against the Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public shareholders may be reduced below $10.00 per share.

 

If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.

 

If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.

 

The ability of shareholders to exercise redemption rights with respect to a large number of shares could increase the probability that the business combination would be unsuccessful and that shareholders would have to wait for liquidation in order to redeem their stock.

 

At the time we entered into the agreements for the business combination, we did not know how many shareholders will exercise their redemption rights, and therefore we structured the business combination based on our expectations as to the number of shares that will be submitted for redemption. The agreements with Target and Signor relating to the business combination require us to have at least $225 million of gross cash proceeds available from the trust account, after giving effect to redemptions of public shares, if any, and/or from other specified sources, if necessary (the “Minimum Proceeds”). If a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account. The above considerations may limit our ability to complete the business combination or optimize our capital structure.

 

The unaudited pro forma condensed combined financial information included in this document may not be indicative of what our actual financial position or results of operations would have been.

 

The unaudited pro forma condensed combined financial information in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the business combination been completed on the dates indicated. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.

 

The business combination is subject to conditions, including certain conditions that may not be satisfied on a timely basis, if at all.

 

The completion of the business combination is subject to a number of conditions. The completion of the business combination is not assured and is subject to risks, including the risk that approval of the business combination by Platinum Eagle’s shareholders is not obtained or that there are not sufficient funds in the trust account, in each case subject to certain terms specified in the Merger Agreements (as described under “The Merger Agreements — Conditions to the Closing of the Business Combination”), or that other closing conditions are not satisfied. If Platinum Eagle does not complete the business combination, it could be subject to several risks, including:

 

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·the parties may be liable for damages to one another under the terms and conditions of the Merger Agreements;
·negative reactions from the financial markets, including declines in the price of Platinum Eagle’s shares due to the fact that current prices may reflect a market assumption that the business combination will be completed; and
·the attention of our management will have been diverted to the business combination rather than our own operations and pursuit of other opportunities that could have been beneficial to that organization.

 

There can be no assurance that our common stock that will be issued in connection with the business combination will be approved for listing on Nasdaq following the closing of the business combination, or that we will be able to comply with the continued listing standards of Nasdaq.

 

Our common stock and warrants will be listed on Nasdaq following the business combination. Our continued eligibility for listing may depend on the number of our shares that are redeemed. If, after the business combination, Nasdaq delists our common stock from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant material adverse consequences including:

 

·a limited availability of market quotations for our securities;
·a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;
·a limited amount of analyst coverage; and
·a decreased ability to issue additional securities or obtain additional financing in the future.

 

If we are not able to complete an initial business combination by January 17, 2020 (or such later date as our shareholders may approve in accordance with our amended and restated memorandum and articles of association), we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate the trust account, in which case our public shareholders may only receive approximately $10.00 per share and our warrants will expire worthless.

 

Our amended and restated articles of association state that we must complete our initial business combination by January 17, 2020. If we have not completed an initial business combination by then (or such later date as our shareholders may approve in accordance with our amended and restated memorandum and articles of association), we 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 the funds held in the trust account and not previously released to us to fund our working capital requirements (subject to an annual limit of $250,000) (less taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of applicable law. In such case, our public shareholders may only receive approximately $10.00 per share and our warrants will expire worthless.

 

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EXTRAORDINARY GENERAL MEETING

 

General

 

Platinum Eagle is furnishing this proxy statement/prospectus to Platinum Eagle’s shareholders as part of the solicitation of proxies by Platinum Eagle’s board of directors for use at the general meeting to be held on                           , 2019, and at any adjournment thereof. This proxy statement/prospectus is first being furnished to Platinum Eagle’s shareholders on or about                           , 2019 in connection with the vote on the proposals described in this proxy statement/prospectus. This proxy statement/prospectus provides Platinum Eagle’s shareholders with information they need to know to be able to vote or instruct their vote to be cast at the general meeting.

 

Date, Time and Place

 

The general meeting will be held on                           , 2019, at           a.m., Eastern Time, at the offices of Winston & Strawn LLP, at 200 Park Avenue, New York, New York, 10166.

 

Purpose of the Platinum Eagle General Meeting

 

At the general meeting, Platinum Eagle is asking holders of ordinary shares to:

 

·consider and vote upon a proposal to approve and adopt the Merger Agreements, which, among other things, provides for the purchase by Platinum Eagle, through its wholly-owned subsidiary, the Holdco Acquiror, of all of the issued and outstanding equity interests of Target Parent and Signor Parent from the Algeco Seller and the Arrow Seller, respectively, and to approve the transactions contemplated by the Merger Agreements (we refer to this proposal as the “business combination proposal”);

 

·consider and vote upon a proposal to approve by special resolution, assuming the business combination proposal is approved and adopted, the change of Platinum Eagle’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware 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 (we refer to this proposal as the “domestication proposal”);

 

·consider and vote upon three separate proposals (which we refer to, collectively, as the “organizational documents proposals”) to approve by special resolution, assuming the domestication proposal is approved and adopted, the following material differences between the current amended and restated memorandum and articles of association of Platinum Eagle and the proposed new certificate of incorporation and bylaws of Target Hospitality:

 

(1)to approve the provision in the Proposed Charter changing the authorized share capital from $40,100 divided into 380,000,000 Class A ordinary shares of a par value of $0.0001 each, 20,000,000 Class B ordinary shares of a par value of $0.0001 each and 1,000,000 preferred shares of a par value of $0.0001 each, to authorized capital stock of 401,000,000 shares, consisting of (x) 400,000,000 shares of Target Hospitality common stock and (y) 1,000,000 shares of preferred stock (we refer to this as “organizational documents proposal A”);

 

(2)to approve the provision in Target Hospitality’s proposed bylaws authorizing that only the board of directors, chairperson of the board of directors or the chief executive officer may call a meeting of stockholders (we refer to this as “organizational documents proposal B”);

 

(3)to approve all other changes in connection with the replacement of the current amended and restated memorandum and articles of association of Platinum Eagle with a new certificate of incorporation and bylaws of Target Hospitality as part of the domestication, including (i) changing the post-domestication corporate name from “Platinum Eagle Acquisition Corp.” to “Target Hospitality Corp.” and making Target Hospitality’s corporate existence perpetual, (ii) adopting Delaware as the exclusive forum for certain stockholder litigation, (iii) granting a waiver regarding corporate opportunities to Target Hospitality’s non-employee directors and (iv) removing certain provisions related to our status as a blank check company that will no longer apply upon consummation of the business combination, all of which Platinum Eagle’s board of directors believe are necessary to adequately address the needs of Target Hospitality after the business combination (we refer to this as “organizational documents proposal C”);

 

·consider and vote upon a proposal to approve by ordinary resolution, assuming the organizational documents proposals are approved and adopted, for the purposes of complying with the applicable Nasdaq listing rules, the issuance of (x) shares of Target Hospitality common stock to (i) Algeco Seller pursuant to the terms of the Target Merger Agreement and (ii) Arrow Seller pursuant to the terms of the Signor Merger Agreement, and (y) Class A ordinary shares to certain institutions and accredited investors in connection with the Equity Offering (we refer to this proposal as the “stock issuance proposal”);

 

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·consider and vote upon a proposal to approve by ordinary resolution, assuming the stock issuance proposal is approved and adopted, the Target Hospitality Corp. 2019 Incentive Award Plan, a copy of which is attached to this proxy statement/prospectus as Annex F (we refer to this proposal as the “incentive award plan proposal” and, collectively with the business combination proposal, the domestication proposal, the organizational documents proposals, the stock issuance proposal, the condition precedent proposals); and

 

·consider and vote upon a proposal to approve by ordinary resolution the adjournment of the general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the general meeting, any of the condition precedent proposals would not be duly approved and adopted by our shareholders or we determine that one or more of the closing conditions under the Merger Agreements is not satisfied or waived (we refer to this proposal as the “adjournment proposal”).

 

Recommendation of Platinum Eagle Board of Directors

 

Platinum Eagle’s board of directors has unanimously determined that the business combination proposal is in the best interests of Platinum Eagle and its shareholders, has unanimously approved the business combination proposal, and unanimously recommends that shareholders vote “FOR” the business combination proposal, “FOR” the domestication proposal, “FOR” each of the separate organizational documents proposals, “FOR” the stock issuance proposal, “FOR” the incentive award plan proposal and “FOR” the adjournment proposal, in each case, if presented to the general meeting.

 

The existence of financial and personal interests of Platinum Eagle’s directors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is in the best interests of Platinum Eagle and its shareholders and what he or they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal — Interests of Platinum Eagle’s Directors and Officers in the Business Combination” for a further discussion.

 

Record Date; Who is Entitled to Vote

 

Platinum Eagle has fixed the close of business on                           , 2019, as the “record date” for determining Platinum Eagle shareholders entitled to notice of and to attend and vote at the general meeting. As of the close of business on                           , 2019, there were 40,625,000 ordinary shares outstanding and entitled to vote. Each ordinary share is entitled to one vote per share at the general meeting.

 

In connection with our initial public offering, our initial shareholders (consisting of our Sponsor and Harry E. Sloan) and our independent directors at the time of our initial public offering entered into letter agreements to vote their founder shares, as well as any public shares purchased during or after our initial public offering, in favor of the business combination proposal and we also expect them to vote their shares in favor of all other proposals being presented at the general meeting. As of the date hereof, our Sponsor and Harry E. Sloan own 20.0% of our total outstanding ordinary shares.

 

Quorum

 

The presence, in person or by proxy, of the holders of a majority of the outstanding ordinary shares entitled to vote constitutes a quorum at the general meeting.

 

Abstentions and Broker Non-Votes

 

Proxies that are marked “abstain” and proxies relating to “street name” shares that are returned to Platinum Eagle but marked by brokers as “not voted” will be treated as shares present for purposes of determining the presence of a quorum on all matters. They will also not be treated as shares voted on the matter. If a shareholder does not give the broker voting instructions, under applicable self-regulatory organization rules, its broker may not vote its shares on “non-routine” proposals, such as the business combination proposal and the domestication proposal.

 

Vote Required for Approval

 

The approval of the business combination proposal requires an ordinary resolution, being the affirmative vote of the holders of a majority of the ordinary shares who, being present and entitled to vote at the general meeting, vote at the general meeting.

 

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The approval of the domestication proposal requires a special resolution under the Cayman Islands Companies Law, being the affirmative vote of the holders of at least two-thirds of the ordinary shares who, being present and entitled to vote at the general meeting, vote at the general meeting. The domestication proposal is conditioned on the approval of the business combination proposal. Therefore, if the business combination proposal is not approved, the domestication proposal will have no effect, even if approved by our public shareholders.

 

The approval of each of the separate organizational documents proposals requires a special resolution under the Cayman Islands Companies Law, being the affirmative vote of the holders of at least two-thirds of the ordinary shares who, being present and entitled to vote at the general meeting, vote at the general meeting. Each of the organizational documents proposals is conditioned on the approval of the domestication proposal, and, therefore, also conditioned on approval of the business combination proposal. Therefore, if the business combination proposal and the domestication proposal are not approved, each of the organizational documents proposals will have no effect, even if approved by our public shareholders.

 

The approval of the stock issuance proposal requires an ordinary resolution, being the affirmative vote of the holders of a majority of the ordinary shares who, being present and entitled to vote at the general meeting, vote at the general meeting. The stock issuance proposal is conditioned on the approval of the organizational documents proposals, and, therefore, also conditioned on approval of the domestication proposal and the business combination proposal. Therefore, if the business combination proposal, the domestication proposal and the organizational documents proposals are not approved, the stock issuance proposal will have no effect, even if approved by our public shareholders.

 

The approval of the incentive award plan proposal requires an ordinary resolution, being the affirmative vote of the holders of a majority of the ordinary shares who, being present and entitled to vote at the general meeting, vote at the general meeting. The incentive award plan proposal is conditioned on the approval of the stock issuance proposal and, therefore, also conditioned on the approval of the business combination proposal, the domestication proposal and the organizational documents proposals. Therefore, if any of those proposals are not approved, the incentive award plan proposal will have no effect, even if approved by our public shareholders.

 

The approval of the adjournment proposal requires an ordinary resolution, being the affirmative vote of the holders of a majority of the ordinary shares who, being present and entitled to vote at the general meeting, vote at the general meeting. The adjournment proposal is not conditioned upon any other proposal.

 

In each case, abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the general meeting.

 

Voting Your Shares

 

Each ordinary share that you own in your name entitles you to one vote. Your proxy card shows the number of ordinary shares that you own. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. There are two ways to vote your ordinary shares at the general meeting:

 

·You Can Vote By Signing and Returning the Enclosed Proxy Card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by Platinum Eagle’s board “FOR” the business combination proposal, “FOR” the domestication proposal, “FOR” each of the separate organizational documents proposals, “FOR” the stock issuance proposal, “FOR” the incentive award plan proposal and “FOR” the adjournment proposal, in each case, if presented to the general meeting. Votes received after a matter has been voted upon at the general meeting will not be counted.

 

·You Can Attend the General Meeting and Vote in Person. You will receive a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a valid legal proxy from the broker, bank or other nominee. That is the only way Platinum Eagle can be sure that the broker, bank or nominee has not already voted your shares.

 

Revoking Your Proxy

 

If you are a Platinum Eagle shareholder and you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

 

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·you may send another proxy card with a later date;

 

·you may notify Eli Baker, Platinum Eagle’s Secretary, in writing before the general meeting that you have revoked your proxy; or

 

·you may attend the general meeting, revoke your proxy, and vote in person, as indicated above.

 

Who Can Answer Your Questions About Voting Your Shares

 

If you are a shareholder and have any questions about how to vote or direct a vote in respect of your ordinary shares, you may call Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing                                  .

 

Redemption Rights

 

Public shareholders may seek to redeem the public shares that they hold, regardless of whether they vote for the proposed business combination, against the proposed business combination or do not vote in relation to the proposed business combination. Any public shareholder may request redemption of their public shares for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the business combination, including interest, less income taxes payable, divided by the number of then issued and outstanding public shares. If a holder properly seeks redemption as described in this section and the business combination is consummated, the holder will no longer own these shares following the business combination.

 

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to 20% or more of the shares of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

 

Platinum Eagle’s initial shareholders will not have redemption rights with respect to any ordinary shares owned by them, directly or indirectly.

 

You will be entitled to receive cash for any public shares to be redeemed only if you:

 

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

 

(ii)prior to               a.m., Eastern Time, on                             , 2019, (a) submit a written request to the transfer agent that Target Hospitality redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.

 

If you hold the shares in street name, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Public shares that have not been tendered (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $80 and it would be up to the broker whether or not to pass this cost on to the redeeming shareholder. In the event the proposed business combination is not consummated this may result in an additional cost to shareholders for the return of their shares.

 

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

 

Any request to redeem public shares, once made, may be withdrawn at any time until immediately prior to the vote on the proposed business combination. Furthermore, if a holder of a public share delivers its certificate in connection with an election of its redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that Platinum Eagle instruct its transfer agent to return the certificate (physically or electronically). The holder can make such request by contacting the transfer agent, at the address or email address listed in this proxy statement/prospectus.

 

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If the business combination is not approved or completed for any reason, then Platinum Eagle’s public shareholders who elected to exercise their redemption rights will not be entitled to redeem their shares. In such case, Platinum Eagle will promptly return any shares previously delivered by public holders.

 

The closing price of ordinary shares on November 9, 2018, was $9.90. For illustrative purposes, the cash held in the trust account on June 30, 2018 was $327,246,119 or $10.0691 per public share, as of June 30, 2018. Prior to exercising redemption rights, shareholders should verify the market price of ordinary shares as they may receive higher proceeds from the sale of their ordinary shares in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. Platinum Eagle cannot assure its shareholders that they will be able to sell their ordinary shares in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in its securities when its shareholders wish to sell their shares.

 

If a public shareholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own those public shares. You will be entitled to receive cash for your public shares only if you properly exercise your right to redeem the public shares that you will hold upon the domestication, no later than the close of the vote on the business combination proposal, and deliver your ordinary shares (either physically or electronically) to the transfer agent, prior to 9:30 a.m., Eastern Time on                           , 2019, and the business combination is consummated.

 

In order for public shareholders to exercise their redemption rights in respect of the proposed business combination, public shareholders must properly exercise their right to redeem the public shares that you will hold upon the domestication no later than the close of the vote on the business combination proposal and deliver their ordinary shares (either physically or electronically) to the transfer agent, prior to        a.m., Eastern Time on                           , 2019. Therefore, the exercise of redemption rights occurs prior to the domestication. For the purposes of Article 49.3 of the amended and restated memorandum and articles of association of Platinum Eagle and the Cayman Islands Companies Law, the exercise of redemption rights shall be treated as an election to have such public shares repurchased for cash and references in this proxy statement/prospectus shall be interpreted accordingly. Immediately following the domestication and the consummation of the business combination, Target Hospitality shall pay public shareholders who properly exercised their redemption rights in respect of their public shares.

 

Appraisal Rights

 

Neither Platinum Eagle shareholders nor Platinum Eagle warrant holders have appraisal rights in connection with the business combination or the domestication under the Cayman Islands Companies Law or under the DGCL.

 

Proxy Solicitation Costs

 

Platinum Eagle is soliciting proxies on behalf of its board of directors. This solicitation is being made by mail but also may be made by telephone or in person. Platinum Eagle and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. Platinum Eagle will bear the cost of the solicitation.

 

Platinum Eagle has hired Morrow Sodali LLC to assist in the proxy solicitation process. Platinum Eagle will pay that firm a fee of $[__] plus disbursements. Such fee will be paid with non-trust account funds.

 

Platinum Eagle will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. Platinum Eagle will reimburse them for their reasonable expenses.

 

Potential Purchases of Public Shares and/or Warrants

 

At any time prior to the general meeting, during a period when they are not then aware of any material nonpublic information regarding Platinum Eagle or its securities, the Platinum Eagle initial shareholders, Target and/or its affiliates and Signor and/or its affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Platinum Eagle’s ordinary shares or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of that (i) the proposals presented to shareholders for approval at the general meeting are approved and/or (ii) that Platinum Eagle satisfy the minimum cash condition. Any such stock purchases and other transactions may thereby increase the likelihood of obtaining shareholder approval of the business combination. This may result in the completion of our business combination that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by the Platinum Eagle initial shareholders for nominal value.

 

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

 

If such transactions are effected, the consequence could be to cause the business combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Platinum Eagle will file a Current Report on Form 8-K to disclose arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the general meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

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THE BUSINESS COMBINATION PROPOSAL

 

We are asking our shareholders to approve by ordinary resolution, and adopt the Merger Agreements and the transactions contemplated thereby. Our shareholders should read carefully this proxy statement/prospectus in its entirety for more detailed information concerning the Merger Agreements, which are attached as Annex A and Annex B to this proxy statement/prospectus. Please see the subsection entitled “The Merger Agreements” below, for additional information and a summary of certain terms of each Merger Agreement. You are urged to read carefully each Merger Agreement in its entirety before voting on this proposal. Capitalized terms used herein and not otherwise defined have the meanings given to them in the Merger Agreements.

 

Because we are holding a shareholder vote on the business combination, we may consummate the business combination only if it is approved by the affirmative vote of the holders of a majority of ordinary shares that are voted at the general meeting.

 

The Merger Agreements

 

General

 

It is intended that the business combination be consummated pursuant to: (a) the Signor Merger Agreement by and among Arrow Seller, the Company and Signor Merger Sub, pursuant to which Signor Parent will merge with and into Signor Merger Sub, with Signor Parent, as sole parent of Arrow Bidco, surviving such merger; and (b) the Target Merger Agreement by and among Algeco Seller, the Company, Arrow Bidco and the Holdco Acquiror, pursuant to which Alegco Parent will merge with and into Arrow Bidco, with Arrow Bidco surviving the merger. Immediately following the transactions contemplated by the Signor Merger Agreement and prior to the transactions contemplated by the Target Merger Agreement, Signor Parent will merge with and into the Holdco Acquiror, with the Holdco Acquiror surviving the merger. Upon the consummation of the business combination, the Holdco Acquiror shall be the sole parent of Arrow Bidco, which shall be the sole parent of each of Target and Signor and a wholly owned subsidiary of Platinum Eagle.

 

Consideration

 

Under the Merger Agreements, the total amount payable by the Holdco Acquiror will be $1.311 billion (which amount is inclusive of the amounts required to pay third party and intercompany indebtedness at the closing of the business combination and net of transaction expenses), of which (A) $562 million will be paid in cash (the “Cash Consideration”) and (B) the remaining $749 million will be paid to the Sellers in the form of shares of common stock, par value $0.0001, of Target Hospitality, with (i) 25,800,000 of such shares delivered to the Algeco Seller pursuant to the Target Merger Agreement and (ii) 49,100,000 of such shares delivered to the Arrow Seller pursuant to the Signor Merger Agreement. The Cash Consideration shall come from the following sources: (1) proceeds available from the trust account, after giving effect to any and all redemptions; (2) the gross proceeds from new debt financing of at least $340 million; and (3) subject to the prior consent of the Sellers, the proceeds from the Equity Offering and Backstop Offering, if any. The Cash Consideration payable to the Algeco Seller will be increased to the extent any cash on the balance sheet of the combined business of Signor and Target, after giving effect to the business combination, the redemptions from the Trust Account, the proceeds from the Equity Offering and the proceeds from the Backstop Offering, if any, exceeds $5.0 million. In the event the Cash Consideration is increased, the Stock Consideration paid to Algeco Seller will be decreased on a dollar for dollar basis. Notwithstanding the foregoing, in no event shall the Cash Consideration be less than $562.0 million, but depending upon the amount of redemptions and additional equity raised through the Equity Offering and Backstop Offering, if any, the Cash Consideration and Stock Consideration will be adjusted accordingly.

 

Trust Account

 

The portion of the purchase price funded from the Equity Offering Backstop Offering, if any, and the trust account, which will be adjusted by an amount equal to the aggregate amount paid to each eligible shareholder of Platinum Eagle who has elected to redeem all or a portion of such shareholder’s shares of Platinum Eagle ordinary shares held by such shareholder at a per-share price, payable in cash, as calculated based on such shareholder’s pro rata share of the funds held in the trust account (the “Platinum Eagle Redemption Shares”), will not be less than $225 million. Prior to the closing of the business combination, none of the funds held in the trust account may be used or released except for the withdrawal of interest to pay income taxes and to effectuate a share redemption of the Platinum Eagle Redemption Shares.

 

Debt Financing

 

A portion of the business combination consideration will be financed with at least $340 million from new debt financings (the “Debt Financing”). For more information regarding the Debt Financing, see “Debt Commitment Letter” below and “Indebtedness – Debt Financing” elsewhere in this proxy statement/prospectus.

 

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Closing

 

The closing of the business combination is expected to take place at 9:00 a.m., local time, at the offices of Allen & Overy LLP, 1221 Avenue of the Americas, New York, NY 10020, or at such other place as mutually agreed to in writing, no later than the later of two (2) business days following the satisfaction or waiver of the conditions described below under “Conditions to Closing” or on such other date as mutually agreed to in writing. The day on which the closing of the business combination actually occurs is referred to herein as the “Closing Date.”

 

Definition of Material Adverse Effect

 

Company Material Adverse Effect

 

Under each Merger Agreement, certain representations and warranties of the Sellers with respect to the Target Parent and the Signor Parent and each of their respective subsidiaries (collectively, the “Acquired Subsidiaries” and together with Target Parent and Signor Parent, the “Acquired Companies”) are qualified in whole or in part by a material adverse effect standard for purposes of determining whether a breach of such representations or warranties has occurred. Pursuant to each Merger Agreement, a “Company Material Adverse Effect” means any change, effect, development, circumstance, condition, event, state of facts or occurrence that, (i) individually, or in the aggregate, has, or would reasonably be expected to have, a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of the Acquired Companies, taken as a whole; provided, however, that in no event would any of the following (or effect of the following) alone, or in combination, be deemed to constitute a Company Material Adverse Effect or shall be taken into account when determining whether a Company Material Adverse Effect exists or has occurred or is reasonably likely to exist or occur: (a) any changes in general United States or global economic conditions; (b) conditions (or changes therein) in any industry or industries in which the Acquired Companies operate; (c) general legal, tax, economic, political and/or regulatory conditions (or changes therein), including any changes in interest rates or other changes affecting financial, credit or capital market conditions; (d) any change in US GAAP or interpretation thereof; (e) any adoption, implementation, promulgation, repeal, modification, amendment, reinterpretation, change or proposal of any applicable Law of or by any Governmental Authority; (f) the execution and delivery of the applicable Merger Agreement or the consummation of the Transactions, or any actions expressly required by, or the failure to take any action expressly prohibited by, the terms of this Agreement; (g) any failure by Target or Signor, as applicable, to meet any internal or published projections, estimates or expectations of revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure by Target or Signor, as applicable, to meet its internal budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself (provided, however, in each case, that the facts and circumstances underlying any such change or failure may be considered in determining whether there has been a Company Material Adverse Effect); or (h) changes or effects arising out of changes in geopolitical conditions, acts of terrorism or sabotage, war (whether or not declared), the commencement, continuation or escalation of a war, acts of armed hostility, natural disaster, weather conditions or other force majeure events; provided, in each of clauses (a), (b), (c) and (h) of this definition, if such change, effect, development, circumstance, condition, event, state of facts or occurrence referenced has a disproportionate effect on the Acquired Companies (as compared to other participants in the industry in which the Acquired Companies operate), then such disproportionate effect may be considered in determining whether a Company Material Adverse Effect has occurred (but only to the extent of such disproportionate effect) or (ii) prevents or materially delays the applicable Seller from performing their material obligations under such Merger Agreement or consummation of the Transactions.

 

Acquiror Material Adverse Effect

 

Under each Merger Agreement, certain representations and warranties of the Acquirors are also qualified in whole or in part by a material adverse effect standard. Pursuant to the Merger Agreements, an “Acquiror Material Adverse Effect” means any change, effect, development, circumstance, condition, event, state of facts or occurrence that has or would reasonably be expected to, individually or in the aggregate, prevent or materially impair the ability of the Acquirors to perform their obligations under such Merger Agreement and related transaction documents or to consummate the business combinations.

 

Representations and Warranties

 

Under each Merger Agreement, each Seller makes customary representations and warranties relating to its qualification, organization, authorization and ownership of the equity interests of Target Parent or Signor Parent and their respective Acquired Subsidiaries, as applicable. In addition, each Seller makes customary representations and warranties relating to: qualification and organization; capitalization; no conflicts; financial statements; no undisclosed liabilities; compliance with laws, permits and regulatory matters; environmental laws and regulations; employee benefit plans; no material adverse effect; investigation; litigation; tax matters; labor and employment matters; intellectual property; real property; material contracts; insurance; finders’ and brokers’ fees; Foreign Corrupt Practices Act and anti-corruption; take-over statues; no rights agreements; affiliate transactions; investment purpose; independent investigation; and disclaimer of warranties.

 

Under each Merger Agreement, the Acquirors, jointly and severally, make customary representations and warranties relating to: qualification and organization; authorization; capitalization; no conflicts; Holdco liabilities; investment purpose; SEC filings and reports; internal controls; Nasdaq compliance; financial statements; trust account; no undisclosed liabilities; compliance with laws; absence of changes; finders’ and brokers’ fees; indebtedness; no discussions with respect to alternative transactions; approvals of shareholders; independent investigation; and disclaimer of warranties.

 

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Covenants and Agreements

 

Covenants of the Sellers

 

Each Seller makes certain covenants under each Merger Agreement with respect to itself and the Acquired Companies and their respective representatives under such Seller’s control, including, among other things, the following:

 

·From the date of such Merger Agreement until the earlier of the Closing Date, or the date, if any, on which such Merger Agreement is terminated, except (i) as specially set forth in the Schedules to such Merger Agreement, (ii) in connection with the transactions contemplated by such Merger Agreement, (iii) as required by law or (iv) as consented to in writing by Acquirors, such consent not to be unreasonably withheld, conditioned or delayed, such Seller shall cause each of the Acquired Companies under its control to conduct its business in all material respects in the ordinary course of business consistent with past practice and use commercially reasonable efforts to preserve intact its present business organizations and present relationships with customers, suppliers and other persons with whom it has material business relationships and agreed not to take, nor permit any such Acquired Company to take, certain actions specifically set forth in such Merger Agreement.

 

·In addition to the above, on or prior to the closing of the business combination, such Seller will use commercially reasonable efforts to: obtain customary and required lien releases; obtain the required consent of lenders under the existing Algeco Group credit facility and the release of any Acquired Subsidiary from its respective obligations (including guarantees) under such existing credit facility and the release of all related liens and other security interests on any property or assets of the Acquired Companies or the equity interests of Target Parent or Signor Parent, as applicable.

 

Covenants of the Acquirors

 

The Acquirors, subject to certain specified exceptions, made certain covenants under each Merger Agreement, including, among other things, the following:

 

·Between the date of each Merger Agreement and the earlier of the Closing Date, or the date, if any, on which such Merger Agreement is terminated, except (i) in connection with the transactions contemplated by such Merger Agreement, (ii) as required by law or (iii) as consented to in writing by the applicable Seller, such consent not to be unreasonably withheld, conditioned or delayed, the Acquirors shall conduct their business in all material respects in the ordinary course of business consistent with past practice and each of the Acquirors agree not to take certain actions specifically set forth in such Merger Agreement.

 

·As promptly as practicable after the Registration Statement is declared effective under the Securities Act, Platinum Eagle will hold a meeting of its shareholders in accordance with the terms and conditions of its governing documents to obtain the approvals required to effectuate the transactions contemplated by each Merger Agreement, including, amongst other things, providing its shareholders with the opportunity to redeem their respective shares of Parent Common Stock.

 

Mutual Covenants of the Sellers and Acquirors

 

The Sellers and the Acquirors, subject to certain specified exceptions, made certain mutual covenants under each Merger Agreement, including, among other things, to not, and to cause their respective affiliates and representatives to not, directly or indirectly, commence, initiate or renew any discussion, proposal, offer or due diligence investigation with a third party, other than as contemplated by the respective Merger Agreements, related to a business combination or possible transaction of any kind with a target and shall immediately cease all discussions and negotiations with any third party that may be ongoing with respect to a possible business combination, and shall cooperate in connection with the following actions:

 

·afford to the other and its representatives reasonable access, during normal business hours and upon reasonable advance notice, to their respective properties, offices, books, contracts, commitments, personnel and records;

 

·furnish reasonably promptly to the other information (financial or otherwise) concerning its business, properties and personnel as reasonably requested;

 

·keep confidential any non-public information;

 

·provide prompt notice of any communication from any governmental authority with respect to the transaction, commencement or threat of legal proceedings or any occurrence or impending occurrence of a Company Material Adverse Effect or an Acquiror Material Adverse Effect;

 

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·prepare and file with the SEC materials that shall include this proxy statement/prospectus to be filed with the SEC as part of the Registration Statement and sent to the shareholders of Platinum Eagle relating to the shareholder’s meeting;

 

·prepare and file with the SEC the Registration Statement, in which this proxy statement will be included as a prospectus, use commercially reasonable efforts to cause the Registration Statement and this proxy statement to comply with the rules and regulations promulgated by the SEC, and have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing and to keep the Registration Statement effective as long as is necessary to consummate the transactions;

 

·use commercially reasonable efforts to obtain all necessary state securities law or “blue sky” permits and approvals required to carry out the Transactions, and furnish all reasonably requested information in connection with any such action;

 

·cause this proxy statement/prospectus to be mailed to each shareholder of record promptly after the Registration Statement is declared effective under the Securities Act;

 

·ensure that information supplied, including in this proxy statement, does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, and promptly notify the other party upon discovery of any such untrue or misleading information and promptly file any required amendment or supplement with respect thereto;

 

·use commercially reasonable efforts to obtain all consents, authorizations, orders and approvals necessary for execution and delivery of such Merger Agreement and performance of obligations thereunder;

 

·disclose to the other party in advance of any applicable filing, submission or attendance, all analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals by or on behalf of either party before any governmental authority in connection with the transactions contemplated by such Merger Agreement (but, for the avoidance of doubt, not including any interactions between the applicable Seller or Acquired Companies with governmental authorities in the ordinary course of business, any disclosure that is not permitted by law or any disclosure containing confidential information);

 

·use commercially reasonable efforts to take (or cause to be taken) all actions, and to do (or cause to be done) all things necessary, proper or advisable such that prior to the closing of the business combination, Arrow Bidco may consummate the Debt Financing;

 

·shall not issue or cause the publication of any press release or other public announcement with respect to such Merger Agreement or the transactions contemplated thereby without the prior consent of the other parties unless such press release or public announcement is required by applicable law;

 

·maintain and sponsor company benefit plans of the applicable Acquired Companies without material interruption for the benefit of employees who remain employed by such Acquired Companies or any successor entity of Platinum Eagle;

 

·use commercially reasonable efforts to adopt a new long-term incentive plan and related new benefit plans for Target Hospitality to grant, on a discretionary basis, any benefits not covered by the existing company benefit plans;

 

·pay all transfer, documentary, sales, use, stamp, registration, recording, value added and other such taxes, fees and charges (including any penalties and interest) incurred in connection with the Merger Agreement, which shall be borne and paid equally by the Acquirors and each Seller, as applicable;

 

·use commercially reasonable efforts to take such actions to expeditiously satisfy the closing conditions, as described under “Conditions to Closing” below;

 

·execute and deliver such additional documents, instruments, conveyances and assurances, and take such actions as may be reasonably required to carry out the provisions of such Merger Agreement and give effect to the transactions; and

 

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Conditions to Closing

 

Conditions to Obligations of the Parties

 

The obligation of each Party to consummate the transactions contemplated by each Merger Agreement are subject to the satisfaction at or prior to the closing of each of the following conditions:

 

·there being no governmental order, statute, rule or regulation enjoining or prohibiting the consummation of the transactions contemplated by such Merger Agreement;

 

·there being no pending legal proceedings by any governmental authority seeking to restrain or prohibit the consummation of the transactions contemplated by such Merger Agreement or any other transaction contemplated thereby;

 

·the Debt Financing having been obtained on or immediately prior to the closing;

 

·applicable approvals of the shareholders of Platinum Eagle having been obtained;

 

·with respect to the Target Merger Agreement only, the required consent under the Algeco Group credit facility having been obtained;

 

·the ancillary agreements listed in each Merger Agreement and described further under “Related Agreements” below having been executed and delivered by each party thereto and the Founders shall have deposited their shares of common stock of Platinum Eagle with the Escrow Agent pursuant to the terms and conditions of the Escrow Agreement;

 

·with respect to the Target Merger Agreement only, the transactions contemplated by the Signor Merger Agreement having been consummated.

 

·with respect to the Signor Merger Agreement only, the transactions contemplated by the Target Merger Agreement having been consummated.

 

·the initial designees having been appointed to the Board of Directors of Platinum Eagle.

 

Conditions to Obligations of Sellers

 

The obligations of each Seller to consummate the transactions contemplated by the applicable Merger Agreement are subject to the satisfaction at or prior to the closing of each of the following conditions:

 

·certain representations and warranties of the Acquirors with respect to capitalization of Platinum Eagle and the Holdco Acquiror being true and correct in all respects as of the date of such Merger Agreement and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date and except for any failures of any representations and warranties to be true and correct that are de minimis in the aggregate);

 

·certain other representations and warranties of the Acquirors with respect to organization and qualification, capitalization of the Acquirors, no Holdco Acquiror liabilities and certain finders’ and brokers’ fees, being true and correct in all material respects (without giving effect to any limitation as to materiality or material adverse effect) as of the date of such Merger Agreement and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date);

 

·all other representations and warranties of the Acquirors being true and correct (without giving effect to any limitation as to materiality or material adverse effect) as of the date of the Merger Agreement and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except for where any failures of any such representation or warranty to be true and correct would not reasonably be expected to have, individually or in the aggregate, an Acquiror Material Adverse Effect;

 

·each of the covenants of the Acquirors in such Merger Agreement to be performed as of or prior to the Closing Date having been performed in all material respects;

 

·the Acquirors having delivered, on the Closing Date, a closing certificate signed by an officer of the Acquirors in relation to the satisfaction of certain conditions;

 

·each of the Acquirors having delivered, on the Closing Date, a certificate signed by the Secretary or any duly authorized officer of such Acquiror, attesting to the corporate documents and corporate authorizations;

 

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·a minimum of $225 million of gross cash proceeds available from the trust account, the Equity Offering and Backstop Offering, if any;

 

·no Acquiror Material Adverse Effect having occurred;

 

·Platinum Eagle having domesticated as a Delaware corporation, with the Certificate of Incorporation of Platinum Eagle having been filed with the Delaware Secretary of State and the Bylaws of Platinum Eagle having been adopted by its Board of Directors;

 

·the Certificate of Incorporation and Bylaws of Holdco Acquiror in the forms filed with the Delaware Secretary of State and attached as exhibits to each Merger Agreement not having been amended without the consent of the applicable Seller;

 

·Platinum Eagle having delivered to each Seller the written resignations of certain specified officers and directors of Platinum Eagle effective as of the Closing Date.

 

Conditions to Obligations of the Acquirors

 

The obligations of the Acquirors to consummate the transactions contemplated by each Merger Agreement are subject to the satisfaction at or prior to the Closing Date of each of the following conditions:

 

·certain representations and warranties of the applicable Seller with respect to capitalization of the applicable Acquired Companies being true and correct in all respects as of the date of such Merger Agreement and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date and except for any failures of any representations and warranties to be true and correct that are de minimis in the aggregate);

 

·certain other representations and warranties of each Seller with respect to such Seller's qualification, organization, authorization and ownership of the equity interests of the applicable Acquired Companies, the organization and qualification, capitalization of the applicable Acquired Companies and certain finders’ and brokers’ fees, being true and correct in all material respects (without giving effect to any limitation as to materiality or material adverse effect) as of the date of such Merger Agreement and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date);

 

·all other representations and warranties of the applicable Seller being true and correct (without giving effect to any limitation as to materiality or material adverse effect) as of the date of such Merger Agreement and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except for where any failures of any such representation or warranty to be true and correct would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;

 

·each of the covenants of the applicable Seller in such Merger Agreement to be performed as of or prior to the Closing Date having been performed in all material respects;

 

·each of the Sellers having delivered, on the Closing Date, a closing certificate signed by an officer of such Seller in relation to the satisfaction of certain conditions;

 

·each of the Sellers having delivered, on the Closing Date, a certificate signed by the Secretary or any duly authorized officer of such Seller, attesting to the corporate documents and corporate authorizations;

 

·no Company Material Adverse Effect having occurred;

 

·each of the Sellers having delivered one or more duly completed and executed FIRPTA certificates from each Seller;

 

·on the Closing Date, prior to giving effect to the proceeds from the trust account, debt financing, Equity Offering and Backstop Offering, if any, there shall be $5.0 million of cash or cash equivalents available at the combined businesses of Target and Signor;

 

·each Acquired Company shall have been released with no further liability from certain of the affiliate agreements specifically listed on the Schedules to the Merger Agreement.

 

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Indemnification

 

The Merger Agreements respectively contain certain indemnification obligations of the Sellers to indemnify and defend the Acquirors and their respective representatives (collectively, the “Indemnitees”) against losses incurred, sustained by or imposed upon the Indemnitees or Target Hospitality as a result of: (i) any breach of certain representations and warranties of the Sellers specifically set forth in the Merger Agreements pertaining to authorization, ownership of equity interests, no conflicts, and, solely with respect to the transactions contemplated by the Target Merger Agreement, or, any action directly relating to or arising from the events or circumstances that resulted in such breach (disregarding any references to materiality or Company Material Adverse Effect when determining whether a breach occurred); (ii) any environmental liability related to the operation of the Acquired Companies prior to the Closing Date; and (iii) any breach of certain tax representations or any action directly relating to or arising from the events, or circumstances that resulted in such breach.

 

The Acquirors and Target Hospitality are required to take all commercially reasonable actions to mitigate any damages. The Sellers’ indemnification obligations will be determined net of any amount actually recovered under any indemnified party’s insurance policies or from other collateral sources and any cash tax benefits actually realized by such indemnified party. Each Sellers’ indemnification obligations, which are several and not joint under the respective Merger Agreements, are payable only if the total amount of such losses under such Merger Agreement equals or exceeds $500,000, in which cash the applicable Seller would be liable for the entire amount of the indemnifiable losses. Algeco Seller would not be liable for any liability incurred under clause (i) above exceeding $82.0 million and, incurred under clause (ii) above exceeding $6,262,395; provided that in no event shall the aggregate amount of indemnifiable losses under clauses (i) and (ii) exceed $82.0 million; provided further that any losses incurred under clause (iii) above shall be uncapped, except that any amounts actually paid by the indemnifying parties with respect to losses under clauses (i) and (ii) shall be taken into account in determining such limitations. Arrow Seller shall would not be liable for any liability exceeding $49.1 million; provided that in no event shall Arrow Seller’s liability under clause (ii) exceed $3,737,605. In no event shall the Sellers be liable for any consequential, indirect, special, exemplary, punitive, incidental or enhanced damages, or other lost business or diminution in value.

 

Termination

 

Each Merger Agreement may be terminated at any time, but not later than the Closing Date, by written notice by the party effecting such termination under each of the following circumstances:

 

·by mutual written consent of the applicable Seller and the Acquirors;

 

·by either the applicable Seller or the Acquirors if the transactions contemplated by such Merger Agreement have not been consummated on or before such date that is 120 days from the Closing Date (the “Outside Date”); provided that such Outside Date may be extended for 30 days by mutual written consent of such Seller and Acquirors;

 

·by the applicable Seller, if the Acquirors have breached any representation or warranty or have failed to comply with any covenant or agreement, in each case that would cause any of the conditions to closing not to be satisfied, and such condition is incapable of being satisfied by the Outside Date, provided, however, that such Seller is not then in material breach of such Merger Agreement;

 

·by the Acquirors, if the applicable Seller has breached any representation or warranty or has failed to comply with any covenant or agreement, in each case that would cause any of the conditions to closing not to be satisfied, and such condition is incapable of being satisfied by the Outside Date, provided, however, that the Acquirors are not then in material breach of such Merger Agreement;

 

·by either the applicable Seller or the Acquirors in the event of the issuance of a final, non-appealable order by a governmental authority restraining or prohibiting the transactions;

 

·by either the applicable Seller or the Acquirors if the required approvals of the shareholders of Platinum Eagle are not obtained at the shareholders meeting of Platinum Eagle duly convened therefor (unless such meeting has been adjourned, in which case at the final adjournment thereof) at which a vote on the transactions contemplated by such Merger Agreement was taken; and

 

·by the Acquirors if each Seller has not, within one (1) hour following execution of this Agreement, delivered evidence reasonably satisfactory to the Acquirors that each Seller, as holder of the equity interests being acquired, has received and approved the applicable Merger Agreement and the transactions contemplated thereby.

 

Effect of Termination

 

In the event of proper termination of each Merger Agreement, such Merger Agreement will be of no further force or effect and the transactions contemplated thereby will be abandoned, except that, among other things:

 

·the obligation of each party to pay fees and expenses incurred by such party in connection with such Merger Agreement will survive;

 

·the respective obligations of the parties to keep non-public information confidential will survive; and

 

·each party’s liability for any breach by such party of the terms and provisions of such Merger Agreement prior to such termination and for fraud will survive.

 

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Extension; Waiver

 

At any time prior to the closing of the business combination, either the applicable Seller or the Acquirors may:

 

·extend the time for performance of any of the obligations or other acts of the other party;

 

·waive any inaccuracies in the representations and warranties contained in such Merger Agreement; or

 

·waive compliance with any of the agreements or conditions contained in such Merger Agreement;

 

provided, however, that such extension or waiver shall not operate as an extension or waiver of, or estoppel with respect to, any subsequent or other failure.

 

Non-Survival of Representations and Warranties

 

Except for the representations and warranties specifically covered by the indemnification provisions of the respective Merger Agreements, none of the representations and warranties in each Merger Agreement or in any schedule, instrument or other document delivered pursuant to such Merger Agreement shall survive the Closing Date; provided, however, this shall not limit any covenant or agreement of the parties that by its terms contemplates performance after the Closing Date (as defined in such Merger Agreement).

 

Expenses

 

Except as otherwise expressly provided in each Merger Agreement, until the closing of the business combination, or in the event such Merger Agreement is terminated, all expenses incurred in connection with such Merger Agreement and the transactions contemplated thereby shall be paid by the party incurring such expenses. Following the Closing, all transaction expenses specifically agreed to by the parties shall be paid by the Acquirors and Target Hospitality from the gross proceeds of the transactions contemplated by the Merger Agreements.

 

Amendments

 

Each Merger Agreement may only be amended, modified and supplemented by an instrument in writing signed by each of the parties.

 

Governing Law; Consent to Jurisdiction; Waiver of Jury Trial

 

Each Merger Agreement is governed by and construed in accordance with the law of the State of Delaware.

 

With respect to any proceeding or action based upon, arising out of or related to each Merger Agreement or the transactions contemplated thereby, each party irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, only to the extent such Court does not have subject matter jurisdiction, the Federal court of the United States of America sitting in Delaware), in respect of any action, suit or proceeding arising in connection with such Merger Agreement, and agrees that any action, suit or proceeding may be brought only in such court.

 

The parties to each Merger Agreement agreed to waive a trial by jury in respect of any claim, demand or action directly or indirectly arising out of or relating to such Merger Agreement or transactions contemplated thereby.

 

Related Agreements

 

Debt Commitment Letter

 

On November 13, 2018, in connection with the execution of the Merger Agreements, the Holdco Acquiror entered into the Debt Commitment Letter pursuant to which the Commitment Parties agreed to provide (or to have certain of their affiliates provide), subject to satisfaction of customary closing conditions, including the closing of the business combination, new credit facilities (the “New Credit Facilities”) for the purpose of financing a portion of the consideration payable, fees and expenses incurred by the Acquirors in connection with the business combination and for general corporate purposes. The New Credit Facilities provide for credit facilities in the aggregate principal amount of up to $425 million, consisting of: (i) a senior secured asset-based revolving credit facility in the aggregate principal amount of $125 million (the “New ABL Facility”), to be made available to Arrow Bidco and certain of its U.S. wholly owned subsidiaries (collectively, the “Borrowers”), and (ii) senior secured increasing rate loans in an aggregate principal amount of up to $300 million (the “Bridge Facility”), made available to Arrow Bidco, to the extent that Arrow Bidco issues less than $300 million in gross cash proceeds of second-lien senior secured notes (the “Notes”) in a Rule 144A offering or other private placement.

 

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The obligations of the Commitment Parties to provide the Debt Financing under the Debt Commitment Letter are subject to a number of conditions, including (1) the execution and delivery of definitive documentation consistent with the terms of the Debt Commitment Letter; (2) the simultaneous or substantially concurrent completion of the business combination in accordance with the Merger Agreements (without giving effect to any amendment, waiver, consent or other modification thereof that is materially adverse to the interests of the lenders (in their capacities as such) unless it is approved by the Commitment Parties); (3) since the date of the Merger Agreements, no Company Material Adverse Effect (as described under “The Business Combination Proposal — Definition of Company Material Adverse Effect — Company Material Adverse Effect” in this proxy statement/prospectus) shall have occurred and be continuing; (4) the Company having made a cash equity contribution to Holdco Acquiror of at least $225 million, and the cash equity contributions made by the Company, plus the stock consideration under the Merger Agreements, constituting at least $750 million of acquisition consideration; (5) delivery of certain audited, unaudited and pro forma financial statements; (6) as a condition to the availability of the Bridge Facility, the Borrower having afforded the investment banks a marketing period of 15 consecutive business days (subject to certain blackout dates) following receipt of a preliminary offering memorandum, which includes certain financial statements; (7) payment of all applicable invoiced fees and expenses; (8) the receipt of documentation and other information about the borrower and guarantors required by regulatory authorities under applicable “know your customer”, “beneficial ownership” and anti-money laundering rules and regulations (including the PATRIOT Act); (9) the execution and delivery of guarantees by certain guarantors and the taking of certain actions necessary to establish and perfect a security interest in specified items of collateral; (10) the accuracy in all material respects of specified representations and warranties in the loan documents under which the Debt Financing will be provided and of certain representations and warranties in the Merger Agreements; (11) delivery of certain customary closing documents; and (12) the receipt of consent of the requisite lenders under the existing Algeco Group credit facility to the sale of Target and related transactions.

 

The obligations of the Commitment Parties to provide the Debt Financing under the Debt Commitment Letter will terminate at the earliest of (1) April 12, 2019; (2) the termination of either of the Merger Agreements without the consummation of the business combination having occurred; and (3) the consummation of the business combination without the use of the Debt Financing.

 

The Holdco Acquiror has agreed to pay BofA Merrill Lynch for its services in connection with the business combination an aggregate fee of $        million which is contingent upon the completion of the business combination. The Holdco Acquiror also has agreed to reimburse BofA Merrill Lynch and Deutsche Bank Securities Inc. (“Deutsche Bank”) for their respective expenses incurred in connection with their engagement and to indemnify BofA Merrill Lynch and Deutsche Bank, any controlling person of BofA Merrill Lynch and Deutsche Bank and each of their respective directors, officers, employees, agents and affiliates against specified liabilities, including liabilities under the federal securities laws.

 

BofA Merrill Lynch, Deutsche Bank and their respective affiliates comprise full service securities firms and commercial banks engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of their businesses, BofA Merrill Lynch, Deutsche Bank and their respective affiliates invest on a principal basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in the equity, debt or other securities or financial instruments (including derivatives, bank loans or other obligations) of the Company, the TDR Investor, Algeco Global, Holdco Acquiror and certain of their respective affiliates.

 

BofA Merrill Lynch, Deutsche Bank and their respective affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to the Company and certain of its affiliates and/or portfolio companies and have received or in the future may receive compensation for the rendering of these services, including having acted or acting as an underwriter for the initial public offering of the Company. Pursuant to the Debt Commitment Letter, BofA Merrill Lynch has agreed to act as administrative agent, joint lead arranger and joint bookrunner and lender for up to an aggregate $125 million of financing. In connection with their financing commitments under the Debt Commitment Letter, BofA Merrill Lynch and certain of its affiliates and Deutsche Bank and certain of its affiliates each currently expect to receive an aggregate fee of approximately $         million, plus an aggregate fee of approximately $         million in connection with a notes offering for Arrow Bidco in connection with the transactions. In addition, pursuant to an underwriting agreement entered into by the Company, BofA Merrill Lynch and Deutsche Bank Securities Inc. in connection with the Company’s initial public offering, BofA Merrill Lynch and Deutsche Bank agreed to defer the principal portion of their underwriting fees until the Company’s consummation of an initial business combination. Of the approximate $         million in deferred underwriting fees, each of Deutsche Bank and BofA Merrill Lynch are entitled to approximately     % of such fees in the event the Company consummates the business combination.

 

In addition, BofA Merrill Lynch, Deutsche Bank and their affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to Algeco Global and certain of its affiliates and/or portfolio companies and have received or in the future may receive compensation for the rendering of these services, including having acted or acting as administrative agent, collateral agent, lead arranger and lender to Algeco Global in connection with Algeco Global’s $1.1 billion revolving credit facility.

 

In addition, BofA Merrill Lynch, Deutsche Bank and their affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to the TDR Investor and Holdco Acquiror and certain of their respective affiliates and/or portfolio companies and have received or in the future may receive compensation for the rendering of these services.

 

Subscription Agreements

 

In order to finance a portion of the Cash Consideration, the Company entered into subscription agreements (the “Subscription Agreements”), each dated as of November 13, 2018, with certain institutions and accredited investors (the “Investors”), pursuant to which, among other things, the Company agreed to issue and sell in private placements an aggregate of up to 8,500,000 Class A ordinary shares to the Investors for up to $10.00 per share (the “Equity Offering”). The Equity Offering is expected to close immediately prior to the Closing.

 

Earnout Agreement

 

As a condition precedent to the closing of the business combination, Arrow Seller, Target Hospitality and the Founder Group (as defined in the Earnout Agreement) will enter into an Earnout Agreement, substantially in the form of Exhibit B to the Signor Merger Agreement. Pursuant to the terms and conditions of the Earnout Agreement, on the Closing Date, and depending upon the delivery of the Minimum Proceeds by Platinum Eagle and the aggregate amount of gross proceeds at Closing, certain Founder Shares and additional shares of Target Hospitality will be deposited into an escrow account at Closing at released to the Founder Group and Arrow Seller, if applicable, upon the occurrence of certain triggering events and in accordance with the terms and conditions of the Earnout Agreement.

 

If Platinum Eagle delivers at least the Minimum Proceeds, the Founder Group shall be entitled to retain at Closing a minimum of 3 million Founder Shares (as defined in the Earnout Agreement) (if Gross Proceeds equal $225 million) and a maximum of 6 million Founder Shares (if Gross Proceeds equal $325 million) and if Gross Proceeds are more than $225 million and less than $325 million, such number shall be pro-rated such that the Founder Shares shall be calculated as (i) 3 million plus (ii) the product of (a) 3 million multiplied by (b) a fraction, the numerator of which is the amount by which Gross Proceeds exceeds $225 million and the denominator of which is $100 million. The balance of the Founder Shares not retained at Closing shall be placed in an escrow account at Closing to be released to the Founder Group in accordance with the terms and conditions of the Earnout Agreement as follows: at any time during the period of three years following the Closing Date, (i) if the closing price of the shares of Target Hospitality exceeds $12.50 per share for 20 out of any 30 consecutive trading days, 50% will be released to the Founder Group and (ii) if the closing price of the shares of Target Hospitality exceeding $15.00 per share for 20 out of any 30 consecutive trading days, the remaining 50% will be released to the Founder Group.

 

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In the event Platinum Eagle delivers less than the Minimum Proceeds, and the Sellers have agreed in their sole discretion to proceed with the Transaction, then the Founder Group shall retain 2 million Founder Shares at Closing, which will be deemed “Upfront Shares”, with the balance of 6.045 million Founder Shares will be placed in an escrow account, half of which will be released to the Founder Group at any time during the period of three years following the Closing Date, (i) if the closing price of the shares of Target Hospitality exceeds $12.50 per share for 20 out of any 30 consecutive trading days, 50% will be released to the Founder Group and (ii) if the closing price of the shares of Target Hospitality exceeding $15.00 per share for 20 out of any 30 consecutive trading days, the remaining 50% will be released to the Founder Group. The remaining half of the 6.045 million Founder Shares in escrow shall be released on 50/50 basis to the Founder Group and Arrow Seller in the event of no Backstop Offering and, in the event of a Backstop Offering, shall be delivered on a pro rata basis to the party or parties who deliver(s) the cash to fund such Backstop Offering, in either case to be released on the same triggering events as noted above. In addition to the foregoing, in the event of an Equity Offering and the issuance of up to 1.0 million additional Founder Shares by Target Hospitality in connection therewith, all of such additional Founder Shares shall be held in escrow at Closing and released to the Founder Group and Arrow Seller on a 50/50 basis in accordance with the same triggering events as above.

 

Upon the expiration of the three year earnout period, any shares remaining in escrow that were not released in accordance with the Earnout Agreement will be forfeited and returned to the Company to be held in treasury.

 

The parties to the Earnout Agreement are obligated to make customary representations, warranties and covenants with respect to authority, due authorization and enforceability. In addition, the Founders will make customary representations with respect to ownership of their shares and Target Hospitality, after giving effect to the business combination, will make customary representations with respect to the valid issuance of the shares and warrants, no conflicts, and compliance with laws and compliance with the Nasdaq marketplace rules. Arrow Seller will make standard accredited investor representations and warranties.

 

The Earnout Agreement will be subject to termination upon: (i) mutual written consent of the parties; (ii) termination of the Signor Merger Agreement; or (iii) the earlier of the expiration of the time periods set forth therein and the depletion of all shares from the escrow account.

 

Escrow Agreement

 

As a condition precedent to the closing of the business combination, pursuant to the terms and conditions of the Earnout Agreement described above, Target Hospitality, the Founder Group (as defined in the Escrow Agreement), Arrow Seller and Continental Stock Transfer & Trust Company, as escrow agent, will enter into an Escrow Agreement, substantially in the form of Exhibit C to each Merger Agreement. The Escrow Agreement provides for, among other things, restricting the escrow shares in an escrow account until such time as the escrow shares are to be released by the escrow agent to the Founder Group and/or Arrow Seller, as the case may be, upon the occurrence of certain triggering events as specifically set forth in the Earnout Agreement. The Founder Group and Arrow Seller will agree to the appointment of an escrow agent to hold the Founder Group’s shares which are subject to the Earnout Agreement in escrow (collectively, the “escrow shares”) and administer release thereof in accordance with the terms and conditions of the Earnout Agreement. The escrow agent will hold the escrow shares as a book-entry position registered in the name of the escrow agent until any such shares are released in accordance with the Earnout Agreement. All voting rights and other shareholder rights with respect to the escrow shares shall be suspended until such shares are released from the escrow account.

 

The escrow agent will release the escrow shares only in accordance with the joint written instructions executed by each Founder party to the Escrow Agreement and Arrow Seller, in the form of a release notice contemplated by the Earnout Agreement, which notices shall in each case be promptly issued upon the occurrence of each triggering event as set forth in the Earnout Agreement. The escrow agent will have no obligation to determine whether a triggering event under the Earnout Agreement has occurred or is contemplated to occur. The escrow agent will have only those duties as are specifically and expressly provided in the Escrow Agreement, which will be deemed purely ministerial in nature. The escrow agent will keep proper books of record and account in which full and correct entries will be made of all release activity in the escrow account. The escrow agent will not be liable for any error of judgment, except for its own gross negligence, willful misconduct or actions taken in bad faith (each as determined by a final judgment of a court of competent jurisdiction). Absent gross negligence, bad faith or willful misconduct, the escrow agent may rely upon and will not be liable for acting or refraining from acting upon any written document furnished to it and reasonably believed by it to be genuine.

 

In the event that the escrow agent is uncertain or believes there is some ambiguity as to its duties or rights hereunder or receives instructions, claims or demands from any party that, in its opinion, conflict with any of the provisions of the Escrow Agreement, the escrow agent will be entitled to refrain from taking any action and its sole obligation will be to keep safely all property held in escrow until it is given a joint direction in writing by the Founder Group and Arrow Seller that eliminates such ambiguity or uncertainty to the satisfaction of the escrow agent or by a final and non-appealable order or judgment of a court of competent jurisdiction.

 

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The Escrow Agreement will terminate on the earlier of the termination of the Earnout Agreement and five calendar days after all the escrow shares have been released. The escrow agent may resign from its duties or obligations by giving 30 days’ advance notice in writing of such resignation. By joint written instructions, the Founder Group and Arrow Seller will have the right to terminate their appointment of the escrow agent upon 30 days’ notice to the escrow agent.

 

The escrow agent will be entitled to compensation for its services under the Escrow Agreement as escrow agent and for reimbursement for its reasonable, documented out-of-pocket costs and expenses incurred by it in performance of its duties.

 

The escrow agent will be liable for any losses of the Founder Group or Arrow Seller only to the extent such losses are determined by a court of competent jurisdiction to be a result of the escrow agent’s bad faith, gross negligence or willful misconduct; provided, however, that any liability of the escrow agent with respect to, arising from or arising in connection with the Escrow Agreement, or from all services provided or omitted to be provided under the Escrow Agreement, will not exceed the aggregate value of the escrow shares deposited with the escrow agent. The Founder Group and Arrow Seller will jointly and severally indemnify and hold the escrow agent harmless from and against, and the escrow agent will not be responsible for, any and all losses arising out of or attributable to the escrow agent’s duties under the Escrow Agreement, including the reasonable costs and expenses of defending itself.

 

Registration Rights Agreement

 

As a condition precedent to the closing of the business combination, Target Hospitality, Arrow Seller, the Founder Group, Algeco Seller and certain other parties named on the signature pages thereto, will enter into an amended and restated registration rights agreement (the “Registration Rights Agreement”) that will amend and restate that certain registration rights agreement, dated January 11, 2018 by and among Platinum Eagle and certain of its initial investors and provides such initial investors, the Arrow Seller and Algeco Seller with certain demand, shelf and piggyback registration rights covering all shares of Target Hospitality common stock and warrants to purchase shares of Target Hospitality common stock owned by each holder, until such shares or warrants, as applicable, cease to be “Registrable Securities” as defined in the Registration Rights Agreement. The Registration Rights Agreement will provide each of Arrow Seller, Algeco Seller and certain of the initial investors (the “Initiating Holders”) the right to request an unlimited number of demands, at any time following the Closing Date and customary shelf registration rights, subject to certain conditions. In addition, the Registration Rights Agreement will grant each of Arrow Seller, Algeco Seller and the Initiating Holders, piggyback registration rights with respect to registration statements filed subsequent to the Closing Date. Target Hospitality will be responsible for all Registration Expenses (as defined in the Registration Rights Agreement) in connection with any demand, shelf or piggyback registration by any of the Arrow Seller, Algeco Seller or the Initiating Holders. In addition, the Registration Rights Agreement will contain certain lock-up provisions.

 

Employment Agreements

 

Prior to the completion of the business combination, Target Hospitality will enter into employment agreements with certain of its key executive officers. Descriptions of the employment agreements are provided under the section entitled “Management of Target Hospitality Following the Business Combination.”

 

Background of the Business Combination

 

The terms of the business combination are the result of negotiations between the representatives of Platinum Eagle, Algeco Scotsman, Arrow BidCo, Target, and TDR Capital. The following is a brief description of the background of these negotiations and the resulting business combination.

 

Platinum Eagle is a blank check company formed in Delaware on January 11, 2018 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have sought to capitalize on the substantial deal sourcing, investing and operating expertise of our management team to identify and combine with businesses with high growth potential.

 

On January 17, 2018, we consummated our initial public offering, or IPO, of 32,500,000 units, with each unit consisting of one share of our common stock and one-third of one warrant. Each whole warrant entitles the holder to purchase one Class A ordinary share of our common stock at an exercise price of $11.50 per full share. The units in our IPO were sold at an offering price of $10.00 per unit, generating total gross proceeds of $325,000,000. Prior to the consummation of our IPO, the Sponsor and Harry E. Sloan (together the “Founder Group”) purchased 8,125,000 founder shares (after various adjustments) for an aggregate purchase price of $25,000, or approximately $0.003 per share.

  

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Simultaneously with the consummation of our IPO, we consummated the private sale of 5,333,334 private placement warrants, each of which entitles the holder to purchase one Class A ordinary share at an exercise price of $11.50 per share, to the Founder Group and James A. Graf, Joshua Kazam and Fredric Rosen (the “Independent Directors”) at a price of $1.50 per warrant, generating gross proceeds of $8,000,000. After deducting underwriting discounts and commissions and offering expenses, $325,000,000 of the proceeds of our IPO and the private placement of the sponsor warrants (or $10.00 per unit sold in our IPO) was placed in a trust account with Continental Stock Transfer & Trust Company as trustee. The trust proceeds are invested in U.S. government treasury bills with a maturity of 180 days or less or money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, which invest only in direct U.S. government treasury obligations.

 

Except for a portion that may be released to us to pay working capital expenses up to $250,000 per calendar year and taxes, none of the funds held in the trust account will be released until the earlier of the completion of our initial business combination and the redemption of 100% of our public shares if we are unable to consummate a business combination by January 17, 2020. As of September 30, 2018, no cash had been withdrawn from the trust account for taxes and no funds had been withdrawn for working capital purposes. As of September 30, 2018, there was approximately $476,554 held outside the trust account available for working capital purposes and approximately $167,768 in current liabilities and payables, excluding the $11,375,000 deferred underwriting fee.

 

Prior to the consummation of our IPO, neither Platinum Eagle, nor anyone on its behalf, engaged in any substantive discussions, directly or indirectly, with respect to an initial business combination with Platinum Eagle.

 

After our IPO, our officers and directors commenced an active search for prospective businesses or assets to acquire in our initial business combination. Representatives of Platinum Eagle were contacted by, and representatives of Platinum Eagle contacted, numerous individuals, financial advisors and other entities who offered to present ideas for business combination opportunities. Our officers and directors and their affiliates, as well as our founding investor Harry E. Sloan, also brought to our attention target business candidates.

 

During this search process, Platinum Eagle reviewed more than 25 acquisition opportunities and entered into discussions with more than 10 potential target businesses or their representatives. In addition to Target Hospitality, we delivered draft term sheets to three other prospective targets and executed a term sheet with one of those other prospective targets. We ultimately determined to abandon each of our other potential acquisition opportunities either because (i) we could not pre-empt a competitive auction process or alternative transaction path (e.g., a standalone IPO); (ii) the target did not have, or could not quickly and easily prepare, SEC-compliant financial statements, or extensive structuring or regulatory consideration would delay a transaction or drive unacceptable uncertainty; or (iii) we concluded that the target business or the terms of a potential business combination would not be a suitable acquisition for Platinum Eagle.

 

On February 27, 2018, Jeff Sagansky, Chief Executive Officer of Platinum Eagle met with Stephen Robertson and Gary Lindsay of TDR Capital in Baltimore, Maryland while on a break during a board meeting for WillScot Corp. During the meeting, Mr. Robertson explained to Mr. Sagansky that after the sale of William Scotsman, Target, an Algeco subsidiary, was the lone United States-based asset of Algeco and did not fit with the core direction of Algeco. Mr. Robertson inquired as to whether Mr. Sagansky and Platinum Eagle would have any interest in pursuing Target as a potential business combination target and creating a stand-alone public company opportunity for Target. Mr. Sagansky replied that he would discuss the opportunity with the rest of the Platinum Eagle team.

 

At that time and during the next several months, Platinum Eagle was pursuing several other business combination targets and was particularly focused on one target, with which it entered into a non-binding term sheet, completed a “testing the waters” roadshow and solicited certain private placement commitments. After Platinum Eagle and the other business combination target terminated discussions in late March, 2018, Mr. Sagansky contacted Mr. Robertson, and Mr. Lindsay, about the Target opportunity and suggested that they share information.

 

On March, 24, 2018, Mr. Lindsay sent a detailed memo about the opportunity in the commercial accommodations sector and details regarding Target and several acquisition opportunities, including Signor. Mr. Lindsay explained the growth in the sector as well as the myriad acquisition opportunities and other vertical opportunities the company was pursuing.

 

On April 16, 2018, Platinum Eagle and TDR entered into a non-disclosure agreement whereby TDR agreed to share information concerning Target as well as information related to Signor, which TDR was pursuing.

 

Following the execution of the non-disclosure agreement, Mr. Sagansky and Mr. Baker had several telephone discussions with Mr. Lindsay regarding a possible business combination with Platinum Eagle. The content of those conversations covered merits of the Target business, the amount of capital required to make a transaction work and considerations pertaining to TDR’s potential acquisition of Signor.

 

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On May 15, 2018, Mr. Sagansky and James Graf, Board Member of Platinum Eagle, and Diarmuid Cummins, Group CEO of Algeco Scotsman, went to Chicago to meet with LEK Consulting, LLC a global management consulting firm. Messrs. Sagansky and Graf met with Chris Kenney and Eric Navales, who had performed extensive research into the remote accommodations sector and prepared a report about the business operations of Target. The LEK Consulting team described the business and the expanding market opportunities both in the Permian and in other shale basins and other areas.

 

On May 17, 2018, Platinum Eagle management had call with representatives of Bank of America Merrill Lynch (“BAML”) who specialized in the energy and oil & gas sectors as well as representatives of BAML’s equity capital markets group. On that call, the Platinum Eagle management team introduced the idea of a potential business combination with Target and asked for such informal feedback from the call participants. The representatives of BAML were supportive as they believed the sector was experiencing strong growth and that the Company was diversifying. They also expressed that the public equity markets would view the story favorably.

 

On May 23, 2018, Mr. Sagansky, Mr. Baker, Mr. Sloan and Mr. Graf flew to Houston to meet the entire Target management team at that their main offices in The Woodlands, Texas just outside of Houston. This was the first occasion that the Platinum Eagle management team met Brad Archer, CEO, Andy Aberdale, CFO, and Troy Schrenk, Chief Commercial Officer and several other Target executives. At the meeting, the Target management team gave a detailed presentation about the Target business, its history and its growth prospects for the future and the parties had an extensive question and answer session.

 

During this time period, the Platinum Eagle team spoke with several potential financial advisors, including Royal Bank of Canada, Deutsche Bank and others about advising Platinum Eagle with respect to a business combination with Target and perhaps a third company.

 

On May 31, 2018, Mr. Baker sent Mr. Lindsay via email a copy of the Platinum Eagle initial public offering prospectus, and a summary of the Platinum Eagle capital structure.

 

On June 25, 2018, Mr. Sagansky, Mr. Baker and Mr. Sloan held a conference call with Mr. Lindsay, Manjit Dale another partner at TDR Capital and others from TDR Capital to discuss the opportunity. The parties agreed to further work together on the possibility of the business combination and TDR Capital made arrangements for Platinum Eagle officers to collaborate with the Target team to further gauge the opportunity and begin conducting due diligence. In addition, we informed Mr. Lindsay that Platinum Eagle would engage Oppenheimer as its financial advisor and that Oppenheimer, at the direction of the Platinum Eagle and Target management teams, would work on an investor presentation describing the potential business combination for Platinum Eagle’s presentation to both of its capital markets advisors, Deutsche Bank and BAML.

 

On June 25, 2018, Eli Baker contacted David Hartzell from Oppenheimer, with whom he was familiar with from prior a transaction. Mr. Baker explained the opportunity and mandate to Mr. Hartzell, who confirmed that Oppenheimer had significant experience in covering the remote accommodations sector. In addition, Mr. Hartzell and Oppenheimer were very familiar with both TDR Capital and Algeco, the parent of Target. Mr. Hartzell and Oppenheimer was also familiar with Signor.

 

On June 27, 2018, TDR Capital convened a call that included Gary Lindsay, Diarmuid Cummins from Algeco, Andy Aberdale, Viki Morris, Gregoire Paepegaey to discuss Target’s readiness to become a public company. This included a discussion as to the status of TDR’s pursuit of Signor and whether Signor would be part of the transaction as well as other subsidiaries of Algeco.

 

From June 27, 2018 through July 2018, Platinum Eagle and its financial advisors at Oppenheimer continued to have conference calls and discussion with Target and TDR and conducted due diligence on Target and Signor. Simultaneously, the Platinum Eagle and the Target Management teams continued to prepare the investor presentation that would be used in connection with meetings to be held with current and prospective investors.

 

Between June 27, 2018 through November 13, 2018, Platinum Eagle and Oppenheimer had numerous phone calls, emails, question and answer sessions with Target’s management and TDR Capital principals. Platinum Eagle prepared a preliminary financial model with the support of BAML and Oppenheimer, which was generally consistent with the model prepared by Target.

 

On July 18, 2018, Mr. Baker held a conference call with Mr. Lindsay and Mr. Aberdale, Mr. Paepegaey and representatives of Ernst & Young (“EY”) regarding the state of the Target financials. The representatives of EY has worked with the Founder Group in previous business combination transactions were asked to join the call in order to provide Mr. Aberdale financial reporting requirements for a business combination with Platinum Eagle. The collective group generally agreed that the required structuring, tax and accounting issues could be handed within two months, and thus it was possible to be in a position to file a registration statement on Form S-4 by early to mid-November 2018.

 

On July 19, 2018, Platinum Eagle and Target entered into a non-disclosure agreement, separate from the one previously executed between Platinum Eagle and TDR.

 

On July 24, 2018, Mr. Sagansky, Mr. Baker and Mr. Sloan flew to Odessa, Texas to meet the Target management to get a tour of the Target facilities in West Texas. The entire group toured the Odessa West Lodge, the Pecos Lodge, and the Mentone Lodge and reviewed their facilities including, rooms, kitchens, food preparation facilities, and other amenities that the communities offer to their customers and guests. The Platinum Eagle team spent considerable time speaking with the community managers and staff as well as conversations with guests. Afterwards, the group flew from Pecos to Cotulla, Texas and drove to the South Texas Residential Center in Dilley, Texas. There, the group toured the entire facility, including the schools, cafeterias, medical center, rooms and other aspects of the location.

 

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On August 30, 2018 Platinum Eagle convened a meeting of its Board of Directors. During the meeting, amongst other agenda matters and discussions about other business combination targets, Mr. Sagansky introduced the Target opportunity to the Board, which was receptive and encouraged Platinum Eagle officers to continue to explore the opportunity.

 

On September 10, 2018, TDR Capital LLC through its acquisition vehicle Arrow BidCo successfully acquired Signor Lodging and issued a press release to announce the acquisition. Shortly thereafter, Mr. Lindsay informed Mr. Sagansky and Mr. Baker that it had completed its acquisition of Signor and that Target would immediately manage Signor under a management agreement.

 

On September 21, 2018, Mr. Sagansky and Mr. Baker prepared and sent a draft of a non-binding term sheet to Mr. Lindsay for the potential business combination between Platinum Eagle, Target and Signor. In addition, Mr. Baker provided a projected timeline to illustrate the steps and the expected timing to complete the proposed business combination.

 

On October 3, 2018, Platinum Eagle hosted a conference call with Deutsche Bank, BAML and Oppenheimer in which Platinum Eagle and the Target management team made a presentation to all the banks. Platinum Eagle management asked both Deutsche Bank and BAML for feedback as to the presentation generally and specific feedback as to the fair and marketable valuation for the combined company. Over the next week, both BAML and Deutsche Bank agreed with the valuation framework established in the investor presentation and did not recommend any changes to the valuation.

 

On October 5, 2018, Platinum Eagle convened a special meeting of its Board of Directors to vote on entering into a non-binding term sheet with Algeco Scotsman Global S.à r.l., Sapphire Holding S.à r.l. and TDR Capital for the potential business combination between Platinum Eagle, Target and Signor. The Board voted unanimously to proceed.

 

During the week of October 8, 2018, Platinum Eagle held “testing the waters” meetings with certain existing shareholders, after they agreed to standard “wall crossing” procedures. Mr. Sagansky, Mr. Baker and Mr. Sloan represented Platinum Eagle, Mr. Lindsay and Mr. Robertson represented TDR and Mr. Archer, Mr. Aberdale and Mr. Shrenk represented the company in these meetings.

 

On October 11, 2018 Platinum Eagle and TDR hosted a conference call to “kick off” the transaction with BAML and Deutsche Bank, as financial and capital markets advisors, Winston & Strawn LLP, as legal advisors to Platinum Eagle, Allen & Overy LLP as legal advisors to Algeco, Target and TDR, and EY as auditor of Target. The parties and their counsel and advisors also continued to finalize the non-binding term sheet. Following this kick-off call, a working group was established to hold bi-weekly calls on all transaction tracks which continued until the transaction announcement.

 

Immediately after the “testing the waters” meetings, Platinum Eagle and TDR Capital initiated requests for proposals from multiple banks to manage the required debt financing for the transaction, which would include both an ABL and senior secured note issuance.

 

On October 31, 2018, Platinum Eagle, Algeco Scotsman Global S.à r.l., Sapphire Holding S.à r.l. and TDR Capital entered into a non-binding term sheet for a business combination. Following execution of the term sheet, the parties began drafting the Merger Agreements. The parties also began discussions with potential subscribers in the Equity Offering.

 

On November 1, 2018, Platinum Eagle arranged for a digital data room to be established to provide certain materials to prospective equity investors. Platinum Eagle, through its capital markets bankers, sent invitation to a small number of potential investors who had a track record of long-term investments and an interest in investing in similar transactions.

 

On November 12, 2018 Platinum Eagle’s board of directors unanimously approved the business combination, the Merger Agreements and the transactions contemplated thereunder, as well as the Equity Offering.

 

On November 13, 2018, the Merger Agreements and the Subscription Agreements for the Equity Offering were signed. On the same day, Platinum Eagle issued a press release and filed a registration statement on Form S-4 with the SEC, of which this proxy statement/prospectus is a part.

 

Platinum Eagle’s Board of Directors’ Reasons for the Approval of the Business Combination

 

On November 12, 2018, our board of directors unanimously (i) approved the signing of the Merger Agreements and the transactions contemplated thereby and (ii) directed that the Merger Agreements, related transaction documentation and other proposals necessary to consummate the business combination be submitted to our shareholders for approval and adoption, and recommended that our shareholders approve and adopt the Merger Agreements, related transaction documentation and such other proposals.  Before reaching its decision, our board of directors reviewed the results of management’s due diligence, which included:

 

research on industry trends, revenue and operating cost projections and other industry factors;

 

extensive meetings and calls with Target’s management team and representatives regarding operations, company services, major customers, financial prospects, the pipeline of potential new builds and possible acquisitions, among other customary due diligence matters;

 

personal visits to Target’ headquarters in The Woodlands, Texas and facilities throughout South West Texas and Dilley, Texas.

 

review of Target and Signors material business contracts and certain other legal and commercial diligence including discussions with the company’s major customers;

 

Financial and accounting diligence; and

 

creation of an independent financial model in conjunction with management of Target, which was generally consistent with the financial model prepared by Target management and TDR Capital.

 

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Our board of directors considered a wide variety of factors in connection with its evaluation of the business combination.  In light of the complexity of those factors, the Platinum Eagle board of directors did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it took into account in reaching its decision. Different individual members of our board of directors may have given different weight to different factors in their evaluation of the business combination.

 

In the prospectus for our IPO, we identified the following general criteria and guidelines that we believed would be important in evaluating prospective target businesses, although we indicated we may enter into a business combination with a target business that does not meet these criteria and guidelines.

 

High-Growth Markets.  We will seek out opportunities in faster-growing segments of developed markets and emerging international markets. Our management has extensive experience operating media businesses and leading transactions in international markets.

 

Business with Revenue and Earnings Growth Potential.  We will seek to acquire one or more businesses that have multiple, diverse potential drivers of revenue and earnings growth, including but not limited to a combination of development, production, digital and distribution capabilities and balance sheet management.

 

Companies with Potential for Strong Free Cash Flow Generation.  We will seek to acquire one or more businesses that have the potential to generate strong and stable free cash flow.

 

These illustrative criteria were not intended to be exhaustive. We stated in the IPO prospectus that any evaluation relating to the merits of a particular initial business combination would be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decided to enter into a business combination with a target business that does not meet the above criteria and guidelines, we indicated that would disclose that the target business does not meet the above criteria in our shareholder communications related to our initial business combination.

 

In considering the business combination, Platinum Eagle’s board of directors concluded that it met all the above criteria. In particular, the board considered the following positive factors, although not weighted or in any order of significance:

 

High-Growth Markets.  The combination of Target and Signor will establish the largest network of premier flexible accommodation in the United States, featuring 22 communities with approximately 13,000 beds that has experienced increases in both utilization and pricing since 2016.  The companies’ network in the Permian Basin provides great growth prospects for the company as the Permian Basin has experienced a dramatic increase in oil and gas production activity as a consequence of a material reduction in productions costs in that area coupled with stability of the price of oil.  Based on further third-party data and industry reports, the Permian Basin is likely to experience continued rapid growth for an extended period of time, providing Target Hospitality the business opportunity to service those customers. 

 

Business with Revenue and Earnings Growth Potential.  Target has an attractive financial profile characterized by a combination of strong growth and profitability.  From 2016 thru 2019E, the company has achieved and projects an EBITDA CAGR of approximately 25% and expects to grow revenues to approximately $303.5 million.  Platinum Eagle believes that Target is well positioned to continue its dynamic growth trajectory as it integrates Target with Signor and expands its network throughout the Permian Basin and beyond.

 

Visibility and Compelling Unit Economics.  Target operates its business through long-term, “take-or-pay” contracts primarily with well capitalized customers.  This has resulted in strong future visibility into revenue, margins and stability of the company for several years into the future.  Coupled with these highly reliable contracts is the certainty of payback on invested capital for the construction of new facilities or new expansion for existing facilities. 

 

High EBITDA Margins with Strong Free Cash Flow.  Along with Target dynamic growth on both revenue and EBITDA metrics, Target has also demonstrated strong EBITDA margins of over 50%.  This is achieved in large part by operating a business with low annual maintenance capital expenditures.  The corresponding result is a business that yields a very strong ratio of free cash to EBITDA, which will allow the company to access capital to build new projects and execute new business opportunities as they arise. 

 

Experienced and Motivated Management Team.  Target is led by a seasoned team of industry experts that have re-defined premiere flexible remote accommodations and lodging and the vision to diversify and expand the business to other private and public customer bases. 

 

The combined purchase price for Target and Signor is $1.311 billion consisting of $560 million in cash and the remaining $749 million will be paid to the Sellers in the form of shares of common stock. With an estimated $340 million in net debt at closing, this represents a market value of equity in excess of 80% of the assets held in Platinum Eagle’s trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account), a requirement for an initial business combination under our amended and restated certificate of incorporation.

 

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Although Platinum Eagle’s board of directors did not seek a third party valuation, and did not receive any report, valuation or opinion from any third party in connection with the business combination other than a review of the Fairness Opinion, the board of directors relied on the following sources (i) due diligence on the Company’s business operations, (ii) detailed channel checks with Target’s customer base, particularly those who have entered into long-term “take-or-pay” contracts with Target, (iii) extensive research reports and data related to the energy sector, which Target greatly serves, with particular emphasis on the Permian and the Bakkan Basins and (iv) Platinum Eagle management’s collective experience in public markets transactions in constructing and evaluating financial models/projections and conducting valuations of businesses. This $1.311 billion purchase price represents 8.0x projected adjusted EBITDA in 2019, on a pre-money basis.  The board of directors concluded that this is fair and reasonable, given the growth prospects, potential industry consolidation and other compelling aspects of the transaction. 

 

The board of directors also gave consideration to the following negative factors (which are more fully described in the “Risk Factors” section of this F-4), although not weighted or in any order of significance:

 

The risk that our public stockholders would vote against the business combination proposal or exercise their redemption rights

 

The board of directors considered the risk that some of the current public stockholders would vote against the business combination proposal or decide to exercise their redemption rights, thereby depleting the amount of cash available in the trust account to an amount below the minimum required to consummate the business combination. The board concluded however, that this risk was substantially mitigated because Platinum Eagle has issued a private placement in the amount of up to $115 million, which represents 51% of the minimum proceeds necessary for closing.  Further, and the fact that public stockholders may vote for the business combination proposal while also exercising their redemption rights mitigates incentive for a public shareholder to vote against the business combination proposal, especially to the extent that they hold public warrants which would be worthless if the business combination is not completed.

 

Our management and directors may have different interests in the business combination than the public stockholders

 

The board of directors considered the fact that members of our management and board of directors may have interests that are different from, or are in addition to, the interests of our stockholders generally, including the matters described under “— Certain Benefits of Platinum Eagle’s Directors and Officers and Others in the Business Combination” below. However, our board of directors concluded that the potentially disparate interests would be mitigated because (i) these interests were disclosed in the initial public offering prospectus, (ii) these disparate interests would exist or may be even greater with respect to a business combination with any target company, (iii) the business combination was structured to permit public stockholders to redeem a substantial portion of our common stock, and (iv) a portion of the founder shares held by the Founder Group have been deferred to an earnout structure based on a certain gradient of gross proceeds raised.  Notwithstanding the foregoing, the 80,000 founder shares held by the Independent Directors are not subject to this earnout.

 

Certain Benefits of Platinum Eagle’s Directors and Officers and Others in the Business Combination

 

In considering the recommendation of our board of directors in favor of approval of the business combination, it should be noted that our directors and officers have interests in the business combination that are different from, or in addition to, your interests as a stockholder. These interests include, among other things:

 

·the continued right of the founders to hold our common stock in Target Hospitality following the business combination, subject to the lock-up agreements;

 

·the continuation of two directors (Mr. Sagansky and Mr. Sloan) as independent members of the board of directors of Target Hospitality;

 

·the continued indemnification of current directors and officers of the Company and the continuation of directors’ and officers’ liability insurance after the business combination.

 

Certain Projected Financial Information

 

Certain Target Hospitality Forecasts and Performance Targets

 

Neither Signor nor Target as a matter of general practice, develop or publicly disclose long-term forecasts or internal projections of their future performance, revenues, earnings, financial condition or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, Signor and Target have established certain targets relating to their consolidated results of operations and businesses in connection with the proposed business combination and certain financial forecasts were prepared by Target’s management and made available to its board of directors and to Platinum Eagle.

 

The targets assume Target Hospitality’s current run-rate is applicable in 2019, with an increase in revenue of $22.2 million or 7.8%, and an increase in EBITDA of $16.6 million or 11.1%.

 

Target Hospitality’s projections for 2019 include an increase in rate of $0.5, or 0.6%, driven by strength in the Permian region and a 1% increase in utilization also being driven by strength in the Permian region.

 

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The targets also assume the consummation of the business combination. Target Hospitality’s ability to achieve the targets set out below will depend upon a number of factors outside of its control. These include significant business, economic and competitive uncertainties and contingencies, as well as actions taken by counterparties. These targets have been developed based upon assumptions with respect to future business decisions and conditions that are subject to change, including Target Hospitality’s execution of its strategies and service development, as well as growth in the markets in which Target Hospitality operates. As a result, Target Hospitality’s actual results may vary from the targets set out below, and those variations may be material. See also “Cautionary Statement Regarding Forward-Looking Statements” and the risk factors set out in “Risk Factors — The estimates and assumptions on which Signor’s and Target’s financial projections for the Target Hospitality business are based may prove to be inaccurate, which may cause Target Hospitality’s future actual results to differ materially from such projections, which may adversely affect Target Hospitality’s future profitability, cash flows and stock price” and “Subsequent to the consummation of the business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.”

 

Target’s management has identified the following targets with respect to certain financial and operating metrics for the business combination:

 

·Fast Growing Business with Strong Momentum: Management estimates that Target Hospitality’s EBITDA will have a compound annual growth rate from 2016 to 2018 of 32% and that Target Hospitality will have an EBITDA margin of more than 50% in 2019, prior to incorporating the impact of any acquisitions or any estimated public company costs. The key value drivers include increased utilization, expansion of existing facilities, and addition of new facilities and acquisitions.

 

·High Margins and Free Cash Flow, with low annual maintenance CAPEX and high EBITDA to free cash flow conversion.

 

·Robust Balance Sheet to Fund Business Expansion with ample liquidity available to support growth.

 

The financial projections reflect numerous estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to Target Hospitality’s business, all of which are difficult to predict and many of which are beyond Target Hospitality’s control. As a result, there can be no assurance that the projected results will be realized or that actual results will not be significantly higher or lower than projected. Since the projections cover multiple years, such information by its nature becomes less predictive with each successive year. These financial projections are subjective in many respects and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. As such, these financial projections constitute forward-looking information and are subject to risks and uncertainties, including the various risks set forth in the section entitled “Risk Factors” in this proxy statement/prospectus.

 

The financial projections were prepared solely for internal use and not with a view toward public disclosure or toward complying with GAAP, the published guidelines of the SEC regarding projections or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The financial projections included below were prepared by Target’s management. None of Target’s independent registered public accounting firm, Signor’s independent registered public accounting form or any other independent accountants, have compiled, examined or performed any procedures with respect to the financial projections included below, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the financial projections. Furthermore, the financial projections do not take into account any circumstances or events occurring after the date they were prepared. Nonetheless, a summary of the projections is provided in this proxy statement/prospectus only because the projections were made available to Platinum Eagle. The inclusion of financial projections in this proxy statement/prospectus should not be regarded as an indication that Platinum Eagle, Platinum Eagle’s board of directors, or their respective affiliates, advisors or other representatives considered, or now considers, such financial projections necessarily to be predictive of actual future results or to support or fail to support your decision whether to vote for or against the business combination proposal. No person has made or makes any representation or warranty to any Platinum Eagle shareholder regarding the information included in these financial projections. The financial forecasts are not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement/prospectus are cautioned not to place undue reliance on this information.

 

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EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE FEDERAL SECURITIES LAWS, BY INCLUDING IN THIS PROXY STATEMENT/PROSPECTUS A SUMMARY OF ITS INTERNAL FINANCIAL PROJECTIONS, PLATINUM EAGLE UNDERTAKES NO OBLIGATIONS AND EXPRESSLY DISCLAIMS ANY RESPONSIBILITY TO UPDATE OR REVISE, OR PUBLICLY DISCLOSE ANY UPDATE OR REVISION TO, THESE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES OR EVENTS, INCLUDING UNANTICIPATED EVENTS, THAT MAY HAVE OCCURRED OR THAT MAY OCCUR AFTER THE PREPARATION OF THESE FINANCIAL PROJECTIONS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS ARE SHOWN TO BE IN ERROR OR CHANGE.

 

The following tables summarize the historical results and future projections of Target Hospitality used by the Platinum Eagle board of directors for purposes of its consideration of the business combination:

 

Target Parent  Year ended December 31, 
(in thousands)  2019E   2018E   2017   2016 
                 
Net Income (loss)  $34,003   $14,865   $981   $26,909 
Income tax expense   8,600    1,100    25,584    17,310 
Interest expense (income), net   32,313    19,230    (5,107)   (3,512)
Other depreciation and amortization   3,770    4,133    5,681    5,029 
Depreciation of accommodation assets   30,735    31,015    24,464    36,300 
EBITDA   109,420    70,344    51,603    82,036 
Currency (gains) losses, net   -    136    (91)   - 
Restructuring costs   -    18,014    2,180    - 
Holdings selling, general and administrative costs   -    9,833    8,771    - 
Other expense (income), net   -    (965)&nb