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Commitments
9 Months Ended
Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS

NOTE 6. COMMITMENTS

 

Registration Rights

 

Pursuant to a registration rights agreement entered into on November 15, 2018, the holders of the Founder Shares, Private Placement Units, Private Placement Shares, Private Placement Warrants and any warrants that may be issued upon conversion of the Working Capital Loans (and their underlying securities) are entitled to registration rights. The holders of these securities are entitled to make up to three demands (or one demand in the case of Private Placement Securities to be acquired by an affiliate of Macquarie Capital (USA) Inc.), excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders have "piggy-back" registration rights to include such securities in other registration statements filed by the Company and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. In the case of the Private Placement Securities acquired by an affiliate of Macquarie Capital (USA) Inc., the demand registration right provided will not be exercisable for longer than five years from the effective date of the registration statement of the Initial Public Offering in compliance with FINRA Rule 5110(f)(2)(G)(iv) and the piggyback registration right provided will not be exercisable for longer than seven years from the effective date of the registration statement of the Initial Public Offering in compliance with FINRA Rule 5110(f)(2)(G)(v). The Company will bear the expenses incurred in connection with the filing of any such registration statements.

 

Underwriting Agreement

 

The underwriters are entitled to a deferred fee of $0.35 per Unit, or $7,000,000 in the aggregate. The deferred fee will be paid in cash upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.

 

Right of First Refusal

 

The Company granted an affiliate of the Sponsor and an underwriter of the Initial Public Offering, a right of first refusal for a period of 36 months from the date of the commencement of sales of the Initial Public Offering to act as one of potentially several banks which provide to the Company certain financial advisory, underwriting, capital raising, and other services for which it may receive a portion of the overall fees. The affiliate has not been retained as of the filing date of these condensed consolidated financial statements, therefore no amounts are currently due. No funds will be paid out of the Trust Fund to fund any such payments and it is not expected that any fees would be paid prior to the completion of a Business Combination. The actual amount of fees to be paid will vary significantly based on the size of any transaction and the extent to which other investments banks are involved.

 

Atlas Business Combination

 

On August 12, 2019, the Company, Holdings, and Buyer, entered into a unit purchase agreement (the "Purchase Agreement") with Atlas Intermediate and Atlas Technical Consultants Holdings LP, a Delaware limited partnership (the "Seller"), pursuant to which Buyer will acquire from the Seller all of the equity interests in Atlas Intermediate (the "Atlas Intermediate Units"). The acquisition of the Atlas Intermediate Units and the other transactions contemplated by the Purchase Agreement are collectively referred to herein as the "Atlas Business Combination." The Seller and its limited partners are collectively referred to herein as the "Continuing Members."

 

Pursuant to the Purchase Agreement, at the closing of the Atlas Business Combination (the "Closing"), the Company will contribute cash and shares of newly-created, voting, non-economic Class B common stock of the Company, par value $0.0001 per share (the "Class B common stock"), to Holdings in exchange for common units of Holdings (the "Holdings Units"). The Seller will transfer to the Buyer (i) a number of Atlas Intermediate Units equal to the product of (a) the number of Atlas Intermediate Units issued and outstanding as of the Closing multiplied by (b) the quotient of (x) the Rolled Unit Value (as defined in the Purchase Agreement) divided by (y) $617 million, in exchange for a corresponding number of Holdings Units, and an equal number of shares of Class B common stock, and (ii) the remainder of the Atlas Intermediate Units, in exchange for cash. Each share of Class B common stock entitles its holder to one vote per share but no right to dividends and distributions.

 

Following the Closing, the combined company will be organized in an "Up-C" structure in which the business of Atlas Intermediate and its subsidiaries ("Atlas") will be held by Holdings and will continue to operate through the subsidiaries of Atlas Intermediate, and in which the Company's only direct assets will consist of Holdings Units. Upon the Closing, the Company will change its name to "Atlas Technical Consultants, Inc."

 

Pursuant to the Purchase Agreement, the purchase price to be paid by the Buyer is $617 million, subject to customary adjustments contained in the Purchase Agreement. Of this amount, subject to the terms and conditions set forth in the Purchase Agreement, the Buyer will pay off the existing debt of the Seller which is anticipated to be approximately $160 million, and the Seller will receive aggregate consideration of $457 million, which shall consist of (i) between $260 million and $337 million of cash and (ii)(a) between $120 million and $197 million of Holdings Units, with each such unit valued at $10.00 per unit (subject to adjustment in accordance with the Purchase Agreement) (the "Rollover Units"), and (b) Class B common stock. For each Holdings Unit received by the Seller as consideration, the Company will issue to the Seller one share of Class B common stock. The final amount of cash and the value of the Rollover Units and Class B common stock is dependent on the amount of money remaining in the Company's Trust Account following any redemptions of the Company's Class A common stock and the amount of additional proceeds (if any) raised by the Company through equity financing sources prior to the Closing (the "Available Equity").

 

Each Rollover Unit received by the Continuing Members, together with one share of Class B common stock, will be exchangeable, subject to certain conditions, for either one share of Class A common stock, or, at the Company's election, the cash equivalent to the market value of one share of Class A common stock, pursuant to and in accordance with the terms of the Holdings LLC Agreement.

 

The Atlas Business Combination will be consummated subject to the deliverables and provisions as further described in the Purchase Agreement.

 

The Purchase Agreement was filed on August 13, 2019 with the Securities and Exchange Commission (the "SEC") as Exhibit 2.1 to the Company's Current Report on Form 8-K.

  

Debt Commitment Letter

 

On August 12, 2019, the Company entered into a debt commitment letter (the "Debt Commitment Letter") with Macquarie Capital (USA) Inc. ("Macquarie Capital"), Macquarie Capital Funding LLC ("Macquarie Funding") and Natixis, New York Branch (together with Macquarie Capital and Macquarie Funding, the "Commitment Parties"), 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 Atlas Business Combination, credit facilities (the "Credit Facilities") for the purpose of financing (i) a portion of the consideration payable under the Purchase Agreement, (ii) costs and expenses incurred by the parties in connection with the Atlas Business Combination, (iii) repayment of the existing indebtedness of Atlas Intermediate, and (iv) for general corporate expenditures. The obligation of the Commitment Parties to provide the Credit Facilities is contingent on, inter alia, there being Available Equity of at least $100 million immediately prior to Closing.

 

Pursuant to the Debt Commitment Letter, the Commitment Parties have agreed to provide for Credit Facilities in the aggregate principal amount of up to $400 million, consisting of: (i) a senior secured first lien term loan facility in an aggregate principal amount of up to $290 million (the "First Lien Term Facility"), (ii) a senior secured first lien revolving credit facility in an aggregate principal amount of $40 million (the "Revolving Facility") and (iii) a senior secured second lien term loan facility in an aggregate principal amount of up to $70 million (together with the First Lien Term Facility, the "Term Loan Facilities"), made available to Buyer. To the extent there is, immediately prior to the Closing, Available Equity of (i) greater than $100 million and less than or equal to $160 million, the principal amount of the Term Loan Facilities will be reduced by the difference between the Available Equity (up to a maximum amount of $160 million) and $100 million, with such reduction to be allocated between such Term Loan Facilities as determined by the Commitment Parties in their sole discretion. To the extent there is, immediately prior to Closing, Available Equity of greater than $160 million, in addition to the reduction in principal amount of the Term Loan Facilities described in the preceding sentence, (x) the number of Rollover Units received by the Seller will be reduced (and the cash consideration to be paid to the Seller will be correspondingly increased) by an amount equal to 20% of the difference between the Available Equity and $160 million and (y) the principal amount of the Term Loan Facilities will be further reduced by an amount equal to 80% of the difference between the Available Equity and $160 million, with such reduction to be allocated between such Term Loan Facilities as determined by the Commitment Parties in their sole discretion until such time as the principal amount of the Term Loan Facilities is reduced to $270 million. Furthermore, to the extent the principal amount of the Term Loan Facilities has been reduced to $270 million, the value of the Rollover Units received by the Seller will be reduced until their value is equal to $120 million, and thereafter the principal amounts of the Term Loan Facilities may be reduced further.

 

The Debt Commitment Letter was filed on August 13, 2019 with the SEC as Exhibit 10.1 to the Company's Current Report on Form 8-K.