DEFA14A 1 defa14a012420_boxwoodmerger.htm DEFINITIVE ADDITIONAL MATERIALS

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A

 

Information Required in Proxy Statement
Schedule 14A Information

 

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

 

Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐

 

Check the appropriate box:

 

Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to §240.14a-12

 

Boxwood Merger Corp.

(Name of Registrant as Specified In Its Charter)

 

N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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  (1) Title of each class of securities to which transaction applies:
     
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BOXWOOD MERGER CORP.
8801 Calera Drive
Austin, Texas 78735

 

PROXY STATEMENT SUPPLEMENT DATED
JANUARY 28, 2020 TO THE DEFINITIVE PROXY
STATEMENT DATED NOVEMBER 12, 2019

 

Dear Stockholders of Boxwood Merger Corp.:

 

On November 12, 2019, Boxwood Merger Corp. (the “Company,” “Boxwood,” “we,” “us” or “our”) filed with the U.S. Securities and Exchange Commission (the “SEC”) and commenced mailing of its definitive proxy statement (the “Definitive Proxy Statement”) with respect to the special meeting in lieu of the 2019 annual meeting of stockholders of Boxwood (the “special meeting”). The special meeting is being held to consider and vote upon a proposal, among other matters, to approve and adopt the unit purchase agreement (as the same may be amended from time to time, the “Purchase Agreement”), dated as of August 12, 2019, by and among Boxwood, Atlas TC Holdings LLC, a wholly-owned subsidiary of the Company and a Delaware limited liability company (“Holdings”), Atlas TC Buyer LLC, a wholly-owned subsidiary of Holdings and a Delaware limited liability company (the “Buyer”), Atlas Intermediate Holdings LLC, a Delaware limited liability company (“Atlas Intermediate”), and Atlas Technical Consultants Holdings LP, a Delaware limited partnership (the “Seller”), pursuant to which the Buyer will acquire from the Seller all of the equity interests in Atlas Intermediate (the “Atlas Intermediate Units”), and approve the acquisition of the Atlas Intermediate Units and the other transactions contemplated by the Purchase Agreement. The acquisition of the Atlas Intermediate Units and the other transactions contemplated by the Purchase Agreement are collectively referred to herein as the “business combination.”

 

The special meeting, which was originally scheduled for December 12, 2019, was subsequently adjourned and will be reconvened on Thursday, February 6, 2020, at 10:00 a.m., Eastern Time, at the offices of Winston & Strawn LLP, at 200 Park Avenue, New York, New York 10166.

 

Only holders of record of shares of Class A common stock and shares of Class F common stock at the close of business on November 6, 2019 are entitled to notice of and to vote and have their votes counted at the special meeting and any adjournments or postponements of the special meeting. The record date has not changed as a result of the Company’s previous adjournments of the special meeting.

 

The deadline by which holders of Boxwood’s shares of Class A common stock may request that Boxwood redeem all or a portion of such shares for cash if the business combination is consummated is Tuesday, February 4, 2020, at 5:00 p.m., Eastern Time (two business days prior to the vote at the special meeting), in accordance with the procedures described in the Definitive Proxy Statement.

 

The attached first supplement to the Definitive Proxy Statement (the “Proxy Supplement”) contains additional information that supplements the Definitive Proxy Statement for recent developments. Boxwood urges you to read this Proxy Supplement, together with the Definitive Proxy Statement previously sent to you regarding the proposed transaction, carefully and in their entirety. Terms used in this Proxy Supplement and not otherwise defined have the meanings set forth in the Definitive Proxy Statement.

 

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the proxy card enclosed with the Definitive Proxy Statement 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 your shares are represented and voted at the special meeting. If you have already submitted your proxy card and do not wish to change your vote, there is no need to submit another proxy card in response to this Proxy Supplement.

 

 

 

On behalf of our board of directors, I would like to thank you for your support of Boxwood Merger Corp., and I look forward to a successful completion of the business combination.

 

  By Order of the Board of Directors,
   
  /s/ Stephen M. Kadenacy 
  Stephen M. Kadenacy
  Chairman and Chief Executive Officer

 

January 28, 2020

 

If you return your proxy card signed and 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 (1) IF YOU HOLD SHARES OF CLASS A COMMON STOCK THROUGH UNITS, 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, (2) SUBMIT A WRITTEN REQUEST TO THE TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING, THAT YOUR PUBLIC SHARES BE REDEEMED FOR CASH, AND (3) DELIVER YOUR SHARES OF CLASS A COMMON STOCK 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 THE DEFINITIVE PROXY STATEMENT. 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 “SPECIAL MEETING — REDEMPTION RIGHTS” IN THE DEFINITIVE PROXY STATEMENT FOR MORE SPECIFIC INSTRUCTIONS.

 

Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of the transactions described in the Definitive Proxy Statement or this Proxy Supplement, passed upon the merits or fairness of the Amended Purchase Agreement (as defined herein) or the transactions contemplated thereby, or passed upon the adequacy or accuracy of the Definitive Proxy Statement or this Proxy Supplement. Any representation to the contrary is a criminal offense.

 

This Proxy Supplement is dated January 28, 2020.

 

 

  

TABLE OF CONTENTS

 

  Page
INTRODUCTION 1
UPDATES TO QUESTIONS AND ANSWERS ABOUT THE PROPOSALS 3
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 8
SUPPLEMENTAL INFORMATION TO THE DEFINITIVE PROXY STATEMENT 10
COMPARATIVE SHARE INFORMATION 20
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 21
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET 25-26
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS 27-28
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 29
BENEFICIAL OWNERSHIP OF SECURITIES 35
WHERE YOU CAN FIND MORE INFORMATION 38
ANNEX A Annex A
ANNEX B Annex B
ANNEX C Annex C
ANNEX D Annex D
ANNEX E Annex E

 

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INTRODUCTION

 

As previously disclosed, on August 12, 2019, Boxwood Merger Corp. (the “Company,” “Boxwood,” “we,” “us” or “our”), Atlas TC Holdings LLC, a wholly-owned subsidiary of Boxwood and a Delaware limited liability company (“Holdings”), and Atlas TC Buyer LLC, a wholly-owned subsidiary of Holdings and a Delaware limited liability company (the “Buyer”), entered into a unit purchase agreement (as the same may be amended from time to time, the “Purchase Agreement”) with Atlas Intermediate and Atlas Technical Consultants Holdings LP, a Delaware limited partnership (the “Seller”), pursuant to which the 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 “business combination.”

 

Following the closing of the business combination (the “Closing,” and the day of such Closing, the “Closing Date”), the combined company will be organized in an “Up-C” structure in which the business of Atlas Intermediate and its subsidiaries will be held by Holdings and will continue to operate through the subsidiaries of Atlas Intermediate, and in which Boxwood’s only direct assets will consist of common units of Holdings (the “Holdings Units”) and Holdings’ only direct assets will consist of its equity interests in Atlas Intermediate.

 

On August 12, 2019, the Company also 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 (collectively 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 the satisfaction of customary closing conditions, including the closing of the 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 business combination, (iii) the repayment of the existing indebtedness of Atlas Intermediate and (iv) general corporate expenditures.

 

Pursuant to the Debt Commitment Letter, the applicable Commitment Parties 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 and (iii) a senior secured second lien term loan facility in an aggregate principal amount of up to $70 million (the “Second Lien Term Facility”), made available to the Buyer.

 

For more information on the Purchase Agreement, the business combination and the Debt Commitment Letter, see the Definitive Proxy Statement.

 

Commitment Letter

 

On January 23, 2020, Boxwood and Holdings entered into a commitment letter (the “Commitment Letter”) with GSO Capital Partners LP (“GSO”) for the purpose of funding a portion of the business combination and the costs and expenses incurred in connection therewith. Pursuant to the Commitment Letter, GSO committed, on the terms and subject to the conditions set forth therein, on the Closing Date, to purchase (i) up to 145,000 units of a new class of Series A Senior Preferred Units of Holdings (the “Preferred Units”) at a price per Preferred Unit of $1,000.00, resulting in gross proceeds to Holdings of up to $145.0 million (the “Preferred Commitment”) and (ii) 1,000,000 shares of Class A common stock of Boxwood, par value $0.0001 per share (the “Class A common stock”), at a price per share of $10.00, resulting in gross proceeds of $10.0 million to Holdings (both such commitments, the “Commitment”).

 

For more information on the Commitment Letter and the terms of the Preferred Units, see the section entitled “Supplemental Information to the Definitive Proxy Statement—Commitment Letter.” The foregoing updates the disclosures in the section entitled “Summary of the Proxy Statement—Summary of the Purchase Agreement—Related Agreements” on pages 23 – 25 and any other applicable section of the Definitive Proxy Statement.

 

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Payment Letter

 

As consideration for the Commitment, Boxwood also entered into a closing payment letter agreement with GSO, dated January 23, 2020 (the “Payment Letter”), pursuant to which Boxwood has agreed to pay to GSO 2% of the aggregate amount of the Liquidation Preference (as defined herein) of the Preferred Units purchased by GSO on the Closing Date (which will be in the form of an original issue discount on such Preferred Units). In addition, GSO will be entitled to receive 1,200,000 shares of Boxwood’s Class F common stock (the “Founder Shares”), subject to adjustment in the event that Boxwood issues shares of Class A common stock to investors in connection with the business combination at a price below $10.00 (without taking into account any Founder Shares that may be received by such investors).

 

For more information on the Payment Letter, see the section entitled “Supplemental Information to the Definitive Proxy Statement—Payment Letter.” The foregoing updates the disclosures in the section entitled “Summary of the Proxy Statement—Summary of the Purchase Agreement—Related Agreements” on pages 23 – 25 and any other applicable section of the Definitive Proxy Statement.

 

Purchase Agreement Amendment

 

On January 23, 2020, Boxwood entered into Amendment No. 1 to the Purchase Agreement by and among Boxwood, Holdings, Buyer, Atlas Intermediate and the Seller (the “Purchase Agreement Amendment”). The Purchase Agreement Amendment was entered into by the parties principally to (i) provide amendments necessary to facilitate the transactions contemplated by the Commitment Letter, (ii) increase the number of Holdings Units the Seller will receive (the “Rollover Units”) as consideration by up to 5,000,000 Holdings Units at $10.00 per Holdings Unit to the extent of the Redemptions (as defined herein) and (iii) reflect the purchase of Long Engineering, Inc. (“Long Engineering”) by Atlas Intermediate following the Closing.

 

For more information on the Purchase Agreement Amendment, see the section entitled “Supplemental Information to the Definitive Proxy Statement—Purchase Agreement Amendment.” The foregoing updates the disclosures in the section entitled “Summary of the Proxy Statement—Summary of the Purchase Agreement” on pages 22 – 23 and any other applicable section of the Definitive Proxy Statement.

 

Forfeiture Agreement

 

On January 23, 2020, the Sponsor and the Seller entered into a forfeiture agreement (the “Forfeiture Agreement”) pursuant to which the Sponsor agreed to perform its obligation to deliver 1,750,000 Founder Shares for cancellation required under the Purchase Agreement Amendment, if applicable.

 

For more information on the Forfeiture Agreement, see the section entitled “Supplemental Information to the Definitive Proxy Statement—Forfeiture Agreement.” The foregoing updates the disclosures in the section entitled “Summary of the Proxy Statement—Summary of the Purchase Agreement—Related Agreements” on pages 23 – 25 and any other applicable section of the Definitive Proxy Statement.

 

Debt Amendment

 

On January 23, 2020, in connection with Boxwood’s entry into the Commitment Letter and the Purchase Agreement Amendment, Boxwood entered into Amendment No. 1 to the Debt Commitment Letter (the “Debt Amendment”) with the Commitment Parties pursuant to which Boxwood and the Commitment Parties have agreed to, among other things, reduce the aggregate principal amount of the Credit Facilities to be provided by the Commitment Parties from up to $400.0 million to up to $321.0 million by reducing the aggregate principal amount available under the First Lien Term Facility from $290.0 million to $281.0 million and eliminating the Second Lien Term Facility, which would have been available for an aggregate principal amount of up to $70 million.

 

The Debt Amendment also changes the mix of cash and equity to be provided to the Seller that was provided in the Debt Commitment Letter. Finally, the Debt Amendment adjusts the condition precedent to the Commitment Parties’ obligation to provide the Credit Facilities from $100 million of Available Equity (as defined herein) to $155 million of Available Equity (of which no more than $145 million will consist of the Preferred Commitment).

 

For more information on the Purchase Agreement Amendment, see the section entitled “Supplemental Information to the Definitive Proxy Statement—Debt Amendment.” The foregoing updates the disclosures in the section entitled “Summary of the Proxy Statement—Summary of the Purchase Agreement—Related Agreements—Debt Financing” on page 25 and any other applicable section of the Definitive Proxy Statement.

  

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UPDATES TO QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

 

The following questions and answers are intended to address briefly some common anticipated questions regarding this Proxy Supplement. The following questions and answers do not include all the information that is important to our stockholders. We urge our stockholders to read carefully the Definitive Proxy Statement, this Proxy Supplement and the annexes attached thereto and hereto.

 

Q:Why am I receiving this proxy statement?

 

A:On January 23, 2020, the Company entered into the Commitment Letter, Payment Letter, Purchase Agreement Amendment, Forfeiture Letter and Debt Amendment. This Proxy Supplement provides information regarding those agreements, describes the impact those agreements will have on the business combination and updates the Definitive Proxy Statement for other developments.

 

Q:Do I still need to read the Definitive Proxy Statement?

 

A:Yes. This Proxy Supplement is intended to supplement the Definitive Proxy Statement by providing an update of certain information contained in the Definitive Proxy Statement. However, this Proxy Supplement does not contain all of the information that you need to know about the business combination, and we urge you to read the Definitive Proxy Statement in conjunction with this Proxy Supplement, all of the annexes thereto and hereto, and the other documents to which we refer you.

 

Q:Has the record date or agenda for the special meeting changed?

 

A:No. Holders of our Class A common stock and Class B common stock at the close of business on November 6, 2019 (the “Record Date”) are entitled to vote at the special meeting. The agenda for the special meeting has not been changed.

 

Q:Has the date and time of the special meeting changed from the Definitive Proxy Statement?

 

A: Yes. The special meeting, which was originally scheduled for December 12, 2019, was subsequently adjourned and will be reconvened on Thursday, February 6, 2020, at 10:00 a.m., Eastern Time, at the offices of Winston & Strawn LLP, at 200 Park Avenue, New York, New York 10166.

 

Q:What is the effect of the Purchase Agreement Amendment?

 

A:The Purchase Agreement Amendment was entered into by the parties principally to (i) provide amendments necessary to facilitate the transactions contemplated by the Commitment Letter, (ii) increase the number of Rollover Units the Seller will receive as consideration by up to 5,000,000 Rollover Units at $10.00 per Rollover Unit to the extent of the Redemptions and (iii) reflect the purchase of Long Engineering by Atlas Intermediate following the Closing.

 

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, as amended by the Purchase Agreement Amendment, the Buyer will pay off the existing net debt of the Seller which is anticipated to be approximately $160 million, and the Seller will receive aggregate consideration of approximately $457 million (inclusive of the Seller’s transaction fees), which will consist of (i) between $210 million and $337 million of cash and (ii)(a) between $120 million and $247 million of Rollover Units, with each such Rollover Unit valued at $10.00 per Rollover Unit (subject to adjustment in accordance with the Purchase Agreement Amendment), and (b) shares of Class B common stock; provided that if the Cancellation (as defined herein) occurs, the Seller will receive an additional $17,500,000 of Rollover Units. For each Rollover 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 final value of the Rollover Units are dependent on the amount of money remaining in the Trust Account following any redemptions of Class A common stock by Boxwood’s public stockholders in connection with the vote to approve the business combination (any such redemptions, the “Redemptions”), and the amount of additional proceeds (if any) raised by the Company through equity financing sources prior to the Closing (together, the “Available Equity”), which is anticipated to include the Commitment.

 

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In addition, if the aggregate net proceeds of any investment in Boxwood, Holdings or Target, other than that anticipated to be received from GSO for the Preferred Units, together with the funds remaining in the Trust Account following the Redemptions, is less than $50.0 million, Boxwood will cancel for no consideration 1,750,000 Founder Shares held by the Sponsor (the “Cancellation”).

 

Q:What are the Commitment Letter and Payment Letter?

 

A:The Commitment Letter and Payment Letter were entered into for the purpose of funding a portion of the business combination and the costs and expenses incurred in connection therewith. Pursuant to the Commitment Letter, GSO has committed, on the terms and subject to the conditions set forth therein, on the Closing Date, to purchase (i) up to 145,000 Preferred Units at a price per Preferred Unit of $1,000.00, resulting in gross proceeds to Holdings of up to $145.0 million and (ii) 1,000,000 shares of Class A common stock at a price per share of $10.00, resulting in gross proceeds of $10.0 million to Holdings. Holdings may elect to reduce the number of Preferred Units to be sold to GSO if the amount of funds remaining in Boxwood’s trust account established in connection with its initial public offering (the “Trust Account”) following any Redemptions plus the amount of any additional equity investments, outside of the Preferred Commitment, that Boxwood may secure prior to the Closing (the “Common Equity Contribution”) is sufficient to reduce the value of the Rollover Units to be received by the Seller to $120.0 million and still have greater than $10.0 million available. If, due to any such reduction, GSO is offered fewer than 145,000 Preferred Units, it will not be obligated to purchase any shares of Class A common stock. However, Holdings may not reduce the number of Preferred Units to be sold to GSO to fewer than 130,000.

 

The Commitment Letter permits Holdings to offer Preferred Units to third party investors (other than Bernhard Capital Partners Management LP (“BCP”) or entities affiliated with BCP or Boxwood) (“Third Party Investors”), provided that the Third Party Investors will be required to purchase $1.75 of Class A common stock for every $1.00 of Preferred Units purchased.

 

For a description of the terms of the Preferred Units see the section entitled “Supplemental Information to the Definitive Proxy Statement—Commitment Letter.”

 

As consideration for the Commitment, Boxwood also entered the Payment Letter, pursuant to which Boxwood has agreed to pay to GSO 2% of the aggregate amount of the Liquidation Preference of the Preferred Units purchased by GSO on the Closing Date (which will be in the form of an original issue discount on such Preferred Units). In addition, GSO will be entitled to receive 1,200,000 Founder Shares, subject to adjustment in the event that Boxwood issues shares of Class A common stock to investors in connection with the business combination at a price below $10 (without taking into account any Founder Shares that may be received by such investors). Such Founder Shares will be subject to the same lock-up provisions as set forth in the Letter Agreement dated November 15, 2019, among Boxwood, Boxwood Sponsor, LLC and the other signatories thereto (the “Letter Agreement”).

 

Q:What is the effect of the Debt Amendment?

 

A:The Debt Amendment was entered into by the parties in connection with our entry into the Commitment Letter and the Purchase Agreement Amendment. Pursuant to the Debt Amendment, the Commitment Parties have agreed to, among other things, reduce the aggregate principal amount of the Credit Facilities to be provided by the Commitment Parties from up to $400 million to up to $321 million by reducing the aggregate principal amount available under the First Lien Term Facility from $290 million to $281 million and eliminating the Second Lien Term Facility, which would have been available for an aggregate principal amount of up to $70 million.

 

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In addition, the Debt Amendment changes the mix of cash and equity to be provided to the Seller that was set forth in the Debt Commitment Letter to provide that:

 

(a)to the extent that the Common Equity Contribution is greater than $10.0 million, the number of Rollover Units shall be reduced (and the cash consideration to the Seller shall be increased) on a dollar-for-dollar basis until the value of Rollover Units received by the Seller is equal to $120.0 million; and

 

(b)to the extent that there remains any amount of Common Equity Contribution after reducing the Equity Rollover in accordance with clause (a) above, the Company shall (i) reduce the Preferred Commitment until the amount of the Preferred Commitment is equal to $130.0 million or (ii) reduce the amount of the Commitment Parties’ aggregate commitments in respect of the First Lien Term Facility or (iii) reduce a combination of both the Preferred Commitment (but in any event, not below $130.0 million) and the First Lien Term Facility, in each case of the foregoing clauses (i), (ii) and (iii), on a dollar-for-dollar basis.

 

The Debt Amendment adjusts the condition precedent to the Commitment Parties’ obligation to provide the Credit Facilities from $100 million of Available Equity to $155 million (of which no more than $145 million will consist of the Preferred Commitment).

 

Q:Why did the parties enter into the Purchase Agreement Amendment, Commitment Letter, Payment Letter and Debt Amendment?

 

A:Between November 12, 2019 and January 23, 2020, in order to offset potential Redemptions in connection with the business combination, the Company held meetings with potential new investors for the purposes of entering into subscriptions agreements with institutional accredited investors (the “PIPE investors”) for the purchase by such investors, immediately prior to or concurrently with the Closing, of our securities, including shares of our common or preferred stock or other equity or equity-linked securities, convertible debt or other hybrid equity securities or a combination of the foregoing (the “PIPE securities”). Between November 2019 and January 2020, Boxwood reviewed indications of interest and negotiated term sheets with potential PIPE investors. Boxwood entered into the Commitment Letter, the Payment Letter, the Purchase Agreement Amendment and the Debt Amendment because, among other things, the proceeds from the sale of the Preferred Units to GSO together with the agreement of the Seller to receive less cash and additional equity upon the closing of the business combination under the Purchase Agreement Amendment ensures that the business combination is fully financed and provides certainty that the business combination will close regardless of the number of potential redemptions, the economic terms and restrictions on the Company set forth in the Commitment Letter compared to the other transaction term sheets and indications of interest received from other investors were more favorable, and as a result of the Commitment Letter, the Company will not need to incur the second lien debt contemplated by the original Debt Commitment Letter and reduce the aggregate principal amount of the credit facilities to be provided from up to $400 million to $321 million.

 

Q:What equity stake will our current stockholders hold in the Company immediately after the consummation of the business combination?

 

A:It is anticipated that, upon completion of the business combination, the ownership interests in the Company will be as set forth in the table below.*

 

   Assuming No
Redemptions
of Public
Shares
   Assuming
Maximum
Redemptions of Public
Shares(1)
 
Boxwood’s Public Stockholders   53.69%    
Initial Stockholders   10.87%   7.62%
Bernhard Capital Partners Management LP   10.43%   58.20%
Atlas Management   21.78%   26.89%
GSO   3.22%   7.29%

 

(1)Assumes that holders of 20,000,000 shares of Class A common stock exercise their redemption rights.

 

*Upon completion of the business combination, Boxwood’s public stockholders, GSO and the initial stockholders will hold shares of Class A common stock and BCP Energy Services Funds and Atlas management will primarily hold Holdings Units and shares of Class B common stock.

 

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The ownership percentages set forth above were calculated based on the amounts set forth in the sources and uses table on page 16 of this Proxy Supplement and do not take into account (a) warrants that will remain outstanding immediately following the business combination and may be exercised thereafter (commencing 30 days after the closing of the business combination) or (b) the issuance of any shares upon completion of the business combination under the Atlas Technical Consultants, Inc. 2019 Omnibus Incentive Plan (the “Incentive Plan”), a copy of which is attached to Definitive Proxy Statement as Annex C, but does include the Founder Shares, which, on the effective date of the business combination, will convert into shares of Class A common stock in accordance with the terms of the Charter (subject to adjustment). If the actual facts are different than the assumptions set forth above, the percentage ownership numbers set forth above will be different.

 

For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

 

Furthermore, there are currently outstanding an aggregate of 23,750,000 warrants to acquire our shares of Class A common stock, which is comprised of 3,750,000 private placement warrants held by our initial stockholders and 20,000,000 warrants sold as part of the units in the Company’s initial public offering. Each of our outstanding warrants is exercisable commencing 30 days following the Closing for one share of Class A common stock and, following the consummation of the business combination, will entitle the holder thereof to purchase one share of Class A common stock in accordance with its terms. Therefore, as of the date of this proxy statement, if we assume that each outstanding warrant is exercised and one share of Class A common stock is issued as a result of such exercise, with payment to Boxwood of the exercise price of $11.50 per warrant for one share, our fully-diluted share capital would increase by a total of 23,750,000 shares, with approximately $273,125,000 paid to Boxwood to exercise the warrants.

 

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 5:00 p.m., Eastern Time, on February 4, 2020 (two business days prior to the vote at the special meeting) (a) submit a written request to the transfer agent that the Company redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through 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 the transfer agent directly and instruct it to do so.

 

Any holder of public shares will be entitled to request that their public shares 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 earned on the funds held in the trust account (net of taxes payable), divided by the number of then-outstanding public shares. For illustrative purposes, as of January 22, 2020, this would have amounted to approximately $10.22 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 stockholders, regardless of whether such public stockholders 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 stockholders 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 the transfer agent at the address listed at the end of this section.

 

6

 

 

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the Closing. If you deliver your shares for redemption to the transfer agent and later decide prior to the special meeting not to elect redemption, you may request that Boxwood instruct our transfer agent to return the shares (physically or electronically). You may make such request by contacting the transfer agent at the phone number or address listed at the end of this section.

 

Any corrected or changed written exercise of redemption rights must be received by Boxwood’s secretary prior to the vote taken on the business combination proposal at the special meeting. No request for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to the transfer agent by 5:00 p.m., Eastern Time, on February 4, 2020.

 

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, the Company 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 Boxwood warrants that you may hold.

 

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

 

A:Yes. Stockholders may send a later-dated, signed proxy card to Boxwood’s secretary at the address set forth below so that it is received by Boxwood’s secretary prior to the vote at the special meeting (which is scheduled to take place on Thursday, February 6, 2020) or attend the special meeting in person and vote. Stockholders also may revoke their proxy by sending a notice of revocation to Boxwood’s secretary, which must be received by Boxwood’s secretary prior to the vote at the special 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: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 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: BWMC.info@morrowsodali.com

 

You also may obtain additional information about Boxwood from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your shares, you will need to deliver your public shares (either physically or electronically) to the transfer agent at the address below prior to 5:00 p.m., Eastern Time, on February 4, 2020 (two business days prior to the vote at the special meeting). 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

 

The foregoing updates the disclosures in the section entitled “Questions and Answers About the Proposals” on pages 9 – 21 and any other applicable section of the Definitive Proxy Statement.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

The statements contained in this Proxy Supplement 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 Supplement in relation to Atlas has been provided by Atlas and its management team, and forward-looking statements include statements relating to Atlas’ management team’s 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 Supplement 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;

 

the benefits of the business combination;

 

the future financial performance of the combined company following the business combination;

 

expansion plans and opportunities; and

 

our potential ability to obtain financing to complete the business combination, including with GSO.

 

The forward-looking statements contained in this Proxy Supplement 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:

 

the satisfaction of conditions to the business combination;

 

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

 

the inability to complete the business combination due to the failure to arrange equity and/or equity-related financing in connection with the closing of the business combination (including with GSO), obtain approval of our stockholders or satisfy other conditions to the closing of the business combination and the inability to complete the transactions contemplated by the agreement between Atlas and Long Engineering due to the failure to satisfy the conditions to the closing of such transactions;

 

the outcome of any legal proceedings that may be instituted against us or Atlas relating to the business combination and related transactions, the Definitive Proxy Statement or this Proxy Supplement;

 

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

 

our ability to raise financing in the future;

 

the risk that the business combination disrupts the parties’ current plans and operations as a result of the announcement and consummation of the transactions described in the Definitive Proxy Statement and this Proxy Supplement;

 

8

 

 

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the 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 public securities’ potential liquidity and trading;

 

costs related to the business combination and the acquisition of Long Engineering;

 

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

 

changes adversely affecting the business in which Atlas is engaged;

 

the risks associated with cyclical demand for Atlas’ services and vulnerability to industry downturns and regional national downturns;

 

fluctuations in Atlas’ revenue and operating results;

 

unfavorable conditions or further disruptions in the capital and credit markets;

 

Atlas’ ability to generate cash, service indebtedness and incur additional indebtedness;

 

competition from existing and new competitors;

 

Atlas’ ability to integrate any businesses it acquires, including Long Engineering;

 

Atlas’ ability to recruit and retain experienced personnel;

 

risks related to legal proceedings or claims, including liability claims;

 

Atlas’ dependence on third-party contractors to provide various services;

 

Atlas’ ability to obtain additional capital on commercially reasonable terms;

 

safety and environmental requirements that may subject Atlas to unanticipated liabilities;

 

general economic conditions; and

 

other factors detailed under the section entitled “Risk Factors” in the Definitive Proxy Statement and in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

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 a stockholder grants its proxy or instructs how its votes should be cast or vote on the proposals set forth in this Proxy Supplement, it should be aware that the occurrence of the events described in the “Risk Factors” section in the Definitive Proxy Statement may adversely affect Boxwood or Atlas.

 

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SUPPLEMENTAL INFORMATION TO THE DEFINITIVE PROXY STATEMENT

 

Update to the Business Combination Proposal

 

Commitment Letter

 

On January 23, 2020, Boxwood and Holdings entered into the Commitment Letter for the purpose of funding a portion of the business combination and the costs and expenses incurred in connection therewith. Pursuant to the Commitment Letter, GSO committed, on the terms and subject to the conditions set forth therein, on the Closing Date, to purchase (i) up to 145,000 Preferred Units at a price per Preferred Unit of $1,000.00, resulting in gross proceeds to Holdings of up to $145.0 million and (ii) 1,000,000 shares of Class A common stock, at a price per share of $10.00, resulting in gross proceeds of $10.0 million to Holdings.

 

Holdings may elect to reduce the number of Preferred Units to be sold to GSO if the amount of the Common Equity Contribution is sufficient to reduce the value of the Rollover Units to be received by the Seller to $120.0 million and still have greater than $10.0 million available. For more information on the mix of cash and equity to be received by the Seller, see the sections entitled “Purchase Agreement Amendment” and “Amendment to the Debt Commitment Letter” below. If, due to any such reduction, GSO is offered fewer than 145,000 Preferred Units, it will not be obligated to purchase any shares of Class A common stock. However, Holdings may not reduce the number of Preferred Units to be sold to GSO to fewer than 130,000.

 

The Commitment Letter permits Holdings to offer Preferred Units to Third Party Investors, provided that the Third Party Investors will be required to purchase $1.75 of Class A common stock for every $1.00 of Preferred Units purchased.

 

The obligation of GSO to fund the Commitment will terminate automatically and immediately upon the earliest to occur of (a) the termination of the Purchase Agreement, (b) the closing of the Business Combination without the use of the Commitment and (c) 5:00 p.m., New York City time, on February 19, 2020 (the “Termination Date”).

 

Pursuant to the Commitment Letter, for the period from the date of the Commitment Letter until the earliest of (a) the mutual agreement by the parties thereto not to execute definitive documentation relating to the Commitment, (b) the Closing Date, and (c) the Termination Date, Boxwood agreed (i) not to, without the prior written consent of GSO, directly or indirectly solicit, participate in any negotiations or discussion with, or provide or afford access to information to, any third party with respect to, or otherwise effect, facilitate, encourage or accept any offers for the purchase or provision of, the Preferred Units or any alternative equity or debt financing arrangements (other than the Credit Facilities or the issuance of, or continued investment in, Class A common stock), in each case, to be put in place in connection with the business combination, and (ii) to terminate any written agreement or arrangement related to the foregoing set forth in clause (i) above (other than the Credit Facilities) to which Boxwood is a party, as well as any related activities and discussions with any party related to the foregoing set forth in clause (i) above other than with GSO.

 

Boxwood will pay all of GSO’s reasonable and documented fees, out-of-pocket costs and expenses in connection with the issuance of the Preferred Units and the Class A common stock it has committed to purchase.

 

Terms of the Preferred Units

 

Ranking

 

The Preferred Units will rank senior in priority to all other existing and future equity securities of Holdings with respect to liquidation preference and distribution rights.

 

Liquidation Preference

 

The Preferred Units will have a liquidation preference of $1,000 per Preferred Unit, plus any accrued and unpaid dividends (the “Liquidation Preference”).

 

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Dividends

 

Subject to any limitations set forth in the Credit Facilities, the Preferred Units will pay a cash dividend of 5% per annum, plus either an additional 6.25% per annum in cash or 7.25% per annum in additional Preferred Units, at Holdings’ option, payable quarterly in arrears.

 

If a cash dividend is not able to be made because of a limitation under the Credit Facilities, then such dividend will convert into a dividend of additional Preferred Units at a rate of 14.25% per annum, payable quarterly in arrears, until cash dividend payments can be made.

 

Voting

 

The Preferred Units will not possess voting rights.

 

Conversion

 

The Preferred Units will not be convertible into any other security of Holdings.

 

Redemption

 

Holdings may redeem the Preferred Units (i) within the first two years of the Closing Date at a customary make-whole premium with a discount rate set at the applicable treasury rate plus 50 basis points, (ii) beginning on the second anniversary of the Closing Date at a price of 103% of the Liquidation Preference (the “Redemption Premium”), and (iii) after the third anniversary of the Closing Date at the Liquidation Preference.

 

Subject to the terms of Holdings’ and its subsidiaries’ senior credit agreements, Holdings will be required to redeem the Preferred Units at the Redemption Premium in the event of (i) a change of control, (ii) sales or other dispositions of all or substantially all of Holdings’ assets, (iii) insolvency/bankruptcy of Holdings or Atlas Intermediate, (iv) an acceleration under any of the debt facilities of Holdings or its subsidiaries in an amount equal to or greater than $12 million, (v) a payment default on the Preferred Units that has not been cured within five business days of the Issuer’s receipt of written notice from GSO, (vi) a default under the Preferred Unit protective provisions, (vii) a final judgement default against Holdings or any of its subsidiaries in an amount equal to or greater than $12 million that is not paid or covered by insurance, or (viii) an actual or asserted invalidity or enforceability of the Holdings operating agreement or GSO Subscription Agreement by the Company, Holdings or any of its subsidiaries.

 

Finally, holders of the Preferred Units may require Holdings to redeem their Preferred Units at the Liquidation Preference, beginning on the eighth anniversary of the Closing Date.

 

Covenants of Holdings

 

The terms of the Preferred Units are expected to include customary covenants for preferred equity, including limitations on debt incurrence, equity issuances and the payments of dividends.

 

Registration Rights

 

If GSO purchases shares of Class A common stock, it will be entitled to customary demand and piggyback registration rights.

 

Board Observer

 

Following the Closing Date, GSO will have the right to appoint one non-voting observer to Boxwood’s Boards of Directors.

 

The foregoing description of the Commitment Letter does not purport to be complete and is qualified in its entirety by the terms and conditions of the Commitment Letter, a copy of which is attached to this Proxy Supplement as Annex A.

 

The foregoing updates the disclosures in the section entitled “The Business Combination Proposal—Related Agreements” on pages 87 – 91 and any other applicable section of the Definitive Proxy Statement.

 

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Payment Letter

 

As consideration for the Commitment, Boxwood also entered into the Payment Letter, pursuant to which Boxwood has agreed to pay to GSO 2% of the aggregate amount of the Liquidation Preference of the Preferred Units purchased by GSO on the Closing Date (which will be in the form of an original issue discount on such Preferred Units). In addition, GSO will be entitled to receive 1,200,000 Founder Shares, subject to adjustment in the event that Boxwood issues shares of Class A common stock to investors in connection with the business combination at a price below $10 (without taking into account any Founder Shares that may be received by such investors). Such Founder Shares will be subject to the same lock-up provisions as set forth in the Letter Agreement.

 

The foregoing description of the Payment Letter does not purport to be complete and is qualified in its entirety by the terms and conditions of the Payment Letter, a copy of which is attached to this Proxy Supplement as Annex B.

 

The foregoing updates the disclosures in the section entitled “The Business Combination Proposal—Related Agreements” on pages 87 – 91 and any other applicable section of the Definitive Proxy Statement.

 

Purchase Agreement Amendment

 

On January 23, 2020, Boxwood entered into the Purchase Agreement Amendment. The Purchase Agreement Amendment was entered into by the parties principally to (i) provide amendments necessary to facilitate the transactions contemplated by the Commitment Letter, (ii) increase the number of Rollover Units the Seller will receive as consideration by up to 5,000,000 Holdings Units at $10.00 per Holdings Unit to the extent of the Redemptions and (iii) reflect the purchase of Long Engineering by Atlas Intermediate following the Closing.

 

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, as amended by the Purchase Agreement Amendment, the Buyer will pay off the existing net debt of the Seller which is anticipated to be approximately $160 million, and the Seller will receive aggregate consideration of approximately $457 million  (inclusive of the Seller’s transaction fees), which will consist of (i) between $210 million and $337 million of cash consideration and (ii)(a) between $120.0 million and $247.0 million of Rollover Units, and (b) shares of Class B common stock of Boxwood; provided that if the Cancellation occurs, the Seller will receive an additional $17,500,000 of Rollover Units. For each Rollover 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 final value of the Rollover Units are dependent on the amount of money remaining in the Trust Account following the Redemptions, and the amount of Available Equity prior to the Closing, which is anticipated to include the Commitment.

 

For more details on the determination of the mix of cash and equity to be paid to the Seller, see the section entitled “Debt Amendment” below.

 

In addition, if the aggregate net proceeds of any investment in Boxwood, Holdings or Target, other than that anticipated to be received from GSO for the Preferred Units, together with the funds remaining in the Trust Account following the Redemptions, is less than $50.0 million, Boxwood will cancel for no consideration 1,750,000 Founder Shares held by the Sponsor.

 

The foregoing description of the Purchase Agreement Amendment does not purport to be complete and is qualified in its entirety by the terms and conditions of the Purchase Agreement Amendment, a copy of which is attached to this Proxy Supplement as Annex C.

 

The foregoing updates the disclosures in the section entitled “The Business Combination Proposal—The Purchase Agreement” on pages 76 – 87 and any other applicable section of the Definitive Proxy Statement.

 

Forfeiture Agreement

 

On January 23, 2020, the Sponsor and the Seller entered into the Forfeiture Agreement pursuant to which the Sponsor agreed to perform its obligation to deliver 1,750,000 Founder Shares for cancellation in connection with the Cancellation, if applicable.

 

The foregoing description of the Forfeiture Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Forfeiture Agreement, a copy of which is attached to this Proxy Supplement as Annex D.

 

The foregoing updates the disclosures in the section entitled “The Business Combination Proposal—Related Agreements” on pages 87 – 91 and any other applicable section of the Definitive Proxy Statement.

 

12

 

 

Debt Amendment

 

On January 23, 2020, in connection with Boxwood’s entry into the Commitment Letter and the Purchase Agreement Amendment, Boxwood entered into the Debt Amendment with the Commitment Parties pursuant to which Boxwood and the Commitment Parties have agreed to, among other things, reduce the aggregate principal amount of the Credit Facilities to be provided by the Commitment Parties from up to $400.0 million to up to $321.0 million by reducing the aggregate principal amount available under the First Lien Term Facility from $290.0 million to $281.0 million and eliminating the Second Lien Term Facility, which would have been available for an aggregate principal amount of up to $70 million.

 

In addition, the Debt Amendment changes the mix of cash and equity to be provided to the Seller that was set forth in the Debt Commitment Letter to provide that:

 

(a)to the extent that the Common Equity Contribution is greater than $10.0 million, the number of Rollover Units shall be reduced (and the cash consideration to the Seller shall be increased) on a dollar-for-dollar basis until the value of Rollover Units received by the Seller is equal to $120.0 million; and

 

(b)to the extent that there remains any amount of Common Equity Contribution after reducing the Equity Rollover in accordance with clause (a) above, the Company shall (i) reduce the Preferred Commitment until the amount of the Preferred Commitment is equal to $130.0 million or (ii) reduce the amount of the Commitment Parties’ aggregate commitments in respect of the First Lien Term Facility or (iii) reduce a combination of both the Preferred Commitment (but in any event, not below $130.0 million) and the First Lien Term Facility, in each case of the foregoing clauses (i), (ii) and (iii), on a dollar-for-dollar basis.

 

The Debt Amendment adjusts the condition precedent to the Commitment Parties’ obligation to provide the Credit Facilities from $100.0 million of Available Equity to $155.0 million of Available Equity (of which no more than $145.0 million will consist of the Preferred Commitment).

 

The foregoing description of the Debt Amendment does not purport to be complete and is qualified in its entirety by the terms and conditions of the Amended Purchase Agreement, a copy of which is attached to this Proxy Statement as Annex E.

 

The foregoing updates the disclosures in the sections entitled “Indebtedness” and “Certain Relationships and Related Party Transactions” on page 154 and pages 168 – 171, respectively, and any other applicable section of the Definitive Proxy Statement.

 

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Update to Organizational Structure

 

The following diagram illustrates the ownership structure of the Company immediately following the Closing. The equity interests shown in the diagram were calculated based on the amounts set forth in the sources and uses table on page 16 of this Proxy Supplement and are based on the assumptions that (i) no stockholder exercises its redemption rights to receive cash from the trust account in exchange for their shares of Class A common stock; (ii) none of the parties set forth in the chart below purchases shares of Class A common stock in the open market; (iii) the founder shares convert on a one-for-one basis into an aggregate of 5,000,000 shares of Class A common stock, subject to adjustment; and (iv) there are no other issuances of equity interests of the Company or its subsidiaries prior to or in connection with the Closing. Notwithstanding the foregoing, the ownership percentages set forth below do not take into account (a) warrants that will remain outstanding immediately following the business combination and may be exercised thereafter (commencing 30 days after the Closing) or (b) the issuance of any shares upon completion of the business combination under the Incentive Plan.

 

 

The foregoing updates the disclosures in the section entitled “Summary of the Proxy Statement—Organizational Structure” on page 27 and any other applicable section of the Definitive Proxy Statement.

 

14

 

 

Update to Post-Business Combination Ownership Structure

 

It is anticipated that, upon completion of the business combination, the ownership interests in the Company will be as set forth in the table below.*

 

   Assuming No
Redemptions
of Public
Shares
   Assuming
Maximum
Redemptions of
Public
Shares(1)
 
Boxwood’s Public Stockholders   53.69%    
Initial Stockholders   10.87%   7.62%
Bernhard Capital Partners Management LP   10.43%   58.20%
Atlas Management   21.78%   26.89%
GSO   3.22%   7.29%

 

(1)Assumes that holders of 20,000,000 shares of Class A common stock exercise their redemption rights.

 

*Upon completion of the business combination, Boxwood’s public stockholders, GSO and the initial stockholders will hold shares of Class A common stock and BCP Energy Services Funds and Atlas management will primarily hold Holdings Units and shares of Class B common stock.

 

The ownership percentages set forth above were calculated based on the amounts set forth in the sources and uses table on page 16 of this Proxy Supplement and do not take into account (a) warrants that will remain outstanding immediately following the business combination and may be exercised thereafter (commencing 30 days after the closing of the business combination) or (b) the issuance of any shares upon completion of the business combination under the Atlas Technical Consultants, Inc. 2019 Omnibus Incentive Plan (the “Incentive Plan”), a copy of which is attached to Definitive Proxy Statement as Annex C, but does include the Founder shares, which, on the effective date of the business combination, will convert into shares of Class A common stock in accordance with the terms of the Charter (subject to adjustment). If the actual facts are different than the assumptions set forth above, the percentage ownership numbers set forth above will be different.

 

For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” In addition, following the business combination, the ownership of Boxwood and Atlas will change based on the exercise of the rights set forth in the Holdings LLC Agreement.

 

The foregoing updates the disclosures in the section entitled “The Business Combination Proposal—The Purchase Agreement—Post-Business Combination Ownership Structure” on page 77 and any other applicable section of the Definitive Proxy Statement.

 

Update to Closing Funding

 

At the Closing, and following the delivery of payments described in the section entitled “The Business Combination Proposal—Trust Account” in the Definitive Proxy Statement, the Company will disburse all remaining amounts then available in the trust account and the proceeds of the debt financing described under “Debt Financing” below and any equity financing received in connection with the business combination for the following purpose and in the following order of priority (to the extent such proceeds are available):

 

first, the repayment of the indebtedness for borrowed money of Atlas Intermediate pursuant to payoff letters delivered prior to Closing;

 

second, the payment of the estimated transaction expenses of the Seller;

 

third, the payment of expenses incurred by the Company in connection with the business combination including any deferred underwriting fees and other deferred fees arising from or incurred in connection with the Company’s initial public offering to the extent actually due and payable in connection with the business combination;

 

fourth, up to $10,500,000 for the immediate use by Holdings, Buyer, Atlas Intermediate or one of its subsidiaries in connection with the acquisition of Long Engineering;

 

fifth, the payment to the Seller, as part of the initial purchase price, until the Rolled Unit Value is equal to $120,000,000; and

 

sixth, to either reduce the total amount of indebtedness under the Credit Facilities, reduce the Preferred Commitment or a combination of both.

 

The foregoing updates the disclosures in the section entitled “The Business Combination Proposal—The Purchase Agreement—Closing Funding” on page 78 and any other applicable section of the Definitive Proxy Statement.

 

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Update to Background of the Business Combination

 

As described in the Definitive Proxy Statement, the terms of the Purchase Agreement are the result of arm’s-length negotiations between representatives of the Company and the Seller over an extended period of time. The background of the business combination through November 12, 2019 is described in the Definitive Proxy Statement. The discussion below supplements this description.

 

Following the filing of the Definitive Proxy Statement, Boxwood conducted a process of meeting potential PIPE investors for the purchase by such investors, immediately prior to or concurrently with the closing of the business combination, of PIPE securities. Between November 2019 and January 2020, Boxwood evaluated a number of potential transactions with PIPE investors. On January 20, 2020, Boxwood’s management reviewed with Boxwood’s board of directors the term sheets and other indications of interest for transactions with potential PIPE investors and determined that it was in the best interests of Boxwood and its stockholders to pursue a transaction with GSO.

 

Between January 17, 2020 and January 22, 2020 Boxwood negotiated, including through its, the Seller’s and the Commitment Parties’ respective legal counsel, the Purchase Agreement Amendment, the Forfeiture Agreement and the Debt Amendment to appropriately provide for the revised terms of the business combination as dictated by the terms of the proposed transaction with GSO.

 

On January 23, 2020, Boxwood’s board of directors approved the Purchase Agreement Amendment, the Commitment Letter, the Payment Letter, the Forfeiture Agreement and the Debt Amendment. Subsequently, each of the foregoing was executed by the respective parties thereto.

 

The foregoing updates the disclosures in the section entitled “The Business Combination Proposal—Background of the Business Combination” on pages 91 – 94 and any other applicable section of the Definitive Proxy Statement.

 

Boxwood’s Board of Directors’ Reasons for the entry into the Commitment Letter, the Payment Letter and the Approval of the Purchase Agreement Amendment.

 

Our board of directors considered several factors in connection with its evaluation of the Commitment Letter and the Payment Letter, and the entry into the Purchase Agreement Amendment. In light of the complexity of those factors, our board of directors, as a whole, 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 to enter into the Commitment Letter, the Payment Letter and the Purchase Agreement Amendment. This explanation of the reasons for our board of directors’ approval of such agreements, and all other information presented in this section, is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Note Regarding Forward-Looking Statements.” in the Proxy Statement.

 

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The factors considered by our board of directors included, but were not limited to, the following:

 

Deal Certainty. The proceeds from the sale of the Preferred Units and the Class A common stock to GSO together with the agreement of the Seller to receive less cash and additional equity upon the closing of the business combination under the Purchase Agreement Amendment ensures that the business combination is fully financed and provides certainty that the business combination will close regardless of the number of potential redemptions;

 

Deal Terms. The economic terms and restrictions on the Company set forth in the Commitment Letter compared to the other transaction term sheets and indications of interest received from other investors were more favorable; and
   
 Reduction in Debt. As a result of the Commitment Letter, the Company will not need to incur the second lien debt contemplated by the original Debt Commitment Letter and reduce the aggregate principal amount of the credit facilities to be provided from up to $400 million to $321 million.

 

The foregoing updates the disclosures in the section entitled “The Business Combination Proposal—Boxwood’s Board of Directors’ Reasons for the Approval of the Business Combination” on pages 94 – 97 and any other applicable section of the Definitive Proxy Statement.

 

Update to 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 Boxwood’s good faith estimate of such amounts.

 

Sources and Uses of Proceeds

($ in 000s)

 

Sources  No
Redemption
   Max
Redemption(1)
 
Proceeds from Trust Account  $204,300,000   $0 
Debt   220,700,000    281,000,000 
Seller Rollover Equity   120,000,000    239,300,000 
GSO Commitment   127,400,000    152,100,000 
Total Sources  $672,400,000   $672,400,000 

 

Uses  No
Redemption
   Max
Redemption
 
Payoff Existing Atlas Debt (and related expenses)  $173,825,000   $173,825,000 
Cash Proceeds to Seller   323,175,000    203,875,000 
Seller Rollover Equity   120,000,000    239,300,000 
Deferred IPO fee   7,000,000    7,000,000 
Other Transaction Expenses   38,000,000    38,000,000 
Acquisition of Long Engineering   10,500,000    10,500,000 
Total Uses  $672,400,000   $672,400,000 

 

 

(1)This presentation assumes that 100% of Boxwood’s public stockholders exercise their redemption rights with respect to their public shares.

 

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The foregoing updates the disclosures in the section entitled “The Business Combination Proposal—Sources and Uses of Funds for the Business Combination” on page 101 and any other applicable section of the Definitive Proxy Statement.

 

Update to Certain Projected Financial Information

 

In connection with Boxwood’s receipt of the Commitment Letter and entry into the Purchase Agreement Amendment, Atlas has confirmed its 2019 Adjusted EBITDA and 2020 Adjusted EBITDA guidance previously provided to Boxwood and its board of directors  that was disclosed in the section entitled “The Business Combination Proposal—Certain Projected Financial Information” on pages 97 – 98 of the Definitive Proxy Statement  and which does not reflect the expected closing of Atlas’ previously announced acquisition of Long Engineering, Inc., which is expected to be accretive. Adjusted EBITDA is a non-GAAP financial measure. Such section of the Definitive Proxy Statement, including the footnotes to the summary of such projections disclosed on page 98 of the Definitive Proxy Statement, contain important disclaimers and disclosures relating to non-GAAP financial measures, including Adjusted EBITDA.

 

The foregoing updates the disclosures in the section entitled “The Business Combination Proposal—Certain Projected Financial Information” on pages 97 – 98 and any other applicable section of the Definitive Proxy Statement.

 

Update to the Nasdaq Proposal

 

As described in the Definitive Proxy Statement, Boxwood’s stockholders will be asked to consider and vote on a proposal to approve, assuming the business combination proposal and the charter proposals (each as defined in the Definitive Proxy Statement) are approved and adopted, for the purposes of complying with the applicable listing rules of The Nasdaq Stock Market (“Nasdaq”), (x) the issuance of more than 20% of our issued and outstanding common stock (i) pursuant to the terms of the Purchase Agreement, (ii) upon redemption of the Rollover Units and shares of Class B common stock pursuant to the Holdings LLC Agreement and (iii) the potential issuance of PIPE securities to any PIPE investors in connection with the business combination, and (y) the issuance of common stock to BCP and the potential issuance of PIPE securities to any potential PIPE investor in connection with the business combination that may result in BCP or any such PIPE investor owning more than 20% of our outstanding common stock, or more than 20% of the voting power, which could constitute a “change of control” under Nasdaq rules (the “Nasdaq proposal”).

 

In addition to the issuances described in the Definitive Proxy Statement, additional shares of our common stock will be issued pursuant to the Commitment Letter and Purchase Agreement Amendment described in this Proxy Supplement in the section entitled “Supplemental Information to the Definitive Proxy Statement—Update to the Business Combination Proposal.” Accordingly, we are also seeking stockholder approval of the issuance of such additional shares.

 

The foregoing updates the disclosures in the section entitled “The Nasdaq Proposal” on pages 110 – 111 and any other applicable section of the Definitive Proxy Statement.

 

Update to Management of the Company Following the Business Combination

 

Upon the completion of the business combination, BCP may beneficially own a majority of the voting power of all outstanding shares of our common stock. Pursuant to The Nasdaq Stock Market listing standards, a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company qualifies as a “controlled company” and may elect not to comply with certain corporate governance requirements. Therefore, if and for so long as BCP beneficially owns a majority of the voting power of all outstanding shares of our common stock, we may elect to not be subject to The Nasdaq Stock Market listing standards that would otherwise require us to have: (i) a board of directors comprised of a majority of independent directors; (ii) compensation of our executive officers determined by a majority of the independent directors or a compensation committee comprised solely of independent directors; (iii) a compensation committee charter which, among other things, provides the compensation committee with the authority and funding to retain compensation consultants and other advisors; and (iv) director nominees selected, or recommended for the board’s selection, either by a majority of the independent directors or a nominating committee comprised solely of independent directors. Accordingly, if we are a controlled company and if we elect to rely on the exemption and during any transition period following a time when we have made such election and are no longer a controlled company, our stockholders would not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements.

 

The foregoing updates the disclosures in the section entitled “Management of the Company Following the Business Combination” on pages 155 – 160 and any other applicable section of the Definitive Proxy Statement.

 

Update to Risk Factors

 

We may be a “controlled company” within the meaning of Nasdaq listing standards and the rules of the SEC. As a result, we may qualify for, and may elect to rely on, exemptions from certain corporate governance requirements that would otherwise provide protection to stockholders of other companies.

 

Upon the completion of the business combination, BCP may beneficially own a majority of the voting power of all outstanding shares of our common stock. Pursuant to Nasdaq listing standards, a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company qualifies as a “controlled company” and may elect not to comply with certain corporate governance requirements. Therefore, if and for so long as BCP beneficially owns a majority of the voting power of all outstanding shares of our common stock, we may elect to not be subject to Nasdaq listing standards that would otherwise require us to have: (i) a board of directors comprised of a majority of independent directors; (ii) compensation of our executive officers determined by a majority of the independent directors or a compensation committee comprised solely of independent directors; (iii) a compensation committee charter which, among other things, provides the compensation committee with the authority and funding to retain compensation consultants and other advisors; and (iv) director nominees selected, or recommended for the board’s selection, either by a majority of the independent directors or a nominating committee comprised solely of independent directors. Accordingly, if we are a controlled company and if we elect to rely on the exemption and during any transition period following a time when we have made such election and are no longer a controlled company, our stockholders would not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements.

 

In addition, on June 20, 2012, the SEC passed final rules implementing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 pertaining to compensation committee independence and the role and disclosure of compensation consultants and other advisers to the compensation committee. The SEC’s rules direct each of the national securities exchanges (including Nasdaq on which we intend to list our common stock) to develop listing standards requiring, among other things, that: (i) compensation committees be composed of fully independent directors, as determined pursuant to new independence requirements; (ii) compensation committees be explicitly charged with hiring and overseeing compensation consultants, legal counsel and other committee advisors; and (iii) compensation committees be required to consider, when engaging compensation consultants, legal counsel or other advisors, certain independence factors, including factors that examine the relationship between the consultant or advisor’s employer and us. If we are a “controlled company”, we will not be subject to these compensation committee independence requirements.

  

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The foregoing updates the disclosures in the section entitled “Risk Factors” on pages 40 – 56 and any other applicable section of the Definitive Proxy Statement.

 

Update to Legal Proceedings

 

On November 22, 2019, a putative class action captioned Wolf v. Boxwood Merger Corp., et al. was filed in the United States District Court for the District of Delaware against Boxwood and certain of its directors asserting claims under Section 14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) in connection with the Definitive Proxy Statement (the “Action”). The complaint alleges that the Definitive Proxy Statement omitted, among other things, certain financial and other information relating to the business combination, and seeks injunctive relief and damages, as well as fees and costs. The Company believes that the claims asserted in the Action are without merit.

 

Nevertheless, while the Company believes that no supplemental disclosure is required under applicable law, in order to moot the disclosure claims asserted in the Action and minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, Boxwood has determined to voluntarily supplement the Definitive Proxy Statement as provided under the heading “Supplemental Disclosures,” below (the “supplemental disclosures”). The named plaintiff in the Action (“Plaintiff”) has agreed that the supplemental disclosures moot his claims and to voluntarily dismiss the Action (with prejudice as to Plaintiff and without prejudice as to the putative class) within five business days of the closing of the business combination.

 

Nothing in this Proxy Supplement shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the supplemental disclosures set forth herein. To the contrary, Boxwood specifically denies all allegations in the Action that any additional disclosure was or is required.

 

Supplemental Disclosures

 

The following disclosures supplement the disclosures contained in the Definitive Proxy Statement and should be read in conjunction with the disclosures contained in the Definitive Proxy Statement, which should be read in its entirety. To the extent the information set forth herein differs from or updates information contained in Definitive Proxy Statement, the information set forth herein shall supersede or supplement the information in the Definitive Proxy Statement. All page and paragraph references used herein refer to the Definitive Proxy Statement before any additions or deletions resulting from the supplemental disclosures, and terms used below, unless otherwise defined, have the meanings set forth in the Definitive Proxy Statement. Underlined text shows text being added to a referenced disclosure in the Definitive Proxy Statement.

 

1.The section of the Definitive Proxy Statement entitled “The Business Combination Proposal — Background of the Business Combination” is hereby supplemented as follows:

 

The final paragraph on page 91 (such paragraph beginning with “We ultimately decided to discontinue discussions with the Potential Targets other than Atlas…”) of the Definitive Proxy Statement is amended and restated to read as follows:

 

We ultimately decided to discontinue discussions with the Potential Targets other than Atlas after conducting further due diligence on the Potential Targets and negotiating the terms of a potential business combination with them. In some circumstances, we did not agree with the desired valuations proposed by such Potential Targets’ sellers. We most actively pursued five Potential targets other than Atlas, which process included meeting with their respective management teams, conducting site visits, submitting valuations and/or engaging in discussions regarding the same. These five Potential Targets were (1) a restoration and reconstruction business, (2) a technical industrial services business serving agencies of the U.S. federal government, (3) a utility services business, (4) a provider of professional services to the U.S. federal government and (5) a utility services provider. Following such process, Atlas emerged as a frontrunner to pursue a business combination. Confidentiality agreements entered into with Atlas and the Potential Targets were individually negotiated on customary terms, did not include so-called “don’t ask, don’t waive” provisions, and either did not contain a standstill provision or provided that any standstill provision would sunset upon our entry into a definitive agreement such as the Purchase Agreement.

 

2.The section of the Definitive Proxy Statement entitled “The Business Combination Proposal — Background of the Business Combination” is hereby supplemented as follows:

 

The first paragraph on page 94 (such paragraph beginning with “On July 30, 2019, our board of directors met telephonically to discuss…”) of the Definitive Proxy Statement is amended and restated to read as follows:

 

On July 30, 2019, our board of directors met telephonically to discuss the business combination with Atlas, including a detailed discussion of the form of Purchase Agreement. Also in attendance were certain officers of Boxwood and representatives of Greenhill and Winston. The board of directors reviewed the proposed terms of the Purchase Agreement and other related transaction agreements. The board of directors also reviewed a presentation prepared by Boxwood’s management, portions of which were prepared with assistance from Greenhill. Greenhill did not prepare, provide or deliver any other written presentation, report, opinion or appraisal relating to the business combination for or to either management or the board of directors. The board of directors then discussed other factors including those described below under the caption “Boxwood’s Board of Directors’ Reasons for the Approval of the Business Combination.” At the end of the meeting, the board of directors directed Boxwood’s management and other advisors to negotiate the final terms of the Purchase Agreement and the other ancillary agreements and to circulate the definitive agreements to the board of directors for approval via written consent prior to execution. Throughout late July and early August, we and our advisors finalized our due diligence which culminated in calls with Atlas customers.

 

The foregoing updates the disclosures in the section entitled “Other Information Related to Boxwood—Legal Proceedings” on page 125 and any other applicable section of the Definitive Proxy Statement. 

 

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COMPARATIVE SHARE INFORMATION

 

The following table sets forth selected historical comparative share and unit information for Boxwood and Atlas Intermediate and unaudited pro forma condensed combined per share information of Boxwood after giving effect to the business combination, assuming two redemption scenarios as follows:

 

Assuming No Redemptions: This presentation assumes that no Boxwood stockholders exercise redemption rights with respect to their public shares.

 

Assuming Maximum Redemptions: This presentation assumes that 100% of Boxwoods public stockholders exercise redemption rights with respect to their public shares.

 

The pro forma book value information reflects the business combination as if it had occurred on June 30, 2019. The weighted average shares outstanding and net earnings per share information reflect the business combination as if it had occurred on January 1, 2018.

 

This information is only a summary and should be read together with the selected historical financial information included in the Definitive Proxy Statement, and the historical financial statements of Boxwood and Atlas Intermediate and related notes that are included in the Definitive Proxy Statement. The unaudited pro forma combined per share information of Boxwood and Atlas Intermediate is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included in the Definitive Proxy Statement.

 

The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of Boxwood and Atlas Intermediate would have been had the companies been combined during the periods presented.

 

           Combined Pro Forma 
(dollars in thousands, except share and per share amounts)  Boxwood   Atlas Intermediate   Assuming No Redemptions   Assuming Maximum Redemptions 
As of and for the Six Months Ended June 30, 2019                
Book value per share/unit (1)  $0.79   $0.72   $12.06   $(24.85)
Weight average shares/units outstanding - basic and diluted (2)   6,330,561    172,603,208           
Weighted average shares outstanding Class A – basic and diluted             25,250,000    4,500,000 
Weighted average shares outstanding Class B – basic and diluted (3)             12,000,000    25,680,000 
Net (loss)/earnings per share/unit – basic and diluted (2)  $(0.04)  $0.03           
Net loss per continuing operations per share Class A – basic and diluted (3)             $(0.60)   $(0.79)
                     
As of and for the Year Ended December 31, 2018                    
Book value per share/unit (1)  $0.80   $1.00     N/A (4)     N/A (4)  
Weight average shares/units outstanding - basic and diluted (2)   6,240,480    172,093,257           
Weighted average shares outstanding Class A – basic and diluted             25,250,000    4,500,000 
Weighted average shares outstanding Class B – basic and diluted (3)             12,000,000    25,680,000 
Net (loss)/earnings per share/unit – basic and diluted (2)  $(0.01)  $0.07           
Net loss per continuing operations per share Class A – basic and diluted (3)            $(1.25)  $(1.56)

 

The foregoing updates the disclosures in the section entitled “Summary of the Proxy Statement—Comparative Share Information” on pages 37 – 38 and any other applicable section of the Definitive Proxy Statement.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Introduction

 

The following unaudited pro forma condensed combined financial statements of Boxwood present the combination of the financial information of Boxwood and Atlas Intermediate adjusted to give effect to the business combination and debt financing and the entry into the Commitment Letter, the Payment Letter, the Purchase Agreement Amendment, the Forfeiture Agreement and the Debt Amendment. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X.

 

Boxwood is a blank check company incorporated in Delaware on June 28, 2017. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, recapitalization or other similar business combination with one or more businesses. Boxwood completed its initial public offering of units on November 20, 2018. Upon the closing of the initial public offering, $200 million ($10.00 per unit) from the net proceeds thereof was placed in a trust account and is invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act 1940, as amended (the “Investment Company Act”), which invest only in direct U.S. government treasury obligations until the earlier of: (i) the completion of a business combination and (ii) the redemption of Boxwood’s public shares if Boxwood is unable to complete a business combination by November 20, 2020, subject to applicable law. As of June 30, 2019, there was approximately $202,579,114 held in the trust account.

 

Atlas Intermediate was incorporated on January 11, 2019 and is a holding company that conducts business indirectly through its wholly-owned subsidiaries. Atlas Intermediate is owned by the Seller, which is owned by BCP Energy Services Funds, which is controlled by Bernhard Capital Partners, a services-focused private equity management firm, and Atlas Technical Consultants Management, LLC. The primary wholly-owned indirect operating subsidiaries through which Atlas conducts business are Atlas Technical Consultants LLC and its subsidiaries (“Atlas LLC”) and ATC Group Partners LLC and its subsidiaries (“ATC LLC”). Atlas LLC’s structure has been in existence since October 17, 2017 while ATC LLC’s structure has been in existence since November 13, 2015. The entities were reorganized under Atlas Intermediate in January 2019. Through these subsidiaries, Atlas Intermediate provides public and private sector clients with comprehensive support in managing large-scale infrastructure improvement programs, including environmental and geotechnical engineering services, design, program development/management, environmental consulting services, industrial hygiene, construction materials testing, due diligence and environmental health and safety training, acquisition and project control services, as well as construction engineering and inspection and materials testing.

 

On August 12, 2019, the Company entered into the Debt Commitment Letter with the Commitment Parties pursuant to which the Commitment Parties agreed to provide (or to have certain of their affiliates provide), subject to the satisfaction of customary closing conditions, including the closing of the business combination, 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 business combination, (iii) the repayment of the existing indebtedness of Atlas Intermediate and (iv) general corporate expenditures. Pursuant to the Debt Commitment Letter, the applicable Commitment Parties 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, (ii) a senior secured first lien revolving credit facility in an aggregate principal amount of $40 million and (iii) a senior secured second lien term loan facility in an aggregate principal amount of up to $70 million, made available to the Buyer. On January 23, 2020, in connection with Boxwood’s entry into the Commitment Letter and the Purchase Agreement Amendment, Boxwood entered into the Debt Amendment with the Commitment Parties pursuant to which Boxwood and the Commitment Parties have agreed to, among other things, reduce the aggregate principal amount of the Credit Facilities to be provided by the Commitment Parties from up to $400.0 million to up to $321.0 million by reducing the aggregate principal amount available under the First Lien Term Facility from $290.0 million to $281.0 million and eliminating the Second Lien Term Facility, which would have been available for an aggregate principal amount of up to $70 million. The Debt Amendment also changes the mix of cash and equity to be provided to the Seller that was provided in the Debt Commitment Letter. Finally, the Debt Amendment adjusts the condition precedent to the Commitment Parties’ obligation to provide the Credit Facilities from $100 million of Available Equity to $155 million of Available Equity (of which no more than $145 million will consist of the Preferred Commitment).

 

On January 23, 2020, Boxwood and Holdings entered into the Commitment Letter with GSO for the purpose of funding a portion of the business combination and the costs and expenses incurred in connection therewith. Pursuant to the Commitment Letter, GSO committed, on the terms and subject to the conditions set forth therein, on the Closing Date, to purchase (i) up to 145,000 Preferred Units at a price per Preferred Unit of $1,000.00, resulting in gross proceeds to Holdings of up to $145.0 million and (ii) 1,000,000 shares of Class A common stock at a price per share of $10.00, resulting in gross proceeds of $10.0 million to Holdings. As consideration for the Commitment, Boxwood also entered into the Payment Letter, pursuant to which Boxwood has agreed to pay to GSO 2% of the aggregate amount of the Liquidation Preference of the Preferred Units purchased by GSO on the Closing Date (which will be in the form of an original issue discount on such Preferred Units).

 

The following unaudited pro forma condensed combined balance sheet as of June 30, 2019 assumes that the business combination and debt financing occurred on June 30, 2019. The following unaudited pro forma condensed combined statement of operations for the year ended December 31, 2018 and for the six months ended June 30, 2019 give pro forma effect to the business combination and debt financing as if they had been completed on January 1, 2018.

 

The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what Boxwood’s financial condition or results of operations would have been had the business combination occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of Boxwood. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.

 

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This information has been developed from and should be read together with Boxwood’s and Atlas’ audited and unaudited financial statements and related notes included in the Definitive Proxy Statement, the sections titled “Boxwood’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Atlas’ Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included in the Definitive Proxy Statement.

 

Under the no redemption scenario presented below, the business combination is accounted for under the scope of the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). In this scenario, pursuant to ASC 805, Boxwood has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances: 

 

Boxwoods stockholders having a majority of the voting power (65%) of the combined company;

 

Boxwood is transferring cash from its trust account and will be incurring liabilities to execute the business combination;

 

Boxwood has the right to nominate four out of the seven initial members who will serve on the board of directors of the combined company; and

 

Boxwood was the entity that initiated the business combination.

 

The preponderance of the evidence discussed above supports the conclusion that Boxwood is the accounting acquirer in the business combination. Atlas Intermediate constitutes a business in accordance with ASC 805 and the business combination constitutes a change in control. Accordingly, the business combination will be accounted for using the acquisition method.

 

Under the maximum redemption scenario presented below, the business combination is accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. In this scenario, Atlas Intermediate has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

 

Atlas Intermediate’s equity holders having a majority of the voting power (85%) of the combined company;

 

Atlas Intermediate comprising the ongoing operations of the combined company;

 

Atlas Intermediate is the larger entity based on historical revenues and net income; and

 

Atlas Intermediate’s senior management comprising the senior management of the combined company.

 

Under this method of accounting, Boxwood 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 Atlas Intermediate issuing stock for the net assets of Boxwood, accompanied by a recapitalization. The net assets of Boxwood will be stated at historical cost, with no goodwill or other intangible assets recorded. 

 

Description of the Business Combination

 

Pursuant to the Purchase Agreement, at the Closing, the Company will contribute cash and shares of Class B common stock to Holdings in exchange for 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 or distributions.

 

Following the Closing, the combined company will be organized in an “Up-C” structure in which the business of 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 and Holding’s only direct assets will consist of its equity interests in Atlas Intermediate. The Company is expected to own between approximately 15.83% and 67.8% of the Holdings Units and will control Holdings as the sole manager of Holdings in accordance with the terms of the Holdings LLC Agreement. Holdings will own all of the equity interests in Atlas Intermediate. Upon the Closing, the Company will change its name to “Atlas Technical Consultants, Inc.

 

At the Closing, Boxwood has agreed to pay $617 million in cash and in equity in consideration for the acquisition of Atlas Intermediate. This amount will be:

 

(i)increased by the amount of cash of Atlas Intermediate and its subsidiaries as of Closing;

 

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(ii)adjusted by the difference between the net working capital of Atlas Intermediate and its subsidiaries as of Closing and a normalized level of working capital (which could be a downward or upward adjustment);

 

(iii)reduced by the amount of debt of Atlas Intermediate and its subsidiaries as of Closing; and

 

(iv)reduced by the amount of unpaid transaction expenses of Atlas Intermediate and its subsidiaries as of Closing.

 

The purchase price paid at Closing will be based on an estimate of the amount of the foregoing adjustments and will be subject to a customary post-Closing true-up. The unaudited pro forma condensed combined financial information has been adjusted to reflect the initial estimates for the foregoing adjustments except for the working capital adjustment as the Company is assuming that amount to be zero.

 

Financing for the business combination and for related transaction expenses will consist of:

 

(i)$200 million of proceeds from Boxwood’s IPO on deposit in the trust account (plus any interest income accrued thereon since the IPO), net of any redemptions of Boxwood’s public shares in connection with the stockholder vote to be held in connection with the transactions contemplated by the Purchase Agreement;

 

(ii)up to $321 million from committed new term loan and revolving credit facilities to be provided by Macquarie Funding and Natixis; and

 

(iii)$120.0 million of rollover equity under the no redemption scenario, or $239.3 million of rollover equity under the maximum redemption scenario from BCP and Atlas Intermediate’s management.

 

(iv)$127.4 million, net of the 2% fee and $152.1 million, net of the 2% fee from the GSO Equity Financing under the minimum and maximum redemption scenario, respectively.

 

The following represents the aggregate consideration:

 

   No   Maximum 
(in thousands)  Redemptions   Redemptions 
         
Net cash to the Seller (a)  $323,175   $203,875 
Debt paydown and Seller expenses (a)   173,825    173,825 
Cash consideration  $497,000   $377,700 
Rollover equity (BCP) (b)   38,855    158,155 
Rollover equity (Atlas Intermediate Management) (b)   81,145    81,145 
Total estimated consideration  $617,000   $617,000 

 

 

(a)As shown, a portion of the total adjusted consideration will be utilized to settle unpaid debt, unpaid pre-combination transaction costs and change in control payments under the no and max redemption scenarios.

(b)The value of the rollover equity included in consideration is reflected at $10 per share. As the stock price is subject to change, the fair value of the consideration under no redemption may increase or decrease. A 10% increase or decrease in stock price would result in a change in estimated consideration and resulting goodwill by $12.0 million assuming no redemption and $23.9 million assuming maximum redemptions.

 

The unaudited pro forma condensed combined financial information has been prepared using the assumptions below with respect to the potential redemption into cash of Boxwood’s Class A common stock:

 

Assuming No Redemptions: This presentation assumes that no Boxwood stockholders exercise redemption rights with respect to their public shares.

 

Assuming Maximum Redemptions: This presentation assumes that 100% of Boxwood’s public stockholders exercise redemption rights with respect to their public shares.

 

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The following summarizes the pro forma common stock shares outstanding under the two scenarios:

 

   Assuming No Redemption   Assuming Maximum Redemption 
   Shares   %   Shares   % 
Class A Shares held by SPAC shareholders   20,000,000    54%   -    0%
Class A Shares held by SPAC founders (1)   4,050,000    11%   2,300,000    8%
Class A Shares issued to GSO PIPE (2)   1,200,000    3%   2,200,000    7%
Class B Shares issued as Rollover Equity to BCP (1)   3,885,466    10%   17,565,466    58%
Class B Shares issued as Rollover Equity to Atlas Intermediate Management   8,114,534    22%   8,114,534    27%
Closing merger shares   37,250,000    100%   30,180,000    100%

 

 

(1)Reflects ending founders shares of 5.3 million less 1.2 million shares transferred to GSO as part of the Equity Financing under the no and maximum redemption scenarios and less an additional 1.75 million shares forfeited under the maximum redemption scenario as part of the Purchase Agreement Amendment. The par value of the 1.75 million shares forfeited was $175, as such, no adjustment was reflected in the pro forma balance sheet due to the minimum amount of the par value. The Seller received an additional 1.75 million class B common shares under the amended agreements under the maximum redemption scenario.
(2)Reflects the 1.2 million founder shares transferred to GSO as part of the Equity Financing as GSO does not purchase common shares under the no redemption scenario and reflects 1.0 million Class A common shares plus 1.2 million founder shares as part of the Equity Financing under the maximum redemption scenario.

 

The following unaudited pro forma condensed combined balance sheet as of June 30, 2019, unaudited pro forma condensed combined statement of operations for the year ended December 31, 2018, and unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2019 are based on the historical financial statements of Boxwood and Atlas Intermediate. The unaudited pro forma adjustments are based on information currently available, assumptions, and estimates and are described in the accompanying notes. Actual results may differ materially from the assumptions and estimates used to present the accompanying unaudited pro forma condensed combined financial information.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2019
(in thousands, dollars)

 

   As of June 30, 2019               As of June 30, 2019            As of June 30, 2019 
   Boxwood
(Historical)
(US GAAP)
   Atlas Intermediate
(Historical)
(US GAAP)
   Combined   Purchase Accounting Adjustments   Pro Forma Adjustments (Assuming No Redemptions)   Pro Forma Combined (Assuming No Redemptions)   Reversal of purchase accounting and recapitalization adjustments   Additional
Pro Forma Adjustments (Assuming Maximum Redemptions)
    Pro Forma Combined (Assuming Maximum Redemptions) 
   (in thousands) 
ASSETS                                     
Cash and cash equivalents  $751   $10,141   $10,892    (497,000)(A)  $(27,546)(D)  $11,151        -    119,300 (A), (N)    11,151 
                   (10,141)(B)   204,300(E)             1,432(D)      
                        210,246(F)             58,868(F)      
                        (7,000)(G)             (204,300)(O)      
                        127,400(P)             24,700(P)      
Accounts receivable, net   -    100,997    100,997    -         100,997    -    -     100,997 
Unbilled receivables   -    37,376    37,376    -    -    37,376    -    -     37,376 
Prepaid expense and other current assets   201    8,476    8,677    -    -    8,677    -    -     8,677 
Total current assets   952    156,990    157,942    (507,141)   507,400    158,201    -    -     158,201 
Property and equipment, net   -    13,503    13,503    -    -    13,503    -    -     13,503 
Intangible assets, net   -    102,300    102,300    252,700(C)   -    355,000    (252,700)(K)         102,300 
Goodwill   -    80,352    80,352    439,944(A)   -    155,965    (75,613)(K)         80,352 
                   (111,631)(B)                          
                   (252,700)(C)                          
Marketable securities held in Trust Account   202,579    -    202,579    -    (202,579)(E)   -    -    -     - 
Security deposit   7    -    7    -    -    7    -    -     7 
Other long-term assets   -    515    515    -    -    515    -    -     515 
Total assets  $203,538   $353,660   $557,198   $(178,828)  $304,821   $683,191   $(328,313)  $-    $354,878 
                                               
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND STOCKHOLDERS’ EQUITY                                              
Accounts payable and accrued expenses  $161   $24,062   $24,223   $-   $150(H)   24,373    -   $-    $24,373 
Accrued liabilities   -    11,381    11,381    (475)(A)        10,906    -    -     10,906 
Current maturities of long-term debt   -    11,190    11,190    (11,190)(A)   2,207(F)   2,207    -    603(F)    2,810 
Other current liabilities   -    13,828    13,828    -    -    13,828    -    -     13,828 
Income taxes payable   341    -    341    -    -    341    -    -     341 
Total current liabilities   502    60,461    60,963    (11,665)   2,357    51,655    -    603     52,258 
Long-term debt, net of current maturities and loan costs   -    163,696    163,696    (163,337)(A)   208,039(F)   208,398    -    58,265(F)    266,663 
Deferred underwriting fees   7,000    -    7,000    -    (7,000)(G)   -    -    -     - 
Other long-term liabilities   -    5,677    5,677    -    -    5,677    -    -     5,677 
Total liabilities   7,502    229,834    237,336    (175,002)   203,396    265,730    -    58,868     324,598 

 

25

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2019 (continued)
(in thousands, dollars)

 

   As of June 30, 2019               As of June 30, 2019            As of June 30, 2019 
   Boxwood
(Historical)
(US GAAP)
   Atlas Intermediate
(Historical)
(US GAAP)
   Combined   Purchase Accounting Adjustments   Pro Forma Adjustments (Assuming No Redemptions)   Pro Forma Combined (Assuming No Redemptions)   Reversal of purchase accounting and recapitalization adjustments   Additional
Pro Forma Adjustments (Assuming Maximum Redemptions)
    Pro Forma Combined (Assuming Maximum Redemptions) 
   (in thousands) 
Commitments                                            - 
Common stock subject to possible redemption   191,036    -    191,036    -    (191,036)(I)   -    -    -     - 
Redeemable non-controlling interests   -    -    -    -    127,400(P)    127,400    -    14,700(P)    142,100 
                                             - 
Stockholders’ Equity                                            - 
Preferred stock   -    -    -    -    -    -    -    -     - 
Class A common stock   -    -    -         2(I)   3    -    (2)(O)    2 
                        1(J)             1(P)      
Class B common stock                  12(A)        12         12(A), (N)    24 
Class F common stock   1    -    1    -    (1)(J)   -    -    -     - 
Additional paid in capital   3,290    -    3,290    119,988(A)   191,034(I)   220,870    1,709(M)   119,288(A), (N)    7,844 
                        (93,442)(Q)        123,826(L)   (204,298)(O)      
                                  (452,139)(K)   9,999(P)      
                                       188,589(Q)      
Retained earnings   1,709    -    1,709         (27,546)(D)   (24,266)   (1,709)(M)   1,432(D)    (24,543)
                        (150)(H)                     
                        1,721(E)                     
Non-controlling interest   -    -    -    -    93,442(Q)   93,442    -    (188,589)(Q)    (95,147)
Total stockholders’ equity   5,000    -    5,000    120,000    165,061    290,061    (328,313)   (73,568)    (111,820)
Members’ Capital   -    123,826    123,826    (2,054)(A)   -    -    123,826(K)         - 
                   (121,772)(B)             (123,826)(L)           
Total equity   5,000    123,826    128,826    (3,826)   165,061    290,061    (328,313)   (73,568)    (111,820)
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND STOCKHOLDERS’ EQUITY  $203,538   $353,660   $557,198   $(178,828)  $304,821   $683,191   $(328,313)  $-    $354,878 

 

26

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2019
(in thousands, except share and per share data)

 

   For the Six Months Ended
June 30, 2019
                     For the Six Months Ended
June 30, 2019
                 For the Six Months Ended
June 30, 2019
 
   Boxwood
(Historical)
(US GAAP)
   Atlas Intermediate
(Historical)
(US GAAP)
   Combined   Purchase Accounting Adjustments      Pro Forma Adjustments (Assuming No Redemptions)      Pro Forma Combined (Assuming No Redemptions)   Reversal of purchase accounting and recapitalization adjustments      Additional
Pro Forma Adjustments (Assuming Maximum Redemptions)
      Pro Forma Combined (Assuming Maximum Redemptions) 
   (in thousands, except share and per share data) 
Revenues  $-   $229,280   $229,280   $-      $-      $229,280   $-      $-      $229,280 
Cost of revenues   -    125,624    125,624    -       -       125,624    -       -       125,624 
Gross profit   -    103,656    103,656    -       -       103,656    -       -       103,656 
Operating expense (income), net   432    92,105    92,537    19,630   (AA)   (941)  (BB)   111,376    (19,630)  (EE)   -       91,746 
                           150   (FF)                          
Total operating expenses (income)   432    92,105    92,537    19,630       (791)      111,376    (19,630)      -       91,746 
Operating income (loss)   (432)   11,551    11,119    (19,630)      791       (7,720)   19,630       -       11,910 
Interest expense   -    5,534    5,534    -       2,856    (CC)   8,390    -       2,197    (CC)   10,587 
Interest income   (2,232)   -    (2,232)   -       2,232    (DD)   -    -       -       - 
Other expense (income), net   -    782    782    -       -       782    -       -       782 
Income (loss) before provision for income taxes   1,800    5,235    7,035    (19,630)      (4,297)      (16,892)   19,630       (2,197)      541 
Provision for income taxes (benefit)   378    159    537    -       (2,786)  (GG)   (2,249)   -       4,416   (GG)   2,167 
Net income (loss) from continuing operations   1,422    5,076    6,498    (19,630)      (1,511)      (14,643)   19,630       (6,613)      (1,626) 
Net income (loss) from continuing operations attributable to non-controlling interest   -    -    -    -       (8,243)  (HH)   (8,243)    -       450   (HH)   (7,793) 
Preferred unit distributions - Cash                          3,524   (II)   3,524             407   (II)   3,931 
Preferred unit distributions - PIK                          5,109   (II)   5,109             590   (II)   5,699 
Preferred unit issuance costs                          64   (II)   64             7   (II)   71 
Net income (loss) from continuing operations attributable to class A shareholders  $1,422   $5,076   $6,498   $(19,630)  -  $(1,965)  -  $(15,097)  $19,630   -  $(8,067)  -  $(3,534)
                                                          
Net Income (loss) per share - basic and diluted                                                         
Net Income (loss)/Net Income (loss) from continuing operations per share Class A  $(0.04)                            $(0.60)                  $(0.79)
Weighted average shares outstanding - Class A   6,330,561                              25,250,000                    4,500,000 

 

27

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2018
(in thousands, except share and per share data)

 

   For the Year Ended
December 31, 2018
                     For the Year Ended
December 31, 2018
                 For the Year Ended
December 31, 2018
 
   Boxwood
(Historical)
(US GAAP)
   Atlas Intermediate
(Historical)
(US GAAP)
   Combined   Purchase Accounting Adjustments      Pro Forma Adjustments (Assuming No Redemptions)      Pro Forma Combined (Assuming No Redemptions)   Reversal of purchase accounting and recapitalization adjustments      Additional
Pro Forma Adjustments (Assuming Maximum Redemptions)
      Pro Forma Combined (Assuming Maximum Redemptions) 
   (in thousands, except share and per share data) 
Revenues  $-   $426,439   $426,439   $-      $-      $426,439   $-      $-      $426,439 
Cost of revenues   -    249,504    249,504    -       -       249,504    -       -       249,504 
Gross profit   -    176,935    176,935    -       -       176,935    -       -       176,935 
Operating expense (income), net   106    157,459    157,565    40,408  (AA)    150  (FF)    198,123    (40,408)  (EE)     -       157,715 
Total operating expenses (income)   106    157,459    157,565    40,408       150       198,123    (40,408)      -       157,715 
Operating income (loss)   (106)   19,476    19,370    (40,408)      (150)      (21,188)   40,408       -       19,220 
Interest expense   -    6,787    6,787    -       10,154   (CC)     16,941    -       4,442   (CC)     21,383 
Interest income   (472)   -    (472)   -       472   (DD)     -    -       -       - 
Other expense (income), net   -    (96)   (96)   -       -       (96)   -       -       (96)
Income (loss) before provision for income taxes   366    12,785    13,151    (40,408)      (10,776)      (38,033)   40,408       (4,442)      (2,067)
Provision for income taxes (benefit)   78    347    425    -       (5,750) (GG)    (5,325)   -       9,306  (GG)    3,981
Net income (loss) from continuing operations   288    12,438    12,726    (40,408)      (5,026)      (32,708)   40,408       (13,748)      (6,048)
Net income (loss) from continuing operations attributable to non-controlling interest   -    -    -    -       (17,555) (HH)    (17,555   -       175  (HH)    (17,380) 
Preferred unit distributions - Cash                          6,679  (II)    6,679             771  (II)    7,450 
Preferred unit distributions - PIK                          9,684  (II)    9,684             1,117  (II)    10,801 
Preferred unit issuance costs                          96  (II)    96             11  (II)    107 
Net income (loss) from continuing operations attributable to class A shareholders  $288   $12,438   $12,726   $(40,408) -   $(3,930) -   $(31,612)  $40,408  -   $(15,822) -   $(7,026)
                                                          
Net Income (loss) per share - basic and diluted                                                         
Net Income (loss)/Net Income (loss) from continuing operations per share Class A  $(0.01)                            $(1.25)                  $(1.56)
Weighted average shares outstanding - Class A   6,240,480                              25,250,000                    4,500,000 

 

28

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

1. Basis of Presentation

 

Under the no redemption scenario, the unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting in accordance with ASC 805, with Boxwood as the accounting acquirer, using the fair value concepts defined in the Financial Accounting Standards Board’s ASC Topic 820, Fair Value Measurement, and based on the historical financial statements of Boxwood and Atlas Intermediate.

 

Under the maximum redemption scenario, the business combination will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, Boxwood 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 Atlas Intermediate issuing stock for the net assets of Boxwood, accompanied by a recapitalization. The net assets of Boxwood will be stated at historical cost, with no goodwill or other intangible assets recorded.

 

The unaudited pro forma condensed combined balance sheet as of June 30, 2019 assumes that the business combination and debt financing occurred on June 30, 2019. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2018 and for the six months ended June 30, 2019 give pro forma effect to the business combination and debt financing as if they had been completed on January 1, 2018.

 

The unaudited pro forma condensed combined balance sheet as of June 30, 2019 has been prepared using, and should be read in conjunction with, the following:

 

  the unaudited condensed balance sheet of Boxwood as of June 30, 2019, and the related notes, included in the Definitive Proxy Statement; and

 

  the unaudited condensed consolidated and combined balance sheet of Atlas Intermediate Holdings LLC and ATC Group Partners LLC as of June 30, 2019 and the related notes, included in the Definitive Proxy Statement.

 

The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2019 has been prepared using, and should be read in conjunction with, the following:

 

  the unaudited condensed statement of operations of Boxwood for the six months ended June 30, 2019 and the related notes, included in the Definitive Proxy Statement; and

 

  the unaudited condensed consolidated and combined statement of operations of Atlas Intermediate Holdings LLC and ATC Group Partners LLC for the six months ended June 30, 2019 and the related notes, included in the Definitive Proxy Statement.

 

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2018 has been prepared using, and should be read in conjunction with, the following:

 

  the audited statement of operations of Boxwood for the year ended December 31, 2018 and the related notes, included in the Definitive Proxy Statement; and

 

  the audited combined statement of operations of Atlas Intermediate Holdings LLC and ATC Group Partners LLC for the year ended December 31, 2018 and the related notes, included in the Definitive Proxy Statement.

 

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

 

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings or cost savings that may be associated with the business combination.

 

29

 

 

The pro forma adjustments reflecting the consummation of the business combination and debt financing are based on certain currently available information and certain assumptions and methodologies that Boxwood believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. Boxwood believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the business combination based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

 

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the business combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the post-combination company. They should be read in conjunction with the historical financial statements and notes thereto of Boxwood and Atlas Intermediate.

 

2. Accounting Policies

 

Upon consummation of the business combination, management will perform a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of Boxwood. Based on its initial analysis, management did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.

 

3. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

 

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the business combination and has been prepared for informational purposes only.

 

The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to events that are (1) directly attributable to the business combination, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the results of the post-combination company. Boxwood and Atlas Intermediate have not had any historical relationship prior to the business combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

 

The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the post-combination company filed consolidated income tax returns during the periods presented.

 

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statements of operations are based upon the number of Boxwood’s shares outstanding, assuming the business combination occurred on January 1, 2018.

 

30

 

  

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

 

The adjustments included in the unaudited pro forma condensed combined balance sheet as of June 30, 2019 are as follows:

 

(A)Reflects consideration of $497.0 million of cash and 12.0 million shares of Class B common stock, valued at $10.0 per share assuming no redemptions, and $377.7 million of cash and 25.7 million shares of Class B common stock, valued at $10.00 per share assuming maximum redemptions. Of the total consideration amount, $174.5 million was utilized to extinguish debt of Atlas Intermediate, $3.6 million was used to repay unpaid pre-combination transaction costs incurred by Atlas Intermediate as of closing, and $2.2 million was used to settle the amounts owed to certain Atlas executives for a change of control provision within their Class A Unit Award Agreements. Under the no redemption scenario, the residual amount of consideration allocated to Goodwill was calculated as follows:

 

Allocation of consideration  Amount 
   (in thousands) 
Total Consideration  $617,000 
Cash and cash equivalents     
Accounts receivable, net   100,997 
Unbilled receivables   37,376 
Prepaid expense and other current assets   8,476 
Property and equipment, net   13,503 
Intangible assets, net   355,000 
Other long-term assets   515 
Total identifiable assets acquired   515,867 
Accounts payable and accrued expenses   24,062 
Accrued liabilities   10,906 
Other current liabilities   13,828 
Long-term debt, net of current maturities and loan costs   359 
Other long-term liabilities   5,677 
Net identifiable liabilities acquired   54,832 
Non-controlling interest     
Goodwill  $155,965 

 

(B)Represents the elimination of Atlas Intermediate’s historical equity under the no redemption scenario.

 

(C)Represents the adjustments to intangible assets to reflect the preliminary fair market value. Adjustments to intangible assets were calculated as follows:

 

(in thousands)  Preliminary
Fair Value
   Remaining
Useful Lives
Trade names  $62,500   7 Years
Customer relationships   215,000   11 Years
Backlog   77,500   3 Years
Total Preliminary Fair Value   355,000    
Carrying Value as of 6/30/2019   102,300    
Adjustment amount  $252,700    

 

The preliminary fair values for the trade names, customer relationships, and backlog, and the preliminary estimates of remaining useful lives for the intangible assets were determined using publicly available benchmarking information, including market transactions of varying degrees of comparability, as well as a variety of other company specific assumptions, including market participant assumptions.

 

These preliminary estimates of fair value and estimated useful lives may differ from final amounts Boxwood will calculate after completing a detailed valuation analysis, and the difference could have a material effect on the accompanying unaudited pro forma condensed combined financial information, including increases or decreases to the expected amortization expense.

 

(D)Reflects the payment of $45.0 million of transaction costs assuming no redemptions and maximum redemptions expected to be incurred by Boxwood in relation to the business combination. Under the no redemption scenario, transaction costs include: (a) $7.0 million of deferred underwriter’s fees incurred during Boxwood’s initial public offering described in note 2(G), (b) $10.5 million of deferred financing fees related to the new debt financing described in Note 2(F), and $27.5 million of other expenses related to GSO equity financing issuance costs, banking, legal, accounting, and advisory fees. Under the maximum redemption scenario, deferred financing costs increases by $1.4 million (from $10.5 million to $11.9 million as described in note 2(F)) and other transaction expenses decreases by $1.4 million.

 

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(E)Reflects a true up of $1.7 million in cash and marketable securities held in the trust account to the current amount available and then the reclassification of the total $204.3 million of cash and marketable securities held in the trust account that becomes available to fund the business combination.

 

(F)Reflects cash proceeds from borrowing and the issuance of new debt financing to fund the consideration as part of the business combination, net of $10.5 million and $11.9 million of deferred financing costs assuming no redemptions and assuming maximum redemptions, respectively.

 

(G)Reflects settlement of deferred underwriter fees incurred during Boxwood’s initial public offering due upon completion of the business combination.

 

(H)Reflects increase in annual compensation pursuant to a new employment agreement executed with a key executive in connection with the business combination.

 

(I)Reflects reclassification of $191.0 million of common stock subject to possible redemption to permanent equity.

 

(J)Reflects the conversion of Class F common stock to Class A common stock. In connection with the closing, all shares of Class F common stock will convert into shares of Class A common stock.

 

(K)Represents the reversal of fair value adjustments in the no redemption scenario in order to depict the reverse recapitalization with Atlas Intermediate as the accounting acquirer under the maximum redemption scenario.

 

(L)Represents the recapitalization of common stock of Atlas Intermediate under the maximum redemption scenario.

 

(M)Reflects the reclassification of Boxwood’s historical retained earnings under the maximum redemption scenario for the recapitalization.

 

(N)Reflects the additional issuance of Class B common stock pursuant to the Purchase Agreement. See Note 2(A).

 

(O)Reflects the maximum redemption of all 20,000,000 Boxwood public shares for approximately $204.3 million allocated to common stock and additional paid-in capital using par value $0.0001 per share and at a redemption price of $10.22 per share.

 

(P)Reflects the issuance of preferred shares and common shares to GSO under the Equity Financing Commitment Letter. The issuance of the preferred shares is reflected as redeemable non-controlling interests under the minimum and maximum redemption scenario. Under the Equity Financing Commitment Letter, GSO will purchase common equity only under the maximum redemption scenario and as such, only that scenario reflects an additional issuance of Class A common stock.

 

(Q)Reflects the 32% and 85% of interests related to the Class B stockholders under the no and max redemption scenarios.

 

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Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations

 

The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2018 and for the six months ended June 30, 2019 are as follows:

 

(AA)Reflects the incremental amortization expense recorded as a result of the fair value adjustment for intangible assets acquired in the business combination under the no redemption scenario.

 

(BB)Reflects elimination of transaction related costs incurred and recorded by Atlas Intermediate.

 

(CC)Reflects the elimination of interest expense on the historical debt that is settled, and additional interest expense as a result of the debt financing, which was calculated based on the following:

 

   First Lien   First Lien 
(in thousands)  Term
Facility
   Revolving Facility 
         
No Redemption Scenario (2)        
Amount utilized  $220,700   $- 
Stated Rate (1)   7.15%   7.15%
Term    7 Years      5 Years  
Effective Rate   7.77%   N/A 
           
Maximum Redemption Scenario (2)          
Amount utilized  $281,000   $- 
Stated Rate (1)   7.15%   7.15%
Term    7 Years      5 Years  
Effective Rate   7.71%   N/A 

 

 

(1)The First Lien Term Facility and First Lien Revolving Facility accrue interest at a rate of LIBOR plus 4.75% under no and maximum redemption. The stated interest rate noted above is based on 1 month LIBOR rates as of 6/28/2019 (2.40%). For the six months ended June 30, 2019, an increase or decrease in the LIBOR rates of 0.125% would result in a change in interest expense of approximately $100,000 for the no redemption scenario and $200,000 for the maximum redemption scenario. For the year ended 12/31/18, an increase or decrease in the LIBOR rates of 0.125% would result in a change in interest expense of approximately $300,000 for both the no redemption and maximum redemption scenarios.
(2)The Debt Commitment Letter dated August 12, 2019 included a Second Lien Term Facility in the amount of $70,000,000. In the First Amendment to the Commitment Letter, the Second Lien Term Facility was terminated.

 

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(DD)Elimination of interest income on the trust account.

 

(EE)Represents the reversal of amortization generated from the business combination in the min redemption scenario in order to depict a reverse recapitalization with Atlas Intermediate as the accounting acquirer under the maximum redemption scenario.

 

(FF)Reflects increase in annual compensation pursuant to a new employment agreement executed with a key executive in connection with the business combination.

 

(GG)Reflects adjustments to income tax expense as a result of the tax impact on the pro forma adjustments to income attributable to Class A stockholders at the estimated statutory tax rate of 26%. Income attributable to non-controlling interests is not subject to taxes.

 

(HH)Reflects the 32% and 85% of interests related to the Class B stockholders under the no and max redemption scenarios.

 

(II)Reflects dividends payable to GSO in cash and PIK as well as the accretion of the 2% issuance discount on the preferred shares under the effective interest method, as outlined in the Equity Financing Commitment Letter, for the preferred shares reflected as redeemable non-controlling interests in the pro forma balance sheet

 

4. Loss per Share

 

Represents the net loss per share calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the business combination, assuming the shares were outstanding since January 1, 2018. As the business combination and related proposed equity transactions are being reflected as if they had occurred at the beginning of the periods presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the business combination have been outstanding for the entire periods presented. If the maximum number of shares are redeemed, this calculation is retroactively adjusted to eliminate such shares for the entire periods. The denominator for loss per share excludes the Class B common stock to be issued to Atlas Intermediate as part of consideration as the Class B common stock entitles its holder to one vote per share but no right to dividends, distributions, or other economic rights. Dividends and the accretion of the issuance discount for the preferred shares issued to GSO under the Equity Financing affect the numerator for the EPS calculation as shown in the pro forma income statement herein.

 

The unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of redemption for the year ended December 31, 2018 and for the six months ended June 30, 2019:

 

(dollars in thousands, except per share amounts)

 

   Six Months Ended
June 30, 2019
   Year Ended
December 31, 2018
 
   No
Redemptions
   Maximum
Redemptions
   No
Redemptions
   Maximum
Redemptions
 
                 
Pro forma net loss from continuing operations attributable to class A shareholders  $(15,097)  $(3,534)  $(31,612)  $(7,026)
                     
Basic weighted average shares outstanding                    
Class A   25,250,000    4,500,000    25,250,000    4,500,000 
                     
Net loss from continuing operations per share Class A - Basic and Diluted (1) (2)  $(0.60)  $(0.79)  $(1.25)  $(1.56)