Cayman Islands (1) |
73709 |
N/A | ||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
Carl P. Marcellino Elizabeth Todd Ropes & Gray LLP 1211 Avenue of the Americas New York, NY 10036-8704 (212) 596-9000 and |
Michael Johns Maples and Calder P.O. Box 309, Ugland House Grand Cayman KY1-1104 Cayman Islands Tel: (345) 949-8066 |
Mitchell S. Eitel Sarah P. Payne Jared M. Fishman Sullivan & Cromwell LLP 125 Broad Street New York, NY 10004 (212) 558-4000 | ||
Adam Eastell Derek Liu Baker McKenzie LLP 100 New Bridge Street London EC4V 6JA United Kingdom +44 20 7919 1000 |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
(1) |
Immediately prior to the consummation of the Mergers described in the proxy statement/prospectus forming part of this registration statement (the “proxy statement/prospectus”), Aurora Acquisition Corp., a Cayman Islands exempted company (“Aurora”), intends to effect a deregistration under Article 206 of the Cayman Islands Companies Act (As Revised) and a domestication under Section 388 of the Delaware General Corporation Law, pursuant to which Aurora’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “Domestication”). All securities being registered will be issued by Aurora (after the Domestication), the continuing entity following the Domestication, which will be renamed “Better Home & Finance Holding Company” upon the consummation of the Mergers, as further described in the proxy statement/prospectus. As used herein, “Better Home & Finance Holding Company” or “Better Home & Finance” refers to Aurora after the Domestication and/or the consummation of the Mergers, including after such change of name, as applicable. |
• | Proposal No. 1—The BCA Proposal |
• | Proposal No. 2—The Domestication Proposal |
• | Proposal No. 3—Organizational Documents Proposals |
• | Proposal No. 3a—Organizational Documents Proposal A |
Home & Finance Class C common stock”), and 100,000,000 shares of preferred stock, par value $0.0001 per share (the Better Home & Finance preferred stock”) (this proposal is referred to herein as “Organizational Documents Proposal A”); |
• | Proposal No. 3b—Organizational Documents Proposal B |
• | Proposal No. 3c—Organizational Documents Proposal C |
• | Proposal No. 3d—Organizational Documents Proposal D |
• | Proposal No. 4—Director Election Proposal |
• | Proposal No. 5—The Stock Issuance Proposal |
• | Proposal No. 6—The Incentive Equity Plan Proposal |
• | Proposal No. 7—The ESPP Proposal |
• | Proposal No. 8—The Adjournment Proposal |
solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting (this proposal is referred to herein as the “Adjournment Proposal”). |
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F-1 |
• | “2020 Credit Facility” are to the amended and restated loan and security agreement, dated as of March 25, 2020, with certain lenders, and Biscay GSTF III, LLC, as agent for such lenders, which amended and restated the loan and security agreement, dated as of March 29, 2019, to provide for a $150.0 million secured term loan facility, which was subsequently amended on November 19, 2021 to provide for an additional asset-backed revolving credit facility in an aggregate principal amount of $100 million (the “2021 Revolver”); |
• | “2022 Plan” are to the Better Home & Finance 2022 Incentive Equity Plan attached to this proxy statement/prospectus as Annex O; |
• | “Aggregate Fully Diluted Better common shares” are to, without duplication, (a) the aggregate number of shares of Better common stock that are (i) issued and outstanding immediately prior to the First Effective Time (including any Better Restricted Stock Awards) or (ii) issuable upon, or subject to, the settlement of Better Options and Better RSUs (in each case, whether or not then vested or exercisable) and Better Warrants, in each case, that are issued and outstanding immediately prior to the First Effective Time, or (iii) issued or to be issuable in connection with the conversion of Better preferred stock pursuant to the Preferred Stock Conversion, minus |
shares equal to the Aggregate Exercise Price (as defined in the Merger Agreement) divided by provided , that any Better Option or Better Warrant with an exercise price equal to or greater than the Per Share Merger Consideration will not be counted for purposes of determining the number of Aggregate Fully Diluted Better common shares. For the avoidance of doubt, any Better common stock to be issued pursuant to the Pre-Closing Bridge Note Purchase Agreement shall not be counted for purposes of determining the number of Aggregate Fully Diluted Better common shares; |
• | “Agreement End Date” are to September 30, 2022, as may be extended pursuant to the Merger Agreement; |
• | “Ancillary Agreements” are to the Confidentiality Agreement, dated as of March 15, 2021, between Aurora and Better or its Affiliate (the “Confidentiality Agreement”), the Aurora Holder Support Agreement, the Better Holder Support Agreement, the Subscription Agreements, the Sponsor Letter and the IPO Insider Letter Agreement (as defined in the Merger Agreement), collectively; |
• | “Aurora” are to Aurora Acquisition Corp. prior to its domestication as a corporation in the State of Delaware; |
• | “Aurora Class A ordinary shares” are to Aurora’s Class A ordinary shares, par value $0.0001 per share; |
• | “Aurora Class B ordinary shares” are to Aurora’s Class B ordinary shares, par value $0.0001 per share; |
• | “Aurora Holder Support Agreement” are to that certain Aurora Holder Support Agreement, dated May 10, 2021, by and among the Sponsor, Aurora, Better and Unbound Holdco Ltd., attached to this proxy statement/prospectus as Annex E; |
• | “Aurora private warrants” are to the Aurora private placement warrants outstanding as of the date of this proxy statement/prospectus and the warrants of Better Home & Finance issued as a matter of law upon the conversion thereof at the time of the Domestication; |
• | “Aurora public shareholders” are to holders of public shares, whether acquired in Aurora’s initial public offering or acquired in the secondary market; |
• | “Aurora public shares” are to the Aurora Class A ordinary shares (including those that underlie the units) that were offered and sold by Aurora in its initial public offering and registered pursuant to the IPO Registration Statement or the shares of Better Home & Finance Class A common stock issued as a matter of law upon the conversion thereof at the time of the Domestication, as the context requires; |
• | “Aurora public warrants” are to the redeemable warrants (including those that underlie the units) that were offered and sold by Aurora in its initial public offering and registered pursuant to the IPO Registration Statement or the redeemable warrants of Better Home & Finance issued as a matter of law upon the conversion thereof at the time of the Domestication, as the context requires; |
• | “Aurora units” and “units” are to the units of Aurora, each unit representing one Aurora Class A ordinary share and one-quarter of one redeemable warrant to acquire one Aurora Class A ordinary share, that were offered and sold by Aurora in its initial public offering and registered pursuant to the IPO Registration Statement (less the number of units that have been separated into the underlying public shares and underlying warrants upon the request of the holder thereof); |
• | “Backstop Purchase” are to the backstop that the Sponsor agreed to provide under the Redemption Subscription Agreement, dated as of May 10, 2021 (attached to this proxy statement/prospectus as Annex J), which was subsequently eliminated by the Redemption Subscription Termination, dated as of November 30, 2021 (attached to this proxy statement/prospectus as Annex J-1), such that the Sponsor has no longer subscribed for, and is not committed to purchase, the number of shares of Better Home & Finance Class A common stock equal to the Shortfall; |
• | “Better” are to, unless otherwise specified or the context otherwise requires, Better Holdco, Inc. and/or its subsidiaries, or any of them; |
• | “Better Awards” are to Better Options, Better RSUs and Better Restricted Stock Awards; |
• | “Better Capital Stock” are to the shares of the Better common stock and the Better preferred stock; |
• | “Better Class B common stock” are to shares of Better Class B common stock, par value $0.0001 per share; |
• | “Better common stock” are to shares of Better common stock, par value $0.0001 per share; |
• | “Better Holder Support Agreement” are to that certain Better Holder Support Agreement, dated May 10, 2021, by and among certain holders of Better Capital Stock, certain directors and all executive officers of Better; |
• | “Better Home & Finance” are to Aurora after the Domestication and/or the Business Combination, including its name change from Aurora Acquisition Corp. to “Better Home & Finance Holding Company,” as applicable; |
• | “Better Home & Finance Class A common stock” are to shares of Better Home & Finance Class A common stock, par value $0.0001 per share, which will be entitled to one vote per share; |
• | “Better Home & Finance Class B common stock” are to shares of Better Home & Finance Class B common stock, par value $0.0001 per share, which will be entitled to three votes per share; |
• | “Better Home & Finance Class C common stock” are to shares of Better Home & Finance Class C common stock, par value $0.0001 per share, which will carry no voting rights except as required by applicable law or as provided in the Proposed Certificate of Incorporation; |
• | “Better Home & Finance common stock” are to shares of Better Home & Finance Class A common stock, Better Home & Finance Class B common stock and Better Home & Finance Class C common stock; |
• | “Better Home & Finance Options” are to options to purchase shares of Better Home & Finance Class B common stock; |
• | “Better Home & Finance Restricted Stock Awards” are to restricted shares of Better Home & Finance Class B common stock; |
• | “Better Home & Finance RSUs” are to restricted stock units based on shares of Better Home & Finance Class B common stock; |
• | “Better Home & Finance Warrants” are to warrants to purchase shares of Better Home & Finance Class A common stock; |
• | “Better Material Adverse Effect” are to a Company Material Adverse Effect (as defined in the Merger Agreement); |
• | “Better Plus” are to Better’s non-mortgage business line, which includes Better Settlement Services (title insurance and settlement services), Better Cover (homeowners insurance) and Better Real Estate (real estate agent services); |
• | “Better Restricted Stock Awards” are to restricted shares of Better common stock; |
• | “Better RSUs” are to restricted stock units based on shares of Better common stock; |
• | “Better Stockholders” are to the common and preferred stockholders of Better and holders of Better Awards prior to the consummation of the Business Combination; |
• | “Better Warrants” are to warrants to purchase shares of Better Capital Stock; |
• | “Business Combination” are to the Domestication together with the Mergers; |
• | “Cayman Constitutional Documents” are to Aurora’s Amended and Restated Memorandum and Articles of Association (as amended from time to time); |
• | “Cayman Islands Companies Act” are to the Cayman Islands Companies Act (As Revised); |
• | “Closing” are to the closing of the Business Combination; |
• | “Closing Date” are to the date on which the Closing actually occurs; |
• | “Company,” “we,” “us” and “our” are to Aurora prior to its domestication as a corporation in the State of Delaware and to Better Home & Finance after its domestication as a corporation incorporated in the State of Delaware, unless otherwise indicated in this proxy statement/prospectus; |
• | “Condition Precedent Approvals” are to approval at the extraordinary general meeting of the Condition Precedent Proposals; |
• | “Condition Precedent Proposals” are to the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal, the Incentive Equity Plan Proposal, and the ESPP Proposal, collectively; |
• | “Continental” are to Continental Stock Transfer & Trust Company; |
• | “COVID-19” are to SARS-CoV-2 COVID-19, and any evolutions thereof; |
• | “DGCL” are to the General Corporation Law of the State of Delaware; |
• | “Domestication” are to the domestication of Aurora Acquisition Corp. as a corporation incorporated in the State of Delaware; |
• | “DTC” are to The Depository Trust Company; |
• | “ESPP” are to the 2022 Employee Stock Purchase Plan attached to this proxy statement/prospectus as Annex P; |
• | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
• | “Exchange Ratio” are to the quotient obtained by dividing |
• | “Fannie Mae” are to the U.S. Federal National Mortgage Association; |
• | “FCPA” are to the United States Foreign Corrupt Practices Act; |
• | “FHA” are to the U.S. Federal Housing Administration; |
• | “First Effective Time” are to when the First Merger Certificate has been accepted for filing by the Secretary of State of the State of Delaware, or at such later time as may be agreed to by Aurora and Better in writing and specified in each of the First Merger Certificate; |
• | “First Merger” are to the merger of Merger Sub with and into Better, with Better surviving the merger as a wholly owned subsidiary of Aurora; |
• | “First Merger Certificate” are to the certificate of merger with respect to the First Merger; |
• | “founder shares” are to the Aurora Class B ordinary shares purchased by the Sponsor and certain directors of Aurora prior to the initial public offering, and the Aurora Class A ordinary shares that will be issued upon the conversion thereof; |
• | “Freddie Mac” are to the Federal Home Loan Mortgage Corporation; |
• | “FTC” are to the Federal Trade Commission; |
• | “Funded Loan Volume” are to the aggregate dollar amount of loans funded in a given period based on the principal amount of the loan at funding; |
• | “GAAP” are to accounting principles generally accepted in the United States of America; |
• | “Gain on Sale Margin” are to mortgage platform revenue, net, as presented on Better’s statements of operations and comprehensive income (loss), excluding origination fees received for loans originated on behalf of Better’s integrated relationship partner and not subsequently purchased by Better, divided by Funded Loan Volume, excluding volume for loans originated on behalf of Better’s integrated relationship partner and not subsequently purchased by Better. For clarity, Gain on Sale Margin represents the difference in value of Better’s loan production compared to the price received on the sale of such loan production and is not a measure of profitability based on the cost to produce such loans; |
• | “Governing Documents” are to the legal document(s) by which any person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the “Governing Documents” of a corporation are its certificate of incorporation and bylaws, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership, the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation and the “Governing Documents” of an exempted company are its memorandum and articles of association; |
• | “GSEs” are to government-sponsored enterprises, including Fannie Mae and Freddie Mac; |
• | “Home Finance” are to Better’s mortgage business line, which is conducted by Better Mortgage Corporation; |
• | “HSR Act” are to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; |
• | “initial public offering” are to Aurora’s initial public offering that was consummated on March 8, 2021; |
• | “IPO Registration Statement” are to the Registration Statement on Form S-1 (333-253106) filed by Aurora in connection with its initial public offering, which became effective on March 3, 2021; |
• | “IRS” are to the U.S. Internal Revenue Service; |
• | “JOBS Act” are to the Jumpstart Our Business Startups Act of 2012; |
• | “Major Aurora Shareholder” are to those certain shareholders of Aurora listed in and party to the Aurora Holder Support Agreement, consisting of Novator Capital Sponsor Limited and Shravin Mittal who owns his shares through Unbound HoldCo Ltd. and is also a member of the board of directors of Aurora; |
• | “Major Better Stockholder” are to those certain directors, executive officers and holders of Better Capital Stock party to that certain Better Holder Support Agreement entered into by the parties thereto as an inducement to Aurora and Better to enter into the Merger Agreement and to consummate the transactions contemplated therein; |
• | “Merger Agreement” are to the Agreement and Plan of Merger, dated as of May 10, 2021, by and among Aurora, Merger Sub and Better, a copy of which is attached to this proxy statement/prospectus as Annex A, including, where applicable, as amended by (i) the first amendment to the Merger Agreement, dated October 27, 2021, a copy of which is attached to this proxy statement/prospectus as Annex A-1, (ii) the second amendment to the Merger Agreement, dated November 9, 2021, a copy of which is attached to this proxy statement/prospectus as Annex A-2, and (iii) the third amendment to the Merger Agreement, dated November 30, 2021, a copy of which is attached to this proxy statement/prospectus as Annex A-3; |
• | “Merger Sub” are to Aurora Merger Sub I, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Aurora; |
• | “Mergers” are to, collectively, the First Merger and the Second Merger; |
• | “Minimum Available Cash Amount” are to the total amount of cash represented by satisfaction of the Minimum Cash Condition; |
• | “Minimum Cash Condition” are to the occurrence of each of (i) funding of $750,000,000 pursuant to the Pre-Closing Bridge Note Purchase Agreement, dated as of November 30, 2021, a copy of which is attached to this proxy statement/prospectus as Annex Q, which was completed on December 2, 2021, and (ii) the entry into definitive documentation for $750,000,000 of Post-Closing Convertible Notes as provided for in the SoftBank Subscription Agreement and the Sponsor Subscription Agreement, each as amended; |
• | “MSRs” are to mortgage-servicing rights; |
• | “Nasdaq” are to the Nasdaq Capital Market; |
• | “ordinary shares” are to the Aurora Class A ordinary shares and the Aurora Class B ordinary shares, collectively; |
• | “organic traffic” are to visitors that come directly to Better’s website, search for Better on a search engine, or engage with Better through its various content pieces, as opposed to being directed to Better’s website through Better’s marketing on a third party’s website; |
• | “Person” are to any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, governmental authority or instrumentality or other entity of any kind; |
• | “Per Share Merger Consideration” are to the product obtained by multiplying |
• | “PIPE Investment” are to the purchase of shares of Better Home & Finance Class A common stock and Better Home & Finance Class C common stock pursuant to the SoftBank Subscription Agreement and the Sponsor Subscription Agreement; |
• | “Post-Closing Conversion Shares” are to the shares of Better Home & Finance Class A common stock into which the Post-Closing Convertible Notes which SoftBank and the Sponsor committed to fund pursuant to the amended SoftBank Subscription Agreement and amended Sponsor Subscription Agreement attached to this proxy statement/prospectus as Annex H-1 and Annex I-1, respectively, are convertible; |
• | “Post-Closing Convertible Notes” are to the subordinated unsecured 1% convertible notes issued in an aggregate principal amount of $750,000,000 (less any amounts released to Better at the Closing from Aurora’s trust account (excluding, for the avoidance of doubt, amounts released to Better under the Subscription Agreements)), which SoftBank and the Sponsor committed to fund pursuant to the amended SoftBank Subscription Agreement and amended Sponsor Subscription Agreement attached to this proxy statement/prospectus as Annex H-1 and Annex I-1, respectively, on and subject to the terms set forth in the term sheets attached thereto. As a result of the commitment by Sponsor, the Major Aurora Shareholder and the Aurora directors and officers not to redeem in the aggregate 3,502,500 Aurora Class A shares held by them, a minimum of $35,025,000 will be released to Better at the Closing from Aurora’s trust account, and, accordingly, the maximum aggregate principal amount of Post-Closing Convertible Notes to be issued is $714,975,000; |
• | “Pre-Closing Bridge Conversion Shares” are to the shares of Better Home & Finance Class A common stock (issuable in connection with the consummation of the Business Combination on the Closing Date), Better preferred stock or Better common stock (issuable in certain other circumstances) into which the Pre-Closing Bridge Notes funded by SoftBank and the Sponsor pursuant to the Pre-Closing Bridge Note Purchase Agreement (described elsewhere in this proxy statement/prospectus) are convertible, as applicable; |
• | Pre-Closing Bridge Financing” are to the receipt by Better of $750,000,000 upon the issuance of Pre-Closing Bridge Notes on December 2, 2021 pursuant to the Pre-Closing Bridge Note Purchase Agreement; |
• | “Pre-Closing Bridge Investors” are SoftBank and the Sponsor, in their capacity as investors under the Pre-Closing Bridge Note Purchase Agreement pursuant to which they funded the Pre-Closing Bridge Financing in connection therewith in an aggregate principal amount of $750,000,000; |
• | “Pre-Closing Bridge Note Purchase Agreement” are to that certain agreement, dated November 30, 2021, by and among Aurora, Better, SoftBank and the Sponsor, a copy of which is attached to this proxy statement/prospectus as Annex Q; |
• | “Pre-Closing Bridge Notes” are to the subordinated 0% bridge promissory notes, issued in an aggregate principal amount of $750,000,000 pursuant to the Pre-Closing Bridge Note Purchase Agreement, that automatically convert into Better Home & Finance Class A common stock and Better Home & Finance Class C common stock, as applicable, at a conversion price of $10 per share, in connection with the consummation of the Business Combination; |
• | “Preferred Stock Conversion” are to the conversion of all outstanding shares of Better preferred stock into shares of Better common stock; |
• | “pro forma” are to giving pro forma effect to the Business Combination; |
• | “pro forma ownership assumptions” are to the assumptions of the pro forma, including that, in connection with the Business Combination, (a) the Pre-Closing Bridge Notes funded by SoftBank in an aggregate principal amount of $650,000,000 convert into Better Home & Finance Class A common stock and Better Home & Finance Class C common stock, (b) the Pre-Closing Bridge Notes funded by the Sponsor in an aggregate principal amount of $100,000,000 convert into Better Home & Finance Class A common stock, (c) under the applicable pro forma scenario presented, either (i) there will be no exercise of redemption rights by Aurora public shareholders (assuming a “no redemptions” scenario), or (ii) all Aurora public shareholders redeem their Aurora Class A ordinary shares (other than those investors that have agreed not to redeem per the Aurora Holder Support Agreement and Sponsor Letter) (assuming a “maximum redemptions” scenario), (d) each Better Stockholder who is entitled to receive Better Home & Finance Class B common stock will elect to do so, rather than receive Better Home & Finance Class A common stock or Better Home & Finance Class C common stock (other than any Better Stockholder that is, or has an affiliate that is, a bank holding company, which holder will elect to receive shares of Better Home & Finance Class A common stock), (e) existing warrants to acquire shares of Better Capital Stock outstanding as of immediately prior to the effective time of the First Merger will, in accordance with the warrant holders’ agreements, be conditionally exercised and eligible to receive their portion of the Stock Consideration or be converted, based on the Exchange Ratio, into warrants to purchase shares of Better Home & Finance Class A common stock, (f) Better repurchases for de minimis consideration prior to Closing an aggregate 937,500 shares of Better Capital Stock from Pine Brook pursuant to a certain side letter agreement that was subject to dispute as described in “ Certain Relationships and Related Party Transactions—Better— Other Stockholder Agreements—Pine Brook Side Letter |
• | “Proposed Bylaws” are to the proposed bylaws of Better Home & Finance upon the effective date of the Business Combination attached to this proxy statement/prospectus as Annex D; |
• | “Proposed Certificate of Incorporation” are to the proposed certificate of incorporation of Better Home & Finance upon the effective date of the Business Combination attached to this proxy statement/prospectus as Annex B; |
• | “Proposed Organizational Documents” are to the Proposed Certificate of Incorporation and the Proposed Bylaws; |
• | “Purchase Loan Volume” are to the aggregate dollar amount of purchase loans funded in a given period based on the principal amount of the loan at funding; |
• | “redemption” are to each redemption of public shares for cash pursuant to the Cayman Constitutional Documents and the Proposed Organizational Documents; |
• | “Refinance Loan Volume” are to the aggregate dollar amount of refinance loans funded in a given period based on the principal amount of the loan at funding; |
• | “Registration Rights Agreement” are to the Amended and Restated Registration Rights Agreement to be entered into at Closing, by and among Aurora, Novator Capital Sponsor Ltd., and certain other Persons (included as Annex G to the proxy statement/prospectus); |
• | “Sarbanes-Oxley Act” are to the Sarbanes-Oxley Act of 2002; |
• | “SEC” are to the United States Securities and Exchange Commission; |
• | “Second Merger” are to the merger of Better with and into Aurora, with Aurora surviving the merger; |
• | “Securities Act” are to the Securities Act of 1933, as amended; |
• | “Shortfall” are to the number of shares that Aurora public shareholders elect to redeem for consideration from Aurora’s trust account; |
• | “SoftBank” are to SB Northstar LP, an affiliate of SoftBank Group and party to the SoftBank Subscription Agreement; |
• | “SoftBank II” are to SVF II Beaver (DE) LLC, an affiliate of SoftBank Group, which is a Better Stockholder and has entered into a contribution agreement with Better and a letter agreement and irrevocable voting proxy with the Better Founder and CEO, each dated as of April 7, 2021, as amended; |
• | “Sponsor” are to Novator Capital Sponsor Ltd., a Cyprus limited liability company; |
• | “Sponsor Base Purchase Amount” are to the number of shares of Better Home & Finance Class A common stock that the Sponsor agreed to subscribe for and purchase pursuant to the Sponsor Subscription Agreement, dated as of May 10, 2021 (attached to this proxy statement/prospectus as Annex I), with an aggregate value equal to $200,000,000, which amount was subsequently reduced to $100,000,000 aggregate principal amount of Post-Closing Convertible Notes pursuant to the amendment to the Sponsor Subscription Agreement, dated as of November 30, 2021 (attached to this proxy statement/prospectus as Annex I-1), subject to adjustment as further described therein; |
• | “Sponsor Letter” are to that certain Letter Agreement, dated May 10, 2021, by and between the Sponsor and Aurora; |
• | “Subscription Agreements” are to, collectively, the SoftBank Subscription Agreement and the Sponsor Subscription Agreement, in each case as amended and each of which is attached to this proxy statement/prospectus as Annexes H and H-1 and Annexes I and I-1, respectively; |
• | “Total Loans” are to the total number of loans funded in a given period; |
• | “Transaction Proposals” are to, collectively, the Condition Precedent Proposals and the Adjournment Proposal; |
• | “trust account” are to the trust account established at the consummation of Aurora’s initial public offering at J.P. Morgan Chase Bank, N.A. and maintained by Continental, acting as trustee; |
• | “Trust Agreement” are to the Investment Management Trust Agreement, dated April 21, 2020, by and between Aurora and Continental, as trustee; |
• | “Trust Amount” are to the amount of cash and cash equivalents held in Aurora’s trust account; |
• | “VA” are to the U.S. Department of Veterans Affairs; |
• | “Warrant Agreement” are to the Warrant Agreement, dated as of March 3, 2021, between Aurora and Continental; and |
• | “warrants” are to all or any of the Aurora public warrants, the Aurora private warrants or the Better Home & Finance Warrants, as the context may so require. |
• | Aurora’s ability to complete the Business Combination or, if Aurora does not consummate such Business Combination, any other initial business combination; |
• | satisfaction or waiver (if applicable) of the conditions to the Mergers, including, among other things: |
• | the satisfaction or waiver of certain customary closing conditions, including, among others, (i) the approval of the Business Combination and related agreements and transactions by the shareholders of Aurora and Better Stockholders, (ii) the effectiveness of the registration statement of which this proxy statement/prospectus forms a part, (iii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and any other required regulatory approvals, (iv) the receipt of approval for listing on Nasdaq of the shares of Better Home & Finance Class A common stock to be issued in connection with the Mergers, (v) that Aurora has at least $5,000,001 of net tangible assets upon Closing and (vi) the absence of any injunctions; |
• | the absence of a material adverse effect on Better; |
• | satisfaction of the Minimum Cash Condition, which is deemed satisfied by the occurrence of each of (i) funding of $750,000,000 pursuant to the Pre-Closing Bridge Note Purchase Agreement, which occurred on December 2, 2021, and (ii) the entry into definitive documentation for $750,000,000 of Post-Closing Convertible Notes as provided for in the SoftBank Subscription Agreement and the Sponsor Subscription Agreement, each as amended; |
• | the ability to obtain approvals for the Business Combination from state regulators, Fannie Mae, Freddie Mac, the FHA, and the VA; |
• | the occurrence of any other event, change or other circumstance that could give rise to the termination of the Merger Agreement; |
• | the unaudited projected financial information, anticipated growth rate, and market opportunity of Better Home & Finance; |
• | the ability to obtain or maintain the listing of Better Home & Finance Class A common stock and Better Home & Finance Warrants on Nasdaq following the Business Combination; |
• | our public securities’ potential liquidity and trading; |
• | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the completion of the Business Combination; |
• | Aurora officers and directors allocating their time to other businesses and potentially having conflicts of interest with Aurora’s business or in approving the Business Combination; |
• | factors relating to the business, operations and financial performance of Better and its subsidiaries, including: |
• | their ability to operate under and maintain or improve their business model; |
• | the effect of interest rates on their business, results of operations, and financial condition; |
• | their ability to grow market share in their existing markets or any new markets they may enter; |
• | their ability to respond to general economic conditions; |
• | their ability to manage their growth effectively and their expectations regarding the development and expansion of their business; |
• | their ability to comply with laws and regulations related to the operation of their business, including any changes to such laws and regulations; |
• | their ability to achieve and maintain profitability in the future; |
• | their ability to raise financing in the future; |
• | their estimates regarding expenses, future revenue, capital requirements and Better’s need for additional financing; |
• | their ability to maintain, expand and be successful in their strategic relationships with third parties; |
• | their ability to maintain an effective system of internal controls over financial reporting; |
• | their ability to successfully enter new service markets and manage their operations; |
• | their ability to expand their customer base; |
• | their ability to develop new products, features and functionality that meet market needs and achieve market acceptance; |
• | their ability to retain, identify and hire individuals for the roles they seek to fill and staff their operations appropriately; |
• | the involvement of the Better Founder and CEO in ongoing litigation related to prior business activities and associated negative media coverage; |
• | their ability to recruit and retain additional directors, members of management and other team members and otherwise achieve their business goals, including their ability in general, and the Better Founder and CEO’s ability in particular, to establish and maintain a larger, more experienced, executive team in transitioning to becoming a public company; |
• | their ability to maintain and improve morale and workplace culture or respond effectively to the effects of negative media coverage; |
• | their ability to maintain, protect, assert, and enhance their intellectual property rights; and |
• | other factors detailed under the section entitled “ Risk Factors |
Q: |
Why am I receiving this proxy statement/prospectus? |
A: | Aurora shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Merger Agreement and approve the Business Combination. The Merger Agreement provides for, among other things, the mergers of (x) Merger Sub with and into Better, with Better surviving the merger as a wholly owned subsidiary of Aurora, and (y) Better with and into Aurora, with Aurora surviving the merger, in each case, in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in this proxy statement/prospectus. See the section entitled “ BCA Proposal” |
Q: |
What proposals are shareholders of Aurora being asked to vote upon? |
A: | At the extraordinary general meeting, Aurora is asking holders of ordinary shares to consider and vote upon: |
• | a proposal to approve by ordinary resolution and adopt the Merger Agreement; |
• | a proposal to approve by special resolution the Domestication; |
• | the following four separate proposals to approve by special resolution the following material differences between the Cayman Constitutional Documents and the Proposed Organizational Documents: |
• | to authorize by ordinary resolution the change in the authorized share capital of Aurora from (i) 500,000,000 Aurora Class A ordinary shares, 50,000,000 Aurora Class B ordinary shares and 5,000,000 Former preference shares, par value $0.0001 per share, to (ii) 1,750,000,000 shares of Better Home & Finance Class A common stock, 600,000,000 shares of Better Home & Finance Class B common stock, 800,000,000 shares of Better Home & Finance Class C common stock and 100,000,000 shares of Better Home & Finance preferred stock; |
• | to authorize by ordinary resolution the board of directors (the “Board”) to issue any or all shares of Better Home & Finance preferred stock in one or more classes or series, with such terms and conditions as may be expressly determined by the Board and as may be permitted by the DGCL; |
• | to authorize by ordinary resolution multiple classes of common stock of Better Home & Finance pursuant to which (i) holders of Better Home & Finance Class A common stock will be entitled to cast one vote per share of Better Home & Finance Class A common stock, (ii) holders of shares of Better Home & Finance Class B common stock will be entitled to cast three votes per share of Better Home & Finance Class B common stock, and (iii) holders of shares of Better Home & Finance Class C common stock will not have any voting rights other than as provided by applicable law or the Proposed Certificate of Incorporation, as applicable, in each case on each matter properly submitted to Better Home & Finance shareholders entitled to vote; |
• | to authorize by ordinary resolution all other changes in connection with the replacement of the Cayman Constitutional Documents with the Proposed Certificate of Incorporation and Proposed Bylaws as part of the Domestication, including (1) changing the corporate name from “Aurora Acquisition Corp.” to “Better Home & Finance Holding Company” in connection with the Business Combination, (2) making Better Home & Finance’s corporate existence perpetual, (3) adopting Delaware as the exclusive forum for certain stockholder litigation, (4) opting out of the provisions of Section 203 of the DGCL and (5) removing certain provisions related to Aurora’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which Aurora’s board of directors believes is necessary to adequately address the needs of Better Home & Finance after the Business Combination; |
• | for holders of Aurora Class B ordinary shares, a proposal to approve by ordinary resolution the election of [ ] directors, who, upon consummation of the Business Combination, will be the directors of Better Home & Finance; |
• | a proposal to approve by ordinary resolution, for purposes of complying with the applicable provisions of Section 5635 of the Nasdaq Listed Company Manual, the issuance of shares of Better Home & Finance Class A common stock, Better Home & Finance Class B common stock or Better Home & Finance Class C common stock, as applicable, to (1) the Pre-Closing Bridge Investors, including the Sponsor, pursuant to (a) the Pre-Closing Bridge Financing (as defined herein) and (b) the issuance of the shares of Better Home & Finance Class A common stock upon the conversion of the Post-Closing Convertible Notes (as defined herein) and (2) the Better Stockholders pursuant to the Merger Agreement; |
• | a proposal to approve by ordinary resolution the 2022 Incentive Equity Plan; |
• | a proposal to approve by ordinary resolution the ESPP; and |
• | a proposal to approve the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting. |
Q: |
Are the proposals conditioned on one another? |
A: | Yes. The Business Combination is conditioned on the approval of each of the Condition Precedent Proposals at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal. |
Q: |
Why is Aurora proposing the Business Combination? |
Q: |
Did Aurora’s board of directors obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination? |
A: | Aurora’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. In analyzing the Business Combination, Aurora’s board of directors and management conducted due diligence on Better and researched the industry in which Better operates and concluded that the Business Combination was in the best interest of Aurora’s |
shareholders. In reaching this conclusion, Aurora’s board of directors considered a number of factors and a broad range of information, including publicly available information, information provided by Better and information provided by Barclays, former financial advisor to Aurora. Aurora’s board of directors believes that, based upon the financial skills and background of its directors, it was qualified to conclude that the Business Combination was fair from a financial perspective to its shareholders. Investors will be relying on the judgment of Aurora’s board of directors, as described above, in valuing Better’s business. For a more extensive discussion of the factors utilized by Aurora’s board of directors in approving the Business Combination, see the section titled “ BCA Proposal—Aurora’s Board of Director’s Reasons for the Business Combination |
Q: |
Will the projections that Aurora considered when evaluating and recommending the Business Combination be realized? |
A: | In performing its financial analyses, Aurora relied on, among other things, certain information, including the forecasts and financial projections described in the section entitled “BCA Proposal—Unaudited Projected Financial Information.” Information About Better—Our Team Members and Human Capital Management Risk Factors—Risks Related to Our Operating History, Business Model, Growth and Financial Condition—If we cannot maintain and improve our corporate culture, we could lose the innovation, collaboration and focus on the mission that contribute to our business, and our ability to attract and retain team members could be diminished, which could materially and adversely affect our business, financial condition, results of operations, and prospects Risks Related to Recent Events Regarding our Business and our Founder and CEO—Vishal Garg, the Better Founder and CEO, exposes us to particular risks and uncertainties regarding his control over our operations, both directly as our CEO and our largest stockholder, as well as through our commercial relationships with his various affiliates, which could materially and adversely affect our business, financial condition, results of operations, and prospects. “Risk Factors—Risks Related to Our |
Operating History, Business Model, Growth and Financial Condition—Since the date of preparation, the assumptions underlying the Better projected financial information considered by Aurora have changed considerably, such that the projected financial information generally, and the near-term financial projections in particular, will not to be realized, which may adversely affect the market price of Better Home & Finance common stock following the completion of the Business Combination” and “BCA Proposal—Unaudited Projected Financial Information.” |
Q: |
What is the aggregate dollar amount and the nature of what Aurora’s Sponsor and its affiliates have at risk that depends on completion of the Business Combination and the current value of securities held, loans extended, fees due, and out-of-pocket expenses for which the Sponsor and its affiliates and Aurora’s and Better’s officers and directors are awaiting reimbursement? |
A: | As of the date of this proxy statement, Aurora’s initial shareholders (i.e., the Sponsor and Aurora’s independent directors) own 4,573,372 Aurora private warrants at an exercise price of $11.50 per share and 6,950,072 Class B ordinary shares. |
Q: |
What will Better Stockholders receive in return for Aurora’s acquisition of all of the issued and outstanding equity interests of Better? |
A: | The consideration that will be received by Better Stockholders will consist of a number of shares of Better Home & Finance Class A common stock, Better Home & Finance Class B common stock or Better Home & Finance Class C common stock equal to (A) 690,000,000, minus (B) the aggregate amount of Better Home & Finance Class B common stock that would be issuable upon the net exercise or conversion, as applicable, of the Better Awards (the “Stock Consideration”). As a result of and upon the Closing (as defined below), among other things, (i) all outstanding shares of Better common stock as of immediately prior to the effective time of the First Merger will be cancelled in exchange for the right to receive the Stock Consideration; (ii) all Better Awards outstanding as of immediately prior to the effective time of the First Merger will be converted, based on the Exchange Ratio, into awards based on shares of Better Home & Finance Class B common stock; and (iii) all Better Warrants outstanding as of immediately prior to the effective time of the First Merger will, in accordance with the warrant holders’ agreements, be conditionally exercised and eligible to receive their portion of the Stock Consideration or be converted, based on the Exchange Ratio, into warrants to purchase shares of Better Home & Finance Class A common stock. For further details, see the section entitled “ BCA Proposal—The Merger Agreement—Consideration—Stock Consideration. |
Q: |
What equity stake and voting power will current Aurora shareholders and Better Stockholders hold in Better Home & Finance immediately after the consummation of the Business Combination? |
A: | As of the date of this proxy statement/prospectus, there are 34,750,359 ordinary shares issued and outstanding, which includes the 6,950,072 founder shares held by the Sponsor (including Aurora’s independent directors) and the 27,800,287 public shares. As of the date of this proxy statement/prospectus, there is outstanding an aggregate of 10,648,444 warrants, which includes the 4,573,372 Aurora private warrants held by the Sponsor and the 6,075,072 public warrants. Each whole warrant entitles the holder thereof to purchase one Aurora Class A ordinary share and, following the Domestication, will entitle the holder thereof to purchase one share of Better Home & Finance Class A common stock. Therefore, as of the date of this proxy statement/prospectus (without giving effect to the Business Combination), the Aurora fully diluted share capital would be 43,112,117 (50% of the Aurora private warrants are subject to forfeiture). |
Fully Diluted Share Ownership and Voting Power in Better Home & Finance (1) |
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Post-Business Combination No Redemptions |
Post-Business Combination Maximum Redemptions |
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Number of Shares |
Percentage of Outstanding Shares |
Percentage of Voting Power |
Number of Shares |
Percentage of Outstanding Shares |
Percentage of Voting Power |
|||||||||||||||||||
Better Stockholders—Class A |
38,830,741 | 4.9 | % | 1.9 | % | 38,830,741 | 5.0 | % | 1.9 | % | ||||||||||||||
Better Stockholders—Class B (2)(3) |
591,765,014 | 74.1 | % | 86.6 | % | 591,765,014 | 76.4 | % | 87.7 | % | ||||||||||||||
Aurora Public Shareholders—Class A |
24,297,787 | 3.0 | % | 1.2 | % | — | — | — | ||||||||||||||||
Sponsor—Class A (4) |
19,062,558 | 2.4 | % | 0.9 | % | 19,062,558 | 2.5 | % | 0.9 | % | ||||||||||||||
SoftBank—Class A (5) |
14,506,577 | 1.8 | % | 0.7 | % | 11,985,615 | 1.5 | % | 0.6 | % | ||||||||||||||
SoftBank II—Class B |
59,404,245 | 7.4 | % | 8.7 | % | 59,404,245 | 7.7 | % | 8.8 | % | ||||||||||||||
SoftBank—Class C (6) |
50,493,423 | 6.3 | % | — | 53,014,385 | 6.8 | % | — | ||||||||||||||||
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Total |
798,360,345 |
100.0 |
% |
100.0 |
% |
774,062,558 |
100.0 |
% |
100.0 |
% | ||||||||||||||
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(1) | Based on outstanding Better Capital Stock, Better Warrants and Better Awards as of June 1, 2022. |
(2) | Excludes 59,404,245 shares of Better Home & Finance Class B common stock to be issued to SoftBank II in respect of its holding of Better Capital Stock prior to the Closing. After consummation of the Business Combination, SoftBank, as an investor in the Pre-Closing Bridge Financing, and SoftBank II, as a holder of Better Capital Stock, are collectively expected to beneficially own approximately 124,404,245 shares representing 9.4% of the voting power of Better Home & Finance common stock (without giving effect to the Voting Proxy described under “ Certain Relationships and Related Party Transactions—Better—Other Stockholder Agreements—SoftBank Agreements |
(3) | Includes shares of Better Home & Finance common stock underlying Better Options, Better RSUs and Better Restricted Stock. |
(4) | Includes Better Home & Finance Class A common stock expected to be held by the Sponsor, the Aurora Major Shareholder and certain Aurora directors and officers. In particular, the Sponsor is expected to beneficially own 16,452,245 shares of Better Home & Finance Class A common stock in the aggregate, comprised of (i) 2,300,000 shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination, (ii) 4,152,245 shares of Better Home & Finance Class A common stock to be issued in connection with conversion of the founder shares (which number excludes 1,390,014 Sponsor Locked-Up Shares because such shares are subject to potential forfeiture in a change of control event, which renders them contingently issuable at Closing) and (iii) 10,000,000 shares of Better Home & Finance Class A common stock to be issued as Pre-Closing Bridge Conversion Shares in connection with the Pre-Closing Bridge Financing funded by the Sponsor. The Aurora Major Shareholder is expected to beneficially own 2,159,375 shares of Better Home & Finance Class A common stock in the aggregate, comprised of (i) 1,000,000 shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination and (ii) 1,159,375 shares of Better Home & Finance Class A common stock to be issued in connection with conversion of the founder shares. Certain Aurora directors and officers not included above are expected to beneficially own 450,938 shares of Better Home & Finance Class A common stock in the aggregate, comprised of (i) 202,500 shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination and (ii) 248,438 shares of Better Home & Finance Class A common stock to be issued in connection with conversion of the founder shares. For more information, see the section entitled “ Beneficial Ownership of Securities |
(5) | Better Home & Finance Class A common stock is expected to be issued to SoftBank as Pre-Closing Bridge Conversion Shares in connection with conversion of the Pre-Closing Bridge Notes at Closing. |
(6) | Better Home & Finance Class C common stock is expected to be issued to SoftBank as Pre-Closing Bridge Conversion Shares in connection with conversion of the Pre-Closing Bridge Notes at Closing. |
Q: |
How has the announcement of the Business Combination affected the trading price of the Aurora Class A ordinary shares? |
A: | On May 7, 2021, the trading date before the public announcement of the Business Combination, Aurora’s public units, Class A ordinary shares and warrants closed at $10.44, $10.50 and $1.375, respectively. On [ ], 2022, the most recent practicable date prior to the date of this proxy statement/prospectus, the Company’s public units, Class A ordinary shares and warrants closed at $[ ], $[ ] and $[ ], respectively. |
Q: |
Will the Company obtain new financing in connection with the Business Combination? |
A: | Yes. Aurora, Better, SoftBank and the Sponsor have entered into the Pre-Closing Bridge Note Purchase Agreement, providing for the issuance of $750,000,000 aggregate principal amount of subordinated 0% bridge promissory notes (the “Pre-Closing Bridge Notes”) that automatically convert into Better Home & Finance Class A common stock and Better Home & Finance Class C common stock in connection with the consummation of the Business Combination at $10 per share of Better Home & Finance Class A common stock (the “Pre-Closing Bridge Conversion Shares”), which was funded on December 2, 2021. Aurora and SoftBank also entered into an amendment to the SoftBank Subscription Agreement to (i) amend the Total Subscription Commitment (as defined in the SoftBank Subscription Agreement) to be $750,000,000, which amount will be further reduced by, among other things, any funding pursuant to the Pre-Closing Bridge Financing, and (ii) provide for a new Total Note Commitment (as defined in the SoftBank Subscription Agreement) of $750,000,000 aggregate principal amount of Post-Closing Convertible Notes (less any amounts released to Better at the Closing from Aurora’s trust account (excluding, for the avoidance of doubt, amounts released to Better under the Subscription Agreements)) that will have terms and be subject to conditions described in such agreement. As a result of the commitment by Sponsor, the Major Aurora Shareholder and the Aurora directors and officers not to redeem in the aggregate 3,502,500 Aurora Class A shares held by them, a minimum of $35,025,000 will be released to Better at the Closing from Aurora’s trust account, and, accordingly, the maximum aggregate principal amount of Post-Closing Convertible Notes to be issued is $714,975,000. In addition, Aurora and the Sponsor entered into an amendment to the Sponsor Subscription Agreement to, among other things, amend the Sponsor’s Purchase Amount (as defined in the Sponsor Subscription Agreement) to be $100,000,000, for which it will receive 10,000,000 shares of Better Home & Finance Class A common stock, minus the aggregate principal amount of any Pre-Closing Bridge Financing funded by the Sponsor under the Pre-Closing Bridge Note Purchase Agreement, and otherwise provide for a commitment to purchase Post-Closing Convertible Notes in an aggregate principal amount of $100,000,000. For more information, see the section entitled “BCA Proposal.” |
Q: |
Why is Aurora proposing the Domestication? |
A: | Our board of directors believes that there are significant advantages to us that will arise as a result of a change of Aurora’s domicile to Delaware. Further, Aurora’s board of directors believes that any direct benefit that the DGCL provides to a corporation also indirectly benefits its shareholders, who are the owners of the corporation. Aurora’s board of directors believes that there are several reasons why a reincorporation in Delaware is in the best interests of the Company and its shareholders, including, (i) the prominence, predictability and flexibility of the DGCL, (ii) Delaware’s well-established principles of corporate governance and (iii) the increased ability for Delaware corporations to attract and retain qualified directors. Each of the foregoing are discussed in greater detail in the section entitled “ Domestication Proposal—Reasons for the Domestication |
Q: |
What amendments will be made to the current constitutional documents of Aurora? |
A: | The consummation of the Business Combination is conditioned, among other things, on the Domestication. Accordingly, in addition to voting on the Business Combination, Aurora’s shareholders are also being asked to consider and vote upon a proposal to approve the Domestication and replace Aurora’s Cayman Constitutional Documents, in each case, under the Cayman Islands Companies Act, with the Proposed Organizational Documents, in each case, under the DGCL, which differ materially from the Cayman Constitutional Documents in the following respects: |
Cayman Constitutional Documents |
Proposed Organizational Documents | |||
Authorized Shares (Organizational Documents Proposal A) |
The Cayman Constitutional Documents authorize 555,000,000 shares, consisting of 500,000,000 Aurora Class A ordinary shares, 50,000,000 Aurora Class B ordinary shares and 5,000,000 preference shares. | The Proposed Organizational Documents authorize 3,250,000,000 shares, consisting of 1,750,000,000 shares of Better Home & Finance Class A common stock, 600,000,000 shares of Better Home & Finance Class B common stock, 800,000,000 shares of Better Home & Finance Class C common stock and 100,000,000 shares of Better Home & Finance preferred stock. | ||
See paragraph 5 of the Existing Memorandum. |
See Article Fourth, subsection (1) of the Proposed Certificate of Incorporation. | |||
Authorize the Board of Directors to Issue Preferred Stock Without Stockholder Consent (Organizational Documents Proposal B) |
The Cayman Constitutional Documents authorize the issuance of 5,000,000 preference shares with such designation, rights and preferences as may be determined from time to time by Aurora’s board of directors. Accordingly, Aurora’s board of directors is empowered under the Cayman Constitutional Documents, without shareholder approval, to issue preference shares with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of ordinary shares (except to the extent it may affect the ability of Aurora to carry out a conversion of Aurora Class B ordinary shares on the Closing Date, as contemplated by the Existing Articles). | The Proposed Organizational Documents authorize the Board to issue all or any shares of preferred stock in one or more series and to fix for each such series such designation, vesting, powers (including voting powers), preferences and relative, participating, optional or other rights (and the qualifications, limitations or restrictions thereof), as the Board may determine. |
Cayman Constitutional Documents |
Proposed Organizational Documents | |||
See paragraph 5 of the Existing Memorandum and Article 3 of the Existing Articles. |
See Article Fourth, subsection (2) of the Proposed Certificate of Incorporation. | |||
Multiple Classes of Common Stock (Organizational Documents Proposal C) |
The Cayman Constitutional Documents provides that the holders of each share of common stock of Aurora is entitled to one vote for each share on each matter properly submitted to the shareholders entitled to vote. | The Proposed Certificate of Incorporation provides holders of shares of Better Home & Finance Class A common stock will be entitled to cast one vote per Class A share, and holders of shares of Better Home & Finance Class B common stock will be entitled to cast three votes per Class B share on each matter properly submitted to the shareholders entitled to vote. Holders of Better Home & Finance Class C common stock will not be entitled to vote, except as otherwise required by applicable law or provided in the Proposed Certificate of Incorporation. | ||
See Article 23 the Existing Articles. |
See Article Fourth, subsection (3) of the Proposed Certificate of Incorporation. | |||
Corporate Name (Organizational Documents Proposal D) |
The Cayman Constitutional Documents provide that the name of the company is “Aurora Acquisition Corp.” | The Proposed Organizational Documents provide that the name of the corporation will be “Better Home & Finance Holding Company.” | ||
See paragraph 1 of the Existing Memorandum. |
See Article First of the Proposed Certificate of Incorporation. | |||
Perpetual Existence (Organizational Documents Proposal D) |
The Cayman Constitutional Documents provide that if Aurora does not consummate a business combination (as defined in the Cayman Constitutional Documents) within 24 months from consummation of the initial public offering, Aurora will cease all operations except for the purposes of winding-up and will redeem the public shares and liquidate Aurora’s trust account. | The Proposed Organizational Documents do not include any provisions relating to Better Home & Finance’s ongoing existence; the default under the DGCL will make Better Home & Finance’s existence perpetual. | ||
See Article 49 of the Cayman Constitutional Documents. |
Default rule under the DGCL. | |||
Exclusive Forum (Organizational Documents Proposal D) |
The Cayman Constitutional Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation. | The Proposed Organizational Documents adopt Delaware as the exclusive forum for certain stockholder litigation. | ||
See Article Twelfth of the Proposed Certificate of Incorporation. |
Cayman Constitutional Documents |
Proposed Organizational Documents | |||
Takeovers by Interested Shareholders (Organizational Documents Proposal D) |
The Cayman Constitutional Documents do not provide restrictions on takeovers of Aurora by a related shareholder following a business combination. | The Proposed Organizational Documents opt out of Section 203 of the DGCL, and, therefore, Better Home & Finance will not be subject to Section 203 of the DGCL relating to takeovers by interested shareholders. | ||
See Article Eighth of the Proposed Certificate of Incorporation. | ||||
Provisions Related to Status as Blank Check Company (Organizational Documents Proposal D) |
The Cayman Constitutional Documents include various provisions related to Aurora’s status as a blank check company prior to the consummation of a business combination. | The Proposed Organizational Documents do not include such provisions related to Aurora’s status as a blank check company, which no longer will apply upon consummation of the Mergers, as Aurora will cease to be a blank check company at such time. | ||
See Article 49 of the Cayman Constitutional Documents. |
Q: |
How will the Domestication affect my ordinary shares, warrants and units? |
A: | As a result of and upon the effective time of the Domestication, (1) each of the then-issued and outstanding Aurora Class A ordinary shares will convert automatically, on a one-for-one one-for-one one-quarter of one Better Home & Finance Warrant. See the section entitled “Domestication Proposal |
Q: |
What are the U.S. federal income tax consequences of the Domestication? |
A: | As discussed more fully under the section entitled “ U.S. Federal Income Tax Considerations U.S. Federal Income Tax Considerations—U.S. Holders” |
• | A U.S. Holder who is a 10% Shareholder (as defined in the section entitled “ U.S. Federal Income Tax Considerations—U.S. Holders—The Domestication—Section 367 |
• | A U.S. Holder who, on the date of the Domestication, is not a 10% Shareholder but whose Aurora stock has a fair market value of $50,000 or more should recognize gain (but not loss) with respect to the Domestication unless such U.S. Holder makes a valid election to include in income as a dividend the “all earnings and profits amount” attributable to the Aurora Class A ordinary shares it directly owns, within the meaning of Treasury Regulations under Section 367 of the Code. |
• | A U.S. Holder who, on the date of the Domestication, is not a 10% Shareholder and whose Aurora Class A ordinary shares have a fair market value of less than $50,000 should not be required to |
recognize any gain or loss under Section 367 of the Code in connection with the Domestication and should not be required to include any part of the “all earnings and profits amount” in income. |
Q: |
Do I have redemption rights? |
A: | If you are a holder of public shares, you have the right to request that we redeem all or a portion of your public shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the BCA Proposal How do I exercise my redemption rights? |
Q: |
How do I exercise my redemption rights? |
A: | If you are a public shareholder and wish to exercise your right to redeem the public shares, you must: |
(i) | (a) hold public shares, or (b) if you hold public shares through units, elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; |
(ii) | submit a written request to Continental, Aurora’s transfer agent, that Better Home & Finance redeem all or a portion of your public shares for cash; and |
(iii) | deliver your public shares to Continental, Aurora’s transfer agent, physically or electronically through The Depository Trust Company (“DTC”). |
Q: |
If I am a holder of units, can I exercise redemption rights with respect to my units? |
A: | No. Holders of issued and outstanding units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If you hold your |
units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact Continental, Aurora’s transfer agent, directly and instruct them to do so. You are requested to cause your public shares to be separated and delivered to Continental, Aurora’s transfer agent, by 5:00 p.m., Eastern Time, on [ ], 2022 (two business days before the extraordinary general meeting) in order to exercise your redemption rights with respect to your public shares. |
Q: |
What are the U.S. federal income tax consequences of exercising my redemption rights? |
A: | The U.S. federal income tax consequences of exercising your redemption rights to receive cash from the trust account in exchange for Better Home & Finance Class A common stock depend on your particular facts and circumstances. It is possible that a U.S. Holder (as defined in the section entitled “ U.S. Federal Income Tax Considerations—U.S. Holders U.S. Federal Income Tax Considerations—U.S. Holders—Redemption of Better Home & Finance Class A Common Stock Received in the Domestication. |
Q: |
What happens to the funds deposited in the trust account after consummation of the Business Combination? |
A: | Following the closing of Aurora’s initial public offering on March 8, 2021, an amount equal to $255,000,000 ($10.00 per unit) (see Note 6 to Aurora’s financial statements for the year ended December 31, 2021) from the net proceeds from Aurora’s initial public offering and the sale of the Aurora private warrants was placed in the trust account. This amount consisted of net proceeds of $220,000,000 from public shares from the initial public offering and net proceeds of $35,000,000 from Aurora private warrants. As of March 31, 2022, an additional $23,002,870 from the proceeds of the underwriters’ over-allotment and interest income of $23,262 has been added to the aggregate amount in the trust account, totaling $278,045,659. This will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a business combination and (ii) the distribution of the funds in the trust account to Aurora shareholders, as described below. |
Q: |
What happens if a substantial number of the public shareholders vote in favor of the BCA Proposal and exercise their redemption rights? |
A: | Our public shareholders are not required to vote in respect of the Business Combination in order to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders. |
Q: |
How will the level of redemptions by holders of Aurora’s Class A ordinary shares affect my ownership of Better Home & Finance upon the closing of the Business Combination? |
A: | Because the Business Combination is structured as an acquisition of Better by Aurora, all Aurora ordinary shares outstanding prior to the Business Combination will remain outstanding after the Business Combination. Initially, pursuant to the Redemption Subscription Agreement, the Sponsor agreed to purchase the number of shares of Aurora Class A ordinary shares equal to the number of shares that Aurora public shareholders have elected to redeem. As a result, the only difference in the maximum and no redemptions scenarios would have been the ownership of the Sponsor and Aurora unaffiliated public shareholders in Better Home & Finance common stock. However, in order to provide Better with immediate liquidity, on November 30, 2021, the structure of the Business Combination was amended to, among other things, replace the backstop provided by the Sponsor under the Redemption Subscription Agreement with (i) Pre-Closing Bridge Notes in an amount equal to $750,000,000, funded on December 2, 2021, which convert into Better Home & Finance Class A common stock and Better Home & Finance Class C common stock upon consummation of the Business Combination, and (ii) a commitment from SoftBank and the Sponsor to fund, pursuant to the amended SoftBank Subscription Agreement and Sponsor Subscription Agreement, respectively, senior subordinated unsecured 1% Post-Closing Convertible Notes with a five-year maturity, in an amount equal to $750,000,000 (less any amounts released to Better at the Closing (excluding, for the avoidance of doubt, amounts released to Better under the Subscription Agreements)) during the first 45 days after the Closing Date. As a result of the commitment by Sponsor, the Major Aurora Shareholder and the Aurora directors and officers not to redeem in the aggregate 3,502,500 Aurora Class A shares held by them, a minimum of $35,025,000 will be released to Better at the Closing from Aurora’s trust account, and, accordingly, the maximum aggregate principal amount of Post-Closing Convertible Notes to be issued is $714,975,000. For further details, see “Summary of the Proxy Statement/Prospectus—Transaction Summary,” “BCA Proposal—Amendments to the Merger Agreement—Amendment No. 3” and “BCA Proposal—Related Agreements.” |
Fully Diluted Share Ownership and Voting Power in Better Home & Finance (1) |
||||||||||||||||||||||||
Post-Business Combination No Redemptions |
Post-Business Combination Maximum Redemptions |
|||||||||||||||||||||||
Number of Shares |
Percentage of Outstanding Shares |
Percentage of Voting Power |
Number of Shares |
Percentage of Outstanding Shares |
Percentage of Voting Power |
|||||||||||||||||||
Better Stockholders—Class A |
38,830,741 | 4.9 | % | 1.9 | % | 38,830,741 | 5.0 | % | 1.9 | % | ||||||||||||||
Better Stockholders—Class B (2) (3) |
591,765,014 | 74.1 | % | 86.6 | % | 591,765,014 | 76.4 | % | 87.7 | % | ||||||||||||||
Aurora Public Shareholders—Class A |
24,297,787 | 3.0 | % | 1.2 | % | — | — | — | ||||||||||||||||
Sponsor—Class A (4) |
19,062,558 | 2.4 | % | 0.9 | % | 19,062,558 | 2.5 | % | 0.9 | % | ||||||||||||||
SoftBank—Class A (5) |
14,506,577 | 1.8 | % | 0.7 | % | 11,985,615 | 1.5 | % | 0.6 | % | ||||||||||||||
SoftBank II—Class B |
59,404,245 | 7.4 | % | 8.7 | % | 59,404,245 | 7.7 | % | 8.8 | % | ||||||||||||||
SoftBank—Class C (6) |
50,493,423 | 6.3 | % | — | 53,014,385 | 6.8 | % | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
798,360,345 |
100.0 |
% |
100.0 |
% |
774,062,558 |
100.0 |
% |
100.0 |
% | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Based on outstanding Better Capital Stock, Better Warrants and Better Awards as of June 1, 2022. |
(2) | Excludes 59,404,245 shares of Better Home & Finance Class B common stock to be issued to SoftBank II in respect of its holding of Better Capital Stock prior to the Closing. After consummation of the Business Combination, SoftBank, as an investor in the Pre-Closing Bridge Financing, and SoftBank II, as a holder of Better Capital Stock, are collectively expected to beneficially own approximately 124,404,245 shares representing 9.4% of the voting power of Better Home & Finance common stock (without giving effect to the Voting Proxy described under “ Certain Relationships and Related Party Transactions—Better—Other Stockholder Agreements—SoftBank Agreements |
(3) | Includes shares of Better Home & Finance common stock underlying Better Options, Better RSUs and Better Restricted Stock. |
(4) | Includes Better Home & Finance Class A common stock expected to be held by the Sponsor, the Aurora Major Shareholder and certain Aurora directors and officers. In particular, the Sponsor is expected to beneficially own 16,452,245 shares of Better Home & Finance Class A common stock in the aggregate, |
comprised of (i) 2,300,000 shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination, (ii) 4,152,245 shares of Better Home & Finance Class A common stock to be issued in connection with conversion of the founder shares (which number excludes 1,390,014 Sponsor Locked-Up Shares because such shares are subject to potential forfeiture in a change of control event, which renders them contingently issuable at Closing) and (iii) 10,000,000 shares of Better Home & Finance Class A common stock to be issued as Pre-Closing Bridge Conversion Shares in connection with conversion of the Pre-Closing Bridge Notes funded by the Sponsor. The Aurora Major Shareholder is expected to beneficially own 2,159,375 shares of Better Home & Finance Class A common stock in the aggregate, comprised of (i) 1,000,000 shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination and (ii) 1,159,375 shares of Better Home & Finance Class A common stock to be issued in connection with conversion of the founder shares .Certain Aurora directors and officers not included above are expected to beneficially own 450,938 shares of Better Home & Finance Class A common stock in the aggregate, comprised of (i) 202,500 shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination and (ii) 248,438 shares of Better Home & Finance Class A common stock to be issued in connection with conversion of the founder shares. For more information, see the section entitled “ Beneficial Ownership of Securities. |
(5) | Better Home & Finance Class A common stock is expected to be issued to SoftBank as Pre-Closing Bridge Conversion Shares in connection with conversion of the Pre-Closing Bridge Notes at Closing. |
(6) | Better Home & Finance Class C common stock is expected to be issued to SoftBank as Pre-Closing Bridge Conversion Shares in connection with conversion of the Pre-Closing Bridge Notes at Closing. |
Q: |
How will dilution affect the shareholders who elect not to redeem their shares in connection with the Business Combination? |
A: | The following table illustrates varying ownership levels by and returns to holders of Better Home & Finance securities (including the Pre-Closing Bridge Investors and others) at various prices based on the pro forma ownership assumptions and the no redemptions scenario. Warrant dilution is calculated using the treasury stock method. This table does not contemplate any incentive awards under the 2022 Plan or 2022 ESPP as the number and terms of any such awards are not yet known. |
Share Price |
$5.00 |
$7.50 |
$10.00 |
$12.50 |
$15.00 |
$17.50 |
$20.00 |
|||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||||||
Number of Shares Held (millions): |
|
|||||||||||||||||||||||||||
Aurora Public Shares (1) |
24.3 | 24.3 | 24.3 | 24.3 | 24.3 | 24.3 | 24.3 | |||||||||||||||||||||
Aurora Public Shares Held by Sponsor |
3.5 | 3.5 | 3.5 | 3.5 | 3.5 | 3.5 | 3.5 | |||||||||||||||||||||
Aurora Public Warrants (2) |
— | — | — | 0.5 | 1.4 | 2.1 | 2.2 | |||||||||||||||||||||
Aurora Founder Shares (3) |
5.6 | 5.6 | 5.6 | 6.0 | 6.5 | 7.0 | 7.0 | |||||||||||||||||||||
Aurora Private Warrants Held by Sponsor (4) |
— | — | — | 0.3 | 0.7 | 1.1 | 1.3 | |||||||||||||||||||||
Aurora Private Warrants Transferred to Better Retail Customers (5) |
— | — | — | 0.2 | 0.5 | 0.8 | 1.0 | |||||||||||||||||||||
Pre-Closing Bridge Financing Providers |
75.0 | |
75.0 |
|
|
75.0 |
|
|
75.0 |
|
|
75.0 |
|
|
75.0 |
|
|
75.0 |
| |||||||||
SoftBank |
65.0 | |
65.0 |
|
|
65.0 |
|
|
65.0 |
|
|
65.0 |
|
|
65.0 |
|
|
65.0 |
| |||||||||
Sponsor |
10.0 | |
10.0 |
|
|
10.0 |
|
|
10.0 |
|
|
10.0 |
|
|
10.0 |
|
|
10.0 |
| |||||||||
Better Existing Stockholders Equity Rollover |
690.0 | 690.0 | 690.0 | 693.0 | 695.0 | 696.4 | 697.5 |
Share Price |
$5.00 |
$7.50 |
$10.00 |
$12.50 |
$15.00 |
$17.50 |
$20.00 |
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|
|
|
|
|
|
|
||||||||||||||||||||||
Post-Money Equity Value ($, millions) (6) |
$ |
3,992 |
$ |
5,988 |
$ |
7,984 |
$ |
10,034 |
$ |
12,105 |
$ |
14,178 |
$ |
16,234 |
||||||||||||||
Implied Returns ($, millions, unless otherwise noted): |
||||||||||||||||||||||||||||
Illustrative Aurora Public Shareholder 1-Year Return (%)(7) |
(50 |
%) |
(25 |
%) |
— |
28 |
% |
59 |
% |
90 |
% |
118 |
% | |||||||||||||||
Illustrative Bridge Investor 1-Year Return (%) (8) |
(50 |
%) |
(25 |
%) |
— | 25 |
% |
50 |
% |
75 |
% |
100 |
% | |||||||||||||||
Sponsor Gain, excluding As-Converted Shares Underlying Pre-Closing Bridge Financing |
$ |
3 |
$ |
26 |
$ |
49 |
$ |
80 |
$ |
119 |
$ |
160 |
$ |
193 |
||||||||||||||
Illustrative Sponsor 1-Year Return, excluding Pre-Closing Bridge Conversion Shares and Post-Closing Convertible Shares (%) |
8 |
% |
62 |
% |
116 |
% |
192 |
% |
284 |
% |
382 |
% |
460 |
% | ||||||||||||||
Sponsor (Loss) Gain, including As-Converted Shares Underlying Pre-Closing Bridge Financing (9) |
($ |
47 |
) |
$ |
1 |
$ |
49 |
$ |
105 |
$ |
169 |
$ |
235 |
$ |
293 |
|||||||||||||
Illustrative Sponsor 1-Year Return, including As-Converted Shares Underlying Pre-Closing Bridge Financing (%) |
(33 |
%) |
1 |
% |
34 |
% |
74 |
% |
119 |
% |
166 |
% |
206 |
% | ||||||||||||||
Implied Ownership of Better Home & Finance (%): |
||||||||||||||||||||||||||||
Aurora Public Stockholders |
3.0 | % | 3.0 | % | 3.0 | % | 3.1 | % | 3.2 | % | 3.3 | % | 3.3 | % | ||||||||||||||
Sponsor, excluding its Bridge Investment |
1.1 | % | 1.1 | % | 1.1 | % | 1.2 | % | 1.3 | % | 1.4 | % | 1.4 | % | ||||||||||||||
Bridge Investors |
9.4 | % | 9.4 | % | 9.4 | % | 9.3 | % | 9.3 | % | 9.3 | % | 9.2 | % | ||||||||||||||
SoftBank (10) |
8.1 | % | 8.1 | % | 8.1 | % | 8.1 | % | 8.1 | % | 8.0 | % | 8.0 | % | ||||||||||||||
Sponsor |
1.3 | % | 1.3 | % | 1.3 | % | 1.2 | % | 1.2 | % | 1.2 | % | 1.2 | % | ||||||||||||||
Better Existing Stockholders Equity Rollover |
86.4 | % | 86.4 | % | 86.4 | % | 86.3 | % | 86.1 | % | 86.0 | % | 85.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Implied Dilution from Aurora Founder Shares and Aurora Private Warrants |
0.7 |
% |
0.7 |
% |
0.7 |
% |
0.8 |
% |
0.9 |
% |
1.0 |
% |
1.0 |
% |
(1) | Excludes 3,502,500 public shares held by Sponsor, the Major Aurora Shareholder and certain directors and officers of Aurora. |
(2) | Shares underlying the 6,075,072 Aurora public warrants held by public shareholders with an $11.50 exercise price calculated using the treasury stock method. Warrants have a redemption price of $18.00; at share prices above $18.00, assumes warrants are exercised at $18.00. |
(3) | Reflects Aurora Class B ordinary shares held by Sponsor and Aurora directors and affiliates that will convert to Aurora Class A ordinary shares in connection with the Business Combination, as well as the release of lock-ups on such shares at $12.50, $15.00, and $17.50. The number of Class A ordinary shares issuable upon conversion of all Aurora Class B ordinary shares is equal, in the aggregate, to 20% of the total number of Class A ordinary shares outstanding after such conversion, including the total number of Aurora Public Shares and Aurora Public Shares held by Sponsor. See “BCA Proposal—Anti-Dilution Rights – Aurora Class B Ordinary Shares |
(4) | Reflects private warrants held by Sponsor and Aurora’s directors and officers, as well as the release of lock-ups on shares underlying such warrants at $12.50, $15.00, and $17.50. |
(5) | Shares underlying the 2,286,686 warrants (50% of 4,573,372 total Aurora private warrants) to be transferred from the Sponsor to Better retail customers at closing with an $11.50 exercise price calculated using the treasury stock method. |
(6) | Calculated as total shares outstanding multiplied by the illustrative share price. |
(7) | Illustrative return based upon a $10 per unit offering price for Aurora public units. |
(8) | Assumes entry price of $10 per share for Pre-Closing Bridge Investors. |
(9) | Includes Public Shares and Public Warrants. |
(10) | Excluding Better rollover equity. |
Q: |
What conditions must be satisfied to complete the Business Combination? |
A: | The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval of the Business Combination and related agreements and transactions by the shareholders of Aurora and Better Stockholders, (ii) effectiveness of the registration statement of which this proxy statement/prospectus forms a part, (iii) expiration or termination of the waiting period under the HSR Act and certain other required regulatory approvals, (iv) receipt of approval for listing on Nasdaq of the shares of Better Home & Finance Class A common stock to be issued in connection with the Mergers, (v) that Aurora have at least $5,000,001 of net tangible assets upon closing, (vi) the absence of any governmental orders or injunctions preventing or otherwise prohibiting or making the consummation of the Business Combination illegal, and (vii) the ability to obtain approvals for the Business Combination from state regulators, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the FHA, and the VA. |
Q: |
When do you expect the Business Combination to be completed? |
A: | It is currently expected that the Business Combination will be consummated in the third quarter of 2022. This date depends, among other things, on the approval of the proposals to be put to Aurora shareholders at the extraordinary general meeting. However, such meeting requires the SEC to declare effective the registration statement of which this proxy statement/prospectus is a part and, if held, could be adjourned if the Adjournment Proposal is adopted by Aurora’s shareholders at the extraordinary general meeting and Aurora elects to adjourn the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting. If the Business Combination is not completed by September 30, 2022 (subject to extension as described in the Merger Agreement), then the Merger Agreement may be terminated. For a description of the conditions for the completion of the Business Combination, see the section entitled “ BCA Proposal—The Merger Agreement. |
Q: |
What happens if the Business Combination is not consummated? |
A: | If Aurora is not able to complete the Business Combination with Better by March 8, 2023 and is not able to complete another business combination by such date, in each case, as such date may be extended pursuant to the Cayman Constitutional Documents, Aurora will: (1) cease all operations except for the purpose of winding-up; (2) as promptly as reasonably possible, but not more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest will be net of taxes payable), divided by |
Q: |
Do I have appraisal rights in connection with the proposed Business Combination and the proposed Domestication? |
A: | Neither Aurora’s shareholders nor Aurora’s warrant holders have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Act or under the DGCL. |
Q: |
What do I need to do now? |
A: | Aurora urges you to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety and to consider how the Business Combination will affect you as a shareholder or warrant holder. Aurora’s shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card. |
Q: |
How do I vote? |
A: | If you are a holder of record of ordinary shares on the record date for the extraordinary general meeting, you may vote in person or virtually at the extraordinary general meeting or by submitting a proxy for the extraordinary general meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage-paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the extraordinary general meeting and vote in person or virtually, obtain a valid proxy from your broker, bank or nominee |
Q: |
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me? |
A: | No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement/prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent, and you may need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker, bank or nominee as to how to vote your shares. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe all the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares and you should instruct your broker to vote your shares in accordance with directions you provide. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal. |
Q: |
When and where will the extraordinary general meeting be held? |
A: | The extraordinary general meeting will be held at [ ] [a.m./p.m.], Eastern Time, on [ ], 2022, at [ ] or such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals. |
Q: |
Who is entitled to vote at the extraordinary general meeting? |
A: | Aurora has fixed [ ], 2022 as the record date for the extraordinary general meeting. If you were a shareholder of Aurora at the close of business on the record date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a shareholder may only vote his or her shares if he or she is present in person or virtually or is represented by proxy at the extraordinary general meeting. |
Q: |
How many votes do I have? |
A: | Aurora shareholders are entitled to one vote at the extraordinary general meeting for each ordinary share held of record as of the record date. As of the close of business on the record date for the extraordinary general meeting, there were 34,750,359 ordinary shares issued and outstanding, of which 27,800,287 were issued and outstanding public shares. |
Q: |
What constitutes a quorum? |
A: | A quorum of Aurora shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if the holders of a majority of the issued and outstanding ordinary shares entitled to vote at the extraordinary general meeting are represented in person or virtually or by proxy. As of the record date for the extraordinary general meeting, 17,375,180 ordinary shares would be required to achieve a quorum. |
Q: |
What vote is required to approve each proposal at the extraordinary general meeting? |
A: | The following votes are required for each proposal at the extraordinary general meeting: |
(i) | BCA Proposal |
(ii) | Domestication Proposal two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. |
(iii) | Organizational Documents Proposals two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. |
(iv) | Director Election Proposal |
(v) | Stock Issuance Proposal |
(vi) | Incentive Equity Plan Proposal |
(viii) | ESPP Proposal |
(ix) | Adjournment Proposal |
Q: |
What are the recommendations of Aurora’s board of directors? |
A: | Aurora’s board of directors believes that the BCA Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of Aurora’s shareholders and unanimously recommends that its shareholders vote “FOR” the BCA Proposal, “FOR” the Domestication Proposal, “FOR” each of the separate Organizational Documents Proposals, “FOR” the Director Election Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Incentive Equity Plan Proposal, “FOR” the ESPP Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting. |
Q: |
How does the Sponsor intend to vote their shares? |
A: | The Sponsor, a Major Aurora Shareholder, has agreed to vote all the founder shares and any other public shares they may hold (including 2,500,000 Aurora Class A common shares purchased in a private placement in connection with the initial public offering (“IPO”) and in the public markets) in favor of all the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/prospectus, the Sponsor (including Aurora’s independent directors and affiliates) owns 30.1% of the issued and outstanding ordinary shares and have committed to vote for the Business Combination as described in the immediately preceding sentence. Additionally, Shravin Mittal, a Major Aurora Shareholder who owns his shares through Unbound HoldCo, also entered into the Aurora Holder Support Agreement, and agreed to vote in favor of all the proposals being presented at the extraordinary general meeting. In total, 30.1% of the issued and outstanding shares have committed to vote their shares in favor of all the proposals being presented at the extraordinary general meeting. Assuming all outstanding shares of Aurora voting stock are voted, in order to obtain the affirmative vote of at least a majority of the voting power of the outstanding shares of Aurora, voting together as a single class, present in person or represented by proxy at the extraordinary general meeting and entitled to vote necessary to approve the proposals being presented at the extraordinary general meeting, the affirmative vote of approximately 20% of the remaining Aurora common shares will be required. |
Q: |
What happens if I sell my Aurora ordinary shares before the extraordinary general meeting? |
A: | The record date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your public shares after the applicable record date, but before the extraordinary general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at such general meeting but the transferee, and not you, will have the ability to redeem such shares (if time permits). |
Q: |
May I change my vote after I have mailed my signed proxy card? |
A: | Yes. Shareholders may send a later-dated, signed proxy card to Aurora’s Secretary at Aurora’s address set forth below so that it is received by Aurora’s Secretary prior to the vote at the extraordinary general meeting (which is scheduled to take place on [ ], 2022) or attend the extraordinary general meeting in person or virtually and vote. Shareholders also may revoke their proxy by sending a notice of revocation to Aurora’s Secretary, which must be received by Aurora’s Secretary prior to the vote at the extraordinary general meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote. |
Q: |
What happens if I fail to take any action with respect to the extraordinary general meeting? |
A: | If you fail to take any action with respect to the extraordinary general meeting and the Business Combination is approved by shareholders and the Business Combination is consummated, you will become a shareholder or warrant holder of Better Home & Finance. If you fail to take any action with respect to the extraordinary general meeting and the Business Combination is not approved, you will remain a shareholder or warrant holder of Aurora. However, if you fail to vote with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your public shares in connection with the Business Combination (if time permits). |
Q: |
What should I do with my share certificates, warrant certificates or unit certificates? |
A: | Our shareholders who exercise their redemption rights must deliver (either physically or electronically) their share certificates to Continental, Aurora’s transfer agent, prior to the extraordinary general meeting. |
Q: |
What should I do if I receive more than one set of voting materials? |
A: | Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your ordinary shares. |
Q: |
Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting? |
A: | Aurora will pay the cost of soliciting proxies for the extraordinary general meeting. Aurora has engaged Okapi Partners LLC (“Okapi Partners”) to assist in the solicitation of proxies for the extraordinary general meeting. Aurora has agreed to pay Okapi Partners a fee of $22,500, plus disbursements (to be paid with |
non-trust account funds). Aurora will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of Aurora Class A ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of Aurora Class A ordinary shares and in obtaining voting instructions from those owners. Aurora’s directors and officers may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies. |
Q: |
Where can I find the voting results of the extraordinary general meeting? |
A: | The preliminary voting results will be expected to be announced at the extraordinary general meeting. Aurora will publish final voting results of the extraordinary general meeting in a Current Report on Form 8-K within four business days after the extraordinary general meeting. |
Q: |
Who can help answer my questions? |
A: | If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus, any document incorporated by reference into this proxy statement/prospectus or the enclosed proxy card, you should contact: |
• | fluctuating and increasing interest rates, which have the effect of reducing industry mortgage origination volume, increasing competition for customers and reducing revenue and Gain on Sale Margin, |
• | the continued impact of the reorganization of its sales and operations teams in the third quarter of 2021, |
• | continued investments in its business (including investments to expand its product offerings), |
• | the effects of negative media coverage following a series of workforce reductions that began in December 2021 (which Better believes resulted in lower interest rate lock volume in December 2021 and early 2022 and is expected to, in part, result in lower Funded Loan Volume in 2022), and |
• | increased costs, including sales and operations compensation expense to support higher Purchase Loan Volumes, severance costs associated with the workforce reductions described above, higher expenses associated with non-mortgage business lines including Better Real Estate and higher technology and product development expenses resulting from continued investment in its platform. |
(1) | Includes Better Home & Finance Class B common stock to be issued to SoftBank II in respect of its holding of Better Capital Stock prior to the Closing. |
(2) | Includes Better Home & Finance Class A common stock expected to be held by the Sponsor, the Aurora Major Shareholder and certain Aurora directors and officers. |
• | Step 1 – Pre-Closing Bridge Financing and Post-Closing Convertible Note Commitment |
• | Step 2 – Domestication Domestication Proposal |
• | Step 3 – First Merger |
automatically convert into the right to receive the applicable share of the Stock Consideration. In addition, the Pre-Closing Bridge Notes will automatically convert into the right to receive shares of Better Home & Finance Class A common stock at a conversion price of $10 per share of aggregate principal amount of Pre-Closing Bridge Financing. |
• | Step 4 – Second Merger |
• | approval by Aurora’s shareholders and Better’s stockholders of the Business Combination and related agreements and transactions; |
• | effectiveness of the registration statement of which this proxy statement/prospectus forms a part; |
• | all approvals with respect to the requisite regulatory approvals, including approvals from federal and state insurance and mortgage-licensing authorities, as applicable; |
• | expiration or termination of the waiting period under the HSR Act; |
• | the absence of governmental order or law which has become final and nonappealable and has the effect of making consummation of the Mergers illegal or otherwise preventing or prohibiting consummation of the Mergers and the ability to obtain approvals for the Business Combination from state regulators, Fannie Mae, Freddie Mac, the FHA, and the VA; |
• | that Aurora has at least $5,000,001 of net tangible assets upon Closing; |
• | that the Minimum Available Cash Condition is satisfied; |
• | the absence of a Better Material Adverse Effect; |
• | approval for listing on Nasdaq of the shares of Better Home & Finance common stock to be issued in connection with the Mergers; and |
• | the completion of the Domestication. |
A. | Proposal No. 3a—Organizational Documents Proposal A—to authorize by ordinary resolution the change in the authorized share capital of Aurora from (i) 500,000,000 Aurora Class A ordinary shares, 50,000,000 Aurora Class B ordinary shares and 5,000,000 Former preference shares, to (ii) 1,750,000,000 shares of Better Home & Finance Class A common stock, 600,000,000 shares of Better Home & Finance Class B common stock, 800,000,000 shares of Better Home & Finance Class C common stock and 100,000,000 shares of Better Home & Finance preferred stock; |
B. | Proposal No. 3b—Organizational Documents Proposal B—to authorize by ordinary resolution the Better Home & Finance board of directors to issue any or all shares of Better Home & Finance preferred stock in one or more classes or series, with such terms and conditions as may be expressly determined by the board of directors and as may be permitted by the DGCL; |
C. | Proposal No. 3c—Organizational Documents Proposal C—to provide by ordinary resolution that (i) holders of shares of Better Home & Finance Class A common stock will be entitled to cast one vote per share of Better Home & Finance Class A common stock, (ii) holders of shares of Better Home & Finance Class B common stock will be entitled to cast three votes per share of Better Home & Finance Class B common stock and (iii) holders of shares of Better Home & Finance Class C common stock will not be entitled to vote and not have any voting rights other than as provided by applicable law or the Proposed Certificate of Incorporation, as applicable; and |
D. | Proposal No. 3d—Organizational Documents Proposal D—to authorize by ordinary resolution all other changes in connection with the replacement of the Cayman Constitutional Documents with the Proposed Certificate of Incorporation and Proposed Bylaws as part of the Domestication and in connection with the consummation of the Business Combination (copies of which are attached to this proxy statement/prospectus as Annex B and Annex D, respectively), including (1) changing the corporate name from “Aurora Acquisition Corp.” to “Better Home & Finance Holding Company” in connection with the Business Combination, (2) making Better Home & Finance’s corporate existence perpetual, (3) adopting Delaware as the exclusive forum for certain stockholder litigation, (4) opting out of the provisions of Section 203 of the DGCL and (5) removing certain provisions related to Aurora’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which Aurora’s board of directors believes is necessary to adequately address the needs of Better Home & Finance after the Business Combination. |
• | Better and the Business Combination |
Fully Diluted Share Ownership and Voting Power in Better Home & Finance (1) |
||||||||||||||||||||||||
Post-Business Combination No Redemptions |
Post-Business Combination Maximum Redemptions |
|||||||||||||||||||||||
Number of Shares |
Percentage of Outstanding Shares |
Percentage of Voting Power |
Number of Shares |
Percentage of Outstanding Shares |
Percentage of Voting Power |
|||||||||||||||||||
Better Stockholders— Class A |
38,830,741 | 4.9 | % | 1.9 | % | 38,830,741 | 5.0 | % | 1.9 | % | ||||||||||||||
Better Stockholders— Class B (2) (3) |
591,765,014 | 74.1 | % | 86.6 | % | 591,765,014 | 76.4 | % | 87.7 | % | ||||||||||||||
Aurora Public Shareholders—Class A |
24,297,787 | 3.0 | % | 1.2 | % | — | — | — | ||||||||||||||||
Sponsor—Class A (4) |
19,062,558 | 2.4 | % | 0.9 | % | 19,062,558 | 2.5 | % | 0.9 | % | ||||||||||||||
SoftBank—Class A (5) |
14,506,577 | 1.8 | % | 0.7 | % | 11,985,615 | 1.5 | % | 0.6 | % | ||||||||||||||
SoftBank II—Class B |
59,404,245 | 7.4 | % | 8.7 | % | 59,404,245 | 7.7 | % | 8.8 | % | ||||||||||||||
SoftBank—Class C (6) |
50,493,423 | 6.3 | % | — | 53,014,385 | 6.8 | % | — | ||||||||||||||||
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Total |
798,360,345 |
100.0 |
% |
100.0 |
% |
774,062,558 |
100.0 |
% |
100.0 |
% | ||||||||||||||
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(1) | Based on outstanding Better Capital Stock, Better Warrants and Better Awards as of June 1, 2022. |
(2) | Excludes 59,404,245 shares of Better Home & Finance Class B common stock to be issued to SoftBank II in respect of its holding of Better Capital Stock prior to the Closing. After consummation of the Business Combination, SoftBank, as an investor in the Pre-Closing Bridge Financing, and SoftBank II, as a holder of Better Capital Stock, are collectively expected to beneficially own approximately 124,404,245 shares representing 9.4% of the voting power of Better Home & Finance common stock (without giving effect to the Voting Proxy described under “Certain Relationships and Related Party Transactions—Better—Other Stockholder Agreements—SoftBank Agreements”). |
(3) | Includes shares of Better Home & Finance common stock underlying Better Options, Better RSUs and Better Restricted Stock. |
(4) | Includes Better Home & Finance Class A common stock expected to be held by the Sponsor, the Aurora Major Shareholder and certain Aurora directors and officers. In particular, the Sponsor is expected to beneficially own 16,452,245 shares of Better Home & Finance Class A common stock in the aggregate, comprised of (i) 2,300,000 shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination, (ii) 4,152,245 shares of Better Home & Finance Class A common stock to be issued in connection with conversion of the founder shares (which number excludes 1,390,014 Sponsor Locked-Up Shares because such shares are subject to potential forfeiture in a change of control event, which renders them contingently issuable at Closing) and (iii) 10,000,000 shares of Better Home & Finance Class A common stock to be issued as Pre-Closing Bridge Conversion Shares in connection with conversion of the Pre-Closing Bridge Notes funded by the Sponsor. The Aurora Major Shareholder is expected to beneficially own 2,159,375 shares of Better Home & Finance Class A common stock in the aggregate, comprised of (i) 1,000,000 shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination and (ii) 1,159,375 shares of Better Home & |
Finance Class A common stock to be issued in connection with conversion of the founder shares. Certain Aurora directors and officers not included above are expected to beneficially own 450,938 shares of Better Home & Finance Class A common stock in the aggregate, comprised of (i) 202,500 shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination and (ii) 248,438 shares of Better Home & Finance Class A common stock to be issued in connection with conversion of the founder shares. For more information, see the section entitled “ Beneficial Ownership of Securities |
(5) | Better Home & Finance Class A common stock is expected to be issued to SoftBank as Pre-Closing Bridge Conversion Shares in connection with conversion of the Pre-Closing Bridge Notes at Closing. |
(6) | Better Home & Finance Class C common stock is expected to be issued to SoftBank as Pre-Closing Bridge Conversion Shares in connection with conversion of the Pre-Closing Bridge Notes at Closing. |
(i) | BCA Proposal |
(ii) | Domestication Proposal two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. |
(iii) | Organizational Documents Proposals two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. |
(iv) | Director Election Proposal |
(v) | Stock Issuance Proposal |
(vi) | Incentive Equity Plan Proposal |
(viii) | ESPP Proposal |
(ix) | Adjournment Proposal |
(i) | (a) hold public shares or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; |
(ii) | submit a written request to Continental, Aurora’s transfer agent, that Better Home & Finance redeem all or a portion of your public shares for cash; and |
(iii) | deliver your public shares to Continental, Aurora’s transfer agent, physically or electronically through DTC. |
• | Prior to Aurora’s initial public offering on March 8, 2021, the Sponsor purchased 5,750,000 Aurora Class B ordinary shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. In February 2021 Aurora effectuated a share dividend of 1,006,250 Class B ordinary shares and subsequently cancelled 131,250 Class B ordinary shares, resulting in an aggregate of 6,625,000 Aurora Class B ordinary shares issued and outstanding. In March 2021, Aurora made a share dividend of 575,000 shares, resulting in 7,200,000 Class B ordinary shares owned by the Sponsor and certain directors of Aurora. After Aurora’s initial public offering, the Sponsor surrendered for cancellation 249,928 shares, which occurred when the 45-day over-allotment period expired, leaving 6,950,072 Class B ordinary shares held by the Sponsor and certain directors of Aurora. If Aurora does not consummate a business combination by March 8, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding-up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Law to provide for claims of creditors and the requirements of other applicable law. In such event, the 6,950,072 Aurora Class B ordinary shares collectively owned by the Sponsor and certain directors of Aurora would be worthless because following the redemption of the public shares, Aurora would likely have few, if any, net assets and because the Sponsor and Aurora’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any Aurora Class A ordinary shares and Aurora Class B ordinary shares held by it or them, as applicable, if Aurora fails to complete a business combination within the required period. Additionally, in such event, the 4,573,372 Aurora private warrants purchased by the Sponsor simultaneously with the consummation of Aurora’s initial public offering for an aggregate purchase price of $6,860,057, will also expire worthless. Certain of Aurora’s directors and executive officers also have a direct or indirect economic interest in such Aurora private warrants. The 6,950,072 shares of Better Home & Finance Class A common stock into which the 6,950,072 Aurora Class B ordinary shares collectively held by the Sponsor and certain directors of Aurora will automatically convert in connection with the Mergers (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $[ ] based upon the closing price of $[ ] per public share on Nasdaq on [ ], 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. However, given that such shares of Better Home & Finance Class A common stock will be subject to certain restrictions, including those described above, Aurora believes such shares have less value. The 4,573,372 Better Home & Finance Warrants into which the 4,573,372 Aurora private warrants held by the Sponsor and certain of Aurora’s directors and executive officers will automatically convert in connection with the Mergers (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $[ ] based upon the closing price of $[ ] per public warrant on Nasdaq on [ ], 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. |
• | The Sponsor (including its representatives and affiliates) and Aurora’s directors and officers are, or may in the future become, affiliated with entities that are engaged in a similar business to Aurora. Thor Björgólfsson is the Founding Partner of Novator Partners LLP and Novator Capital Advisors LLP, Arnaud Massenet is the Chairman of GRIP Ltd., and each of our other officers presently has and any of them in the future may have additional fiduciary or contractual obligations to at least one other entity |
pursuant to which such executive officer or director is or will be required to present a business combination opportunity to such entity under Delaware General Corporation Law. The Sponsor and Aurora’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check companies prior to Aurora completing its initial business combination. Moreover, certain of Aurora’s directors and officers have time and attention requirements for investment funds of which affiliates of the Sponsor are the investment managers. Aurora’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to Aurora, and the other entities to which they owe certain fiduciary or contractual duties, including Novator Partners LLP and Novator Capital Advisors LLP. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in Aurora’s favor, and such potential business opportunities may be presented to other entities prior to their presentation to Aurora, subject to applicable fiduciary duties under Cayman Islands Companies Act. Aurora’s Cayman Constitutional Documents provide that Aurora renounces its interest in any corporate opportunity offered to any director or officer of Aurora unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of Aurora, and it is an opportunity that Aurora is able to complete on a reasonable basis. |
• | Aurora’s existing directors and officers will be eligible for continued indemnification and continued coverage under Aurora’s directors’ and officers’ liability insurance after the Mergers and pursuant to the Merger Agreement. |
• | Aurora, Better, SoftBank and the Sponsor entered into the Pre-Closing Bridge Note Purchase Agreement, pursuant to which SoftBank and the Sponsor funded the purchase of $750,000,000 of Pre-Closing Bridge Notes, which are convertible into the Pre-Closing Bridge Conversion Shares as follows: (i) upon Closing, the Pre-Closing Bridge Notes will convert into shares of Better Home & Finance Class A common stock at a conversion rate of one share per $10 of consideration; (ii) if the Closing does not occur by the Maturity Date, or in the event of a Corporate Transaction or Merger Withdrawal (each as defined in the Pre-Closing Bridge Note Purchase Agreement) prior to the Maturity Date or prior to the time when a Note may otherwise be converted pursuant to the Pre-Closing Bridge Note Purchase Agreement, the Pre-Closing Bridge Notes will convert into a new series of preferred stock of Better, which series will be identical to Better’s Series D Preferred Stock, provided that the ratchet adjustment provisions relating to Better’s Series D Preferred Stock will not apply, and such series will vote together with Better’s Series D Preferred Stock as a single class on all matters; or (iii) in the event of a termination of the Merger Agreement (a) by Better, arising out of or resulting from breaches on the part of Aurora or the Sponsor, (b) by Better, arising out of or resulting from breaches on the part of Aurora or any Subscriber in connection with any Subscription Agreement or (c) arising out of or resulting from breaches on the part of Aurora, SoftBank or the Sponsor in connection with the Pre-Closing Bridge Note Purchase Agreement or any ancillary agreement, the Pre-Closing Bridge Notes will convert into shares of Better common stock. In the event that Pre-Closing Bridge Conversion Shares are issued in the form of Better Home & Finance Class A common stock, the Pre-Closing Bridge Note Purchase Agreement provides for customary registration rights with respect to such Pre-Closing Bridge Conversion Shares. For additional information, see the sections entitled “BCA Proposal—Amendments to the Merger Agreement—Amendment No. 3 BCA Proposal—Related Agreements—Pre-Closing Bridge Note Purchase Agreement |
• | SoftBank and the Sponsor committed to fund, pursuant to the amended SoftBank Subscription Agreement and Sponsor Subscription Agreement, respectively, the purchase of the Post-Closing Convertible Notes, which are subordinated unsecured 1% Post-Closing Convertible Notes with a five-year maturity, in an amount equal to $750,000,000 (less any amounts released to Better at the Closing from Aurora’s trust account (excluding, for the avoidance of doubt, amounts released to Better under |
the Subscription Agreements)) during the first 45 days after the Closing Date. As a result of the commitment by Sponsor, the Major Aurora Shareholder and the Aurora directors and officers not to redeem in the aggregate 3,502,500 Aurora Class A shares held by them, a minimum of $35,025,000 will be released to Better at the Closing from Aurora’s trust account, and, accordingly, the maximum aggregate principal amount of Post-Closing Convertible Notes to be issued is $714,975,000. See the sections entitled “ BCA Proposal—Amendments to the Merger Agreement—Amendment No. 3 BCA Proposal—Related Agreements—Amendment to the SoftBank Subscription Agreement BCA Proposal—Related Agreements—Amendment to the Sponsor Subscription Agreement |
• | In the event that Aurora fails to consummate a business combination within the prescribed time frame (pursuant to the Cayman Constitutional Documents), or upon the exercise of a redemption right in connection with the Business Combination, Aurora will be required to provide for payment of claims of creditors that were not waived that may be brought against Aurora within the ten years following such redemption. In order to protect the amounts held in Aurora’s trust account, the Sponsor has agreed that it will be liable to Aurora if and to the extent any claims by a third party (other than Aurora’s independent auditors) for services rendered or products sold to Aurora, or a prospective target business with which Aurora has discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under the indemnity of the underwriters of Aurora’s initial public offering against certain liabilities, including liabilities under the Securities Act. |
• | Our Sponsor has advanced funds to us for working capital purposes, including $1,812,295 as of March 31, 2022. These outstanding advances were documented in an amended and restated promissory note, dated as of May 10, 2021 (the “Promissory Note”), issued by Aurora to the Sponsor, pursuant to which Aurora may borrow up to $2,000,000 from the Sponsor (including those amounts which are currently outstanding). The Promissory Note is non-interest bearing, unsecured and due and payable in full on the earlier of (i) the date on which the Merger by and between Better and Aurora is completed or (ii) the date that is 30 days after the termination of the Merger Agreement in accordance with its terms. If we do not complete our initial business combination within the required period, we may use a portion of our working capital held outside the trust account to repay such advances and any other working capital advances made to us, but no proceeds held in the trust account would be used to repay such advances and any other working capital advances made to us, and such related party may not be able to recover the value it has loaned us and any other working capital advances it may make. If Aurora’s operating costs, in relation to its proposed Business Combination, exceed the amounts still available and not currently drawn under the Promissory Note, the Sponsor will increase the amount available under the Promissory Note to cover such costs, subject to an aggregate principal amount cap of $8,000,000. On February 23, 2022, the Promissory Note was amended and restated to increase the aggregate principal amount of the note to $4,000,000. This amount would be reflective of estimated total costs of Aurora through March 23, 2023 in relation to Aurora’s initial business combination, in the event the Business Combination is unsuccessful. |
• | Aurora remunerates Ms. Harding, Aurora’s chief financial officer, for professional services rendered to Aurora in her role as chief financial officer at the rate of $10,000 per month and for her service on our board of directors at the rate of $15,000 per year, with an incremental hourly fee in certain circumstances of $500. Under the terms of that certain Director’s Services Agreement (included as an exhibit to the registration statement of which this proxy statement/prospectus is a part), Ms. Harding is to provide services to Merger Sub which include acting as a non-executive director and president and secretary of Merger Sub in consideration of $50,000 in annual payments, with an incremental hourly fee in certain circumstances of $500. Additionally, Ms. Harding received a $50,000 payment on March 21, 2021 in contemplation of her services to Aurora and will receive a $75,000 payment on the |
earlier of March 21, 2023 or the date on which Aurora is liquidated. As of March 31, 2022 and December 31, 2021, $10,000 and $100,000 was accrued and as of March 31, 2022 and December 31, 2021, $30,000 and $83,750 was expensed for these services. |
• | Aurora’s officers and directors, and their affiliates, are entitled to reimbursement of out-of-pocket |
• | Pursuant to the Registration Rights Agreement, the Sponsor and related Sponsor holders and certain legacy Better Stockholders will have customary registration rights, including demand, piggy-back rights and block trade rights following the consummation of the Business Combination. |
• | Aurora has the right to select two individuals, one of which is expected to be Prabhu Narasimhan and another has been or will be mutually agreed between Aurora and the Better Founder and CEO, to be nominated for election to the initial Board of Directors of Better Home & Finance, so long as the Aurora nominees complete a background check reasonably satisfactory to Better, qualify as “independent” directors for purposes of Nasdaq rules and are otherwise in compliance with SEC and Nasdaq rules and requirements governing directors, and satisfy any other applicable regulatory requirements. |
• | The Proposed Certificate of Incorporation will contain a provision expressly electing that Better Home & Finance will not be governed by Section 203 (Delaware’s “interested stockholder” statute) of the DGCL, and, therefore, Better Home & Finance will not be subject to Section 203 of the DGCL. |
• | Treatment of Better Equity Awards in the Business Combination |
granted by Better prior to the Closing will be converted into stock options, restricted stock awards and RSUs with respect to shares of Better Home & Finance Class B common stock that will be subject to same terms and conditions as were in effect for such awards prior to the Closing (including with respect to vesting, exercisability and termination-related provisions). See the section entitled “ BCA Proposal—The Merger Agreement—Treatment of Better Options, Restricted Stock Awards, Restricted Stock Unit Awards and Better Warrants |
Name |
Options |
Restricted Stock |
RSUs |
|||||||||
Vishal Garg |
8,000,000 | 1,083,334 | — | |||||||||
Kevin Ryan |
— | 837,250 | — | |||||||||
Sigurgeir Jonsson |
757,000 | 93,012 | — | |||||||||
Diane Yu (1) |
— | 1,130,000 | — | |||||||||
Sarah Pierce (2) |
1,100,417 | 393,751 | — | |||||||||
All Non-Employee Directors |
793,386 | 145,834 | 96,367 | |||||||||
All Other Executive Officers |
1,000,000 | 60,417 | — |
(1) | Ms. Yu separated from Better as of April 8, 2022. For more information, please see “ Executive Compensation—Compensation Discussion and Analysis—Elements of Compensation—Equity Compensation |
(2) | Ms. Pierce separated from Better as of February 3, 2022. For more information, please see “ Executive Compensation—Compensation Discussion and Analysis—Elements of Compensation—Equity Compensation. |
• | Director Compensation non-employee directors post-Closing in connection with Better’s transition to becoming a publicly traded company. For more information, please see “Executive Compensation—Director Compensation |
• | Executive Change in Control Severance Plan. Executive Compensation—Executive Compensation Arrangements—Executive Change in Control Plan |
• | Management Transaction Bonuses Executive Compensation—Executive Compensation Arrangements—Transaction Bonuses |
• | Executive Loans under the Employee Loan Program |
Sarbanes-Oxley Act. For more information about the Employee Loan Program, please see “Executive Compensation—Compensation Discussion and Analysis—Elements of Compensation—Employee Loan Program |
• | Post-Closing Directors and Officers Management of Better Home & Finance Following the Business Combination |
• | Indemnification BCA Proposal—The Merger Agreement—Covenants and Agreements—Covenants of Aurora |
Sources (assuming no redemptions) |
Uses (assuming no redemptions) |
|||||||||
Cash and investments held in trust account (1) |
278,045,659 | Cash to Better Home & Finance Balance Sheet |
1,465,000,000 | |||||||
Pre-Closing Bridge Financing (2) |
750,000,000 | Better Equity Rollover | 6,900,000,000 | |||||||
Post-Closing Convertible Note Commitment (3) |
471,954,341 | Estimated Fees & Expenses (4) |
35,000,000 | |||||||
Better Equity Rollover |
6,900,000,000 | |||||||||
|
|
|
|
|||||||
Total Sources |
$ |
8,400,000,000 |
Total Uses |
$ |
8,400,000,000 |
|||||
|
|
|
|
(1) | As of March 31, 2022. |
(2) | Pre-Closing Bridge Conversion Shares issuable in connection with the conversion of Pre-Closing Bridge Notes pursuant to the Pre-Closing Bridge Financing are at a deemed value of $10.00 per share. |
(3) | SoftBank and the Sponsor have committed to fund, at the option of Better Home & Finance Holding Company, up to $750,000,000 aggregate principal amount of Post-Closing Convertible Notes within 45 days after Closing, which commitment is reduced on a dollar-for-dollar basis by cash retained by Better Home & Finance from the Aurora trust account that, in the no redemptions scenario, is assumed to be equal to $278,045,659, and the proceeds of which are included here assuming funding of such commitment on the Closing Date. |
(4) | Includes transaction bonuses to executives of Better of $20.0 million and estimated transaction expenses. In connection with resignations described elsewhere in this proxy statement/prospectus, Barclays and Citigroup waived their entitlement to certain fees which would be owed upon completion of the Business Combination, which were comprised of approximately $8.5 million for Barclays as a deferred underwriting fee and financial advisory fee and $7.5 million for Citigroup, as a financial advisory fee, which accordingly are excluded from estimated fees and expenses. For more information, see “ Risk Factors—Risks Related to the Business Combination and Aurora—Each of Barclays and Citigroup has resigned from its financial advisory role in connection with the Business Combination, and investors should not put any reliance on the fact that any such investment bank was involved with any aspect of the Business Combination . Although not formally retained by Better, Bank of America also has indicated it is resigning from any role it had |
Sources (assuming maximum redemptions) |
Uses (assuming maximum redemptions) |
|||||||||
Cash and investments held in trust account (1) |
35,025,000 | Cash to Better Home & Finance Balance Sheet |
1,465,000,000 | |||||||
Pre-Closing Bridge Financing (2) |
750,000,000 | Better Equity Rollover | 6,900,000,000 | |||||||
Post-Closing Convertible Note Commitment (3) |
714,975,000 | Estimated Fees & Expenses (4) |
35,000,000 | |||||||
Better Equity Rollover |
6,900,000,000 | |||||||||
|
|
|
|
|||||||
Total Sources |
$ |
8,400,000,000 |
Total Uses |
$ |
8,400,000,000 |
|||||
|
|
|
|
(1) | As of March 31, 2022. Cash remaining in trust account reflects cash in respect of Aurora public shares held by Aurora’s directors and officers, the Sponsor, Aurora Major Shareholders and their respective affiliates. |
(2) | Pre-Closing Bridge Conversion Shares issuable in connection with the conversion of Pre-Closing Bridge Notes pursuant to the Pre-Closing Bridge Financing are at a deemed value of $10.00 per share. |
(3) | SoftBank and the Sponsor have committed to fund, at the option of Better Home & Finance Holding Company, up to $750,000,000 aggregate principal amount of Post-Closing Convertible Notes within 45 days after Closing (less any amounts released to Better at the Closing from Aurora’s trust account (excluding, for the avoidance of doubt, amounts released to Better under the Subscription Agreements), up to approximately $714,975,000 aggregate principal amount of which may be issued because of the commitment by the Sponsor, the Major Aurora Shareholder and the other Aurora directors and officers not to redeem in the aggregate 3,502,500 Aurora Class A Shares held by them), the proceeds of which are included here assuming funding of such commitment on the Closing Date. |
(4) | Includes transaction bonuses to executives of Better of $20.0 million and estimated transaction expenses. In connection with resignations described elsewhere in this proxy statement/prospectus, Barclays and Citigroup waived their entitlement to certain fees which would be owed upon completion of the Business Combination, which were comprised of approximately $8.5 million for Barclays as a deferred underwriting fee and financial advisory fee and $7.5 million for Citigroup, as a financial advisory fee, which accordingly are excluded from estimated fees and expenses. For more information, see “ Risk Factors—Risks Related to the Business Combination and Aurora—Each of Barclays and Citigroup has resigned from its financial advisory role in connection with the Business Combination, and investors should not put any reliance on the fact that any such investment bank was involved wit h any aspect of the Business Combination . Although not formally retained by Better, Bank of America also has indicated it is resigning from any role it had. |
• | Better’s business is significantly impacted by interest rates. Changes in prevailing interest rates or U.S. monetary policies that affect interest rates may have a material adverse effect on Better’s business, financial condition, results of operations, and prospects. |
• | Better has a history of operating losses, has not been able to maintain profitability achieved in 2020 and early 2021 and may not achieve and maintain profitability in the future. |
• | The projected financial information considered by Aurora generally, and the near-term financial projections in particular, was not and will not be realized, which may materially and adversely affect the market price of Better Home & Finance common stock. |
• | Better may be unable to effectively manage its growth, which could have a material adverse effect on its business, financial condition and results of operations. |
• | Better depends on its ability to sell loans and MSRs in the secondary market to a limited number of loan purchasers, including government-sponsored enterprises and other secondary market participants for each relevant product. |
• | Better’s business is highly dependent on Fannie Mae and Freddie Mac and certain other U.S. government agencies, and any changes in these entities or agencies or their current roles could have a material adverse effect on its business. |
• | The geographic concentration of Better’s loan production and factors adversely affecting those geographic areas may have a material adverse effect on Better’s financial condition and results of operations, and Better faces intense competition that could materially and adversely affect it. |
• | Better operates in a heavily regulated industry, and its loan production and servicing activities, real estate brokerage activities, title and settlement services activities and homeowners insurance agency activities expose it to risks of noncompliance with a large and increasing body of complex laws and regulations at the U.S. federal, state and local levels, which, at times, may be inconsistent. |
• | Better’s products use third-party software, hardware and services that may be difficult to replace or cause errors or failures of Better’s products that could materially and adversely affect its business, financial condition, liquidity, results of operations, or prospects. |
• | Better relies on its warehouse lines to fund loans and otherwise operate its business. If one or more of such facilities are terminated or otherwise become unavailable to use, Better may be unable to find replacement financing at commercially favorable terms, or at all, which could have a material adverse effect on its business. |
• | Better is, and may in the future be, subject to government or regulatory investigations, litigation or other disputes. If the outcomes of these matters are adverse to Better, it could materially and adversely affect Better’s business, revenues, financial condition, results of operations, and prospects. |
• | The Better Founder and CEO is involved in litigation that could have a material adverse effect on Better’s revenues, financial condition, cash flows and results of operations. |
• | Better and the Better Founder and CEO have been subject to negative media coverage, which is a distraction to management and has negatively affected Better’s ability to maintain and establish third- |
party relationships (including with business partners, warehouse lenders and investors), recruit and retain team members, management and directors, maintain morale among its workforce and accordingly achieve its operational and financial targets. |
• | Better’s management team has limited experience managing a public company. |
• | Better’s compliance and risk management policies, procedures and techniques may not be sufficient to identify all of the financial, legal, regulatory, and other risks to which Better is exposed, and failure to identify and address such risks could result in substantial losses and materially and adversely disrupt Better’s business operations. |
• | Better has identified a material weakness in its internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control, which may result in material misstatements of its financial statements or cause Better to fail to meet its periodic reporting obligations. |
• | Better’s failure to accurately predict demand or growth of new or existing product lines could materially and adversely affect its business, financial condition, results of operations, and prospects. |
• | The public shareholders will experience immediate dilution as a consequence of the issuance of Better Home & Finance common stock as consideration in the Business Combination, the Pre-Closing Bridge Financing, and due to future potential issuances with respect to the Post-Closing Convertible Notes and pursuant to the 2022 Plan and the ESPP. |
• | Neither the Aurora board of directors nor any committee thereof obtained a third-party valuation in determining whether or not to pursue the Business Combination. |
• | Since the Sponsor and Aurora’s directors and executive officers have interests that are different from, or in addition to (and which conflict with), the interests of Aurora’s shareholders, a conflict of interest existed in determining whether the Business Combination with Better is appropriate as an initial business combination. |
• | Since the Sponsor and the directors and officers of Aurora have a lower cost basis in their Aurora shares than Aurora’s unaffiliated public shareholders, you may recognize a loss on your investment, even where they earn a positive return on their investment. |
• | Future sales of stock could dilute Aurora’s equity, which may materially and adversely affect the market price of its common stock. |
• | Aurora has identified a material weakness in respect of its internal controls over financial reporting. |
• | The existence of multiple classes of common stock may materially and adversely impact the value and liquidity of Better Home & Finance Class A common stock. |
• | The Domestication may result in material and adverse tax consequences for holders of Aurora Class A ordinary shares and Aurora warrants. |
• | Because the combined company will become a public reporting company by means other than a traditional underwritten initial public offering, the combined company’s stockholders may face additional risks and uncertainties. |
Three Months Ended March 31 |
As of and for the Year Ended December 31, 2021 |
As of December 31, 2020 and for the Period from October 7, 2020 (inception) through December 31, 2020 |
||||||||||||||
2022 |
2021 |
|
|
|||||||||||||
Statement of Operations Data |
||||||||||||||||
Revenue |
||||||||||||||||
Formation and operating costs |
$ | 1,091,289 | $ | 98,419 | $ | 7,390,964 | $ | 20,000 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations |
$ | (1,091,289 | ) | $ | (98,419 | ) | $ | (7,390,964 | ) | |||||||
|
|
|
|
|
|
|
|
|||||||||
Change in fair value of warrants |
$ | 2,078,067 | $ | (1,836,968 | ) | $ | 1,576,196 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Change in fair value of over-allotment option liability |
— | $ | 496,161 | 1,056,000 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Offering costs allocated to warrants liability |
— | $ | (299,524 | ) | $ | (299,523 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Interest earned on marketable securities held in trust account |
$ | 23,262 | $ | — | $ | 19,527 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
$ | 1,010,040 | $ | (1,738,750 | ) | $ | (5,038,764 | ) | $ | (20,000 | ) | |||||
|
|
|
|
|
|
|
|
|||||||||
Basic and diluted weighted-average shares outstanding, Class A Common Stock subject to possible redemption |
24,300,287 |
6,158,956 |
24,300,287 |
— |
||||||||||||
Basic and diluted net income (loss) per share, Class A ordinary shares subject to possible redemption |
$ | 0.03 | — | $ | (0.15 | ) | — | |||||||||
Basic and diluted weighted-average shares outstanding, Non-Redeemable Class A and Class B Common Stock |
|
10,450,072 |
|
|
7,218,327 |
|
|
9,590,182 |
|
6,375,000 | ||||||
Basic and diluted net income (loss) per share, Non-Redeemable Class A and Class B Common Stock |
$ | 0.03 | $ | (0.13 | ) | $ | (0.15 | ) | $ | (0.00 | ) | |||||
Balance Sheet Data |
||||||||||||||||
Total assets |
$ | 278,989,390 | $ | 280,004,055 | $ | 279,089,672 | $ | 562,663 | ||||||||
Current Liabilities |
||||||||||||||||
Accounts payable and accrued offering costs |
$ | 6,190,174 | $ | 463,793 | $ | 5,622,429 | $ | 531,947 | ||||||||
Related party loans |
$ | 1,812,295 | $ | 212,295 | $ | 1,412,295 | $ | 25,716 | ||||||||
Over-allotment Option Liability |
— | $ | 559,839 | — | — | |||||||||||
Total Current Liabilities |
$ | 8,002,469 | $ | 1,235,927 | $ | 7,034,724 | $ | 557,663 | ||||||||
Warrant Liability |
$ |
11,262, 650 |
$ |
16,753,883 |
$ |
13,340,717 |
||||||||||
Deferred Underwriting Fee Payable |
$ | 8,505,100 | $ | 8,505,100 | $ | 8,505,100 | — | |||||||||
Total liabilities |
$ |
27,770,219 |
$ |
26,494,910 |
$ |
28,880,541 |
$ |
557,663 |
||||||||
Commitment and Contingencies |
||||||||||||||||
Class A ordinary shares subject to possible redemption, 24,300,287 shares at redemption value as of March 31, 2022, March 31, 2021 and December 31, 2021, respectively |
$ | 243,002,870 | 243,002,870 | $ | 243,002,870 | — | ||||||||||
Shareholders’ Equity |
||||||||||||||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding |
— | — | — | — | ||||||||||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 3,500,000 shares issued and outstanding (excluding 24,300,287 shares subject to possible redemption) as of March 31, 2022, March 31, 2021, December 31, 2021 and December 31, 2020, respectively |
$ | 350 | $ | 350 | $ | 350 | — | |||||||||
Class B ordinary shares, $0.0001 par value, 50,000,000 shares authorized; 6,950,072, 7,200,000, 6,950,072 and 7,200,000 shares issued and outstanding as of March 31, 2022, March 31, 2021, December 31, 2021 and December 31, 2020, respectively |
$ |
695 |
$ |
720 |
$ |
695 |
$ |
720 |
||||||||
Additional Paid in Capital |
$ |
12,263,980 |
$ |
12,263,955 |
$ |
12,263,980 |
$ |
24,280 |
||||||||
Accumulated Deficit |
$ |
(4,048,724 |
) |
$ |
(1,758,750 |
) |
$ |
(5,058,764 |
) |
$ |
(20,000 |
) | ||||
|
|
|
|
|
|
|
|
|||||||||
Total shareholders’ equity |
$ |
8,216,301 |
$ |
10,506,275 |
$ |
7,206,261 |
$ |
5,000 |
||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities and Shareholders’ equity |
$ | 278,989,390 | $ | 280,004,055 | $ | 279,089,672 | $ | 562,663 | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
Year Ended December 31, | |||||||||||||||||||
(Amounts in thousands, except per share amounts) |
2022 |
2021 |
2021 |
2020 |
2019 |
|||||||||||||||
Revenues |
||||||||||||||||||||
Mortgage platform revenue, net (1) |
$ | 78,542 | $ | 405,979 | $ | 1,081,421 | $ | 834,530 | $ | 84,445 | ||||||||||
Cash Offer program revenue (4) |
107,224 | — | 39,361 | — | — | |||||||||||||||
Other platform, revenue |
18,300 | 21,162 | 94,388 | 39,539 | 4,911 | |||||||||||||||
Net interest income (expense): |
||||||||||||||||||||
Interest income |
9,313 | 14,040 | 88,965 | 26,697 | 7,951 | |||||||||||||||
Warehouse interest expense |
(7,406 | ) | (15,486 | ) | (69,929 | ) | (25,189 | ) | (8,136 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net interest income (expense) |
1,907 | (1,446 | ) | 19,036 | 1,508 | (185 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net revenues |
205,973 | 425,695 | 1,234,206 | 875,577 | 89,171 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Expenses: |
||||||||||||||||||||
Mortgage platform expenses (2)(3) |
185,777 | 158,537 | 710,132 | 299,164 | 66,326 | |||||||||||||||
Cash Offer program expenses (4) |
107,707 | — | 39,505 | — | — | |||||||||||||||
Other platform expenses (2)(3) |
38,933 | 16,218 | 100,974 | 24,210 | 4,483 | |||||||||||||||
General and administrative expenses (2)(3) |
62,763 | 49,654 | 232,669 | 159,096 | 35,244 | |||||||||||||||
Marketing and advertising expenses (2)(3) |
36,880 | 45,817 | 249,275 | 83,554 | 27,204 | |||||||||||||||
Technology and product development expenses (2)(3) |
42,561 | 25,855 | 143,951 | 57,333 | 21,210 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total operating expenses |
474,621 | 296,081 | 1,476,506 | 623,357 | 154,467 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from operations |
(268,648 | ) | 129,614 | (242,300 | ) | 252,220 | (65,296 | ) | ||||||||||||
Interest and other expense, net: |
||||||||||||||||||||
Interest and amortization on non-funding debt |
(3,372 | ) | (1,826 | ) | (11,834 | ) | (50,967 | ) | (726 | ) | ||||||||||
Interest on Pre-Closing Bridge Notes |
(62,602 | ) | — | (19,211 | ) | — | — | |||||||||||||
Change in fair value of convertible preferred stock warrants |
8,277 | (45,293 | ) | (32,790 | ) | (23,723 | ) | (1,287 | ) | |||||||||||
Change in fair value of bifurcated derivative |
— | — | — | 36,827 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest and other expense, net |
(57,697 | ) | (47,119 | ) | (63,835 | ) | (37,863 | ) | (2,013 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) before income tax expense |
(326,345 | ) | 82,495 | (306,135 | ) | 214,357 | (67,309 | ) | ||||||||||||
Income tax expense (benefit) |
1,356 | 289 | (2,383 | ) | 42,302 | 271 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) |
$ | (327,701 | ) | $ | 82,206 | $ | (303,752 | ) | $ | 172,055 | $ | (67,580 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) per share attributable to common stockholders, basic |
$ | (3.50 | ) | $ | 0.43 | $ | (3.49 | ) | $ | 1.02 | $ | (0.97 | ) | |||||||
Diluted |
$ | (3.50 | ) | $ | 0.40 | $ | (3.49 | ) | $ | 0.86 | $ | (0.97 | ) |
(1) | The components of mortgage platform revenue, net for the periods presented were as follows: |
Three Months Ended March 31, |
Year Ended December 31, | |||||||||||||||||||
2022 |
2021 |
2021 |
2020 |
2019 |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Net gain (loss) on sale of loans |
$ | (19,587 | ) | $ | 279,459 | $ | 934,532 | $ | 858,974 | $ | 84,646 | |||||||||
Integrated relationship revenue/(loss) |
(4,170 | ) | 10,669 | 83,929 | 73,100 | 11,105 | ||||||||||||||
Servicing income |
— | — | — | 7,326 | 568 | |||||||||||||||
Changes in fair value of IRLCs and forward sale commitments |
102,299 | 115,851 | 62,960 | (104,870 | ) | (11,874 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total mortgage platform revenue, net |
$ | 78,542 | $ | 405,979 | $ | 1,081,421 | $ | 834,530 | $ | 84,445 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(2) | Includes stock-based compensation expense as follows: |
Three Months Ended March 31, |
Year Ended December 31, | |||||||||||||||||||
2022 |
2021 |
2021 |
2020 |
2019 |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Mortgage platform expenses |
$ | 2,237 | $ | 2,734 | $ | 13,671 | $ | 2,739 | $ | 163 | ||||||||||
General and administrative expenses |
7,143 | 5,325 | 27,559 | 15,138 | 519 | |||||||||||||||
Marketing and advertising expenses |
170 | 339 | 1,159 | 306 | 20 | |||||||||||||||
Technology and product development expenses |
4,341 | 1,299 | 11,172 | 1,076 | 123 | |||||||||||||||
Other platform expenses |
360 | 304 | 1,654 | 42 | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total stock-based compensation expense |
$ | 14,251 | $ | 10,001 | $ | 55,215 | $ | 19,301 | $ | 829 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(3) | Includes depreciation and amortization expense as follows: |
Three Months Ended March 31, |
Year Ended December 31, | |||||||||||||||||||
2022 |
2021 |
2021 |
2020 |
2019 |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Mortgage platform expenses |
$ | 2,262 | $ | 1,036 | $ | 5,221 | $ | 2,001 | $ | 603 | ||||||||||
General and administrative expenses |
864 | 165 | 933 | 1,041 | 191 | |||||||||||||||
Marketing and advertising expenses |
40 | 11 | 64 | 26 | 36 | |||||||||||||||
Technology and product development expenses |
8,803 | 3,142 | 20,286 | 6,799 | 3,498 | |||||||||||||||
Other platform expenses |
184 | 143 | 716 | 29 | 12 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total depreciation and amortization |
$ | 12,153 | $ | 4,497 | $ | 27,220 | $ | 9,896 | $ | 4,340 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(4) | The December 31, 2021 Cash Offer program revenue and expense amounts have been reclassified and presented as separate line items to conform to the March 31, 2022 presentation, reflecting reclassification of each from other platform revenue and expense as compared to the 2021 audited consolidated financial statements included elsewhere in this proxy statement/prospectus. |
March 31, 2022 |
As of December 31, | |||||||||||
2021 |
2020 |
|||||||||||
(in thousands) |
||||||||||||
Balance sheet data: |
||||||||||||
Total assets |
$ | 2,289,499 | $ | 3,312,604 | $ | 2,984,741 | ||||||
Total liabilities |
1,927,414 | 2,638,788 | 2,525,727 | |||||||||
Total stockholders’ (deficit) equity |
(74,195 | ) | 237,536 | 49,326 |
Unaudited Pro Forma |
||||||||||||||||
Three Months Ended March 31, 2022 |
Year Ended December 31, 2021 |
|||||||||||||||
(Assuming No Redemptions) |
(Assuming Maximum Redemptions) |
(Assuming No Redemptions) |
(Assuming Maximum Redemptions) |
|||||||||||||
Combined Statement of Operations data: |
||||||||||||||||
Total net revenues |
$ | 205,973 | $ | 205,973 | $ | 1,234,206 | $ | 1,234,206 | ||||||||
Total expenses |
$ | 475,712 | $ | 475,712 | $ | 1,503,897 | $ | 1,503,897 | ||||||||
Net loss from operations |
$ | (279,721 | ) | $ | (280,323 | ) | $ | (307,502 | ) | $ | (309,932 | ) | ||||
Net loss per share—Better Home & Finance Class A, B and C common stock, basic |
$ | (0.40 | ) | $ | (0.41 | ) | $ | (0.45 | ) | $ | (0.47 | ) |
Unaudited Pro Forma |
||||||||||||||||
Three Months Ended March 31, 2022 |
Year Ended December 31, 2021 |
|||||||||||||||
(Assuming No Redemptions) |
(Assuming Maximum Redemptions) |
(Assuming No Redemptions) |
(Assuming Maximum Redemptions) |
|||||||||||||
Net loss per share—Better Home & Finance Class A, B and C common stock, diluted |
$ | (0.40 | ) | $ | (0.41 | ) | $ | (0.45 | ) | $ | (0.47 | ) | ||||
Weighted-average shares outstanding, basic |
704,323,000 | 680,025,000 | 688,068,000 | 663,770,000 | ||||||||||||
Weighted-average shares outstanding, diluted |
704,323,000 | 680,025,000 | 688,068,000 | 663,770,000 |
As of March 31, 2022 |
||||||||
(Assuming No Redemptions) |
(Assuming Maximum Redemptions) |
|||||||
(in thousands) |
||||||||
Combined Balance sheet data: |
||||||||
Total assets |
$ | 2,924,228 | $ | 2,924,228 | ||||
Total liabilities |
$ | 1,746,703 | $ | 1,989,724 | ||||
Total stockholders’ equity |
$ | 1,177,525 | $ | 934,504 |
Combined pro forma |
||||||||||||||||
Aurora Historical |
Better Historical |
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||
As of and for the three months ended March 31, 2022 |
||||||||||||||||
Book value per share (1) |
0.24 | (0.75 | ) | 1.63 | 1.34 | |||||||||||
Weighted-average shares outstanding, Class A common stock subject to possible redemption—basic and diluted |
24,300,287 | |||||||||||||||
Net income (loss) per share, Class A common stock subject to possible redemption—basic and diluted |
0.03 | |||||||||||||||
Weighted-average shares outstanding—basic and diluted |
10,450,072 | |||||||||||||||
Net income (loss) per share—basic and diluted |
0.03 | |||||||||||||||
Weighted-average shares outstanding of Better Holdco, Inc. and Subsidiaries—basic |
93,665,693 | |||||||||||||||
Net loss per share attributable to Better Holdco, Inc. and Subsidiaries stockholders—basic |
(3.50) | |||||||||||||||
Weighted-average shares outstanding of Better Holdco, Inc. and Subsidiaries—diluted |
93,665,693 | |||||||||||||||
Net loss per share attributable to Better Holdco, Inc. and Subsidiaries stockholders—diluted |
(3.50) | |||||||||||||||
Weighted-average shares outstanding of Better Home & Finance—basic |
704,323,000 | 680,025,000 | ||||||||||||||
Net loss per share attributable to Better Home & Finance—Class A, B and C common stock, basic (2) |
(0.40) | (0.41) | ||||||||||||||
Weighted-average shares outstanding of Better Home & Finance—diluted |
704,323,000 | 680,025,000 | ||||||||||||||
Net loss per share attributable to Better Home & Finance—Class A, B and C common stock, diluted (2) |
(0.40) | (0.41) | ||||||||||||||
As of and for the year ended December 31, 2021 |
||||||||||||||||
Book value per share (1) |
$ | 0.21 | $ 2.40 | $ | 1.95 | $ | 1.67 | |||||||||
Weighted-average shares outstanding, Class A common stock subject to possible redemption—basic and diluted |
24,300,287 | |||||||||||||||
Net income (loss) per share, Class A common stock subject to possible redemption—basic and diluted |
$ | (0.15 | ) | |||||||||||||
Weighted-average shares outstanding—basic and diluted |
9,590,182 | |||||||||||||||
Net income (loss) per share—basic and diluted |
$ | (0.15 | ) |
Combined pro forma |
||||||||||||||||
Aurora Historical |
Better Historical |
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||
Weighted-average shares outstanding of Better Holdco, Inc. and Subsidiaries—basic |
86,984,646 | |||||||||||||||
Net loss per share attributable to Better Holdco, Inc. and Subsidiaries stockholders—basic |
$ | (3.49 | ) | |||||||||||||
Weighted-average shares outstanding of Better Holdco, Inc. and Subsidiaries—diluted |
86,984,646 | |||||||||||||||
Net loss per share attributable to Better Holdco, Inc. and Subsidiaries stockholders—diluted |
$ | (3.49 | ) | |||||||||||||
Weighted-average shares outstanding of Better Home & Finance—basic |
688,068,000 | 663,770,000 | ||||||||||||||
Net loss per share attributable to Better Home & Finance—Class A, B and C common stock, basic (2) |
$ | (0.45 | ) | $ | (0.47 | ) | ||||||||||
Weighted-average shares outstanding of Better Home & Finance—diluted |
688,068,000 | 663,770,000 | ||||||||||||||
Net loss per share attributable to Better Home & Finance—Class A, B and C common stock, diluted (2) |
$ | (0.45 | ) | $ | (0.47 | ) |
(1) | Book value per share is calculated as: |
— | Aurora: Total shareholders’ equity of Aurora divided by the number of Aurora Ordinary Shares outstanding as of March 31, 2022 and December 31, 2021, respectively. |
— | Better: Total stockholder’s equity of Better divided by Better common stock outstanding as of March 31, 2022 and as of December 31, 2021, respectively. |
— | Combined Pro Forma: Total stockholder’s equity of Better Home & Finance divided by the aggregate number of Better Home & Finance Class A, B and C common stock expected to be outstanding at closing of the Business Combination under both the no redemptions and maximum redemptions scenario, respectively. |
(2) | Better Home & Finance Class A, B and C common stock all have the same rights to share in the earnings and dividends of Better Home & Finance. |
• | TheNumber, LLC (“TheNumber”), which is controlled and partially owned by the Better Founder and CEO and was co-founded by the Better Founder and CEO along with Nicholas Calamari, our General Counsel, amongst others, provides data inputs and analytics on which our platform relies. TheNumber also provides lead generation and risk analysis services. These services are provided pursuant to a 2016 contract between the parties that is due to be renegotiated. Our payment obligation to TheNumber was determined by negotiation between Better and TheNumber and is materially the same as the amount previously paid by Better to a competitor of TheNumber for substantially similar services and technology. The services provided by TheNumber are not integral to Better’s technology platform and amounts incurred are not material to Better or would not materially differ if the services were provided by a third party. Services rendered to Better by TheNumber were extended into 2022 in connection with entry into a development agreement for the further integration of its technology and services into our mortgage origination platform. Subsequent to March 31, 2022 the technology integration and license agreement by and between Better and TheNumber was terminated as of May 12, 2022 and will be subject to a six month wind-down period. The further integration of these services increases our dependency on TheNumber. If we are unable to negotiate future agreements with TheNumber on acceptable terms, then, until such time as we were able to replace the services on acceptable terms, this could materially and adversely affect our business, financial condition, results of operations, and prospects. If the Better Founder and CEO caused TheNumber to cease providing services to us, then, until such time as we were able to replace the services on acceptable terms, our ability to operate Tinman and our mortgage lending software offering would be materially and adversely impaired, which would in turn materially and adversely affect our business, financial condition, results of operations, and prospects. |
• | Notable Finance, LLC (“Notable”), which is controlled by and partially owned by the Better Founder and CEO and other senior leadership of Better, including our General Counsel Nicholas Calamari, Head of Financial Products Sigurgeir Jonsson and current director Zach Frankel, administers the Better Home Improvement Line of Credit, a branded prepaid card, similar to a gift card, which converts to an unsecured line of credit. On January 14, 2022, Better Trust I, a subsidiary of Better, entered into a master loan purchase agreement (the “Notable MLPA”), side letter to the Notable MLPA, and service |
agreement with Notable in relation to the Better Home program, attached to the registration statement of which this proxy statement/prospectus forms a part, respectively. Given its technology and portfolio of consumer lending licenses, Better determined Notable was well positioned to administer this program, notwithstanding its affiliation with the Better Founder and CEO. Our payment obligation to Notable was determined by negotiation between Better and Notable and may be overly favorable to Notable, although subject to uncertainty given the absence of third-party loan purchasers for Home Improvement Line of Credit loans. The services provided by Notable are not integral to Better’s technology platform and amounts incurred are not material to Better or would not materially differ if the services were provided by a third party. Better pays Notable an administrative fee per card issued and also purchases from Notable up to $20.0 million of unsecured home improvement loans underwritten and originated by Notable for Better’s customers. To date, $6.2 million principal amount of Home Improvement Line of Credit loans have been originated by Notable and purchased by Better since January 1, 2022. The purchase price includes the principal balance of such loans as well as interest and fees that have accrued on the respective loans that remain unpaid on the purchase date. Unless earlier terminated pursuant to the Notable MLPA, the Notable MLPA will terminate 15 months after the effective date of the MLPA, or upon 90 days’ prior written notice. If we are unable to negotiate subsequent agreements with Notable to provide continuing support for this program on acceptable terms, then, until such time as we were able to replace the services on acceptable terms, it could negatively impact our growth prospects and profitability and may interrupt our ability to offer this product. |
• | Various members of our management team and legal department previously had, presently have, and may in the future have additional, ownership interests in, employment by and contractual obligations to other entities affiliated with 1/0 Capital, the Better Founder and CEO’s investment management firm, and the Better Founder and CEO. For example, Nicholas Calamari, our General Counsel, maintains an ownership stake in 1/0 Capital, as a well as a direct ownership interest in Notable and TheNumber, and until earlier this year was employed by 1/0 Capital. Sigurgeir Jonsson, our Head of Financial Products, maintains an ownership stake in 1/0 Capital, Notable and TheNumber. Such interests could divert the attention of our management from our business or create conflicts of interests, including litigation or investigations that could materially and adversely affect the reputation and perception among our consumers or potential team members of the Better Founder and CEO or our management team, which could in turn materially and adversely affect our business, financial condition and results of operations. |
• | fluctuating and increasing interest rates, which have the effect of reducing industry mortgage origination volume, increasing competition for customers and reducing revenue and Gain on Sale Margin, |
• | the continued impact of the reorganization of our sales and operations teams in the third quarter of 2021, |
• | continued investments in our business (including investments to expand our product offerings), |
• | the effects of negative media coverage following a series of workforce reductions that began in December 2021 (which we believe resulted in lower interest rate lock volume in December 2021 and early 2022 and is expected to, in part, result in lower Funded Loan Volume in 2022), and |
• | increased costs, including sales and operations compensation expense to support higher Purchase Loan Volumes, severance costs associated with the workforce reductions described above, higher expenses associated with non-mortgage business lines including Better Real Estate and higher technology and product development expenses resulting from continued investment in our platform. |
• | fluctuating and increasing interest rates, which have the effect of reducing industry mortgage origination volume, increasing competition for customers and reducing revenue and Gain on Sale Margin, |
• | the continued impact of the reorganization of our sales and operations teams in the third quarter of 2021, |
• | continued investments in our business (including investments to expand our product offerings), |
• | the effects of negative media coverage following a series of workforce reductions that began in December 2021 (which we believe resulted in lower interest rate lock volume in December 2021 and early 2022 and is expected to, in part, result in lower Funded Loan Volume in 2022), and |
• | increased costs, including sales and operations compensation expense to support higher Purchase Loan Volumes, severance costs associated with the workforce reductions described above, higher expenses associated with non-mortgage business lines including Better Real Estate and higher technology and product development expenses resulting from continued investment in our platform. |
• | our representations and warranties concerning mortgage loan quality and mortgage loan characteristics are inaccurate or are otherwise breached and not remedied within any applicable cure period (usually 90 days or less) after we receive notice of the breach; |
• | we fail to secure adequate mortgage insurance within a certain period after closing of the applicable mortgage loan; |
• | a mortgage insurance provider denies coverage; |
• | the borrower defaults on the loan payments within a contractually defined period (early payment default); |
• | the borrower prepays the mortgage loan within a contractually defined period (early payoff); or |
• | the mortgage loan fails to comply with applicable underwriting or regulatory requirements, including those of investors or insurers, or at the federal, state, or local government level. |
• | the ability to profitably manage acquired businesses or successfully integrate the acquired businesses’ operations, personnel, financial reporting, accounting and internal controls, technologies and products into our business; |
• | increased indebtedness and the expense of integrating acquired businesses, including significant administrative, operational, economic, geographic or cultural challenges in managing and integrating the expanded or combined operations; |
• | entry into jurisdictions or acquisition of products or technologies with which we have limited or no prior experience, such as our recent agreements to acquire two companies in the United Kingdom, and the potential of increased competition with new or existing competitors as a result of such acquisitions; |
• | entry into business lines in which we have not previously operated, which could expose us to new risks, additional licensing requirements and regulatory oversight and require additional integration and attention of management; |
• | responsibility for legacy liabilities of companies or businesses we acquire, the existence or amount of which may not be known at the time of acquisition; |
• | diversion of management’s attention and the over-extension of our operating infrastructure and our management systems, information technology systems, and internal controls and procedures, which may be inadequate to support growth; |
• | the ability to fund our capital needs and any cash flow shortages that may occur if anticipated revenue is not realized or is delayed, whether by general economic or market conditions, or unforeseen internal difficulties; and |
• | the ability to retain or hire qualified personnel required for expanded operations. |
• | changes in applicable tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect; |
• | changes in accounting and tax standards or practice; |
• | changes in the mix of earnings and losses in state jurisdictions with differing tax rates; |
• | changes in the valuation of deferred tax assets and liabilities; and |
• | our operating results before taxes. |
• | credit standards for mortgage loans; |
• | our default and claims rates on recently produced FHA loans; |
• | our staffing levels and other servicing practices; |
• | the servicing and ancillary fees that we may charge; |
• | our modification standards and procedures; |
• | the amount of reimbursable and non-reimbursable advances that we may make; and |
• | the types of loan products that are eligible for sale or securitization. |
• | we fail to purchase, or maintain eligibility to purchase, leads from third-party sites, or effectively use search engines, social media platforms, content-based online marketing and other online sources for generating traffic to our website; |
• | potential customers in a particular market generally do not meet our underwriting guidelines; |
• | competitors offer similar or more attractive platforms and products than we have or offer better pricing than we do; |
• | our platform experiences disruptions; |
• | we suffer reputational harm to our brand resulting from negative publicity, whether accurate or inaccurate; |
• | we fail to expand geographically; |
• | we fail to offer new and competitive product offerings; |
• | customers have difficulty accessing our website on mobile devices or web browsers as a result of actions by us or third parties; |
• | technical or other problems frustrate the customer experience, particularly if those problems prevent us from generating quotes or paying claims in a fast and reliable manner; |
• | we are unable to address customer concerns regarding the content, privacy, and security of our platform; |
• | we are the subject of negative media coverage that may reduce potential customers’ propensity to use our products; or |
• | we are unable to obtain or maintain required licenses to operate in certain jurisdictions. |
• | require us to use a large portion of our cash flow to pay principal and interest on debt, which will reduce the amount of cash flow available to fund working capital, capital expenditures, acquisitions, research and development, or R&D, expenditures and other business activities; |
• | result in certain of our debt instruments being accelerated to be immediately due and payable or being deemed to be in default if certain terms of default are triggered, such as applicable cross-default and/or cross-acceleration provisions; |
• | limit our future ability to raise funds for capital expenditures, strategic acquisitions or business opportunities, R&D and other general corporate requirements; |
• | restrict our ability to incur specified indebtedness, create or incur certain liens and enter into sale-leaseback financing transactions; |
• | increase our vulnerability to adverse economic and industry conditions; and |
• | increase our exposure to interest rate risk from variable rate indebtedness. |
• | limitations imposed on us under existing and future debt facilities that contain restrictive covenants and borrowing conditions that may limit our ability to raise additional debt; |
• | a decline in liquidity in the credit markets, including due to the COVID-19 pandemic; |
• | volatility in our mortgage loan sales secondary market; |
• | prevailing interest rates; |
• | the financial strength of the lenders from whom we borrow; |
• | the decision of lenders from whom we borrow to reduce their exposure to mortgage loans due to global economic conditions, or a change in such lenders’ strategic plan, future lines of business, the COVID-19 pandemic, or otherwise; |
• | the amount of eligible collateral pledged on debt facilities, which may be less than the borrowing capacity of these facilities; |
• | the larger portion of our warehouse lines that is uncommitted, versus what is committed; |
• | more stringent financial covenants in such refinanced facilities, which we may not be able to achieve; and |
• | accounting changes that impact calculations of covenants in our debt facilities. |
• | loss of our licenses and approvals to engage in our lending, servicing and brokering businesses; |
• | damage to our reputation in the industry; |
• | governmental investigations and enforcement actions, which also could involve allegations that such compliance failures demonstrate weaknesses in our CMS; |
• | administrative fines and penalties and litigation; |
• | civil and criminal liability, including class action lawsuits and defenses to foreclosure; |
• | diminished ability to sell loans that we produce or purchase, requirements to sell such loans at a discount compared to other loans or repurchase or address indemnification claims from purchasers of such loans, including the GSEs; |
• | inability to raise capital; and |
• | inability to execute on our business strategy, including our growth plans. |
• | limited availability of market quotations for Better Home & Finance’s securities; |
• | a limited amount of analyst coverage; and |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
• | our ability to integrate operations, products, and services; |
• | our ability to execute our business plan; |
• | operating results below expectations; |
• | our issuance of additional securities, including debt or equity or a combination thereof, which will be necessary to fund our operating expenses; |
• | announcements of new or similar products by us or our competitors; |
• | loss of any strategic relationship; |
• | period-to-period |
• | developments concerning intellectual property rights; |
• | changes in legal, regulatory, and enforcement frameworks impacting the transportation of cannabis; |
• | the addition or departure of key personnel; |
• | continued negative publicity about us (and adverse reactions from our customers, current and potential commercial partners, investors, lenders, and current and potential team members); |
• | announcements by us or our competitors of acquisitions, investments, or strategic alliances; |
• | actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry; |
• | the level and changes in our year-over-year revenue growth rate; |
• | the failure of securities analysts to publish research about us, or shortfalls in our results of operations compared to levels forecast by securities analysts; |
• | economic and other external factors; and |
• | the general state of the securities market. |
• | fluctuating and increasing interest rates, which have the effect of reducing industry mortgage origination volume, increasing competition for customers and reducing revenue and Gain on Sale Margin, |
• | the continued impact of the reorganization of its sales and operations teams in the third quarter of 2021, |
• | continued investments in its business (including investments to expand its product offerings), |
• | the effects of negative media coverage following a series of workforce reductions that began in December 2021 (which Better believes resulted in lower interest rate lock volume in December 2021 and early 2022 and is expected to, in part, result in lower Funded Loan Volume in 2022), and |
• | increased costs, including sales and operations compensation expense to support higher Purchase Loan Volumes, severance costs associated with the workforce reductions described above, higher expenses associated with non-mortgage business lines including Better Real Estate and higher technology and product development expenses resulting from continued investment in its platform. |
• | permit only the board of directors to establish the number of directors and fill vacancies on the board; |
• | authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan (also known as a “poison pill”); |
• | eliminate the ability of our shareholders to call special meetings of shareholders after the Better Home & Finance Class B common stock converts to Better Home & Finance Class A common stock; |
• | prohibit stockholder action by written consent after the Better Home & Finance Class B common stock converts to Better Home & Finance Class A common stock, which requires all stockholder actions after such time to be taken at a meeting of our shareholders; |
• | prohibit cumulative voting; |
• | authorize our board of directors to amend the bylaws; |
• | establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by shareholders at annual stockholder meetings; and |
• | require a super-majority vote of shareholders to amend some provisions described above. |
• | Prior to Aurora’s initial public offering on March 8, 2021, the Sponsor purchased 5,750,000 Aurora Class B ordinary shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. In February 2021, Aurora effectuated a share dividend of 1,006,250 Class B ordinary shares and subsequently cancelled 131,250 Class B ordinary shares, resulting in an aggregate of 6,625,000 Aurora Class B ordinary shares issued and outstanding. In March 2021, Aurora made a share dividend of 575,000 shares, resulting in 7,200,000 Class B ordinary shares owned by the Sponsor. After Aurora’s initial public offering, the Sponsor surrendered for cancellation 249,928 shares which occurred when the 45-day over-allotment period expired, leaving 6,950,072 Class B ordinary shares held by the Sponsor and certain directors of Aurora. If Aurora |
does not consummate a business combination by March 8, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding-up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Law to provide for claims of creditors and the requirements of other applicable law. In such event, the 6,950,072 Aurora Class B ordinary shares collectively owned by the Sponsor and certain directors of Aurora would be worthless because following the redemption of the public shares, Aurora would likely have few, if any, net assets and because the Sponsor and Aurora’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any Aurora Class A ordinary shares and Aurora Class B ordinary shares held by it or them, as applicable, if Aurora fails to complete a business combination within the required period. Additionally, in such event, the 4,573,372 Aurora private warrants purchased by the Sponsor simultaneously with the consummation of Aurora’s initial public offering for an aggregate purchase price of $6,860,057, will also expire worthless. Certain of Aurora’s directors and executive officers also have a direct or indirect economic interest in such Aurora private warrants. The 6,950,072 shares of Better Home & Finance Class A common stock into which the 6,950,072 Aurora Class B ordinary shares collectively held by the Sponsor and certain directors of Aurora will automatically convert in connection with the Mergers (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $[ ] based upon the closing price of $[ ] per public share on Nasdaq on [ ], 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. However, given that such shares of Better Home & Finance Class A common stock will be subject to certain restrictions, including those described above, Aurora believes such shares have less value. The 4,573,372 Better Home & Finance Warrants into which the 4,573,372 Aurora private warrants held by the Sponsor and certain of Aurora’s directors and executive officers will automatically convert in connection with the Mergers (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $[ ] based upon the closing price of $[ ] per public warrant on Nasdaq on [ ], 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. |
• | The Sponsor (including its representatives and affiliates) and Aurora’s directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to Aurora. The Sponsor and Aurora’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check companies prior to Aurora completing its initial business combination. Moreover, certain of Aurora’s directors and officers have time and attention requirements for investment funds of which affiliates of the Sponsor are the investment managers. Aurora’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to Aurora, and the other entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in Aurora’s favor, and such potential business opportunities may be presented to other entities prior to their presentation to Aurora, subject to applicable fiduciary duties under Cayman Islands Companies Law. Aurora’s Cayman Constitutional Documents provide that Aurora renounces its interest in any corporate opportunity offered to any director or officer of Aurora unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of Aurora and it is an opportunity that Aurora is able to complete on a reasonable basis. |
• | Aurora’s existing directors and officers will be eligible for continued indemnification and continued coverage under Aurora’s directors’ and officers’ liability insurance after the Mergers and pursuant to the Merger Agreement. |
• | Aurora, Better, SoftBank and the Sponsor entered into the Pre-Closing Bridge Note Purchase Agreement, pursuant to which SoftBank and the Sponsor funded the purchase of $750,000,000 of Pre-Closing Bridge Notes, which are convertible into the Pre-Closing Bridge Conversion Shares as follows: (i) upon Closing, the Pre-Closing Bridge Notes will convert into shares of Better Home & Finance Class A common stock at a conversion rate of one share per $10 of consideration; (ii) if the Closing does not occur by the Maturity |
Date, or in the event of a Corporate Transaction or Merger Withdrawal (each as defined in the Pre-Closing Bridge Note Purchase Agreement) prior to the Maturity Date or prior to the time when a Note may otherwise be converted pursuant to the Pre-Closing Bridge Note Purchase Agreement, the Pre-Closing Bridge Notes will convert into a new series of preferred stock of Better, which series will be identical to Better’s Series D Preferred Stock, provided that the ratchet adjustment provisions relating to Better’s Series D Preferred Stock will not apply, and such series will vote together with Better’s Series D Preferred Stock as a single class on all matters; or (iii) in the event of a termination of the Merger Agreement (a) by Better, arising out of or resulting from breaches on the part of Aurora or the Sponsor, (b) by Better, arising out of or resulting from breaches on the part of Aurora or any Subscriber in connection with any Subscription Agreement or (c) arising out of or resulting from breaches on the part of Aurora, SoftBank or the Sponsor in connection with the Pre-Closing Bridge Note Purchase Agreement or any ancillary agreement, the Pre-Closing Bridge Notes will convert into shares of Better common stock. In the event that Pre-Closing Bridge Conversion Shares are issued in the form of Better Home & Finance Class A common stock, the Pre-Closing Bridge Note Purchase Agreement provides for customary registration rights with respect to such Pre-Closing Bridge Conversion Shares. For additional information, see the sections entitled “ BCA Proposal—Amendments to the Merger Agreement—Amendment No. 3 BCA Proposal—Related Agreements—Pre-Closing Bridge Note Purchase Agreement |
• | SoftBank and the Sponsor committed to fund, pursuant to the amended SoftBank Subscription Agreement and Sponsor Subscription Agreement, respectively, the purchase of the Post-Closing Convertible Notes, which are subordinated unsecured 1% Post-Closing Convertible Notes with a five-year maturity, in an amount equal to $750,000,000 (less any amounts released to Better at the Closing from Aurora’s trust account (excluding, for the avoidance of doubt, amounts released to Better under the Subscription Agreements)) during the first 45 days after the Closing Date. As a result of the commitment by Sponsor, the Major Aurora Shareholder and the Aurora directors and officers not to redeem in the aggregate 3,502,500 Aurora Class A shares held by them, a minimum of $35,025,000 will be released to Better at the Closing from Aurora’s trust account, and, accordingly, the maximum aggregate principal amount of Post-Closing Convertible Notes to be issued is $714,975,000. See the sections entitled “ BCA Proposal—Amendments to the Merger Agreement—Amendment No. 3 BCA Proposal—Related Agreements— Amendment to the SoftBank Subscription Agreement BCA Proposal—Related Agreements— Amendment to the Sponsor Subscription Agreement |
• | In the event that Aurora fails to consummate a business combination within the prescribed time frame (pursuant to the Cayman Constitutional Documents), or upon the exercise of a redemption right in connection with the Business Combination, Aurora will be required to provide for payment of claims of creditors that were not waived that may be brought against Aurora within the ten years following such redemption. In order to protect the amounts held in Aurora’s trust account, the Sponsor has agreed that it will be liable to Aurora if and to the extent any claims by a third-party (other than Aurora’s independent auditors) for services rendered or products sold to Aurora, or a prospective target business with which Aurora has discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third-party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under the indemnity of the underwriters of Aurora’s initial public offering against certain liabilities, including liabilities under the Securities Act. |
• | Our Sponsor has advanced funds to us for working capital purposes, including $1,812,295 as of March 31, 2022. These outstanding advances were documented in an amended and restated promissory note, dated as of May 10, 2021 (the “Promissory Note”), issued by Aurora to the Sponsor, pursuant to which Aurora may borrow up to $2,000,000 from the Sponsor (including those amounts which are currently outstanding). The Promissory Note is non-interest bearing, unsecured and due and payable in full on the earlier of (i) the date on which the Merger by and between Better and Aurora is completed or (ii) the date that is 30 days after the termination of the Merger Agreement in accordance with its terms. If we do not complete our initial |
business combination within the required period, we may use a portion of our working capital held outside the trust account to repay such advances and any other working capital advances made to us, but no proceeds held in the trust account would be used to repay such advances and any other working capital advances made to us, and such related party may not be able to recover the value it has loaned us and any other working capital advances it may make. If Aurora’s operating costs, in relation to its proposed Business Combination, exceed the amounts still available and not currently drawn under the Promissory Note, the Sponsor will increase the amount available under the Promissory Note to cover such costs, subject to an aggregate principal amount cap of $8,000,000. On February 23, 2022, the Promissory Note was amended and restated to increase the aggregate principal amount of the note to $4,000,000. This amount would be reflective of estimated total costs of Aurora through March 23, 2023 in relation to Aurora’s initial business combination, in the event the Business Combination is unsuccessful. |
• | Aurora remunerates Ms. Harding, Aurora’s chief financial officer, for professional services rendered to Aurora in her role as chief financial officer at the rate of $10,000 per month and for her service on our board of directors at the rate of $15,000 per year, with an incremental hourly fee in certain circumstances of $500. Under the terms of that certain Director’s Services Agreement (included as an exhibit to the registration statement of which this proxy statement/prospectus is a part), Ms. Harding is to provide services to Merger Sub which include acting as a non-executive director and president and secretary of Merger Sub in consideration of $50,000 in annual payments, with an incremental hourly fee in certain circumstances of $500. Additionally, Ms. Harding received a $50,000 payment on March 21, 2021 in contemplation of her services to Aurora and will receive a $75,000 payment on the earlier of March 21, 2023 or the date on which Aurora is liquidated. As of March 31, 2022 and December 31, 2021, $10,000 and $100,000 was accrued and as of March 31, 2022 and December 31, 2021, $30,000 and $83,750 was expensed for these services. |
• | Aurora’s officers and directors, and their affiliates are entitled to reimbursement of out-of-pocket |
• | Pursuant to the Registration Rights Agreement, the Sponsor and Aurora’s independent directors will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect to the shares of Better Home & Finance Class A common stock and warrants held by such parties following the consummation of the Business Combination. |
• | Aurora has the right to select two individuals, one of which is expected to be Prabhu Narasimhan and another has been or will be mutually agreed between Aurora and the Better Founder and CEO, to be nominated for election to the initial Board of Directors of Better Home & Finance, so long as the Aurora nominees complete a background check reasonably satisfactory to Better, qualify as “independent” directors for purposes of Nasdaq rules and are otherwise in compliance with SEC and Nasdaq rules and requirements governing directors, and satisfy any other applicable regulatory requirements. |
• | The Proposed Certificate of Incorporation will contain a provision expressly electing that Better Home & Finance will not be governed by Section 203 (Delaware’s “interested stockholder” statute) of the DGCL, and therefore, Better Home & Finance will not be subject to Section 203 of the DGCL. |
• | A U.S. Holder who is a 10% Shareholder (as defined in the section entitled “ U.S. Federal Income Tax Considerations—U.S. Holders—The Domestication—Section 367 |
• | A U.S. Holder who, on the date of the Domestication, is not a 10% Shareholder but whose Aurora stock has a fair market value of $50,000 or more should recognize gain (but not loss) with respect to the Domestication unless such U.S. Holder makes a valid election to include in income as a dividend the “all earnings and profits amount” attributable to the Aurora Class A ordinary shares it directly owns, within the meaning of Treasury Regulations under Section 367 of the Code. |
• | A U.S. Holder who, on the date of the Domestication, is not a 10% Shareholder and whose Aurora Class A ordinary shares have a fair market value less than $50,000 should not be required to recognize any gain or loss under Section 367 of the Code in connection with the Domestication and should not be required to include any part of the “all earnings and profits amount” in income. |
• | consider and vote upon a proposal to approve by ordinary resolution and adopt the Merger Agreement attached to this proxy statement/prospectus as Annex A, pursuant to which, among other things, following the Domestication of Aurora to the State of Delaware, (i) Merger Sub will merge with and into Better, with Better surviving the merger as a wholly owned subsidiary of Aurora, (ii) Better will merge with and into Aurora, with Aurora surviving the merger, and (iii) Aurora will change its name to “Better Home & Finance Holding Company,” in each case in accordance with the terms and subject to the conditions of the Merger Agreement, as more fully described elsewhere in this proxy statement/prospectus (the “BCA Proposal”); |
• | consider and vote upon a proposal to approve by special resolution, assuming the BCA Proposal is approved and adopted, the change of Aurora’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication Proposal”); |
• | consider and vote upon the following four separate proposals (collectively, the “Organizational Documents Proposals”) to approve by special resolution, assuming the BCA Proposal and the Domestication Proposal are approved and adopted, the Cayman Constitutional Documents being amended and restated by their deletion in their entirety and the substitution in their place the proposed certificate of incorporation and bylaws of Aurora together with the following material differences between the Cayman Constitutional Documents and the Proposed Organizational Documents: |
(A) | to authorize by ordinary resolution the change in the authorized share capital stock of Aurora from 500,000,000 Class A ordinary shares, par value $0.0001 per share (the “Aurora Class A ordinary shares”), 50,000,000 Class B ordinary shares, par value $0.0001 per share (the “Aurora Class B ordinary shares” and, together with the Aurora Class A ordinary shares, the “Aurora ordinary shares”), and 5,000,000 preference shares, par value $0.0001 per share (the “Former preference shares”), to 1,750,000,000 shares of Better Home & Finance Class A common stock, 600,000,000 shares of Better Home & Finance Class B common stock, 800,000,000 shares of Better Home & Finance Class C common stock, and 100,000,000 shares of Aurora preferred stock (“Organizational Documents Proposal A”); |
(B) | to authorize by ordinary resolution the board of directors of Better Home & Finance to issue any or all shares of Better Home & Finance preferred stock in one or more classes or series, with such terms and conditions as may be expressly determined by the board of directors of Better Home & Finance and as may be permitted by the DGCL (“Organizational Documents Proposal B”); |
(C) | to authorize by ordinary resolution that holders of shares of Better Home & Finance Class A common stock will be entitled to cast one vote per share of Better Home & Finance Class A common stock and holders of shares of Better Home & Finance Class B common stock will be entitled to cast three votes per share of Better Home & Finance Class B common stock on each matter properly submitted to Better Home & Finance shareholders entitled to vote (“Organizational Documents Proposal C”); and |
(D) | to authorize by ordinary resolution all other changes in connection with the replacement of Cayman Constitutional Documents with the Proposed Certificate of Incorporation and Proposed Bylaws in connection with the consummation of the Business Combination (copies of which are attached to this proxy statement/prospectus as Annex B and Annex D, respectively), including (1) changing the corporate name from “Aurora Acquisition Corp.” to “Better Home & Finance Holding Company” in connection with the Business Combination, (2) making Better Home & Finance’s corporate existence perpetual, (3) adopting Delaware as the exclusive forum for certain stockholder litigation, (4) opting out of the provisions of Section 203 of the DGCL and (5) removing certain provisions related to Aurora’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which Aurora’s board of directors believes is necessary to adequately address the needs of Better Home & Finance after the Business Combination (“Organizational Documents Proposal D”); |
• | for holders of Aurora Class B ordinary shares, consider and vote upon a proposal to approve by ordinary resolution, to elect [ ] directors of Better Home & Finance (the “Director Election Proposal”); |
• | consider and vote upon a proposal to approve by ordinary resolution for purposes of complying with the applicable provisions of Section 5635 of the Nasdaq’s Listed Company Manual, the issuance of shares of Better Home & Finance Class A common stock, Better Home & Finance Class B common stock and Better Home & Finance Class C common stock, as applicable, to (a) the Pre-Closing Bridge Investors, including the Sponsor, pursuant to (i) the Pre-Closing Bridge Financing (as defined herein) and (ii) the issuance of the shares of Better Home & Finance Class A common stock upon the conversion of the Post-Closing Convertible Notes (as defined herein) and (b) the Better Stockholders pursuant to the Merger Agreement (the “Stock Issuance Proposal”); |
• | consider and vote upon a proposal to approve by ordinary resolution, the 2022 Incentive Equity Plan (the “2022 Plan”) (the “Incentive Equity Plan Proposal”); |
• | consider and vote upon a proposal to approve by ordinary resolution, the 2022 Employee Stock Purchase Plan (the “ESPP”) (the “ESPP Proposal”); and |
• | consider and vote upon a proposal to approve the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting (we refer to this as the “Adjournment Proposal”). |
• | You can vote by signing and returning the enclosed proxy card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by Aurora’s board “FOR” the BCA Proposal, “FOR” the Domestication Proposal, “FOR” each of the separate Organizational Documents Proposals, “FOR” the Director Election Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Incentive Equity Plan Proposal, “FOR” the ESPP Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting. Votes received after a matter has been voted upon at the extraordinary general meeting will not be counted. |
• | You can attend the extraordinary general meeting and vote in person. You will receive a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a valid legal proxy from the broker, bank or other nominee. That is the only way Aurora can be sure that the broker, bank or nominee has not already voted your shares. |
• | you may send another proxy card with a later date; |
• | you may notify Aurora’s Secretary in writing before the extraordinary general meeting that you have revoked your proxy; or |
• | you may attend the extraordinary general meeting, revoke your proxy, and vote in person or online, as indicated above. |
• | (a) hold public shares, or (b) hold public shares through units, you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; |
• | submit a written request to Continental, Aurora’s transfer agent, that Better Home & Finance redeem all or a portion of your public shares for cash; and |
• | deliver your public shares to Continental, Aurora’s transfer agent, physically or electronically through DTC. |
• | the Ordinary Stock Election Consideration, which is a number of shares of Better Home & Finance Class B common stock equal to the Exchange Ratio, and is the default election in the case of a share of Better common stock for which no election is made pursuant to the Merger Agreement (the “Ordinary Stock Electing Shares”); |
• | the BHC Election Consideration, which is a number of Better Home & Finance Class A common stock equal to the Exchange Ratio (the “BHC Stock Electing Shares”); or |
• | the Non-Voting Stock Electing Consideration, which is a number of Better Home & Finance Class C common stock equal to the Exchange Ratio (the “Non-Voting Stock Electing Shares”). |
• company organization; • subsidiaries; • due authorization; • no conflicts; • governmental authorizations and consents; • capitalization and subsidiaries; • financial statements; • undisclosed liabilities; • litigation and proceedings; |
• brokers’ fees; • insurance; • permits; • equipment and other tangible property; • real property; • intellectual property; • privacy and cybersecurity; • environmental matters; • absence of changes; |
• legal compliance; • contracts and no defaults; • Better’s benefit plans; • labor relations and employees; • taxes; |
• anti-corruption compliance; • sanctions and international trade compliance; • critical technologies; and • mortgage loans. |
• company organization; • due authorization; • no conflicts; • litigation and proceedings; • SEC filings; • internal controls; • listing and financial statements; • governmental authorizations and consents; • trust account; • Investment Company Act and JOBS Act; • absence of changes; • no undisclosed liabilities; |
• capitalization of Aurora; • brokers’ fees; • indebtedness; • taxes; • business activities; • Nasdaq registration and compliance with Nasdaq rules; • no mandatory CFIUS filing requirement; • compliance of the proxy statement/prospectus with relevant rules under the Securities Act and Exchange Act; • anti-corruption compliance; and • sanctions and international trade compliance. |
(a) | any change in applicable Laws or GAAP or any COVID-19 Measures (each as defined in the Merger Agreement) or, in each case, any interpretation thereof following the date of the Merger Agreement; |
(b) | any change in interest rates or economic, political, business or financial market conditions generally; |
(c) | the taking of any action required by the Merger Agreement; |
(d) | any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar occurrences), pandemic, outbreak of disease or illness or public health event (including COVID-19) or change in climate; |
(e) | any acts of terrorism or war, the outbreak or escalation of hostilities, geopolitical conditions, civil unrest, local, national or international political conditions; |
(f) | any failure of Better to meet any projections or forecasts (provided that this clause will not prevent a determination that any Event not otherwise excluded from this definition of Better Material Adverse Effect underlying such failure to meet projections or forecasts has resulted in a Better Material Adverse Effect); |
(g) | any events generally applicable to the industries or markets in which Better and its subsidiaries operate (including changes in the U.S. housing markets); |
(h) | the announcement of the Merger Agreement and consummation of the transactions contemplated thereby, including any termination of, reduction in or similar adverse impact (but in each case only to the extent attributable to such announcement or consummation) on relationships, contractual or otherwise, with any landlords, customers, suppliers, distributors, partners or employees of Better and its subsidiaries; |
(i) | any action taken by, or at the request of, Aurora or Merger Sub. |
(a) | make any change in or amendment to government documents of Better, or adopt a plan of liquidation, restructuring, recapitalization, dissolution or winding-up of Better or any of its subsidiaries; |
(b) | other than in the ordinary course of business consistent with past practice, form or establish a subsidiary; |
(c) | (i) make, declare or pay any dividend or distribution to any equityholder (other than repurchases of Better Restricted Stock Awards upon termination of service with any employee or other individual service provider pursuant to the underlying award agreements in effect on the date of the Merger Agreement or evidencing an award that is not granted in breach of the Merger Agreement), (ii) effect any recapitalization, reclassification, split, combination or other change in its capitalization, including any amendment to the terms of its shares, (iii) authorize for issuance, issue, sell, transfer, pledge, encumber, dispose of or deliver any additional shares of Better Capital Stock or convertible securities (other than (x) in accordance with the Preferred Stock Conversion, or (y) pursuant to the exercise of Better Options or Better Warrants, the settlement of Better RSUs or the lapse of restrictions on Better Restricted Stock Awards, in each case described in clause (y), in accordance with their terms and outstanding as of the date of the Merger Agreement or granted not in breach of the Merger Agreement or (iv) purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital of Better (other than repurchases of Better Restricted Stock Awards on the terms set forth in the Merger Agreement); |
(d) | amend or terminate any material contract, except in the ordinary course consistent with past practice; |
(e) | grant to, or agree to grant to, any person rights to any intellectual property that is material to Better and its subsidiaries, except for non-exclusive licenses granted in the ordinary course of business consistent with past practice, or dispose of, abandon or permit to lapse any rights to any intellectual property that is material to Better and its subsidiaries except for the expiration of Better’s registered intellectual property in accordance with the applicable statutory term (or in the case of domain names, applicable registration period) or in the reasonable exercise of Better’s or any of its subsidiaries’ business judgment as to the costs and benefits of maintaining the item; |
(f) | permit any of its material intellectual property to become subject to a lien (other than a Permitted Lien (as defined in the Merger Agreement)) or sell, lease, license or otherwise dispose of any of its material intellectual property rights, but excluding licenses to intellectual property granted by Better or any of its subsidiaries in the ordinary course of business consistent with past practice; |
(g) | (i) make, change or revoke any material tax election, (ii) amend, modify or otherwise change any filed material tax return, (iii) adopt or request permission of any taxing authority to change any accounting |
method for tax purposes, (iv) enter into any “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local or foreign Law) with any governmental authority, (v) settle any claim or assessment in respect of a material amount of taxes, (vi) knowingly surrender or allow to expire any right to claim a refund of a material amount of taxes or (vii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of a material amount of taxes or in respect of any material tax attribute that would give rise to any claim or assessment of taxes; |
(h) | except as may be required by applicable Law or GAAP, make any material change in its financial or tax accounting methods; |
(i) | (i) merge or consolidate with, or purchase substantially all of the assets of, any entity in excess of $50.0 million individually or $125.0 million in the aggregate, or (ii) adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization; |
(j) | other than in the ordinary course of business, sell, assign, transfer, convey, lease or otherwise dispose of any material tangible assets or properties of Better or its subsidiaries, including the material leased real property, except for (i) dispositions of obsolete or worthless equipment in the ordinary course of business and (ii) transactions among Better and its wholly owned subsidiaries or among its wholly owned subsidiaries; |
(k) | (i) materially increase the aggregate cost of compensation, fees or benefits provided to employees, independent contractors providing services in their personal capacity, or directors of Better or its subsidiaries; (ii) adopt, enter into, or amend any collective bargaining or similar agreement; or (iii) terminate (other than for cause) any executive officer of Better, or give notice of any such action; (iv) grant any equity or equity-based compensation awards; or (v) other than in the ordinary course of business, terminate, adopt, enter into or amend any Better Benefit Plan (as defined as “Company Benefit Plan” in the Merger Agreement, or any plan, policy, program, agreement or arrangement that would be a Better Benefit Plan if in effect on the date hereof); |
(l) | waive, release, settle, compromise or otherwise resolve any inquiry, investigation, claim, action, litigation or other legal proceedings, except where such waivers, releases, settlements or compromises involve only the payment of monetary damages in an amount less than $5,000,000 individually and less than $10,000,000 in the aggregate; |
(m) | incur any indebtedness or issue any warrants or other rights to acquire any indebtedness, except (i) borrowings in the ordinary course of business consistent with past practice solely to fund the ongoing business operations of Better and its subsidiaries, including (x) under the Existing Credit Facilities (as defined in the Merger Agreement) and (y) under any facility or similar indebtedness amending, increasing, refinancing (in whole or in part) the Existing Credit Facilities (the “Replacement Facilities”), (ii) intercompany indebtedness in the ordinary course of business consistent with past practice among Better and its subsidiaries, (iii)(x) to the extent not drawn upon and payments are not triggered thereby, letters of credit, bank guarantees, security or performance bonds or similar credit support instruments and (y) overdraft facilities or cash management programs, in each case issued, made and entered into in the ordinary course of business consistent with past practice, (iv) hedging arrangements entered into in the ordinary course of business consistent with past practice and not for speculative purposes, or (v) secured or unsecured notes issued by Better or its subsidiary in an aggregate principal amount for all such notes not to exceed $450,000,000 and which issuance would not result in the incurrence of incremental indebtedness of more than $250,000,000 (disregarding incremental indebtedness incurred as original issue discount or to fund related refinancing expenses, including make-whole or other premium, breakage and similar costs, accrued interest or other related fees and expenses); |
(n) | enter into any Affiliate Agreement (as defined in the Merger Agreement), other than as may be required or permitted under the Merger Agreement to effect the transactions contemplated under the Merger Agreement; |
(o) | knowingly take any action, or knowingly fail to take any action, where such action or failure to act could reasonably be expected to prevent the Mergers, taken together, from constituting an integrated transaction described in Rev. Rul. 2001-46, 2001-2 C.B. 321 that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations; or |
(p) | enter into any agreement to take any of the above actions prohibited under the Merger Agreement. |
(a) | seek any approval from Aurora’s shareholders, or otherwise take any action, to change, modify or amend the Trust Agreement or the Governing Documents of Aurora or the Merger Sub, except as otherwise contemplated by the Transaction Proposals; |
(b) | except as otherwise contemplated by the Transaction Proposals, (x) make or declare any dividend or distribution to the shareholders of Aurora or make any other distributions in respect of any of Aurora’s or Merger Sub’s capital stock, share capital or equity interests, (y) split, combine, reclassify or otherwise amend any terms of any shares or series of Aurora’s or Merger Sub’s capital stock or equity interests or (z) purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital stock, share capital or membership interests, warrants or other equity interests of Aurora or Merger Sub, other than a redemption of shares of Aurora Class A ordinary shares effected in connection with the Merger; |
(c) | (i) make, change or revoke any material tax election, (ii) amend, modify or otherwise change any filed material tax return, (iii) adopt or request permission of any taxing authority to change any accounting method for tax purposes, (iv) enter into any closing agreement with any governmental authority, (v) settle any claim or assessment in respect of a material amount of taxes, (vi) knowingly surrender or allow to expire any right to claim a refund of a material amount of taxes or (vii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of a material amount of taxes or in respect of any material tax attribute that would give rise to any claim or assessment of taxes; |
(d) | knowingly take any action, or knowingly fail to take any action, where such action or failure to act could reasonably be expected to prevent either of the Mergers, taken together, from constituting an integrated transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations; |
(e) | enter into, renew or amend in any material respect, any transaction or contract with SoftBank or any of its affiliates or an affiliate of Aurora or Merger Sub (including, for the avoidance of doubt, (i) the Sponsor or anyone related by blood, marriage or adoption to any Sponsor and (ii) any person in which the Sponsor has a direct or indirect legal, contractual or beneficial ownership interest of 5% or greater); |
(f) | incur or assume any indebtedness or guarantee any indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Better or any of its subsidiaries or guaranty any debt securities of another person, other than any indebtedness for borrowed money or guarantee (i) incurred in the ordinary course of business consistent with past |
practice and in an aggregate amount not to exceed 50,000, (ii) incurred between Aurora and Merger Sub, (iii) in respect of any working capital loan in an aggregate amount not to exceed $1,500,000, or (iv) any drawdown under the Promissory Note; |
(g) | incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any indebtedness or otherwise knowingly and purposefully incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any other material liabilities, debts or obligations, other than fees and expenses for professional services incurred in support of the transactions contemplated by the Merger Agreement and the Ancillary Agreements or in support of the ordinary course operations of Aurora consistent with past practice (which the parties agree shall include any indebtedness in respect of any working capital loan); |
(h) | waive, release, compromise, settle or satisfy any pending or threatened material claim (which shall include, but not be limited to, any pending or threatened action); |
(i) | other than with respect to the PIPE Investment, the Subscription Agreements or the Sponsor Letter, (i) issue any securities of Aurora or securities exercisable for or convertible into securities of Aurora, other than the issuance of the Stock Consideration, (ii) grant any options, warrants or other equity-based awards with respect to securities of Aurora securities, not outstanding on the date of the Merger Agreement or (iii) amend, modify or waive any of the material terms or rights set forth in any Aurora warrant or the Warrant Agreement, including any amendment, modification or reduction of the warrant price set forth therein; or |
(j) | enter into any agreement to do any of the above actions prohibited under the Merger Agreement. |
• | subject to confidentiality obligations (whether contractual, imposed by applicable law or otherwise) that may be applicable to information furnished to Better or any of its subsidiaries by third parties and except for any information that is subject to attorney-client privilege, and to the extent permitted by applicable law, afford Aurora and its accountants, counsel and other representatives reasonable access during normal business hours and upon reasonable advance notice during the Interim Period to their properties, books, contracts, commitments, tax returns, records and appropriate officers and employees and furnish such representatives will all financial and operating data and other information concerning the affairs of Better and its subsidiaries that are in the possession of Better or its subsidiaries as such representatives may reasonably request; |
• | deliver, as soon as reasonably practicable following the date of the Merger Agreement, (i) the audited consolidated balance sheet and statements of operations, cash flows and shareholders’ equity of Better and its subsidiaries as of and for the years ended December 31, 2020 and December 31, 2019, each audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and (ii) the unaudited condensed consolidated balance sheets and statements of operations and comprehensive loss, shareholders’ deficit, and cash flow of Better and its subsidiaries as of and for the three-month period ended March 31, 2021, reviewed in accordance with PCAOB standards; |
• | prior to the First Effective Time, effect the Preferred Stock Conversion; and |
• | during the Interim Period, not, and cause its subsidiaries not to, and instruct its and their representatives action on its and their behalf not to, initiate any negotiations or enter into any agreements for certain alternative transactions and to terminate any such negotiations ongoing as of the date of the Merger Agreement. |
• | recognize, or cause Better and its subsidiaries to recognize, each continuing employee’s employment or service with Better or any of its subsidiaries prior to the Closing for all purposes, including for purposes of determining, as applicable, eligibility for participation, vesting and entitlement of the continuing employee under all employee benefit plans maintained by Better, its Subsidiaries, Aurora or its affiliate, including vacation plans or arrangements, 401(k) or other retirement plans and any welfare plans (excluding equity incentive plans or benefit accruals under a defined benefit pension plan), except to the extent such recognition would result in a duplication of benefits; |
• | effective as of the Closing and thereafter, cause Better Home & Finance and its subsidiaries to, (i) cause any pre-existing conditions or limitations, eligibility waiting periods, actively at work requirements, evidence of insurability requirements or required physical examinations under any health or similar plan of Better, its subsidiaries, Aurora or its affiliate to be waived with respect to continuing employees and their eligible dependents (provided, that, in the case of any insured arrangements, subject to the consent of the applicable insurer and Aurora’s commercially reasonable efforts to obtain such consent), except to the extent that any waiting period, exclusions or requirements still applied to such continuing employee under the comparable Better Benefit Plan in which such continuing employee participated immediately before the Closing, and (ii) fully credit each continuing employee with all deductible payments, co-payments and other out-of-pocket co-payments, or maximum out-of-pocket |
• | prior to the Closing Date, approve and adopt (i) an incentive equity plan, pursuant to which a number of shares of Better Home & Finance Class A common stock equal to 11.0% of the fully diluted shares of Better Home & Finance Class A common stock outstanding immediately after the Closing shall be reserved for issuance, subject to an annual evergreen provision of 5.0% for the 10-year period following the Closing Date (the “2022 Plan”), together with the form of restricted stock unit award grant notice and award agreement thereunder and the form of stock option grant notice and agreement thereunder, (ii) an Employee Stock Purchase Plan pursuant to which a number of shares of Better Home & Finance Class A common stock equal to 2.0% of the fully diluted shares of Better Home & Finance Class A common stock outstanding immediately after the Closing shall be reserved for issuance, subject to an annual evergreen provision of 1.0% for the 10-year period following the Closing Date (the “ESPP”), and (iii) a management transaction bonus plan permitting bonuses in aggregate of up to $20,000,000 (the “Management Transaction Bonus Plan”), the general terms and conditions of which shall be agreed prior to Closing by Better and will be approved by Better’s Board of Directors; |
• | within two Business Days (as defined in the Merger Agreement) following the expiration of the 60-day period following the date Aurora has filed current Form 10 information with the SEC reflecting its status as an entity that is not a shell company, file an effective registration statement on Form S-8 (or other applicable form) with respect to the Better Home & Finance Class A common stock issuable under the 2022 Plan and the ESPP, and use reasonable best efforts to maintain the effectiveness of such registration statement(s) (and maintain the current status of the prospectus or prospectuses contained therein) for so long as awards granted pursuant to the 2022 Plan and the ESPP remain outstanding; |
• | take certain actions so that the Trust Amount will be released from the trust account and so that the trust account will terminate thereafter, in each case, pursuant to the terms and subject to the conditions of the Trust Agreement; |
• | during the Interim Period, ensure Aurora remains listed as a public company on the Nasdaq, and shall prepare and submit to Nasdaq a listing application, if required under Nasdaq rules, covering the shares of Better Home & Finance common stock issuable in the Mergers and the Domestication, and use reasonable best efforts to obtain approval for the listing of such shares of Better Home & Finance Class A common stock on Nasdaq; |
• | during the Interim Period, not, and cause its subsidiaries not to, and instruct its and their representatives action on its and their behalf not to, initiate any negotiations or enter into any agreements for certain alternative transactions and to terminate any such negotiations ongoing as of the date of the Merger Agreement; |
• | subject to the terms of Aurora’s organizational documents, as applicable, take all action within its power as may be necessary or appropriate such that immediately following the effective time of the First Merger: |
• | the Board of Directors of Aurora and committees thereof will be comprised of such individuals as selected by Better, following consultation with Aurora; provided that (i) the composition of the Board of Directors complies with all applicable laws, including all Nasdaq rules, and (ii) two individuals will be selected by Aurora, one of which is expected to be Prabhu Narasimhan and another has been or will be mutually agreed between Aurora and the Better Founder and CEO (in each case, so long as the Aurora nominees complete a background check reasonably satisfactory to Better, qualify as “independent” directors for purposes of Nasdaq rules and are otherwise in compliance with SEC and Nasdaq rules and requirements governing directors); and |
• | the initial officers of Aurora will be as set forth in Better’s disclosure letter, who will serve in such capacity in accordance with the terms of the organizational documents of Aurora following the effective time of the First Merger; |
• | subject to approval of Aurora’s shareholders, cause the Domestication to become effective prior to the effective time of the First Merger (see the section entitled “ Domestication Proposal |
• | after the effective time of the First Merger, indemnify and hold harmless each present and former director and officer of Better and Aurora and each of their respective subsidiaries against any costs, expenses, damages or liabilities incurred in connection with any legal proceeding, to the fullest extent that would have been permitted under applicable law and the applicable organizational documents to indemnify such person; |
• | maintain, and cause its subsidiaries to maintain for a period of not less than six years from the effective time of the Mergers, (i) provisions in its Governing Documents and those of its subsidiaries concerning the indemnification and exoneration of its subsidiaries and its subsidiaries’ former and current officers, directors and employees, no less favorable than as contemplated by the applicable Governing Documents immediately prior to the effective time of the Mergers and (ii) a directors’ and officers’ liability insurance policy covering those persons who are currently covered by Aurora’s, Better’s or their respective subsidiaries’ directors’ and officers’ liability insurance policies on terms no less favorable than the terms of such current insurance coverage, except that in no event will Aurora be required to pay an annual premium for such insurance in excess of 300% of the aggregate annual premium payable by Aurora and/or Better, as applicable (whichever premium being higher), for such insurance policy for the year ended December 31, 2020; |
• | on the Closing Date, enter into customary indemnification agreements reasonably satisfactory to each of Better and Aurora with the post-Closing directors and officers of Aurora, which indemnification agreements will continue to be effective following the Closing; |
• | during the Interim Period, keep current and timely file all reports required to be filed or furnished with the SEC and otherwise comply in all material respects with its reporting obligations under applicable law; |
• | except as otherwise approved by Better (in its sole discretion), not permit any amendment or modification to be made to, any waiver (in whole or in part) of, or provide consent to modify (including consent to termination), any provision other than amendments, modifications or waivers that are both ministerial and immaterial in nature and effect or remedy under, or any replacements of, the Subscription Agreements, except for any such actions that would not (i) increase conditionality or impose any new obligation on the Better or Aurora, (ii) reduce the amount or purchase price under the Subscription Agreements, except as explicitly provided in the SoftBank Subscription Agreement as in effect on the date of the Merger Agreement, (iii) reduce or impair the rights of Aurora under the Subscription Agreements, (iv) prevent, materially delay or materially impede the consummation of the transactions contemplated by the Merger Agreement or (v) otherwise adversely affect any rights of Aurora or Better under the Subscription Agreements; provided, that the foregoing shall not prohibit any assignment or transfer expressly permitted by the Subscription Agreements; |
• | use its reasonable best efforts to take, or to cause to be taken, all actions required, necessary or that it otherwise deems to be proper or advisable to consummate the transactions contemplated by the Subscription Agreements on the terms and conditions described therein, including by using its reasonable best efforts to (i) maintain in effect the Subscription Agreements; (ii) satisfy in all material respects on a timely basis all conditions and covenants applicable to Aurora in the Subscription Agreements and otherwise comply in all material respects with its obligations thereunder; (iii) in the event that all conditions in the Subscription Agreements have been satisfied, consummate transactions contemplated by the Subscription Agreements at or prior to Closing; and (iv) enforce its rights under the Subscription Agreements in a timely and diligent manner including, in the event that all conditions in the Subscription Agreements have been satisfied, by causing the parties to the Subscription Agreements to deliver payment or cause the delivery of payment to (or as directed by) Aurora the amount set forth in the Subscription Agreements to which such persons are a party in accordance with its terms; |
• | give Better prompt written notice: (i) of any amendment to Subscription Agreements (other than amendments, modifications or waivers that are ministerial and immaterial in nature and effect), (ii) of any actual or potential breach or default (or any event or circumstance that, with or without notice, lapse of time or both, would give rise to any breach or default) by any party to the Subscription Agreements that becomes known to Aurora regardless of the reason therefor, (iii) of the receipt of any written notice or other written communication from any party to a Subscription Agreement or its affiliates with respect to any actual, potential, threatened or claimed expiration, lapse, withdrawal, breach, default, termination or repudiation by any party to the Subscription Agreements or any provisions of the Subscription Agreements; and (iv) if Aurora has any reason not to expect to receive all or any portion of the amounts due pursuant to the Subscription Agreements, in which case Aurora shall use its reasonable efforts to obtain as promptly as practicable following the occurrence of such event, alternative equity financing for any such amount due pursuant to the Subscription Agreements from alternative sources in an amount sufficient, when taken together with cash in the trust account at the Closing, to pay the amounts due under the terms of and as contemplated by the Merger Agreement; and |
• | in the event that any litigation related to the Merger Agreement, any Ancillary Agreement or the transactions contemplated hereby or thereby is brought, or, to the knowledge of Aurora, threatened in writing, against Aurora or the Board of Directors of Aurora by any of Aurora’s shareholders prior to the Closing, (i) promptly notify Better of any such litigation and keep Better reasonably informed with respect to the status thereof; and (ii) provide the Company the opportunity to participate in (subject to a customary joint defense agreement), but not control, the defense of any such litigation, give due consideration to Better’s advice with respect to such litigation and not to settle any such litigation |
without the prior written consent of Better, such consent not to be unreasonably withheld, conditioned or delayed. |
• | Each party shall cooperate and use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the Mergers and the other transactions contemplated hereby and to cooperate with the other party in connection with the foregoing, including, without limitation, to prepare as promptly as practicable all documentation, to make all filings and to obtain all consents, approvals, waivers, permits and other authorizations of all governmental authorities required to consummate the Mergers and the other transactions contemplated by the Merger Agreement; |
• | Each party shall make all necessary filings in respect of the requisite regulatory approvals relating to the Mergers and the other transactions contemplated hereby as promptly as practicable following the date of the Merger Agreement; provided that (x) Aurora and Better shall, and shall cause their affiliates to, use their respective best efforts to file notifications under the HSR Act no later than 10 business days after the date of the Merger Agreement, such filing to request early termination of the waiting period under the HSR Act and (y) Better shall, and shall cause its affiliates to, use their best efforts to make all necessary initial filings by Better in respect of other requisite regulatory approvals by no later than forty-five (45) days following the date of the Merger Agreement; |
• | Each party shall, subject to applicable law, (i) permit counsel for the other party to review in advance any proposed filing, application, correspondence or other written communication to any governmental authority in connection with the Mergers and the other transactions contemplated hereby, (ii) consider in good faith the views of the other party or its counsel with respect to any such filing, application, correspondence or other written communication, (iii) provide counsel for the other party with copies of all filings, applications or other written submissions made by such party, and all material correspondence between such party (and its advisors) with any governmental authority and any other information supplied by such party and such party’s affiliates to a governmental authority or received from such a governmental authority in connection with the Mergers and the other transactions contemplated hereby and (iv) to provide notice to the other party of receipt of any approval; |
• | (i) With respect to any threatened or pending preliminary or permanent governmental order that would adversely affect the ability of the parties hereto to consummate the Mergers or the other transactions contemplated hereby, to use their respective reasonable best efforts to prevent the entry, enactment or promulgation thereof, as the case may be, and (ii) in the event that any action is commenced after the date of the Merger Agreement challenging any of the parties’ rights to consummate the Mergers or the other transactions contemplated hereby, the parties shall use their reasonable best efforts, and take all reasonable actions necessary and appropriate, to contest such action; |
• | The parties shall supply as promptly as reasonably practicable any additional information and documentary material that may be requested by a governmental authority pursuant to the foregoing and to take all other actions necessary, proper or advisable to obtain any requisite regulatory approval as soon as practicable. No party shall take any action that would reasonably be expected to adversely affect or materially delay obtaining any requisite regulatory approval; |
• | Aurora and Better will jointly prepare and Aurora will file with the SEC the proxy statement/registration statement in connection with the registration under the Securities Act of (i) the shares of Better Home & Finance common stock and Better Home & Finance Warrants and units comprising such to be issued in exchange for the issued and outstanding shares of Aurora common stock, and in connection with the Domestication, (ii) the shares of Better Home & Finance common stock (other than Better Home & Finance Class C common stock) that constitute the Stock Consideration and |
(iii) the shares of Better Home & Finance common stock subject to Better Home & Finance Options, Better Home & Finance Restricted Stock Awards and Better Home & Finance RSUs; |
• | Aurora will, as promptly as practicable after this proxy statement/prospectus is declared effective under the Securities Act, (i) disseminate the proxy statement/prospectus to the shareholders of Aurora, (ii) give notice, convene and hold a meeting of the shareholders, in each case in accordance with its Governing Documents then in effect and Section 710 of the Nasdaq Listing Rule 5620(b), as applicable, for a date no later than 30 business days following the date the registration statement is declared effective, (iii) solicit proxies from the holders of public shares of Aurora to vote in favor of each of the Transaction Proposals, and (iv) provide its shareholders with the opportunity to elect to effect a redemption; |
• | Better will (i) obtain and deliver to Aurora, shareholder approval of Better, (x) in the form of a written consent as soon as reasonably practicable after the registration statement is declared effective under the Securities Act and delivered or otherwise made available to shareholders, and in any event within 10 business days after the registration statement is declared effective and delivered or otherwise made available to shareholders, and (y) in accordance with the terms and subject to the conditions of Governing Documents of Better, and (ii) take all other action necessary or advisable to secure shareholder approval of Better and, if applicable, any additional consents or approvals of its shareholders related thereto; |
• | Better and Aurora will, prior to the Closing, take all such steps as may be required (to the extent permitted under applicable law) to cause any dispositions of shares of Better Capital Stock or acquisitions of shares of Better Home & Finance common stock (including, in each case, securities deliverable upon exercise, vesting or settlement of any derivative securities) resulting from the transactions contemplated by the Merger Agreement by each individual who may become subject to the reporting requirements of Section 16(a) of the Exchange Act in connection with the transactions contemplated thereby to be exempt under Rule 16b-3 promulgated under the Exchange Act; |
• | Each of Better and Aurora will each, and will each cause their respective subsidiaries and affiliates and its and their representatives to, prior to the Closing, reasonably cooperate in a timely manner in connection with any equity financing arrangement the parties seek in connection with the transactions contemplated by the Merger Agreement and the Ancillary Agreement; and |
• | Aurora will use reasonable efforts to, and will instruct its financial advisors to, keep Better and its financial advisors reasonably informed with respect to the SoftBank Subscription Agreement and PIPE Investment, including by (i) providing regular updates and (ii) consulting and cooperating with, and considering in good faith any feedback from, Better or its financial advisors with respect to such matters. |
• | the approval of the Transaction Proposals by Aurora’s shareholders will have been obtained (the “Aurora Shareholder Approval”); |
• | the approval of the Transaction Proposals by Better’s shareholders will have been obtained (the “Better Stockholder Approval”); |
• | the Registration Statement shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn; |
• | all approvals with respect to the requisite regulatory approvals (other than those required under the HSR Act) shall have been obtained; |
• | any applicable waiting periods under the HSR Act shall have expired or been terminated early; |
• | (i) no governmental authority shall have enacted, issued, promulgated, enforced or entered any governmental order which has become final and nonappealable and has the effect of making consummation of the Mergers illegal or otherwise preventing or prohibiting consummation of the Mergers, and (ii) no law shall have been adopted that makes consummation of the Mergers illegal or otherwise prohibited; |
• | Aurora will have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act); |
• | the shares of Better Home & Finance common stock to be issued in connection with the Mergers will have been approved for listing on the Nasdaq; and |
• | the Domestication shall have been completed and a time-stamped copy of the certificate issued by the Secretary of State of the State of Delaware in relation thereto shall have been delivered to Better. |
• | Section 4.6(a) and (b) of Better’s capitalization-related representations and warranties shall be true and correct in all but de minimis de minimis |
• | each of the Better Fundamental Representations (as defined in the Merger Agreement) (other than those portions of the capitalization representations referenced above) will be true and correct in all material respects, in each case as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and warranties will be true and correct in all material respects at and as of such date, except for changes after the date of the Merger Agreement which are contemplated or expressly permitted by the Merger Agreement or the Ancillary Agreements; |
• | each of the remaining representations and warranties of Better contained in the Merger Agreement (disregarding any qualifications and exceptions contained therein relating to materiality, Better Material Adverse Effect or any similar qualification or exception) will be true and correct as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and warranties will be true and correct at and as of such date, except for, in each case, inaccuracies or omissions that would not, individually or in the aggregate, reasonably be expected to have a Better Material Adverse Effect; |
• | each of the covenants of Better to be performed as of or prior to the Closing will have been performed in all material respects (subject to a 30-calendar day cure period, or if earlier, five business days prior to the Agreement End Date); and |
• | there will not have occurred a Better Material Adverse Effect after the date of the Merger Agreement. |
• | each of the representations and warranties of Aurora regarding its capitalization, as provided for in the Merger Agreement, will be true and correct in all but de minimis |
• | each of the Aurora Fundamental Representations (as defined in the Merger Agreement) (other than the capitalization representations referenced above) will be true and correct in all material respects, in each case as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and warranties will be true and correct in all material respects at and as of such date, except for changes after the date of the Merger Agreement which are contemplated or expressly permitted by the Merger Agreement or the Ancillary Agreements; |
• | each of the other remaining representations and warranties of Aurora contained in the Merger Agreement (disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) will be true and correct in all material respects, in each case as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and warranties will be true and correct in all material respects at and as of such date, except for changes after the date of the Merger Agreement which are contemplated or expressly permitted by the Merger Agreement or the Ancillary Agreements; |
• | each of the covenants of Aurora to be performed as of or prior to the Closing will have been performed in all material respects (subject to a 30-calendar day cure period, or if earlier, five business days prior to the Agreement End Date); and |
• | Aurora will hold in the trust account an amount at least equal to the Minimum Available Cash Amount. |
• | by written consent of Better and Aurora; |
• | by Better or Aurora if (i) any governmental authority that must grant a requisite regulatory approval has denied such approval and such denial has become final and nonappealable, (ii) any governmental order has become final and nonappealable which has the effect of making consummation of the Mergers illegal or otherwise preventing or prohibiting the Mergers or (iii) if there shall be adopted any law that makes consummation of the Mergers illegal or otherwise prohibited; |
• | by Better if the Aurora Shareholder Approval will not have been obtained by reason of the failure to obtain the required vote at a meeting of Aurora’s shareholders duly convened therefor or at any adjournment thereof; |
• | by Better if there has been a modification in recommendation of the board of directors of Aurora with respect to any of the Transaction Proposals; |
• | by written notice to Better from Aurora in the event of certain uncured breaches on the part of Better or if the Closing has not occurred on or before September 30, 2022 (which date may be automatically extended for up to sixty (60) days if all closing conditions have been satisfied or waived other than receipt of all requisite regulatory approvals, the “Agreement End Date”), unless Aurora is in material breach of the Merger Agreement; |
• | by Aurora if Better Stockholder Approval will not have been obtained within 10 business days after the registration statement is declared effective and delivered or otherwise made available to stockholders; or |
• | by written notice to Aurora from Better in the event of certain uncured breaches on the part of Aurora or Merger Sub or if the Closing has not occurred on or before the Agreement End Date, unless Better is in material breach of the Merger Agreement. |
• | one-third will be released if the volume weighted-average share price of Better Home & Finance Class A common stock equals or exceeds $12.50 per share for 20 of any 30 consecutive trading days commencing after Closing; |
• | one-third will be released if the volume weighted-average share price of Better Home & Finance Class A common stock equals or exceeds $15.00 per share for 20 of any 30 consecutive trading days commencing after Closing; and |
• | one-third will be released if the volume weighted-average share price of Better Home & Finance Class A common stock equals or exceeds $17.50 per share for 20 of any 30 consecutive trading days commencing after Closing. |
• | less than $12.50 per share, then 100% of the then-remaining locked up shares will be forfeited for no consideration; |
• | greater than or equal to $12.50 per share but less than $15.00 per share, then one-third of the tranches of Better Home & Finance Class A common stock subject to the lock-up may receive the same consideration as all other shares of Better Home & Finance A common stock in such transaction and any then-remaining locked up shares will be forfeited for no consideration; and |
• | greater than or equal to $15.00 per share but less than $17.50 per share, then two-thirds of the tranches of Better Home & Finance Class A common stock subject to the lock-up may receive the same consideration as all other shares of Better Home & Finance A common stock in such transaction and any then-remaining locked up shares will be forfeited for no consideration. |
• | Technology and media companies in Europe, the Middle East, and Africa (“EMEA”) from core network and traditional media assets to advanced technologies with momentum and showing potential for rapid acceleration and that can benefit from the significant experience of Aurora’s management team and board of directors who have experience sourcing, acquiring, expanding and monetizing such companies. |
• | attractive market and competitive dynamics; compelling long-term growth prospects; leadership in technology driven transformation; high barriers to entry for new entrants; low or manageable risks of technological obsolescence; strong recurring revenues; attractive steady-state margins; high incremental margins; favorable environmental, social and corporate governance characteristics; and opportunities for operational improvement. |
• | Better and the Business Combination |
• | Best Available Opportunity |
• | Results of Due Diligence |
• | Terms of the Merger Agreement BCA Proposal |
• | Potential Inability to Complete the Mergers |
• | Post-Business Combination Corporate Governance Organizational Documents Proposals |
• | Non-Survival of Representations, Warranties and Covenants |
• | Diversion of Management |
• | Litigation |
• | Fees and Expenses |
• | No Third-Party Valuation or Fairness Opinion |
• | Interests of Aurora’s Directors and Executive Officers BCA Proposal—Interests of Aurora’s Directors and Executive Officers in the Business Combination |
• | Other Risk Factors Risk Factors |
• | The risk that Better’s financial performance may not meet Aurora’s expectations. |
• | Macroeconomic uncertainty, including the potential impact of the COVID-19 pandemic, and the potential effects on Better’s revenues and profitability. |
• | The potential effects of the business combination on the overall business of Better, including its relationships with customers, suppliers and regulators. |
• | Industry Volumes |
• | Market Share |
• | Funded Loan Volume |
• | Gain on Sale Margin |
• | Total Expenses |
• | Volume growth supported by industry volumes |
• | Operational Reorganization Better’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Performance—Operational Reorganization and Response to Market Environment. |
• | Gain on Sale Margins |
• | Production and non-production expenses |
Year ended December 31, 2021 (as reported) |
Unaudited Projections for year ended December 31, 2021 (as of May 6, 2021) |
|||||||
($ in millions) |
||||||||
Net income (loss) |
$ |
(303.8 |
) |
$ |
52.7 |
|||
|
|
|
|
|||||
Stock-based compensation expense (1) |
55.2 | 70.2 | ||||||
Change in fair value of convertible preferred stock warrants (2) |
32.8 | 0 | ||||||
Interest on Pre-Closing Bridge Notes (3) |
19.2 | 0 | ||||||
Other non-recurring expenses (4) |
17.6 | 0 | ||||||
Adjusted Net Income (Loss) |
$ |
(179.0 |
) |
$ |
122.9 |
|||
|
|
|
|
|||||
Net income (loss) |
(303.8 |
) |
52.7 |
|||||
Income tax expense |
(2.4 | ) | 43.6 | |||||
Depreciation and amortization expense |
27.2 | 21.7 | ||||||
Stock-based compensation expense |
55.2 | 70.2 | ||||||
Interest and amortization on non-funding debt |
11.8 | 22.5 | ||||||
Other non-recurring expenses (4) |
17.6 | 0 | ||||||
Interest on Pre-Closing Bridge Notes (3) |
19.2 | 0 | ||||||
Change in fair value of convertible preferred stock warrants (2) |
32.8 | 0 | ||||||
Adjusted EBITDA |
$ |
(142.4 |
) |
$ |
210.7 |
|||
|
|
|
|
(1) | Stock-based compensation represents the non-cash grant date fair value of stock-based instruments utilized to incentivize employees and consultants recognized over the applicable vesting period. This expense is a non-cash expense. Better excludes this expense from internal operating plans and measurement of financial performance (although Better considers the dilutive impact to its stockholders when awarding stock-based compensation and values such awards accordingly). Tax on stock-based compensation is assessed at exercise, if applicable. |
(2) | Change in fair value of convertible preferred stock warrants represents change in fair value of liability-classified warrants as presented in Better’s Consolidated Statements of Operations and Comprehensive Income (Loss). |
(3) | Interest on Pre-Closing Bridge Notes represents the amortization of the discount recognized upon issuance of the Pre-Closing Bridge Notes which is amortized into interest expense under the effective interest method over the term of the Pre-Closing Bridge Notes. This expense is a non-cash expense, and we believe that it does not correlate to the performance of our business during the periods presented. |
(4) | Other non-recurring expenses include employee related severance costs incurred to realign our staffing needs as well as expenses related to our acquisitions. |
Year Ended December 31, (1) |
||||||||||||||||
($ in millions) |
2020A |
2021E |
2022E |
2023E |
||||||||||||
Origination Volume ($bn) |
$ | 24.2 | $ | 57.3 | $ | 101.9 | $ | 181.0 | ||||||||
Implied Market Share (2) |
0.5 | % | 1.4 | % | 3.2 | % | 5.6 | % | ||||||||
Revenue ($mm) |
$ | 875.6 | $ | 1,387.0 | $ | 2,704.5 | $ | 5,139.9 | ||||||||
Adjusted EBITDA ($mm) (3) |
$ | 281.1 | $ | 210.7 | $ | 716.0 | $ | 1,860.3 | ||||||||
Adjusted Net Income ($mm) (4) |
$ | 220.1 | $ | 122.9 | $ | 470.8 | $ | 1,281.4 |
(1) | Prospective information as of May 6, 2021 does not reflect updates. |
(2) | Origination volume forecast divided by the forecast market sizes according to the Fannie Mae February 2021 Housing Forecast. |
(3) | Adjusted EBITDA is calculated as EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization), adjusted to exclude stock-based compensation expense, change in fair value of warrants, change in the fair value of bifurcated derivative and amortization of bifurcated derivative and beneficial conversion features, interest and amortization on non-funding debt, depreciation and amortization expense and income tax expense. See the section entitled “Better’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—Adjusted EBITDA and Adjusted Net Income (Loss) |
(4) | Adjusted Net Income is calculated as net income adjusted for the impact of stock-based compensation expense, change in fair value of warrants, change in the fair value of bifurcated derivative and amortization of bifurcated derivative and beneficial conversion features. See the section entitled “ Better’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—Adjusted EBITDA and Adjusted Net Income (Loss) |
($ in millions) |
2019A (1) |
2020A (1) |
2021E |
2022E |
2023E |
|||||||||||||||
Net Income (GAAP) |
($ |
67.6 |
) |
$ |
172.1 |
$ |
52.7 |
$ |
332.4 |
$ |
1,047.9 |
|||||||||
Adjustments: (2) |
||||||||||||||||||||
Income tax expense |
$ | 0.3 | $ | 42.3 | $ | 43.6 | $ | 168.2 | $ | 455.3 | ||||||||||
Depreciation of property and equipment and amortization of internal use software |
4.3 | 9.9 | 21.7 | 51.7 | 98.3 | |||||||||||||||
Stock-based compensation |
1.0 | 19.3 | 70.2 | 138.4 | 233.6 | |||||||||||||||
Interest and amortization on non-funding debt |
0.7 | 51.0 | 22.5 | 25.0 | 25.3 | |||||||||||||||
Change in fair value of warrants |
1.3 | 23.7 | 0.0 | 0.0 | 0.0 | |||||||||||||||
Change in fair value of bifurcated derivative |
0.0 | (36.8 | ) | 0.0 | 0.0 | 0.0 | ||||||||||||||
Adjusted EBITDA |
($ |
60.0 |
) |
$ |
281.4 |
$ |
210.7 |
$ |
716.0 |
$ | 1,860.3 | |||||||||
Net Income (GAAP) |
($ |
67.6 |
) |
$ |
172.1 |
$ |
52.7 |
$ |
332.4 |
$ |
1,047.9 |
|||||||||
Adjustments: (2) |
||||||||||||||||||||
Stock-based compensation |
$ | 1.0 | $ | 19.3 | $ | 70.2 | $ | 138.4 | $ | 233.6 | ||||||||||
Change in fair value of warrants |
1.3 | 23.7 | 0.0 | 0.0 | 0.0 | |||||||||||||||
Change in fair value of bifurcated derivative |
0.0 | (36.8 | ) | 0.0 | 0.0 | 0.0 | ||||||||||||||
Amortization of bifurcated derivatives and beneficial conversion feature(3) |
0.0 | 41.9 | 0.0 | 0.0 | 0.0 | |||||||||||||||
Adjusted Net Income |
($ |
65.3 |
) |
$ |
220.1 |
$ |
122.9 |
$ |
470.8 |
$ |
1,281.4 |
(1) | Adjusted for audited actuals. For more information, see “ Better’s Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
(2) | Adjustments are not tax-effected. |
(3) | Relates to amounts for the amortization of the beneficial conversion feature and bifurcated derivative debt discounts as well as the de-recognition of the remaining unamortized beneficial conversion feature and bifurcated derivative debt discounts upon conversion of Better convertible notes that were converted in the year ended December 31, 2020 (the “2020 Convertible Notes”). |
• | Prior to Aurora’s initial public offering on March 8, 2021, the Sponsor purchased 5,750,000 Aurora Class B ordinary shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. In February 2021, Aurora effectuated a share dividend of 1,006,250 Class B ordinary shares and subsequently cancelled 131,250 Class B ordinary shares, resulting in an aggregate of 6,625,000 Aurora Class B ordinary shares issued and outstanding. In March 2021, Aurora made a share dividend of 575,000 shares, resulting in 7,200,000 Class B ordinary shares owned by the Sponsor. After Aurora’s initial public offering, the Sponsor surrendered for cancellation 249,928 shares, which occurred when the 45-day over-allotment period expired, leaving 6,950,072 Class B ordinary shares held by the Sponsor and certain directors of Aurora. If Aurora does not consummate a business combination by March 8, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding-up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Law to provide for claims of creditors and the requirements of other applicable law. In such event, the 6,950,072 Aurora Class B ordinary shares collectively owned by the Sponsor and certain directors of Aurora would be worthless because following the redemption of the public shares, Aurora would likely have few, if any, net assets and because the Sponsor and Aurora’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any Aurora Class A ordinary shares and Aurora Class B ordinary shares held by it or them, as applicable, if Aurora fails to complete a business combination within the required period. Additionally, in such event, the 4,573,372 Aurora private warrants purchased by the Sponsor simultaneously with the consummation of Aurora’s initial public offering for an aggregate purchase price of $6,860,057, will also expire worthless. Certain of Aurora’s directors and executive officers also have a direct or indirect economic interest in such Aurora private warrants. The 6,950,072 shares of Better Home & Finance Class A common stock into which the 6,950,072 Aurora Class B ordinary shares collectively held by the Sponsor and certain directors of Aurora will automatically convert in connection with the Mergers (including after giving effect to the Domestication), if unrestricted and freely tradeable, would have had an aggregate market value of $[ ] based upon the closing price of $[ ] per public share on Nasdaq on [ ], 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. However, given that such shares of Better Home & Finance Class A common stock will be subject to certain restrictions, including those described above, Aurora believes such shares have less value. The 4,573,372 Better Home & Finance Warrants into which the 4,573,372 Aurora private warrants held by the Sponsor and certain of Aurora’s directors and executive officers will automatically convert in connection with the Mergers (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $[ ] based upon the closing price of $[ ] per public warrant on Nasdaq on [ ], 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. |
• | Aurora’s existing directors and officers will be eligible for continued indemnification and continued coverage under Aurora’s directors’ and officers’ liability insurance after the Mergers and pursuant to the Merger Agreement. |
• | Aurora, Better, SoftBank and the Sponsor entered into the Pre-Closing Bridge Note Purchase Agreement, pursuant to which SoftBank and the Sponsor funded the purchase of $750,000,000 of Pre-Closing Bridge Notes, which are convertible into the Pre-Closing Bridge Conversion Shares as follows: (i) upon Closing, the Pre-Closing Bridge Notes will convert into shares of Better Home & Finance Class A common stock at a conversion rate of one share per $10 of consideration; (ii) if the Closing does not occur by the Maturity Date, or in the event of a Corporate Transaction or Merger Withdrawal (each as defined in the Pre-Closing Bridge Note Purchase Agreement) prior to the Maturity Date or prior to the time when a Note may otherwise be converted pursuant to the Pre-Closing Bridge Note Purchase Agreement, the Pre-Closing Bridge Notes will convert into a new series of preferred stock of Better, which series will be identical to Better’s Series D Preferred Stock, provided that the ratchet adjustment provisions relating to Better’s Series D Preferred Stock will not apply, and such series will vote together with Better’s Series D Preferred Stock as a single class on all matters; or (iii) in the event of a termination of the Merger Agreement (a) by Better, arising out of or resulting from breaches on the part of Aurora or the Sponsor, (b) by Better, arising out of or resulting from breaches on the part of Aurora or any Subscriber in connection with any Subscription Agreement or (c) arising out of or resulting from breaches on the part of Aurora, SoftBank or the Sponsor in connection with the Pre-Closing Bridge Note Purchase Agreement or any ancillary agreement, the Pre-Closing Bridge Notes will convert into shares of Better common stock. In the event that Pre-Closing Bridge Conversion Shares are issued in the form of Better Home & Finance Class A common stock, the Pre-Closing Bridge Note Purchase Agreement provides for customary registration rights with respect to such Pre-Closing Bridge Conversion Shares. For additional information, see the sections entitled “ BCA Proposal—Amendments to the Merger Agreement—Amendment No. 3 BCA Proposal—Related Agreements—Pre-Closing Bridge Note Purchase Agreement |
• | SoftBank and the Sponsor committed to fund, pursuant to the amended SoftBank Subscription Agreement and Sponsor Subscription Agreement, respectively, the purchase of the Post-Closing Convertible Notes, which are subordinated unsecured 1% Post-Closing Convertible Notes with a five-year maturity, in an amount equal to $750,000,000 (less any amounts released to Better at the Closing from Aurora’s trust account (excluding, for the avoidance of doubt, amounts released to Better under the Subscription Agreements)) during the first 45 days after the Closing Date. As a result of the commitment by Sponsor, the Major Aurora Shareholder and the Aurora directors and officers not to redeem in the aggregate 3,502,500 Aurora Class A shares held by them, a minimum of $35,025,000 will be released to Better at the Closing from Aurora’s trust account, and, accordingly, the maximum aggregate principal amount of Post-Closing Convertible Notes to be issued is $714,975,000. See the sections entitled “ BCA Proposal—Amendments to the Merger Agreement—Amendment No. 3 BCA Proposal—Related Agreements—Amendment to the SoftBank Subscription Agreement BCA Proposal—Related Agreements—Amendment to the Sponsor Subscription Agreement |
• | In the event that Aurora fails to consummate a business combination within the prescribed time frame (pursuant to the Cayman Constitutional Documents), or upon the exercise of a redemption right in connection with the Business Combination, Aurora will be required to provide for payment of claims of creditors that were not waived that may be brought against Aurora within the ten years following such redemption. In order to protect the amounts held in Aurora’s trust account, the Sponsor has agreed that it will be liable to Aurora if and to the extent any claims by a third-party (other than Aurora’s independent auditors) for services rendered or products sold to Aurora, or a prospective target business |
with which Aurora has discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third-party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under the indemnity of the underwriters of Aurora’s initial public offering against certain liabilities, including liabilities under the Securities Act. |
• | Our Sponsor has advanced funds to us for working capital purposes, including $1,812,295 as of March 31, 2022. These outstanding advances were documented in an amended and restated promissory note, dated as of May 10, 2021 (the “Promissory Note”), issued by Aurora to the Sponsor, pursuant to which Aurora may borrow up to $2,000,000 from the Sponsor (including those amounts which are currently outstanding). The Promissory Note is non-interest bearing, unsecured and due and payable in full on the earlier of (i) the date on which the Merger by and between Better and Aurora is completed or (ii) the date that is 30 days after the termination of the Merger Agreement in accordance with its terms. If we do not complete our initial business combination within the required period, we may use a portion of our working capital held outside the trust account to repay such advances and any other working capital advances made to us, but no proceeds held in the trust account would be used to repay such advances and any other working capital advances made to us, and such related party may not be able to recover the value it has loaned us and any other working capital advances it may make. If Aurora’s operating costs, in relation to its proposed Business Combination, exceed the amounts still available and not currently drawn under the Promissory Note, the Sponsor will increase the amount available under the Promissory Note to cover such costs, subject to an aggregate principal amount cap of $8,000,000. On February 23, 2022, the Promissory Note was amended and restated to increase the aggregate principal amount of the note to $4,000,000. This amount would be reflective of estimated total costs of Aurora through March 23, 2023 in relation to Aurora’s initial business combination, in the event the Business Combination is unsuccessful. |
• | Aurora remunerates Ms. Harding, Aurora’s chief financial officer, for professional services rendered to Aurora in her role as chief financial officer at the rate of $10,000 per month and for her service on our board of directors at the rate of $15,000 per year, with an incremental hourly fee in certain circumstances of $500. Under the terms of that certain Director’s Services Agreement (included as an exhibit to the registration statement of which this proxy statement/prospectus is a part), Ms. Harding is to provide services to Merger Sub which include acting as a non-executive director and president and secretary of Merger Sub in consideration of $50,000 in annual payments, with an incremental hourly fee in certain circumstances of $500. Additionally, Ms. Harding received a $50,000 payment on March 21, 2021 in contemplation of her services to Aurora and will receive a $75,000 payment on the earlier of March 21, 2023 or the date on which Aurora is liquidated. As of March 31, 2022 and December 31, 2021, $10,000 and $100,000 was accrued and as of March 31, 2022 and December 31, 2021, $30,000 and $83,750 was expensed for these services. |
• | Aurora’s officers and directors, and their affiliates, are entitled to reimbursement of out-of-pocket |
• | Pursuant to the Registration Rights Agreement, the Sponsor and Aurora’s independent directors will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect to the shares of Better Home & Finance Class A common stock and warrants held by such parties following the consummation of the Business Combination. |
• | Aurora has the right to select two individuals, one of which is expected to be Prabhu Narasimhan and another has been or will be mutually agreed between Aurora and the Better Founder and CEO, to be nominated for election to the initial Board of Directors of Better Home & Finance, so long as the Aurora nominees complete a background check reasonably satisfactory to Better, qualify as “independent” directors for purposes of Nasdaq rules and are otherwise in compliance with SEC and Nasdaq rules and requirements governing directors, and satisfy any other applicable regulatory requirements. |
• | The Proposed Certificate of Incorporation will contain a provision expressly electing that Better Home & Finance will not be governed by Section 203 (Delaware’s “interested stockholder” statute) of the DGCL, and, therefore, Better Home & Finance will not be subject to Section 203 of the DGCL. |
• | Better Stockholders will have the largest voting interest in the post-combination company; |
• | The board of directors of the post-combination company will have [ ] members, and Better will have the ability to nominate the majority of the initial members of the board of directors; |
• | Better management will hold all executive management roles (including Chief Executive Officer, Chief Financial Officer, and Chief Technology Officer, among others) for the post-combination company and be responsible for the day-to-day |
• | The post-combination company will assume the name Better Home & Finance Holding Company. |
• | Prominence, Predictability, and Flexibility of Delaware Law |
• | Well-Established Principles of Corporate Governance |
• | Increased Ability to Attract and Retain Qualified Directors |
The Cayman Constitutional Documents |
The Proposed Organizational Documents | |||
Authorized Shares (Organizational Documents Proposal A) | The Cayman Constitutional Documents authorize 555,000,000 shares, consisting of 500,000,000 Aurora Class A ordinary shares, 50,000,000 Aurora Class B ordinary shares and 5,000,000 preference shares. | The Proposed Organizational Documents authorize 3,250,000,000 shares, consisting of 1,750,000,000 shares of Better Home & Finance Class A common stock, 600,000,000 shares of Better Home & Finance Class B common stock, 800,000,000 shares of Better Home & Finance Class C common stock and 100,000,000 shares of Better Home & Finance preferred stock. | ||
See paragraph 5 of the Existing Memorandum. |
See Article Fourth, subsection (1) of the Proposed Certificate of Incorporation. | |||
Authorize the Board of Directors to Issue Preferred Stock Without Stockholder Consent (Organizational Documents Proposal B) |
The Cayman Constitutional Documents authorize the issuance of 5,000,000 preference shares with such designation, rights and preferences as may be determined | The Proposed Organizational Documents authorize the Board to issue all or any shares of preferred stock in one or more series and to fix for each such series such designation, |
The Cayman Constitutional Documents |
The Proposed Organizational Documents | |||
from time to time by Aurora’s board of directors. Accordingly, Aurora’s board of directors is empowered under the Cayman Constitutional Documents, without shareholder approval, to issue preference shares with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of ordinary shares (except to the extent it may affect the ability of Aurora to carry out a conversion of Aurora Class B ordinary shares on the Closing Date, as contemplated by the Existing Articles). | vesting, powers (including voting powers), preferences and relative, participating, optional or other rights (and the qualifications, limitations or restrictions thereof), as the Board may determine. | |||
See paragraph 5 of the Existing Memorandum and Article 3 of the Existing Articles. |
See Article Fourth, subsection (2) of the Proposed Certificate of Incorporation. | |||
Multiple Classes of Common Stock (Organizational Documents Proposal C) | The Current Charter provides that the holders of each share of common stock of Aurora is entitled to one vote for each share on each matter properly submitted to the stockholders entitled to vote. See Article 23 of the Existing Articles. |
The Proposed Certificate of Incorporation provides holders of shares of Better Home & Finance Class A common stock will be entitled to cast one vote per Class A share, and holders of shares of Better Home & Finance Class B common stock will be entitled to cast three votes per Class B share on each matter properly submitted to the stockholders entitled to vote. Holders of Better Home & Finance Class C common stock will not be entitled to vote, except as otherwise required by applicable law or provided in the Proposed Certificate of Incorporation. | ||
See Article Fourth, subsection (3) of the Proposed Certificate of Incorporation. | ||||
Corporate Name (Organizational Documents Proposal D) | The Cayman Constitutional Documents provide that the name of the company is “Aurora Acquisition Corp.” | The Proposed Organizational Documents provide that the name of the corporation will be “Better Home & Finance Holding Company.” | ||
See paragraph 1 of the Existing Memorandum. |
See Article First of the Proposed Certificate of Incorporation. | |||
Perpetual Existence (Organizational Documents Proposal D) | The Cayman Constitutional Documents provide that if Aurora does not consummate a business combination (as defined in the Cayman Constitutional Documents) | The Proposed Organizational Documents do not include any provisions relating to Better Home & Finance’s ongoing existence; the default under the DGCL will make |
The Cayman Constitutional Documents |
The Proposed Organizational Documents | |||
within 24 months from consummation of the initial public offering, Aurora will cease all operations except for the purposes of winding-up and will redeem the public shares and liquidate Aurora’s trust account. | Better Home & Finance’s existence perpetual. | |||
See Article 49 of the Cayman Constitutional Documents. |
Default rule under the DGCL. | |||
Exclusive Forum (Organizational Documents Proposal D) | The Cayman Constitutional Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation. | The Proposed Organizational Documents adopt Delaware as the exclusive forum for certain stockholder litigation. | ||
See Article Twelfth of the Proposed Certificate of Incorporation. | ||||
Takeovers by Interested Stockholders (Organizational Documents Proposal D) | The Cayman Constitutional Documents do not provide restrictions on takeovers of Aurora by a related shareholder following a business combination. | The Proposed Organizational Documents opt out of Section 203 of the DGCL, and therefore, Better Home & Finance will not be subject to Section 203 of the DGCL relating to takeovers by interested stockholders. | ||
See Article Eighth of the Proposed Certificate of Incorporation. | ||||
Provisions Related to Status as Blank Check Company (Organizational Documents Proposal D) |
The Cayman Constitutional Documents include various provisions related to Aurora’s status as a blank check company prior to the consummation of a business combination. | The Proposed Organizational Documents do not include such provisions related to Aurora’s status as a blank check company, which no longer will apply upon consummation of the Mergers, as Aurora will cease to be a blank check company at such time. | ||
See Article 49 of the Cayman Constitutional Documents. |
• | to the extent that an award terminates, expires or lapses for any reason or an award is settled in cash without the delivery of shares, any shares subject to the award at such time will be available for future grants under the 2022 Plan; |
• | to the extent shares are tendered or withheld to satisfy the grant, exercise price or tax withholding obligation with respect to any award under the 2022 Plan, such tendered or withheld shares will be available for future grants under the 2022 Plan; |
• | to the extent shares subject to stock appreciation rights are not issued in connection with the stock settlement of stock appreciation rights on exercise thereof, such shares will be available for future grants under the 2022 Plan; |
• | the payment of dividend equivalents in cash in conjunction with any outstanding awards will not be counted against the shares available for issuance under the 2022 Plan; and |
• | to the extent permitted by applicable law or any exchange rule, shares issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of combination by us or any of Better Home & Finance’s subsidiaries will not be counted against the shares available for issuance under the 2022 Plan. |
• | Non-statutory Stock Options |
• | Incentive Stock Options |
• | Restricted Stock |
• | Restricted Stock Units |
• | Stock Appreciation Rights |
• | Performance Bonus Awards and Performance Stock Units |
• | Dividend Equivalents |
vesting will either (i) to the extent permitted by applicable law, not be paid or credited or (ii) be accumulated and subject to vesting to the same extent as the related award. |
• | Other Stock or Cash-Based Awards |
• | financial institutions or financial services entities; |
• | broker-dealers; |
• | S corporations; |
• | partnerships (including entities or arrangements treated as partnerships for U.S. federal income tax purposes); |
• | taxpayers that are subject to the mark-to-market |
• | tax-exempt entities; |
• | governments or agencies or instrumentalities thereof; |
• | insurance companies; |
• | regulated investment companies or real estate investment trusts; |
• | expatriates or former long-term residents or citizens of the United States; |
• | persons that directly or constructively own five percent or more of our voting shares or five percent or more of the total value of all classes of our shares (except as specifically addressed below); |
• | persons that acquired our securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation; |
• | persons that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated or similar transaction; |
• | persons subject to the alternative minimum tax; |
• | persons whose functional currency is not the U.S. dollar; |
• | controlled foreign corporations; |
• | accrual method taxpayers that file applicable financial statements as described in Section 451(b) of the Code; or |
• | passive foreign investment companies. |
• | an individual citizen or resident of the United States; |
• | a corporation (or other entity that is treated as a corporation for U.S. federal income tax purposes) that is created or organized (or treated as created or organized) in or under the laws of the United States or any state thereof or the District of Columbia; |
• | an estate whose income is subject to U.S. federal income tax regardless of its source; or |
• | a trust if (1) a U.S. court can exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person. |
A. |
The Domestication |
1. | Qualification as F Reorganization |
2. | Section 367 |
(a) |
Application of Section 367 to U.S. Holders that Own More than 10% of Aurora |
(b) |
Application of Section 367 to U.S. Holders that Own Less Than 10% of Aurora |
(i) | a statement that the Domestication is a Section 367(b) exchange (within the meaning of the applicable Treasury Regulations); |
(ii) | a complete description of the Domestication; |
(iii) | a description of any stock, securities or other consideration transferred or received in the Domestication; |
(iv) | a statement describing the amounts required to be taken into account for U.S. federal income tax purposes; |
(v) | a statement that the U.S. Holder is making the election that includes (A) a copy of the information that the U.S. Holder received from Aurora establishing and substantiating the U.S. Holder’s “all earnings |
and profits amount” with respect to the U.S. Holder’s Aurora Class A ordinary shares and (B) a representation that the U.S. Holder has notified Aurora (or Better Home & Finance) that the U.S. Holder is making the election; and |
(vi) | certain other information required to be furnished with the U.S. Holder’s tax return or otherwise furnished pursuant to the Code or the Treasury Regulations. |
(c) |
Application of Section 367 to U.S. Holders that Own Aurora Class A Ordinary Shares with a Fair Market Value of Less Than $50,000 |
3. | PFIC Considerations |
(a) |
PFIC Definition |
(b) |
Application of PFIC Rules to the U.S. Holders |
• | the U.S. Holder’s gain, if any, would generally be allocated ratably over the U.S. Holder’s holding period for such U.S. Holder’s Aurora Class A ordinary shares or Aurora warrants (as applicable); |
• | the amount of gain allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain, or to the period in the U.S. Holder’s holding period before the first day of the first taxable year in which Aurora was a PFIC, would generally be taxed as ordinary income; |
• | the amount of gain allocated to other taxable years (or portions thereof) of the U.S. Holder and included in such U.S. Holder’s holding period would generally be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and |
• | an additional tax equal to the interest charge generally applicable to underpayments of tax would generally be imposed on the U.S. Holder in respect of the tax attributable to each such other taxable year of such U.S. Holder. |
(c) |
QEF Election and Mark-to-Market |
B. |
Redemption of Better Home & Finance Class A Common Stock Received in the Domestication |
C. |
The Mergers |
D. |
Ownership and Disposition of Better Home & Finance Class A Common Stock and Better Home & Finance Warrants Received in the Domestication |
1. | Distributions on Better Home & Finance Class A Common Stock |
2. | Sale, Exchange or Other Taxable Disposition of Better Home & Finance Class A Common Stock and Better Home & Finance Warrants |
3. | Exercise, Lapse, or Redemption of a Better Home & Finance Warrant |
4. | Possible Constructive Distributions |
A. |
The Domestication |
B. |
Redemption of Better Home & Finance Class A Common Stock Received in the Domestication |
C. |
The Mergers |
D. |
Ownership and Disposition of Better Home & Finance Class A Common Stock and Better Home & Finance Warrants Received in the Domestication |
1. | Distributions on Better Home & Finance Class A Common Stock |
2. | Sale, Exchange or Other Taxable Disposition of Better Home & Finance Class A Common Stock and Better Home & Finance Warrants |
(i) | such non-U.S. Holder is an individual who was present in the United States for 183 days or more in the taxable year of such disposition and certain other requirements are met, in which case any gain realized will generally be subject to a flat 30% U.S. federal income tax; |
(ii) | the gain is effectively connected with a trade or business of such non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, attributable to a U.S. permanent establishment or fixed base maintained by such non-U.S. Holder), in which case such gain will be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to U.S. Holders, and any such gain of a non-U.S. Holder that is a corporation may be subject to an additional “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty); or |
(iii) | Better Home & Finance is or has been a U.S. real property holding corporation at any time during the shorter of the five-year period preceding such disposition and such non-U.S. Holder’s holding period and either (A) Better Home & Finance Class A common stock and Better Home & Finance Warrants are not regularly traded on an established securities market or (B) such non-U.S. Holder has owned or is deemed to have owned, at any time during the shorter of the five-year period preceding such disposition and such non-U.S. Holder’s holding period, more than 5 percent of such securities, as applicable. |
3. | Exercise, Lapse, or Redemption of a Better Home & Finance Warrant |
4. | Possible Constructive Distributions |
5. | Information Reporting Requirements and Backup Withholding |
6. | Foreign Account Tax Compliance Act |
• | Aurora’s unaudited financial statements and related notes as of and for the three months ended March 31, 2022, included elsewhere in this proxy statement/prospectus. |
• | Aurora’s audited financial statements and related notes as of and for the year ended December 31, 2021, included elsewhere in this proxy statement/prospectus. |
• | Better’s unaudited condensed consolidated financial statements and related notes as of and for the three months ended March 31, 2022 included elsewhere in this proxy statement/prospectus. |
• | Better’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2021 included elsewhere in this proxy statement/prospectus. |
• | Aurora’s Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this proxy statement/prospectus. |
• | Better’s Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this proxy statement/prospectus. |
• | Risk Factors included elsewhere in this proxy statement/prospectus. |
(i) | subordinated 0% Pre-Closing Bridge Notes in an amount equal to $750.0 million (the “Pre-Closing Bridge Notes”), funded as of December 2, 2021, with such Pre-Closing Bridge Notes convertible into either (a) Better Home & Finance Class A common stock and Better Home & Finance Class C common stock, as applicable, or (b) (1) if the Mergers are not consummated (other than due to a breach covered in clause (2)), a new series of preferred stock with terms consistent with those of Better’s Series D Preferred Stock or (2) if the Mergers are not consummated due to a breach by Aurora, the Sponsor or SoftBank, Better common stock; and |
(ii) | a commitment from SoftBank and the Sponsor to fund, pursuant to the amended SoftBank Subscription Agreement and Sponsor Subscription Agreement, respectively, subordinated 1% Post-Closing Convertible Notes in an amount equal to $750.0 million (less any amounts released to Better at the Closing from Aurora’s trust account (excluding, for the avoidance of doubt, amounts released to Better under the Subscription Agreements)) during the first 45 days after the Closing Date. |
• | Assuming No Redemptions |
• | Assuming Maximum Redemptions |
and Aurora directors and officers who have waived their redemption rights as per the Aurora Holder |
Support Agreement multiplied by $10 per share. Subject to the Aurora Holder Support Agreement, the Sponsor who owns his shares through Novator Capital Sponsor Limited and Shravin Mittal who owns his shares through Unbound HoldCo Ltd., each a Major Aurora Shareholder and, in the case of Mr. Mittal, a member of the board of directors of Aurora, have agreed to waive their redemption rights in connection with the consummation of the Business Combination with respect to any Aurora Class A ordinary shares held by them. Collectively, the Major Aurora Shareholders and Aurora directors and officers own 3.5 million shares, which were purchased as part of the private placement offering and have been excluded from the maximum redemptions calculation as the shares will not be redeemed. The Redemption Subscription Agreement was terminated in connection with the execution of the third amendment to the Merger Agreement (see “ BCA Proposal—Amendments to the Merger Agreement—Amendment No. 3 Certain Relationships and Related Party Transactions—Subscription Agreements—Redemption Subscription Agreement |
Assuming No Redemptions and Maximum Redemptions |
||||
Rollover of Better Options, Better RSUs and Better Restricted Stock (1)(2) |
$ | 756,259 | ||
Shares issued to Better Stockholders (1) |
6,143,741 | |||
|
|
|||
Total Consideration |
$ | 6,900,000 | ||
|
|
(1) | Rollover of Better Options, Better Restricted Stock and Better RSUs, together with shares issued to Better Stockholders, after the contingent and assumed exercise of Better Warrants, is calculated using to the Share Conversion Ratio. The “Share Conversion Ratio” is the quotient obtained by dividing the Aggregate Merger Consideration (as defined in the Merger Agreement) by the fully diluted number of shares of Better common stock and common stock equivalents outstanding prior to the effective time of the Merger (collectively referred as “Stock Consideration”). |
(2) | The rollover of Better Options, Better Restricted Stock and Better RSUs were not included in the “Total shares at Closing” below, however, they were considered as part of the diluted EPS calculation. The dilutive impact of the Better Options, Better Warrants, Better Restricted Stock, and Better RSUs was calculated using the historical treasury stock method adjusted for the market price and then giving effect to the Share Conversion Ratio. |
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||||
In thousands |
Shares |
Ownership % |
Shares |
Ownership % |
||||||||||||
(in thousands) |
|
(in thousands) |
|
|||||||||||||
Aurora public shareholders - Class A common stock |
24,298 | 3.4 | % | — | 0.0 | % | ||||||||||
Sponsor - Class A common stock (1)(2) |
9,063 | 1.3 | % | 9,063 | 1.3 | % | ||||||||||
Pre-Closing Bridge Investors - Pre-Closing Bridge Financing - As-Converted - Class A common stock (3) |
26,021 | 3.6 | % | 23,500 | 3.4 | % | ||||||||||
Better Stockholders - Class A common stock |
38,562 | 5.3 | % | 38,562 | 5.5 | % | ||||||||||
Better Stockholders - Class B common stock (4) |
575,812 | 79.7 | % | 575,812 | 82.4 | % | ||||||||||
Pre-Closing Bridge Investors - Pre-Closing Bridge Financing - As-Converted - Class C common stock (3)(5) |
48,979 | 6.7 | % | 51,500 | 7.4 | % | ||||||||||
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|
|
|
|
|
|
|||||||||
Total shares at Closing (6) |
722,735 | 100.0 | % | 698,437 | 100.0 | % | ||||||||||
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|
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|
|
(1) | Includes Better Home & Finance Class A common stock expected to be held by the Sponsor, the Aurora Major Shareholder and certain Aurora directors and officers. In particular, the Sponsor is expected to beneficially own 16.5 million shares of Better Home & Finance Class A common stock in the aggregate, comprised of (i) 2.3 million shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination, (ii) 4.2 million shares of Better Home & Finance Class A common stock to be issued in connection with conversion of the founder shares and (iii) 10.0 million shares of Better Home & Finance Class A common stock to be issued as Pre-Closing Bridge Conversion Shares in connection with Pre-Closing Bridge Financing funded by the Sponsor. The Aurora Major Shareholder is expected to beneficially own 2.2 million shares of Better Home & Finance Class A common stock in the aggregate, comprised of (i) 1.0 million shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination and (ii) 1.2 million shares of Better Home & Finance Class A common stock to be issued in connection with conversion of the founder shares. Certain Aurora directors and officers are expected to beneficially own 0.4 million shares of Better Home & Finance Class A common stock in the aggregate, comprised of (i) 0.2 million shares of Better Home & Finance Class A common stock converted from Aurora Class A ordinary shares held prior to the Business Combination and (ii) 0.2 million shares of Better Home & Finance Class A common stock to be issued in connection with conversion of the founder shares. |
(2) | Excludes 1.4 million of Sponsor Locked-Up Shares which were excluded due to the fact that they will be contingently issuable shares upon Closing, as they are subject to potential forfeiture in a change of control event. |
(3) | The structure of the Business Combination was amended to replace both (A) the $1.5 billion PIPE Investment (including use of such proceeds for a $950.0 million secondary purchase of shares of existing Better Stockholders), and (B) the backstop provided by the |
Sponsor under the Redemption Subscription Agreement, with (i) subordinated 0% Pre-Closing Bridge Notes in an amount equal to $750.0 million, funded as of December 2, 2021, with such Pre-Closing Bridge Notes convertible into Better Home & Finance Class A common stock and Better Home & Finance Class C common stock upon the Closing, and (ii) a commitment from SoftBank and the Sponsor to fund, pursuant to the amended SoftBank Subscription Agreement and Sponsor Subscription Agreement, respectively, senior subordinated unsecured 1% Post-Closing Convertible Notes with a five-year maturity, in an amount equal to $750.0 million (less any amounts released to Better at the Closing (excluding, for the avoidance of doubt, amounts released to Better under the Subscription Agreements)) during the first 45 days after the Closing Date. As a result of the commitment by Sponsor, the Major Aurora Shareholder and the Aurora directors and officers not to redeem in the aggregate 3.5 million Aurora Class A shares held by them, a minimum of $35.0 million will be released to Better at the Closing from Aurora’s trust account, and, accordingly, the maximum aggregate principal amount of Post-Closing Convertible Notes to be issued is $715.0 million. The mandatory conversion of the Pre-Closing Bridge Notes at Closing results in the issuance of 26.0 million shares of Better Home & Finance Class A common stock (consisting of 10.0 million shares to the Sponsor and 16.0 million shares to SoftBank), and 49.0 million shares of Better Home & Finance Class C common stock to SoftBank under the no redemptions scenario and 23.5 million shares of Better Home & Finance Class A common stock (consisting of 10.0 million shares to the Sponsor and 13.5 million shares to SoftBank), and 51.5 million shares of Better Home & Finance Class C common stock to SoftBank under the maximum redemptions scenario. |
(4) | Better has a side letter agreement with each of Pine Brook and another Better Stockholder where Better has the right to repurchase for de minimis consideration an aggregate amount of 1,898,734 shares of Better Capital Stock prior to the Closing (1,875,000 from Pine Brook). Pine Brook contested the enforceability of its side letter agreement and Better and Pine Brook settled such litigation on the basis that, among other things, Better is entitled to repurchase, for $1, an amount of Aggregate Merger Consideration (as defined in the Merger Agreement) that Pine Brook receives in exchange for the common stock of Better into which 937,500 of Pine Brook’s shares of Better’s Series A Preferred Stock convert prior to the Mergers. The purchase of these shares reduces the number of fully diluted shares of Better Capital Stock outstanding prior to the Mergers and has an effect on the Better Home & Finance Class A and Better Home & Finance Class B common stock issued to Better Stockholders at the Closing. For pro forma purposes, these shares are considered to be repurchased prior to the Closing and are not included in the fully diluted number of shares of Better Capital Stock outstanding prior to the effective time of the Mergers. |
(5) | In accordance with the SoftBank Subscription Agreement, the maximum voting power of Better Home & Finance common stock owned by SoftBank cannot exceed 9.4% of the outstanding voting power of Better Home & Finance as of the Closing (without giving effect to the Voting Proxy described under “ Certain Relationships and Related Party Transactions—Better—Other Stockholder Agreements—SoftBank Agreements non-voting Better Home & Finance Class C common stock instead of Better Home & Finance Class A common stock. |
(6) | The “Total shares at Closing” does not include the 75,626,000 shares of Better Home & Finance common stock underlying Better Options, Better RSUs and Better Restricted Stock, which upon vesting and exercise give the right to purchase Better Home & Finance common stock following the Closing. Based on outstanding Better Capital Stock and Better Awards as of March 31, 2022: |
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||
Shares (in thousands) |
Shares (in thousands) |
|||||||
Total shares at Closing |
722,735 | 698,437 | ||||||
Better Home & Finance shares of common stock underlying Better Options, Better RSUs and Better Restricted Stock |
75,626 | 75,626 | ||||||
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Total fully diluted shares |
798,361 | 774,063 | ||||||
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|
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• | Better Stockholders will have the largest voting interest in Better Home & Finance; |
• | The board of directors of Better Home & Finance will have [ ] members, and Better will have the ability to nominate the majority of the initial members of the board of directors; |
• | Better management will hold all executive management roles (including Chief Executive Officer, President, and Chief Financial Officer, among others) in Better Home & Finance and be responsible for the day-to-day |
• | The combined company will assume the name Better Home & Finance Holding Company. |
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||||||||||||||||||||
Aurora Historical |
Better Historical |
Transaction Accounting Adjustments |
Note |
Pro Forma |
Transaction Accounting Adjustments |
Note |
Pro Forma |
|||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||||
Cash and cash equivalents |
$ | 36 | $ | 683,218 | $ | 278,046 | 2a |
$ | 1,454,489 | $ | (243,021 | ) | 2r |
$ | 1,454,489 | |||||||||||||||||
— | — | 471,954 | 2c |
— | 243,021 | 2c |
— | |||||||||||||||||||||||||
— | — | (7,942 | ) | 2d |
— | — | — | |||||||||||||||||||||||||
— | — | (5,222 | ) | 2e |
— | — | — | |||||||||||||||||||||||||
— | — | (1,812 | ) | 2f |
— | — | — | |||||||||||||||||||||||||
— | — | (20,000 | ) | 2g |
— | — | — | |||||||||||||||||||||||||
— | — | 1,460 | 2h |
— | — | — | ||||||||||||||||||||||||||
— | — | 54,751 | 2p |
— | — | — | ||||||||||||||||||||||||||
Cash held in trust account |
278,046 | — | (278,046 | ) | 2a |
— | — | — | ||||||||||||||||||||||||
Restricted cash |
— | 34,557 | — | 34,557 | — | 34,557 | ||||||||||||||||||||||||||
Mortgage loans held for sale, at fair value |
— |
1,043,469 |
— |
1,043,469 |
— |
1,043,469 |
||||||||||||||||||||||||||
Related party receivable |
489 | — | (489 | ) | 2f |
— | — | — | ||||||||||||||||||||||||
Other receivables, net |
— |
48,426 |
— |
48,426 |
— |
48,426 |
||||||||||||||||||||||||||
Prepaid expenses and other assets |
418 | 140,379 | (15,237 | ) | 2d |
125,560 | — | 125,560 | ||||||||||||||||||||||||
Property and Equipment, net |
— |
45,158 |
— |
45,158 |
— |
45,158 |
||||||||||||||||||||||||||
Right-of-use-asset |
— |
54,021 |
— |
54,021 |
— |
54,021 |
||||||||||||||||||||||||||
Internal use software and other intangible assets, net |
— |
79,554 |
— |
79,554 |
— |
79,554 |
||||||||||||||||||||||||||
Goodwill |
— |
19,566 |
— |
19,566 |
— |
19,566 |
||||||||||||||||||||||||||
Derivative assets, at fair value |
— |
19,428 |
— |
19,428 |
— |
19,428 |
||||||||||||||||||||||||||
Loan commitment asset |
— |
121,723 |
(121,723 |
) |
2c |
— |
— |
— |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total Assets |
$ |
278,989 |
$ |
2,289,499 |
$ |
355,740 |
$ |
2,924,228 |
$ |
— |
$ |
2,924,228 |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Liabilities, Temporary Equity, and Stockholders’ Equity |
||||||||||||||||||||||||||||||||
Liabilities |
||||||||||||||||||||||||||||||||
Accounts payable and accrued expenses |
6,190 | 143,162 | (7,942 | ) | 2d |
141,410 | — | 141,410 | ||||||||||||||||||||||||
Corporate line of credit, net |
— | 148,117 | — | 148,117 | — | 148,117 | ||||||||||||||||||||||||||
Warehouse lines of credit |
— | 902,406 | — | 902,406 | — | 902,406 | ||||||||||||||||||||||||||
Escrow payable |
— | 8,057 | — | 8,057 | — | 8,057 | ||||||||||||||||||||||||||
Derivative liabilities, at fair value |
— | 16,484 | — | 16,484 | — | 16,484 | ||||||||||||||||||||||||||
Convertible preferred stock warrants |
— | 23,720 | (23,720 | ) | 2h |
— | — | — | ||||||||||||||||||||||||
Other liabilities |
— | 75,778 | (489 | ) | 2f |
92,033 | — | 92,033 | ||||||||||||||||||||||||
— | — | 16,744 | 2p |
— | — | — | ||||||||||||||||||||||||||
Lease liabilities |
— | 69,755 | — | 69,755 | — | 69,755 | ||||||||||||||||||||||||||
Related party loans |
1,812 | — | (1,812 | ) | 2f |
— | — | — |
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||||||||||||||||||||
Aurora Historical |
Better Historical |
Transaction Accounting Adjustments |
Note |
Pro Forma |
Transaction Accounting Adjustments |
Note |
Pro Forma |
|||||||||||||||||||||||||
Deferred underwriting fee payable |
8,505 | — | (8,505 | ) | 2d |
— | — | — | ||||||||||||||||||||||||
Warrant liabilities |
11,263 | — | (4,386 | ) | 2i |
6,877 | — | 6,877 | ||||||||||||||||||||||||
Pre-Closing Bridge Notes |
— | 539,935 | (539,935 | ) | 2b |
— | — | — | ||||||||||||||||||||||||
Post-Closing Convertible Notes |
— | — | 350,231 | 2c |
350,231 | 243,021 | 2c |
593,252 | ||||||||||||||||||||||||
Sponsor Locked-up Shares liability |
|
— |
|
|
— |
|
|
11,333 |
|
|
2j |
|
|
11,333 |
|
|
— |
|
|
11,333 |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total Liabilities |
|
27,770 |
|
|
1,927,414 |
|
|
(208,481 |
) |
|
1,746,703 |
|
|
243,021 |
|
|
1,989,724 |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Temporary Equity |
||||||||||||||||||||||||||||||||
Class A ordinary shares subject to possible redemption, 24,300,287 shares |
243,003 | — | (243,003 | ) | 2k |
— | — | — | ||||||||||||||||||||||||
Convertible preferred stock |
— | 436,280 | (436,280 | ) | 2l |
— | — | — | ||||||||||||||||||||||||
Stockholders’ Equity |
||||||||||||||||||||||||||||||||
Preference shares, 0.0001 par value, 5,000,000 shares authorized, none issued and outstanding |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Class A common stock |
— | — | 3 | 2b |
10 | (1 | ) | 2b | 7 | |||||||||||||||||||||||
— | — | 2 | 2k |
— | (2 | ) | 2r |
— | ||||||||||||||||||||||||
— | — | 1 | 2m |
— | — | — | ||||||||||||||||||||||||||
— | — | 4 | 2n |
— | — | — | ||||||||||||||||||||||||||
Class A ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 3,500,000 shares issued and outstanding (excluding 24,300,287 shares subject to possible redemption) |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Class B common stock |
— | — | 58 | 2o |
58 | — | 58 | |||||||||||||||||||||||||
Class B ordinary shares, 0.0001 par value, 50,000,000 shares authorized, 6,950,072 shares issued and outstanding |
1 | — | (1 | ) | 2m |
— | — | — | ||||||||||||||||||||||||
Class C common stock |
— | — | 5 | 2b |
5 | — | 5 | |||||||||||||||||||||||||
Common Stock |
— | 10 | (10 | ) | 2l |
— | — | — | ||||||||||||||||||||||||
Notes receivable from stockholders |
— | (44,592 | ) | 38,007 | 2p |
(6,585 | ) | — | (6,585 | ) | ||||||||||||||||||||||
Additional paid-in capital |
12,264 | 593,694 | 539,927 | 2b |
1,827,379 | (243,019 | ) | 2r |
1,584,361 | |||||||||||||||||||||||
— | — | (6,732 | ) | 2d |
— | 1 | 2b | — | ||||||||||||||||||||||||
— | — | (5,187 | ) | 2e |
— | — | — | |||||||||||||||||||||||||
— | — | 25,180 | 2h |
— | — | — | ||||||||||||||||||||||||||
— | — | 4,386 | 2i |
— | — | — | ||||||||||||||||||||||||||
— | — | 243,001 | 2k |
— | — | — | ||||||||||||||||||||||||||
— | — | 436,290 | 2l |
— | — | — | ||||||||||||||||||||||||||
— | — | (4 | ) | 2n |
— | — | — | |||||||||||||||||||||||||
— | — | (58 | ) | 2o |
— | — | — | |||||||||||||||||||||||||
— | — | (4,049 | ) | 2q |
— | — | — | |||||||||||||||||||||||||
(11,333 | ) | 2j |
— | — | — |
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||||||||||||||||||||
Aurora Historical |
Better Historical |
Transaction Accounting Adjustments |
Note |
Pro Forma |
Transaction Accounting Adjustments |
Note |
Pro Forma |
|||||||||||||||||||||||||
Accumulated deficit |
(4,049 | ) | (622,938 | ) | 4,049 | 2q |
(642,973 | ) | — | (642,973 | ) | |||||||||||||||||||||
— | — | (20,000 | ) | 2g |
— | — | — | |||||||||||||||||||||||||
(35 | ) | 2e |
— | — | ||||||||||||||||||||||||||||
Accumulated other comprehensive loss |
— | (369 | ) | — | (369 | ) | — | (369 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total stockholders’ equity (deficit) |
8,216 |
(74,195 |
) |
1,243,504 |
1,177,525 |
(243,021 |
) |
934,504 |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total Liabilities, Temporary Equity, and Stockholders’ Equity |
$ |
278,989 |
$ |
2,289,499 |
$ |
355,740 |
$ |
2,924,228 |
— |
$ |
2,924,228 |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||||||||||||||||||||
Aurora Historical |
Better Historical |
Transaction Accounting Adjustments |
Note |
Pro Forma |
Transaction Accounting Adjustments |
Note |
Pro Forma |
|||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||||||
Mortgage platform revenue, net |
$ | — | $ | 78,542 | $ | — | $ | 78,542 | $ | — | $ | 78,542 | ||||||||||||||||||||
Cash Offer program revenue |
— | 107,224 | — | 107,224 | — | 107,224 | ||||||||||||||||||||||||||
Other platform revenue |
— | 18,300 | — | 18,300 | — | 18,300 | ||||||||||||||||||||||||||
Net interest income (expense) |
— | — | — | |||||||||||||||||||||||||||||
Interest income |
— | 9,313 | — | 9,313 | — | 9,313 | ||||||||||||||||||||||||||
Warehouse interest expense |
— | (7,406 | ) | — | (7,406 | ) | — | (7,406 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net interest income |
— | 1,907 | — | 1,907 | — | 1,907 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total net revenues |
— |
205,973 |
— |
205,973 |
— |
205,973 |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Expenses: |
||||||||||||||||||||||||||||||||
Mortgage platform expenses |
— | 185,777 | — | 185,777 | — | 185,777 | ||||||||||||||||||||||||||
Cash Offer program expenses |
— | 107,707 | — | 107,707 | — | 107,707 | ||||||||||||||||||||||||||
General and administrative expenses |
— | 62,763 | — | 62,763 | — | 62,763 | ||||||||||||||||||||||||||
Marketing and advertising expenses |
— | 36,880 | — | 36,880 | — | 36,880 | ||||||||||||||||||||||||||
Technology and product development expenses |
— | 42,561 | — | 42,561 | — | 42,561 | ||||||||||||||||||||||||||
Other platform expenses |
— | 38,933 | — | 38,933 | — | 38,933 | ||||||||||||||||||||||||||
Formation and operating costs |
1,091 | — | — | 1,091 | — | 1,091 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total expenses |
1,091 |
474,621 |
— |
475,712 |
— |
475,712 |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Loss from operations |
(1,091 |
) |
(268,648 |
) |
— |
(269,739 |
) |
— |
(269,739 |
) | ||||||||||||||||||||||
Interest and other expenses, net |
||||||||||||||||||||||||||||||||
Interest and amortization on non-funding debt |
— | (3,372 | ) | (7,278 | ) | 3a |
(10,650 | ) | (602 | ) | 3g |
(11,252 | ) | |||||||||||||||||||
Interest on Pre-Closing Bridge Notes |
— | (62,602 | ) | 62,602 | 3b |
— | — | — | ||||||||||||||||||||||||
Change in fair value of convertible preferred stock warrants |
— | 8,277 | (8,277 | ) | 3c |
— | — | — | ||||||||||||||||||||||||
Interest earned (expense) on marketable securities held in trust account |
23 | — | (23 | ) | 3d |
— | — | — | ||||||||||||||||||||||||
Change in fair value of warrant liabilities |
2,078 | — | (54 | ) | 3e |
2,024 | — | 2,024 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total Interest and Other Expense, net |
2,101 | (57,697 | ) | 46,970 | (8,626 | ) | (602 | ) | (9,228 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Loss before income tax expenses |
1,010 |
(326,345 |
) |
46,970 |
(278,365 |
) |
(602 |
) |
(278,967 |
) | ||||||||||||||||||||||
Income tax expense |
— | 1,356 | — | 3f |
1,356 | — | 3f |
1,356 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net loss |
1,010 |
(327,701 |
) |
46,970 |
(279,721 |
) |
(602 |
) |
(280,323 |
) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Other comprehensive income (loss) |
||||||||||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax |
— | (264 | ) | — | (264 | ) | — | (264 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Comprehensive loss |
1,010 |
(327,965 |
) |
46,970 |
(279,985 |
) |
(602 |
) |
(280,587 |
) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||||||||||||||||||||
Aurora Historical |
Better Historical |
Transaction Accounting Adjustments |
Note |
Pro Forma |
Transaction Accounting Adjustments |
Note |
Pro Forma |
|||||||||||||||||||||||||
Net earnings (loss) per share |
||||||||||||||||||||||||||||||||
Net loss per share, Class A common stock subject to possible redemption – basic and diluted |
$ | 0.03 | n/a | $ | — | n/a | $ | — | n/a | |||||||||||||||||||||||
Weighted-average shares outstanding, Class A common stock subject to possible redemption – basic and diluted |
24,300,287 | n/a | — | n/a | — | n/a | ||||||||||||||||||||||||||
Net loss per share, Non-Redeemable Class A and Class B Common Stock – basic and diluted |
0.03 | n/a | — | n/a | — | n/a | ||||||||||||||||||||||||||
Weighted-average shares outstanding, Non-Redeemable Class A and Class B Common Stock – basic and diluted |
10,450,072 | — | — | n/a | — | — | ||||||||||||||||||||||||||
Net loss per share attributable to Better Holdco, Inc. and Subsidiaries stockholders – basic |
n/a | (3.50 | ) | — | — | — | — | |||||||||||||||||||||||||
Net loss per share attributable to Better Holdco, Inc. and Subsidiaries stockholders – diluted |
n/a | (3.50 | ) | — | — | — | — | |||||||||||||||||||||||||
Weighted-average shares outstanding – basic |
— | 93,665,693 | — | 704,323,000 | — | 680,025,000 | ||||||||||||||||||||||||||
Weighted-average shares outstanding – diluted |
— | 93,665,693 | — | 704,323,000 | — | 680,025,000 | ||||||||||||||||||||||||||
Net loss per share – Class A, B and C Common Stock, basic (1) |
— | — | — | (0.40 | ) | — | (0.41 | ) | ||||||||||||||||||||||||
Net loss per share – Class A, B and C Common Stock, diluted (1) |
— | — | — | (0.40 | ) | — | (0.41 | ) |
(1) | Class A, B and C Common Stock all have the same rights to share in the Company’s earnings and dividends. |
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||||||||||||||||||||
Aurora Historical |
Better Historical |
Transaction Accounting Adjustments |
Note |
Pro Forma |
Transaction Accounting Adjustments |
Note |
Pro Forma |
|||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||||||
Mortgage platform revenue, net |
$ | — | $ | 1,081,421 | $ | — | $ | 1,081,421 | $ | — | $ | 1,081,421 | ||||||||||||||||||||
Other platform revenue |
— | 133,749 | — | 133,749 | — | 133,749 | ||||||||||||||||||||||||||
Net interest income (expense) |
||||||||||||||||||||||||||||||||
Interest income |
— | 88,965 | — | 88,965 | — | 88,965 | ||||||||||||||||||||||||||
Warehouse interest expense |
— | (69,929 | ) | — | (69,929 | ) | — | (69,929 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net interest income |
— | 19,036 | — | 19,036 | — | 19,036 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total net revenues |
— |
1,234,206 |
— |
1,234,206 |
— |
1,234,206 |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Expenses: |
||||||||||||||||||||||||||||||||
Mortgage platform expenses |
— | 710,132 | — | 710,132 | — | 710,132 | ||||||||||||||||||||||||||
General and administrative expenses |
— | 232,669 | 20,000 | 3h |
252,669 | — | 252,669 | |||||||||||||||||||||||||
Marketing and advertising expenses |
— | 249,275 | — | 249,275 | — | 249,275 | ||||||||||||||||||||||||||
Technology and product development expenses |
— | 143,951 | — | 143,951 | — | 143,951 | ||||||||||||||||||||||||||
Other platform expenses |
— | 140,479 | — | 140,479 | — | 140,479 | ||||||||||||||||||||||||||
Formation and operating costs |
7,391 | — | — | 7,391 | — | 7,391 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total expenses |
7,391 |
1,476,506 |
20,000 |
1,503,897 |
— |
1,503,897 |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Loss from operations |
(7,391 |
) |
(242,300 |
) |
(20,000 |
) |
(269,691 |
) |
— |
(269,691 |
) | |||||||||||||||||||||
Interest and other expenses, net |
||||||||||||||||||||||||||||||||
Interest and amortization on non-funding debt |
— |
(11,834 |
) |
(29,065 |
) |
3i |
(40,899 |
) |
(2,430 |
) |
3q |
(43,329 |
) | |||||||||||||||||||
Interest on Pre-Closing Bridge Notes |
|
— |
|
(19,211 | ) | 19,211 | |
3j |
|
— | — | — | ||||||||||||||||||||
Change in fair value of convertible preferred stock warrants |
— | (32,790 | ) | 32,790 | 3k |
— | — | — | ||||||||||||||||||||||||
Interest earned (expense) on marketable securities held in trust account |
20 | — | (20 | ) | 3l |
— | — | — | ||||||||||||||||||||||||
Change in fair value of warrant liabilities |
1,576 | — | (536 | ) | 3m |
1,040 | — | 1,040 | ||||||||||||||||||||||||
Change in fair value of over-allotment option liability |
1,056 | — | (1,056 | ) | 3n |
— | — | — | ||||||||||||||||||||||||
Offering costs allocated to warrants liability |
(300 |
) |
— |
(35 |
) |
3o |
(335 |
) |
— |
(335 |
) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total Interest and Other Expense, net |
2,352 |
(63,835 |
) |
21,289 |
(40,194 |
) |
(2,430 |
) |
(42,624 |
) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Loss before income tax expenses |
(5,039 |
) |
(306,135 |
) |
1,289 |
(309,885 |
) |
(2,430 |
) |
(312,315 |
) | |||||||||||||||||||||
Income tax expense |
— |
(2,383 |
) |
— |
3p |
(2,383 |
) |
— |
3p |
(2,383 |
) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net loss |
(5,039 |
) |
(303,752 |
) |
1,289 |
(307,502 |
) |
(2,430 |
) |
(309,932 |
) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Other comprehensive income (loss) |
||||||||||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax |
— | 35 | — | 35 | — | 35 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Comprehensive loss |
$ |
(5,039 |
) |
$ |
(303,717 |
) |
$ |
1,289 |
$ |
(307,467 |
) |
$ |
(2,430 |
) |
$ |
(309,897 |
) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||||||||||||||||||||
Aurora Historical |
Better Historical |
Transaction Accounting Adjustments |
Note |
Pro Forma |
Transaction Accounting Adjustments |
Note |
Pro Forma |
|||||||||||||||||||||||||
Net loss per share |
||||||||||||||||||||||||||||||||
Net loss per share, Class A common stock subject to possible redemption – basic and diluted |
(0.15 | ) | n/a | — | n/a | — | n/a | |||||||||||||||||||||||||
Weighted-average shares outstanding, Class A common stock subject to possible redemption – basic and diluted |
24,300,287 | n/a | — | n/a | — | n/a | ||||||||||||||||||||||||||
Net loss per share, Non-Redeemable Class A and Class B Common Stock – basic and diluted |
(0.15 | ) | — | — | n/a | — | n/a | |||||||||||||||||||||||||
Weighted-average shares outstanding, Non-Redeemable Class A and Class B Common Stock – basic and diluted |
9,590,182 | — | — | n/a | — | n/a | ||||||||||||||||||||||||||
Net loss per share attributable to Better Holdco, Inc. and Subsidiaries stockholders - basic |
— | (3.49 | ) | — | — | — | — | |||||||||||||||||||||||||
Net loss per share attributable to Better Holdco, Inc. and Subsidiaries stockholders - diluted |
— | (3.49 | ) | — | — | — | — | |||||||||||||||||||||||||
Weighted-average shares outstanding - basic |
— | 86,984,646 | — | 688,068,000 | — | 663,770,000 | ||||||||||||||||||||||||||
Weighted-average shares outstanding - diluted |
— | 86,984,646 | — | 688,068,000 | — | 663,770,000 | ||||||||||||||||||||||||||
Net loss per share – Class A, B and C Common Stock, basic (1) |
— | — | — | (0.45 | ) | — | (0.47 | ) | ||||||||||||||||||||||||
Net loss per share – Class A, B and C Common Stock, diluted (1) |
— | — | — | (0.45 | ) | — | (0.47 | ) |
(1) | Class A, B and C Common Stock all have the same rights to share in the Company’s earnings and dividends. |
a. | Reflects the reclassification of $278.0 million of cash and cash equivalents held in the trust account at the balance sheet date that becomes available for redemption of public shares, to fund expenses and operating activities in connection with the Business Combination or future cash needs of Better Home & Finance. |
b. | Reflects the conversion of the Pre-Closing Bridge Notes from the Sponsor and SoftBank upon Closing. The Pre-Closing Bridge Notes are mandatorily convertible upon the Closing into Better Home & Finance Class A common stock and Better Home & Finance Class C common stock to the extent SoftBank and its affiliates exceed their maximum voting power in accordance with the SoftBank Subscription Agreement. The mandatory conversion of the Pre-Closing Bridge Notes results in the issuance of 26.0 million shares of Better Home & Finance Class A common stock (consisting of 10.0 million shares to the Sponsor and 16.0 million shares to SoftBank), and 49.0 million shares Better Home & Finance Class C common stock to SoftBank under the no redemptions scenario and 23.5 million shares of Better Home & Finance Class A common stock (consisting of 10.0 million shares to the Sponsor and 13.5 million shares to SoftBank), |
and 51.5 million shares of Better Home & Finance Class C common stock to SoftBank under the maximum redemptions scenario. Upon conversion, of the $750.0 million, $3 thousand is recorded under Better Home & Finance Class A common stock at par, $5 thousand is recorded under Better Home & Finance Class C common stock at par and the remaining is recorded under additional paid-in-capital |
c. | Reflects the proceeds from the issuance of the Post-Closing Convertible Notes in the amount of $750.0 million pursuant to the SoftBank Subscription Agreement and Sponsor Subscription Agreement, each as amended, and the elimination of the loan commitment asset associated with the right to draw this additional funding on Better’s historical balance sheet as a debt discount to the value of the Post-Closing Convertible Notes. The $750.0 million is reduced dollar for dollar by any remaining cash in Aurora’s trust account released to Better Home & Finance, and as a result the amount of Post-Closing Convertible Notes issued is $472.0 million under the no redemptions scenario and $715.0 million under the maximum redemptions scenario. Better Home & Finance has the right, but not the obligation, to draw on this additional funding at Closing and the assumption is that Better Home & Finance will exercise that right. |
(in thousands) |
Assuming No Redemptions |
Assuming Maximum Redemptions |
||||||
Post-Closing Convertible Notes Commitment |
$ | 750,000 | $ | 750,000 | ||||
Less: Cash remaining in Trust account |
278,046 | 35,025 | ||||||
Total Post-Closing Convertible Notes to be issued |
$ | 471,954 | $ | 714,975 | ||||
Less: Debt discount |
121,723 | 121,723 | ||||||
Post-Closing Convertible Notes |
$ | 350,231 | $ | 593,252 |
d. | Reflects the payment of $7.9 million of transaction costs incurred and accrued by Aurora and Better. Of that amount, $6.2 million and $1.7 million relates to the payment of direct and incremental transaction costs accrued on the historical balance sheet of Aurora and Better, respectively, as of March 31, 2022. Better capitalized these $1.7 million of transaction costs which were accrued and recorded in prepaid expenses and other assets. The balance associated with these transaction costs in prepaid expenses and other assets was reclassified into additional paid-in-capital. paid-in-capital Risk Factors — Risks Related to the Business Combination and Aurora — Each of Barclays and Citigroup has resigned from its financial advisory role in connection with the Business Combination, and investors should not put any reliance on the fact that any such investment bank was involved with any aspect of the Business Combination. Although not formally retained by Better, Bank of America also has indicated it is resigning from any role it had. |
e. | Reflects the transaction costs of $5.2 million that are expected to be incurred concurrently with the Business Combination. Of the $5.2 million, $4.4 million relates to legal, third-party advisory, and other |
miscellaneous fees to be incurred by Better, and $0.8 million relates to legal, third-party advisory, and other miscellaneous fees to be incurred by Aurora. The costs are direct and incremental to the equity offering, accounted for as a reverse recapitalization and in accordance with SAB Topic 5.A will be reflected as a reduction to additional paid-in-capital |
f. | Reflects the payment of $1.8 million for Aurora’s Promissory Note and $0.5 million for the settlement of Aurora’s related party receivable due from Better as a reduction of the related party payable on Better’s historical balance sheet upon the consummation of the Business Combination. The related party receivable consists of costs incurred in relation to the Pine Brook dispute described in “ Certain Relationships and Related Party Transactions—Better—Other Stockholder Agreements—Pine Brook Side Letter |
g. | Reflects the payment of $20.0 million in transaction-related bonuses to Better employees upon the consummation of the Business Combination as noted in the Merger Agreement. |
h. | Prior to the Closing, certain Better Warrant holders have elected to exercise their warrants on a net share or cash basis contingent and effective only upon the successful consummation of the Business Combination. Additionally, the remaining Better Warrant holders are assumed to elect to exercise their warrants on a net basis prior to Closing. This unaudited pro forma condensed combined balance sheet reflects the cash exercise of 806,730 warrants at an exercise price of $1.81 for cash proceeds of $1.5 million with an offset to additional paid-in-capital, and also reflects the net share settlement and reclassification of $23.7 million convertible preferred stock warrant liability to additional paid-in-capital. |
i. | Reflects the derecognition of $4.4 million warrant liabilities to account for the forfeiture of 50% of Aurora private warrants held by the Sponsor upon Closing as noted in the Merger Agreement. |
j. | Reflects the recognition of the preliminary estimated fair value of $11.3 million of the Sponsor Locked-up Shares subject to vesting, contingent upon the price of Better Home & Finance Class A common stock exceeding certain thresholds. The preliminary fair value was determined using the most reliable information currently available. The actual fair values could change materially once the final valuation is determined upon Closing. Refer to Note 5 for more information. |
k. | Represents the reclassification of $243.0 million of 24.3 million Aurora Class A ordinary shares subject to possible redemption to Better Home & Finance Class A common stock and additional paid-in-capital. |
l. | Reflects the conversion of Better’s convertible preferred and common stock triggered by the Business Combination and the reclassification of $436.3 million to additional paid-in-capital, |
m. | Reflects the reclassification of $1 thousand par value of Aurora Class B ordinary shares to Better Home & Finance Class A common stock at par value, to account for the conversion of 5.6 million Aurora Class B ordinary shares to Better Home & Finance Class A common stock on a one-for-one Locked-Up Shares. |
n. | Reflects the issuance of 38.6 million shares of Better Home & Finance Class A common stock to Better Stockholders, including preferred stockholders, at $0.0001 par value, totaling $4 thousand, as consideration for the Business Combination. |
o. | Reflects the issuance of 575.8 million shares of Better Home & Finance Class B common stock to Better Stockholders, including preferred stockholders, at $0.0001 par value, totaling $58 thousand as consideration for the Business Combination. |
p. | While the Company is currently assessing other alternatives for loan repayment, including the possibility of loan forgiveness for certain executives, this unaudited pro forma condensed combined balance sheet |
reflects the executive officers’ repayment of $54.8 million to Better for the outstanding notes receivable from stockholders due upon the consummation of the Business Combination. Of the $54.8 million, $38.0 million is related to the vested portion of the early exercised options and is eliminated from notes receivable from stockholders on the unaudited pro forma condensed combined balance sheet. The remaining $16.7 million is the portion related to early exercised options not yet vested and is reflected within other liabilities. No contractual arrangements have been agreed to at this time. |
q. | Reflects the elimination of Aurora’s historical accumulated deficit of $4.0 million. |
The | additional pro forma adjustments assuming Maximum Redemptions: |
r. | Reflects the $243.0 million withdrawal of funds from the trust account to fund the redemption of 24.3 million shares of Aurora’s Class A ordinary shares at approximately $10.00 per share. |
a. | Reflects the interest expense of $1.2 million and amortization of the debt discount of $6.1 million on the Post-Closing Convertible Notes under the no redemptions scenario. Refer to Note 2(c) — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet for further details. |
b. | Reflects the elimination of $62.6 million of interest expense on the Pre-Closing Bridge Notes as a result of the conversion upon Closing, as if the transaction occurred on January 1, 2021. Refer to Note 2(b) — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet for further details. |
c. | Reflects the elimination of $8.3 million realized and unrealized change in fair value of convertible preferred stock warrants for the three months ended March 31, 2022, because certain Better Warrant holders have elected to contingently exercise their preferred stock warrants prior to Closing, and the remaining Better Warrant holders are assumed to also elect to exercise prior to the Closing. Refer to Note 2(h) — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet for further details. |
d. | Represents the elimination of $23.0 thousand of interest earned on marketable securities held in Aurora’s trust account for the three months ended March 31, 2022. |
e. | Reflects the elimination of $54.0 thousand change in fair value of warrant liabilities for the three months ended March 31, 2022, given that the Sponsor will forfeit 50% of its Aurora Private Placement Warrants. Refer to Note 2(i) — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet for further details. |
f. | The pro forma income statement adjustments do not reflect any income tax effect because Better has a full valuation allowance offsetting any potential tax impact and a loss for the current period. |
g. | Reflects the additional interest expense of $0.6 million on the Post-Closing Convertible Notes under the maximum redemptions scenario. Under the maximum redemptions scenario, the principal of the Post-Closing Convertible Notes issued is greater as a result of there being less cash in Aurora’s trust account released to Better Home & Finance. Refer to Note 2(c) — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet for further details. |
h. | Reflects the payment of transaction-related bonuses of $20.0 million that are payable to Better employees upon the consummation of the Business Combination for the year ended December 31, |
2021. Refer to Note 2(g) — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet for further details. |
i. | Reflects the interest expense of $4.7 million and amortization of the debt discount of $24.3 million on the Post-Closing Convertible Notes under the no redemptions scenario. Refer to Note 2(c) — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet for further details. |
j. | Reflects the elimination of $19.2 million of interest expense on the Pre-Closing Bridge Notes as a result of the conversion upon Closing, as if the transaction occurred on January 1, 2021. Refer to Note 2(b) — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet for further details. |
k. | Reflects the elimination of $32.8 million realized and unrealized change in fair value of convertible preferred stock warrants for the year ended December 31, 2021, because certain Better Warrant holders have elected to contingently exercise their preferred stock warrants prior to Closing, and the remaining Better Warrant holders are assumed to also elect to exercise prior to the Closing. Refer to Note 2(h) — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet for further details. |
l. | Represents the elimination of $20.0 thousand of interest earned on marketable securities held in Aurora’s trust account for the year ended December 31, 2021. |
m. | Reflects the elimination of $0.5 million change in fair value of warrant liabilities for the year ended December 31, 2021, given that the Sponsor will forfeit 50% of its Aurora private warrants. Refer to Note 2(i) — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet for further details. |
n. | Reflects the elimination of the $1.1 million change in fair value of the over-allotment option liability for the year ended December 31, 2021. |
o. | Reflects the allocation of offering costs expected to be incurred by Aurora to the warrant liability. |
Allocation of Aurora offering costs to the warrant liability (in thousands) |
Amount |
|||
Fair value of Aurora Warrants |
$ | 11,263 | ||
Total of Aurora’s IPO Proceeds (1) |
$ | 278,003 | ||
|
|
|||
Percentage of costs to be incurred by Aurora to be allocated to warrant liability |
4.05 | % | ||
Total Aurora offerings costs to be incurred |
$ | 865 | ||
|
|
|||
Aurora offering costs to be allocated to the warrant liability |
$ | 35 | ||
|
|
(1) | Consists of proceeds of $255.0 million from Aurora’s IPO and $23.0 million from the Underwriters over-allotment. |
p. | The pro forma income statement adjustments do not reflect any income tax effect because Better has a full valuation allowance offsetting any potential tax impact and a loss for the current period. |
The | additional pro forma adjustments assuming Maximum Redemptions: |
q. | Reflects the additional interest expense of $2.4 million on the Post-Closing Convertible Notes under the maximum redemptions scenario. Under the maximum redemptions scenario, the principal of the Post-Closing Convertible Notes issued is greater as a result of there being less cash in Aurora’s trust account released to Better Home & Finance. Refer to Note 2(c) — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet for further details. |
For the three months ended March 31, 2022 |
For the year ended December 31, 2021 | |||||||||||||||
(in thousands, except per share data) |
Assuming No Redemptions |
Assuming Maximum Redemptions |
Assuming No Redemptions |
Assuming Maximum Redemptions |
||||||||||||
Pro forma net loss – basic |
$ |
(279,721 |
) |
$ |
(280,323 |
) |
$ |
(307,502 |
) |
$ |
(309,932 |
) | ||||
Pro forma weighted-average common stock - basic |
704,323 |
680,025 |
688,068 |
663,770 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Pro forma Basic loss per share - Class A, B and C Common Stock (1) |
$ |
(0.40 |
) |
$ |
(0.41 |
) |
$ |
(0.45 |
) |
$ |
(0.47 |
) | ||||
Pro forma net loss attributable to shareholders |
$ |
(279,721 |
) |
$ |
(280,323 |
) |
$ |
(307,502 |
) |
$ |
(309,932 |
) | ||||
Pro forma weighted-average common stock - diluted |
704,323 |
680,025 |
688,068 |
663,770 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Pro forma Diluted loss per share - Class A, B and C Common Stock (1) |
$ |
(0.40 |
) |
$ |
(0.41 |
) |
$ |
(0.45 |
) |
$ |
(0.47 |
) | ||||
Pro forma weighted-average shares - Basic |
||||||||||||||||
Aurora public shareholders - Class A common stock |
24,298 |
— |
24,298 |
— |
||||||||||||
Sponsor - Class A common stock |
9,063 |
9,063 |
9,063 |
9,063 |
||||||||||||
Bridge Investors – Bridge Financing As-Converted - Class A common stock |
26,021 | 23,500 | 26,021 | 23,500 | ||||||||||||
Better existing stockholders - Class A common stock (2) |
37,406 |
37,406 |
36,386 |
36,386 |
||||||||||||
Better existing stockholders - Class B common stock (2) |
558,556 |
558,556 |
543,321 |
543,321 |
||||||||||||
Bridge Investors - Bridge Financing - As-Converted - Class C common stock |
48,979 |
51,500 |
48,979 |
51,500 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total pro forma weighted-average shares - Basic |
704,323 |
680,025 |
688,068 |
663,770 |
||||||||||||
Incremental - Options (3) |
||||||||||||||||
Better Options and RSUs |
— | — | — | — | ||||||||||||
Post-Closing Convertible Notes |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total pro forma weighted-average shares - Diluted |
704,323 |
680,025 |
688,068 |
663,770 |
||||||||||||
|
|
|
|
|
|
|
|
(1) | Class A, B and C Common Stock all have the same rights to share in Better Home & Finance’s earnings and dividends. |
(2) | The pro forma Class A and Class B common stock has been reduced to reflect the repurchase of 937,500 historical shares of Better Capital Stock owned by Pine Brook prior to the Closing. |
(3) | For the three months ended March 31, 2022 and for the year ended December 31, 2021, Better Home & Finance is in a pro forma net loss position and as such all potentially dilutive securities are anti-dilutive. |
For the three months ended March 31, 2022 |
For the year ended December 31, 2021 |
|||||||||||||||
Assuming No Redemptions |
Assuming Maximum Redemptions |
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||
Aurora Warrants (1) |
9,237 | 9,237 | 9,237 | 9,237 | ||||||||||||
Better Options and RSUs (2) |
88,939 | 88,939 | 99,280 | 99,280 | ||||||||||||
Post-Closing Convertible Notes (3) |
41,553 | 62,949 | 41,450 | 62,793 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
139,729 | 161,125 | 149,967 | 171,310 | |||||||||||||
|
|
|
|
|
|
|
|
(1) | Includes 6,075,072 Public Warrants, 2,286,686 Aurora private warrants after giving effect to the 50% forfeiture pursuant to the Sponsor Agreement, and 875,000 Aurora private warrants vesting at the Closing Date, which are all anti-dilutive, as their exercise price is $11.50. |
(2) | The anti-dilutive impact of the options and RSUs was calculated using the historical treasury stock method adjusted for the market price and then giving effect to the Share Conversion Ratio. |
(3) | The anti-dilutive impact of the Post-Closing Convertible Notes was calculated using the if-converted method under the assumption of a $10 VWAP. |
Name |
Age |
Position | ||||
Arnaud Massenet |
56 | Chief Executive Officer | ||||
Prabhu Narasimhan |
41 | Chief Investment Officer | ||||
Caroline Harding |
41 | Chief Financial Officer and Director | ||||
Thor Björgólfsson |
54 | Chairman | ||||
Shravin Mittal |
34 | Director | ||||
Sangeeta Desai |
46 | Director | ||||
Michael Edelstein |
54 | Director |
• | may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Aurora Class B ordinary shares resulted in the issuance of Aurora Class A ordinary shares on a greater than one-to-one “BCA Proposal—Anti-Dilution Rights – |
• | may subordinate the rights of holders of Aurora Class A ordinary shares if preference shares are issued with rights senior to those afforded our Aurora Class A ordinary shares; |
• | could cause a change in control if a substantial number of our Aurora Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present executive officers and directors; |
• | may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and |
• | may adversely affect prevailing market prices for our Aurora units, Aurora Class A ordinary shares and/or Aurora public warrants. |
• | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
• | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
• | our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; |
• | our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; |
• | our inability to pay dividends on our Aurora Class A ordinary shares; |
• | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Aurora Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
• | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
• | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
• | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes; and |
• | other disadvantages compared to our competitors who have less debt. |
(1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Aurora, |
(2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that Aurora’s receipts and expenditures are being made only in accordance with authorizations of Aurora’s management and directors, and |
(3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Aurora’s assets that could have a material effect on the financial statements. |
Quarter Ended March 31, |
Year Ended December 31, |
|||||||||||||||
2022 |
2021 |
2020 |
2019 |
|||||||||||||
MBA Average 30-year fixed rate |
4.08 | % | 3.17 | % | 3.33 | % | 4.26 | % | ||||||||
Better Average 30-year fixed rate |
3.89 | % | 2.97 | % | 3.13 | % | 3.83 | % | ||||||||
Better Gain on Sale Margin |
1.21 | % | 2.05 | % | 3.71 | % | 1.94 | % | ||||||||
Better Net Income (Loss) Margin |
(163.3 | )% | (24.6 | )% | 19.7 | % | (75.8 | )% | ||||||||
Better Adjusted Net Income (Loss) Margin |
(110.3 | )% | (14.5 | )% | 25.1 | % | (73.2 | )% |
• | Advertising Relationships point-of-sale |
• | Integrated Relationships end-to-end ‘Better-as-a-Service’ low-cost, high-quality experience to the partner’s customers, powered by our technology and team members. We do not pay customer acquisition costs through this type of relationship. Currently, we earn revenue from our integrated relationship in the form of a fixed fee per transaction, as well as by purchasing certain of the closed loans from Ally and selling them on the secondary market. When the loans are sold on the secondary market, Ally receives a portion of the execution proceeds, with the total amount Better pays Ally for the loans (including the initial purchase price and portion of the execution proceeds) not exceeding the loans’ fair market value. |
• | Seamless. |
• | Transparent. |
• | Accessible. |
• | Faster to Certainty. |
• | Lower Fees and Rates. 30-year fixed mortgage. |
• | One-Stop Shop for Homeownership Financial Products. |
• | Expanded Product Offering. |
• | Highly Customizable Solutions. |
infrastructure allows us to address our partners’ requirements by combining existing solutions and customizing functionality to meet a specific arrangement, making us more attractive to potential B2B customers and also reducing R&D costs. This ability enables us to offer tailored solutions without significant R&D and to quickly add new B2B partners. |
• | Demand/Supply Match Through Back-end Integration. PDF-based rate sheets and providing real time loan bid data from our loan purchasers. Using this pricing data updated in real time, Tinman constantly calibrates customer pricing to investor demand, which drives our ability to match loan purchasers with a basket of loans specifically customized to their demand and offer competitive prices to our customers. For investors on our platform seeking specific loan attributes, such as Community Reinvestment Act credit, we are able to quickly identify and competitively price qualifying loans on our loan purchasers’ behalf. |
• | High Quality Digital Underwriting. |
• | Better Plus Customer Acquisition . |
• | Data-Driven Customized Products . |
• | Superior Customer Experience . |
Customers can see their rate options in as little as three seconds, get pre-approved in as little as three minutes, lock in rates and get connected to a real estate agent in as little as 30 minutes and close their loan in as little as three weeks. Our goal is to surface to our customers the most updated interest rates, and our tools provide them with flexibility to evaluate Home Finance and Better Plus products in real time as they move through our customer workflow. |
• | Highly Scalable Platform in Breadth and Depth . co-branded loan production solutions, or advertising and providing incentives or discounts to other partners’ customers or rewards program members). Our technology infrastructure allows us to address our partners’ requirements by combining existing solutions and customizing functionality. |
• | Lower Labor Cost . re-engineered traditionally complex, manual and highly specialized loan workflows into simple tasks that can be largely completed through automation or with unspecialized lower-cost labor. Our digital platform orchestrates each transaction, and simplifies the mortgage workflow to reduce complex tasks that typically would be performed by a high-cost revenue-commissioned loan officer or agent. Tinman can make our loan manufacturing team members more productive than the competition at a lower cost. Similarly for real estate, our non-commissioned in-house real estate agents have the ability to complete meaningfully more transactions per real estate agent than the industry average as a result of our technology-driven approach to doing business. Furthermore, by minimizing the need for specialized skills through the adoption of technological solutions, we believe our workforce pool is much larger and we are able to train our team members much faster through our in-house training program, Better University. As a result, we can complete many of our transactions at a lower production labor cost per unit. In 2021, Better’s mortgage production labor cost per unit was approximately $2,800 on average per quarter, compared to an average of approximately $6,000 on average per quarter according to the MBA Quarterly Mortgage Bankers Performance Reports. Because of our lower labor cost, we are able to pass savings on to our customers and offer them lower rates and prices across our suite of products. |
• | Data Advantage . re-entry of personal details and details on their home captured through the loan origination and appraisal process, reducing fatigue from dealing with numerous providers, offering them the best combination of tailored products through our expanding homeownership platform. We are able to surface highly relevant and suitable products for each customer based on their personalized financial and property circumstances. |
• | Limited Credit Exposure . |
permanently retain loans or MSRs on our balance sheet as part of our business model. We retained loans on our balance sheet for approximately 19 days, on average, over the course of 2020. As of December 31, 2020, we had zero MSRs on our balance sheet. In 2020 and 2021, approximately 96% and 93%, respectively, of all the loans we produced were conforming with GSE-guaranteed takeout, providing access to liquidity for our loans through market cycles. For jumbo loans, which are not GSE eligible, we enter into sale agreements with purchasers prior to lock, thereby enabling us to take minimal balance sheet exposure for non-conforming loans, limiting our credit risk and supporting our model. |
• | Integrated Platform. |
• | Integrated Home Purchase and Agent Strategy. Having proven strong traction and ability to grow our refinance business, we are focused on growing purchase and demonstrating our purchase customer value proposition through our integrated homeownership platform. We believe that providing value to prospective customers early, as well as providing them with multiple products throughout their homeownership journey, enables us to build longer and more enduring relationships. We believe real estate agents are trusted advisors throughout the homeownership journey. A key pillar of our home purchase strategy is to make real estate agent services a core part of our homeownership value proposition. In 2020, we established and are continuing to grow our real estate agent program, Better Real Estate (offered through both in-house Better-employed real estate agents and our network of partner real estate agents), which enables us to provide a seamless purchase experience for our customers. Through our in-house real estate agents, we believe we are particularly well positioned to improve the purchase journey for our customers, who come to our website looking to understand how much mortgage they can afford and get pre-approved to begin shopping, and, at their request and following appropriate disclosures, we connect them directly with a trusted local real estate agent to help with the process. This in-house aspect of our real estate agent program leverages our technology and sales-based commission-free approach from our loan business and applies it to the real estate market. Better Real Estate also is partnering with approximately 15,000 leading real estate agents across the U.S. on a third-party basis to refer potential homebuyers that have received a pre-approval from Better Mortgage Corporation, but do not yet have a real estate agent, pursuant to cooperative brokerage arrangements between Better Real Estate and the third-party agents. We are building value-added technology for our in-house real estate agents, including a full suite of collaboration and workflow management tools better equipping them to run their businesses effectively. We believe developing the real estate agent process will improve the customer experience, increase our revenue per customer and position us favorably across market cycles. We are also enhancing features in Tinman to drive engagement with customers that intend to purchase a home further out in the future with our loan products, including pre-transaction education, property search, and affordability simulations. These product features will allow our home purchase customers to hire best-in-class real estate agents, find properties that meet their needs and secure lower-cost financing. In addition, we are investing in our Better Real Estate and integrated home purchase strategy in order to diversify our revenue streams into relatively less rate-sensitive products as compared to refinance loans. |
• | Customer Acquisition . (pay-per-click) |
• | Conversion . top-of-funnel |
• | Enhance Technology Innovation. |
• | Expand Better Plus Products. |
• | Additional B2B Partners. low-cost, high-quality homeownership products to their customers. Our partners trust us to do right by their customers, and we leverage the same scalable end-to-end |
• | Broadening U.S. Geographic and Product Coverage . |
Columbia through its agent network. Better Settlement Services, which offers title services, is licensed in 25 states and the District of Columbia. Better Cover is licensed in 49 states and the District of Columbia. We aim to increase our addressable market by providing all of our products across the United States. Additionally, we continue to invest in infrastructure to diversify and scale our loan product portfolio (FHA, VA, Non-Agency Jumbo and Non-QM) to meet demand. Due to state licensing and other regulations, the number of Better Plus products available to customers in some states is limited, providing us with substantial growth potential as we increase product availability. We plan to expand access to our Better Plus portfolio of products across the U.S. This broad array of products and services, combined with expanded market access, is intended to create a one-stop shop for all of our customers’ homeownership needs. |
• | Grow the Ecosystem. |
• | International Expansion |
• | Expansion of Homeownership rent-to-own, non-traditional homeownership pathways as a growth opportunity. Our goal is to make homeownership easier and more accessible to the widest range of consumers, and we believe our data-driven product is well suited to be a pioneer in new ways for consumers to build home equity. |
• | ability to build consumer trust by consistently delivering value through low prices and a seamless experience; |
• | overall customer experience, including transparency throughout each step of the transaction; |
• | convenience in obtaining homeownership products, including the ease and speed of the loan application, underwriting and approval process; |
• | range of products offered; |
• | interest rates and fees charged; |
• | partner satisfaction and delivering value to all parties in our ecosystem; |
• | flexibility, scalability, and ability to innovate rapidly; |
• | effectiveness of customer acquisition; and |
• | ability to convert customers who come to our site. |
• | the Real Estate Settlement Procedures Act, or RESPA, and Regulation X, which require certain disclosures to be made to the borrower at application, as to the lender’s good faith estimate of loan |
production costs, and at closing with respect to the actual real estate settlement statement costs (for most loans, such disclosures are in conjunction with those required under the Truth in Lending Act), prohibit kickbacks, referrals, and unearned fees in connection with settlement service business and impose requirements and limitations on affiliates and strategic partners, and certain loan servicing practices including with respect to escrow accounts, requests for information from borrowers, servicing transfers, lender-placed insurance, error resolution and loss mitigation; |
• | the Truth in Lending Act, or TILA, including the HOEPA, and Regulation Z, which regulate mortgage loan production and servicing activities, require certain disclosures be made to borrowers throughout the loan process regarding terms of mortgage financing (including those disclosures required under the TILA-RESPA Integrated Disclosure, or TRID, rule), provide for a three-day right to rescind some transactions, regulate certain higher-priced and high-cost mortgages, require lenders to make a reasonable and good faith determination that consumers have the ability to repay the loan prior to consummation, mandate home ownership counseling for high-cost mortgage applicants, impose restrictions on loan production compensation, and apply to certain loan servicing practices; |
• | the Fair Credit Reporting Act and Regulation V, which regulate the use and reporting of information related to the credit history of consumers, require disclosures to consumers regarding the use of credit report information in certain credit decisions and require lenders to take measures to prevent or mitigate identity theft; |
• | the Equal Credit Opportunity Act and Regulation B, which prohibit discrimination on the basis of age, race and certain other characteristics in the extension of credit, require creditors to deliver copies of appraisals and other valuations, and require certain notifications to applicants for credit; |
• | the Homeowners Protection Act, which requires certain disclosures and the cancellation or termination of private mortgage insurance once certain equity levels are reached; |
• | the Home Mortgage Disclosure Act and Regulation C, which require reporting of mortgage loan application, origination and purchase data, including the number of mortgage loan applications originated, approved but not accepted, denied, purchased, closed for incompleteness and withdrawn; |
• | the Fair Housing Act, which prohibits discrimination in housing on the basis of race, sex, national origin and certain other characteristics; |
• | the Fair Debt Collection Practices Act, which regulates the timing and content of debt collection communications and debt collection practices; |
• | the Gramm-Leach-Bliley Act and Regulation P, which require initial and periodic communication with consumers on privacy matters, provide limitations on sharing nonpublic personal information, and the maintenance of privacy and security regarding certain consumer data in our possession; |
• | the Bank Secrecy Act, or BSA, and related regulations including the Office of Foreign Assets Control and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, or the USA PATRIOT Act, which impose certain due diligence and recordkeeping requirements on lenders to detect and block money laundering that could support terrorist activities; |
• | the SAFE Act, which imposes state licensing requirements on mortgage loan originators; |
• | the Electronic Signatures in Global and National Commerce Act and similar state laws, particularly the Uniform Electronic Transactions Act, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures and which require creditors and loan servicers to obtain a consumer’s consent to electronically receive disclosures required under federal and state laws and regulations; |
• | the Electronic Fund Transfer Act of 1978, or EFTA, and Regulation E, which protect consumers engaging in electronic fund transfers; |
• | the Servicemembers Civil Relief Act, which provides financial protections for eligible service members; |
• | the Federal Trade Commission Act, the FTC Credit Practices Rules and the FTC Telemarketing Sales Rule, which prohibit unfair or deceptive acts or practices and certain related practices; |
• | the Telephone Consumer Protection Act, or the TCPA, which restricts telephone solicitations and automatic telephone equipment in connection with both origination and servicing of loans; |
• | the Mortgage Acts and Practices Advertising Rule, Regulation N, which prohibits certain unfair and deceptive acts and practices related to mortgage advertising and imposes recordkeeping requirements on advertisers; |
• | the CAN-SPAM Act, which makes it unlawful to send certain electronic mail messages that contain false or deceptive information and provide other protections for email users; |
• | the Consumer Financial Protection Act, enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, which (among other things) created the Consumer Financial Protection Bureau, or the CFPB, and gave it broad rulemaking authority over certain enumerated consumer financial laws and supervisory and enforcement jurisdiction over mortgage lenders and servicers, and prohibits any unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service; |
• | the Bankruptcy Code and bankruptcy injunctions and stays, which can restrict collection of debts; and |
• | the CARES Act, which imposes several new compliance obligations on our mortgage servicing activities, including, but not limited to, mandatory forbearance offerings, prohibitions of fees, penalties, or interest beyond the amounts scheduled during the forbearance period, altered credit reporting obligations, and moratoriums on foreclosure actions. |
Three Months Ended March 31, |
||||||||||||||||
(Amounts in thousands, except percentage amounts) |
2022 |
2021 |
||||||||||||||
Amounts |
Percentages |
Amounts |
Percentages |
|||||||||||||
Revenues—Sale of loan production |
||||||||||||||||
Mortgage platform revenue, net |
$ | 78,542 | 38 | % | $ | 405,979 | 95 | % | ||||||||
Revenues—Better Plus & net interest income (expense) |
||||||||||||||||
Cash Offer program revenue |
107,224 | 52 | % | — | — | % | ||||||||||
Other platform revenue |
18,300 | 9 | % | 21,162 | 5 | % | ||||||||||
Net interest income (expense) |
1,907 | 1 | % | (1,446 | ) | — | % | |||||||||
|
|
|
|
|
|
|||||||||||
Total net revenues |
$ | 205,973 | $ | 425,695 | ||||||||||||
|
|
|
|
Year Ended December 31, |
||||||||||||||||||||||||
(Amounts in thousands, except per share amounts) |
2021 |
2020 |
2019 |
|||||||||||||||||||||
Amounts |
Percentages |
Amounts |
Percentages |
Amounts |
Percentages |
|||||||||||||||||||
Revenues—Sale of loan production |
||||||||||||||||||||||||
Mortgage platform revenue, net |
$ | 1,081,421 | 88 | % | $ | 834,530 | 95 | % | $ | 84,445 | 95 | % | ||||||||||||
Revenues—Better Plus & net interest income (expense) |
||||||||||||||||||||||||
Cash Offer program revenue |
39,361 | 3 | % | — | — | % | — | — | % | |||||||||||||||
Other platform Revenue |
94,388 | 8 | % | 39,539 | 5 | % | 4,911 | 5 | % | |||||||||||||||
Net interest income (expense) |
19,036 | 2 | % | 1,508 | — | % | (185 | ) | — | % | ||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total net revenues |
$ | 1,234,206 | $ | 875,577 | $ | 89,171 | ||||||||||||||||||
|
|
|
|
|
|
• | fluctuating and increasing interest rates, which have the effect of reducing industry mortgage origination volume, increasing competition for customers and reducing revenue and Gain on Sale Margin, |
• | the continued impact of the reorganization of our sales and operations teams in the third quarter of 2021, |
• | continued investments in our business (including investments to expand our product offerings), |
• | the effects of negative media coverage following a series of workforce reductions that began in December 2021 (which we believe resulted in lower interest rate lock volume in December 2021 and early 2022 and is expected to, in part, result in lower Funded Loan Volume in 2022), and |
• | increased costs, including sales and operations compensation expense to support higher Purchase Loan Volumes, severance costs associated with the workforce reductions described above, higher expenses associated with non-mortgage business lines including Better Real Estate and higher technology and product development expenses resulting from continued investment in our platform. |
Three Months Ended March 31, 2022 |
Three Months Ended March 31, 2021 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2019 |
||||||||||||||||
Key Business Metric |
||||||||||||||||||||
Home Finance |
||||||||||||||||||||
Funded Loan Volume |
$ | 6,971 | $ | 14,094 | $ | 57,973 | $ | 24,210 | $ | 4,913 | ||||||||||
Refinance Loan Volume |
$ | 4,305 | $ | 12,727 | $ | 46,519 | $ | 20,581 | $ | 3,284 | ||||||||||
Purchase Loan Volume |
$ | 2,665 | $ | 1,367 | $ | 11,454 | $ | 3,629 | $ | 1,629 | ||||||||||
D2C Loan Volume |
$ | 4,610 | $ | 12,219 | $ | 44,002 | $ | 17,237 | $ | 3,767 | ||||||||||
B2B Loan Volume |
$ | 2,361 | $ | 1,874 | $ | 13,971 | $ | 6,973 | $ | 1,146 | ||||||||||
Total Loans (number of loans) |
18,559 | 38,145 | 153,843 | 70,288 | 14,370 | |||||||||||||||
Average Loan Amount ($ value, not millions) |
$ | 376,000 | $ | 369,000 | $ | 377,000 | $ | 344,000 | $ | 342,000 | ||||||||||
Gain on Sale Margin |
1.21 | % | 3.01 | % | 2.05 | % | 3.71 | % | 1.94 | % | ||||||||||
Total Market Share |
0.9 | % | 1.1 | % | 1.3 | % | 0.5 | % | 0.2 | % | ||||||||||
Better Plus |
||||||||||||||||||||
Better Real Estate Transaction Volume |
$ | 691 | $ | 284 | $ | 2,163 | $ | 694 | $ | 135 | ||||||||||
Insurance Coverage Written |
$ | 3,541 | $ | 5,258 | $ | 22,156 | $ | 8,785 | $ | 1,065 |
Three Months Ended March 31, 2022 |
Three Months Ended March 31, 2021 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
Year Ended December 31, 2019 |
||||||||||||||||
California |
17.7 | % | 25.7 | % | 23.2 | % | 23.6 | % | 25.9 | % | ||||||||||
Texas |
10.6 | % | 7.2 | % | 8.5 | % | 7.5 | % | 10.2 | % | ||||||||||
Washington |
5.0 | % | 7.8 | % | 6.9 | % | 8.4 | % | 8.8 | % | ||||||||||
Florida |
9.8 | % | 6.0 | % | 6.9 | % | 5.6 | % | 7.0 | % |
i. | Net gain on sale of loans—This represents the premium we receive in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market. Net |
gain on sale of loans includes unrealized changes in the fair value of LHFS, which are recognized on a loan by loan basis as part of current period earnings until the loan is sold on the secondary market. The fair value of LHFS is measured based on observable market data. Also included within net gain on sale of loans is the day one recognition of the fair value of MSRs and any subsequent changes in the measurement of the fair value of the MSRs for loans sold servicing retained, including any gain or loss on subsequent sales of MSRs. We do not manage our business to optimize for Gain on Sale for either our Purchase Loan or Refinance Loan offerings specifically and do not observe material differences in Gain on Sale between such products over time. |
ii. | Integrated relationship revenue—Includes fees that we receive for originating loans on behalf of an integrated relationship partner, which are recognized as revenue upon the integrated relationship partner’s funding of the loan. Some of the loans originated on behalf of the integrated relationship partner are purchased by us. Subsequent changes in the fair value of loans purchased by us are included as part of current period earnings. These loans may be sold in the secondary market at our discretion for which any gain on sale is included in this account. For loans sold on the secondary market, the integrated relationship partner will receive a portion of the execution proceeds. A portion of the execution proceeds that is to be allocated to the integrated relationship partner is accrued as a reduction of integrated relationship revenue when the loan is initially purchased from the integrated relationship partner. |
iii. | Servicing income—Includes the related income earned from the servicing of loans, including loans sold with MSRs (i.e., servicing retained) and interim servicing requirements. |
iv. | Changes in fair value of IRLCs and forward sale commitments—IRLCs include the fair value upon issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market. Fair value of forward commitments hedging IRLCs and LHFS are measured based on quoted prices for similar assets. |
i. | Expected volatility—We estimated volatility for option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the options’ expected term. |
ii. | Expected term—The expected term of our options represents the period that the stock-based awards are expected to be outstanding. We have elected to use the midpoint of the stock options vesting term and contractual expiration period to compute the expected term, as we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. |
iii. | Risk-free interest rate—The risk-free interest rate is based on the implied yield currently available on US Treasury zero-coupon issues with a term that is equal to the options’ expected term at the grant date. |
iv. | Dividend yield—We have not declared or paid dividends to date and do not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero. |
Three Months Ended March 31, |
Year Ended December 31, | |||||||||||||||||||
(Amounts in thousands, except per share amounts) |
2022 |
2021 |
2021 |
2020 |
2019 |
|||||||||||||||
Revenues: |
||||||||||||||||||||
Mortgage platform revenue, net (1) |
$ | 78,542 | $ | 405,979 | $ | 1,081,421 | $ | 834,530 | $ | 84,445 | ||||||||||
Cash Offer program revenue |
107,224 | — | 39,361 | — | — | |||||||||||||||
Other platform revenue |
18,300 | 21,162 | 94,388 | 39,539 | 4,911 | |||||||||||||||
Net interest income (expense): |
||||||||||||||||||||
Interest income |
9,313 | 14,040 | 88,965 | 26,697 | 7,951 | |||||||||||||||
Warehouse interest expense |
(7,406 | ) | (15,486 | ) | (69,929 | ) | (25,189 | ) | (8,136 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net interest income (expense) |
1,907 | (1,446 | ) | 19,036 | 1,508 | (185 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net revenues |
205,973 | 425,695 | 1,234,206 | 875,577 | 89,171 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Expenses: |
||||||||||||||||||||
Mortgage platform expenses (2)(3) |
185,777 | 158,537 | 710,132 | 299,164 | 66,326 | |||||||||||||||
Cash Offer program expenses |
107,707 | — | 39,505 | — | — | |||||||||||||||
Other platform |
38,933 | 16,218 | 100,974 | 24,210 | 4,483 | |||||||||||||||
General and administrative expenses (2)(3) |
62,763 | 49,654 | 232,669 | 159,096 | 35,244 | |||||||||||||||
Marketing and advertising expenses (2)(3) |
36,880 | 45,817 | 249,275 | 83,554 | 27,204 | |||||||||||||||
Technology and product development expenses (2)(3) |
42,561 | 25,855 | 143,951 | 57,333 | 21,210 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total expenses |
474,621 | 296,081 | 1,476,506 | 623,357 | 154,467 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (Loss) from operations |
(268,648 | ) | 129,614 | (242,300 | ) | 252,220 | (65,296 | ) | ||||||||||||
Interest and other expense, net: |
||||||||||||||||||||
Interest and amortization on non-funding debt |
(3,372 | ) | (1,826 | ) | (11,834 | ) | (50,967 | ) | (726 | ) | ||||||||||
Interest on Bridge Notes |
(62,602 | ) | — | (19,211 | ) | — | — | |||||||||||||
Change in fair value of convertible preferred stock warrants |
8,277 | (45,293 | ) | (32,790 | ) | (23,723 | ) | (1,287 | ) | |||||||||||
Change in fair value of bifurcated derivative |
— | — | — | 36,827 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest and other expenses, net |
(57,697 | ) | (47,119 | ) | (63,835 | ) | (37,863 | ) | (2,013 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) before income tax expense |
(326,345 | ) | 82,495 | (306,135 | ) | 214,357 | (67,309 | ) | ||||||||||||
Income tax expense |
1,356 | 289 | (2,383 | ) | 42,302 | 271 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) (4) |
(327,701 | ) | 82,206 | (303,752 | ) | 172,055 | (67,580 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Earnings (loss) per share attributable to common stockholders (Basic) |
$ | (3.50) | $ | 0.43 | $ | (3.49) | $ | 1.02 | $ | (0.97 | ) | |||||||||
Earnings (loss) per share attributable to common stockholders (Diluted) |
$ | (3.50) | $ | 0.40 | $ | (3.49) | $ | 0.86 | $ | (0.97 | ) |
(1) | The components of mortgage platform revenue, net for the periods presented were as follows: |
Three Months Ended March 31, |
Year Ended December 31, | |||||||||||||||||||
(Amounts in thousands) |
2022 |
2021 |
2021 |
2020 |
2019 |
|||||||||||||||
Net gain (loss) on sale of loans |
$ | (19,587 | ) | $ | 279,459 | $ | 934,532 | $ | 858,974 | $ | 84,646 | |||||||||
Integrated relationship revenue (loss) |
(4,170 | ) | 10,669 | 83,929 | 73,100 | 11,105 | ||||||||||||||
Servicing income |
— | — | — | 7,326 | 568 | |||||||||||||||
Changes in fair value of IRLCs and forward sale commitments |
102,299 | 115,851 | 62,960 | (104,870 | ) | (11,874 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total mortgage platform revenue, net |
$ | 78,542 | $ | 405,979 | $ | 1,081,421 | $ | 834,530 | $ | 84,445 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(2) | Includes stock-based compensation expense as follows: |
Three Months Ended March 31, |
Year Ended December 31, | |||||||||||||||||||
(Amounts in thousands) |
2022 |
2021 |
2021 |
2020 |
2019 |
|||||||||||||||
Mortgage platform expenses |
$ | 2,237 | $ | 2,734 | $ | 13,671 | $ | 2,739 | $ | 163 | ||||||||||
Cash Offer program expenses |
— | — | — | — | — | |||||||||||||||
Other platform expenses |
360 | 304 | 1,654 | 42 | 4 | |||||||||||||||
General and administrative expenses |
7,143 | 5,325 | 27,559 | 15,138 | 519 | |||||||||||||||
Marketing and advertising expenses |
170 | 339 | 1,159 | 306 | 20 | |||||||||||||||
Technology and product development |
4,341 | 1,299 | 11,172 | 1,076 | 123 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total stock-based compensation expense |
$ | 14,251 | $ | 10,001 | $ | 55,215 | $ | 19,301 | $ | 829 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(3) | Includes depreciation and amortization expense as follows: |
Three Months Ended March 31, |
Year Ended December 31, | |||||||||||||||||||
2022 |
2021 |
2021 |
2020 |
2019 |
||||||||||||||||
(Amounts in thousands) |
||||||||||||||||||||
Mortgage platform expenses |
$ | 2,262 | $ | 1,036 | $ | 5,221 | $ | 2,001 | $ | 603 | ||||||||||
Cash Offer program expenses |
— | — | — | — | — | |||||||||||||||
Other platform expenses |
184 | 143 | 716 | 29 | 12 | |||||||||||||||
General and administrative expenses |
864 | 165 | 933 | 1,041 | 191 | |||||||||||||||
Marketing and advertising expenses |
40 | 11 | 64 | 26 | 36 | |||||||||||||||
Technology and product development |
8,803 | 3,142 | 20,286 | 6,799 | 3,498 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total depreciation and amortization |
$ | 12,153 | $ | 4,497 | $ | 27,220 | $ | 9,896 | $ | 4,340 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(4) | We experienced a net loss of $303.8 million for the year-ended December 31, 2021, compared to net income of $172.1 million for the year ended December 31, 2020. As non-GSE loan purchasers entered the market and became a greater share of loan purchases, gain on sale decreased throughout the mortgage market. In addition, as interest rates began moving higher in mid-2021, we maintained our low rates and, through most of 2021, continued to grow our headcount and organizational structure, in order to continue to grow funded loan volume and market share. Our strategy to prioritize growing our market share decreased our gain on sale, which in turn reduced profitability substantially. We also invested in new products and services, such as Better Cash Offer and other pilot programs that require capital. As interest rates have continued to rise, |
we have increasingly focused on more profitable loans at the expense of volume growth. For more information, see “ Better’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Performance—Fluctuations in Interest Rates |
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
(in thousands) |
||||||||
Revenues: |
||||||||
Mortgage platform revenue, net |
$ | 78,542 | $ | 405,979 | ||||
Cash Offer program revenue |
107,224 | — | ||||||
Other platform revenue |
18,300 | 21,162 | ||||||
Net interest income (expense): |
||||||||
Interest income |
9,313 | 14,040 | ||||||
Warehouse interest expense |
(7,406 | ) | (15,486 | ) | ||||
|
|
|
|
|||||
Net interest income |
1,907 | (1,446 | ) | |||||
|
|
|
|
|||||
Total net revenues |
$ | 205,973 | $ | 425,695 | ||||
|
|
|
|
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
(in thousands) |
||||||||
Mortgage platform expenses |
$ | 185,777 | $ | 158,537 | ||||
Cash Offer program expenses |
107,707 | — | ||||||
Other platform expenses |
38,933 | 16,218 | ||||||
General and administrative expenses |
62,763 | 49,654 | ||||||
Marketing and advertising expenses |
36,880 | 45,817 | ||||||
Technology and product development expenses |
42,561 | 25,855 | ||||||
|
|
|
|
|||||
Total operating expenses |
$ | 474,621 | $ | 296,081 | ||||
|
|
|
|
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
(in thousands) |
||||||||
Compensation and benefits |
$ | 31,636 | $ | 27,612 | ||||
Stock-based compensation |
7,143 | 5,325 | ||||||
Depreciation and amortization |
864 | 165 | ||||||
Rent |
175 | 567 | ||||||
Legal, accounting, and other professional services |
22,945 | 15,985 | ||||||
|
|
|
|
|||||
Total general and administrative expenses |
$ | 62,763 | $ | 49,654 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
(in thousands) |
||||||||
Revenues: |
||||||||
Mortgage platform revenue, net |
$ | 1,081,421 | $ | 834,530 | ||||
Cash Offer program revenue |
39,361 | — | ||||||
Other platform revenue |
94,388 | 39,539 | ||||||
Net interest income (expense): |
||||||||
Interest income |
88,965 | 26,697 | ||||||
Warehouse interest expense |
(69,929 | ) | (25,189 | ) | ||||
Net interest income (expense) |
19,036 | 1,508 | ||||||
|
|
|
|
|||||
Total net revenues |
$ | 1,234,206 | $ | 875,577 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
(in thousands) |
||||||||
Mortgage platform expenses |
$ | 710,132 | $ | 299,164 | ||||
Cash Offer program expenses |
39,505 | — | ||||||
Other platform expenses |
100,974 | 24,210 | ||||||
General and administrative expenses |
232,669 | 159,096 | ||||||
Marketing and advertising expenses |
249,275 | 83,554 | ||||||
Technology and product development expenses |
143,951 | 57,333 | ||||||
|
|
|
|
|||||
Total operating expenses |
$ | 1,476,506 | $ | 623,357 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
(in thousands) |
||||||||
Compensation and benefits |
$ | 131,051 | $ | 74,967 | ||||
Stock-based compensation |
27,559 | 15,138 | ||||||
Depreciation and amortization |
933 | 1,041 | ||||||
Rent |
2,485 | 6,852 | ||||||
Legal, accounting, and other professional services |
70,641 | 61,098 | ||||||
|
|
|
|
|||||
Total |
$ | 232,669 | $ | 159,096 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Revenues: |
||||||||
Mortgage platform revenue, net |
$ | 834,530 | $ | 84,445 | ||||
Cash Offer program revenue |
— | — | ||||||
Other platform revenue |
39,539 | 4,911 | ||||||
Net interest income (expense): |
||||||||
Interest income |
26,697 | 7,951 | ||||||
Warehouse interest expense |
(25,189 | ) | (8,136 | ) | ||||
|
|
|
|
|||||
Net interest income (expense) |
1,508 | (185 | ) | |||||
|
|
|
|
|||||
Total net revenues |
$ | 875,577 | $ | 89,171 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Mortgage platform expenses |
$ | 299,164 | $ | 66,326 | ||||
Other platform expenses |
24,210 | 4,483 | ||||||
General and administrative expenses |
159,096 | 35,244 | ||||||
Marketing and advertising expenses |
83,554 | 27,204 | ||||||
Technology and product development expenses |
57,333 | 21,210 | ||||||
|
|
|
|
|||||
Total operating expenses |
$ | 623,357 | $ | 154,467 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
|
|
|
|
|||||
(in thousands) |
||||||||
|
|
|
|
|||||
Compensation and benefits |
$ | 74,967 | $ | 18,059 | ||||
Stock-based compensation |
15,138 | 519 | ||||||
Depreciation and amortization |
1,041 | 191 | ||||||
Rent |
6,852 | 1,659 | ||||||
Legal, accounting, and other professional services |
61,098 | 14,816 | ||||||
|
|
|
|
|||||
Total |
$ | 159,096 | $ | 35,244 | ||||
|
|
|
|
• | We use Adjusted Net Income (Loss) to assess our overall performance, without regard to items that are considered to be unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations; |
• | Adjusted EBITDA is widely used by investors and securities analyst to measure a company’s operating performance without regard to items such as stock-based compensation expense, depreciation and amortization expense, interest and amortization on non-funding debt, income tax expense, and costs that are unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations, all of which can vary substantially from company to company depending upon their financing and capital structures; |
• | We use Adjusted Net Income (Loss) and Adjusted EBITDA in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance; and |
• | Adjusted Net Income (Loss) and Adjusted EBITDA provide consistency and comparability with our past financial performance, facilitate period-to-period comparisons of our core operating results, and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. |
• | |
• | Adjusted Net Income (Loss) and Adjusted EBITDA exclude stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy; |
• | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
• | Adjusted EBITDA does not reflect (i) interest expense, or the cash requirements necessary to service interest or principal payments on our non-funding debt, which reduces cash available to us; or (ii) tax accruals or tax payments that represent a reduction in cash available to us; and |
• | The expenses and other items that we exclude in our calculations of Adjusted Net Income (Loss) and Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from similarly-titled non-GAAP measures when they report their operating results, and we may, in the future, exclude other significant, unusual or non-recurring expenses or other items from these financial measures. |
Three Months Ended March 31, |
Year Ended December 31, | |||||||||||||||||||
2022 |
2021 |
2021 |
2020 |
2019 |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Adjusted Net Income (Loss) |
||||||||||||||||||||
Net income (loss) |
$ (327,701) | $ | 82,206 | $ | (303,752 | ) | $ | 172,055 | $ | (67,580 | ) | |||||||||
Stock-based compensation expense (1) |
14,251 | 10,001 | 55,215 | 19,301 | 987 | |||||||||||||||
Change in fair value of warrants (2) |
(8,277 | ) | 45,293 | 32,790 | 23,723 | 1,287 | ||||||||||||||
Change in fair value of bifurcated derivative (3) |
— | — | — | (36,827 | ) | — | ||||||||||||||
Amortization of bifurcated derivatives and beneficial conversion feature (BCF) (4) |
— | — | — | 41,871 | — | |||||||||||||||
Interest on Bridge Notes |
62,602 | — | 19,211 | — | — | |||||||||||||||
Other non-recurring expenses (7) |
37,727 | — | 17,618 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted Net Income (Loss) |
$ (221,398) | $ | 137,500 | $ | (178,918 | ) | $ | 220,123 | $ | (65,306 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted EBITDA |
||||||||||||||||||||
Net income (loss) |
$ (327,701) | $ | 82,206 | $ | (303,752 | ) | $ | 172,055 | $ | (67,580 | ) | |||||||||
Income tax expense |
1,356 | 289 | (2,383 | ) | 42,302 | 271 | ||||||||||||||
Depreciation and amortization expense (5) |
12,153 | 4,497 | 27,220 | 9,896 | 4,339 | |||||||||||||||
Stock-based compensation expense (1) |
14,251 | 10,001 | 55,215 | 19,301 | 987 | |||||||||||||||
Interest and amortization on non-funding debt(6) |
3,372 | 1,826 | 11,834 | 50,967 | 726 | |||||||||||||||
Interest on Bridge Notes (8) |
62,602 | — | 17,618 | — | — | |||||||||||||||
Other non-recurring expenses (7) |
37,727 | — | 19,211 | — | — | |||||||||||||||
Change in fair value of warrants (2) |
(8,277 | ) | 45,293 | 32,790 | 23,723 | 1,287 | ||||||||||||||
Change in fair value of bifurcated derivative (3) |
— | — | — | (36,827 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted EBITDA |
$ (204,517) | $ | 143,871 | $ | (142,247 | ) | $ | 281,417 | $ | (59,970 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Stock-based compensation represents the non-cash grant date fair value of stock-based instruments utilized to incentivize employees and consultants recognized over the applicable vesting period. This expense is a non-cash expense. We exclude this expense from our internal operating plans and measurement of financial performance (although we consider the dilutive impact to our shareholders when awarding stock-based compensation and value such awards accordingly). Tax on stock-based compensation is assessed at exercise, if applicable. |
(2) | Change in fair value of convertible preferred stock warrants represents change in fair value of liability-classified warrants as presented in our Consolidated Statements of Operations and Comprehensive Income (Loss). This charge is a non-cash charge. |
(3) | Change in fair value of bifurcated derivative represents the change in fair value of embedded features within the 2020 Convertible Notes that require bifurcation and are separately accounted for as a single compounded derivative. Upon issuance of the 2020 Convertible Notes, the fair value of the bifurcated derivative is treated as reduction, or discount, in the carrying value of the 2020 Convertible Notes, while subsequent changes in the fair value are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss). |
These derivatives are marked to market at each reporting date. This expense is a non-cash expense, and we believe that it does not correlate to the performance of our business during the periods presented. |
(4) | Amortization of bifurcated derivative and beneficial conversion feature represents the amortization of the bifurcated derivative and beneficial conversion feature that was recorded as a debt discount upon the issuance of the 2020 Convertible Notes. The bifurcated derivative and beneficial conversion feature debt discounts were amortized in the Consolidated Statements of Operations and Comprehensive Income (Loss) under the effective interest rate method over the term of the 2020 Convertible Notes. Upon conversion of the 2020 Convertible Notes in November 2020, the remaining unamortized debt discount was expensed in the Consolidated Statements of Operations and Comprehensive Income (Loss). This expense is a non-cash expense, and we believe that it does not correlate to the performance of our business during the periods presented. |
(5) | Depreciation and amortization represents the loss in value of fixed and intangible assets through depreciation and amortization, respectively. These expenses are non-cash expenses, and we believe that they do not correlate to the performance of our business during the periods presented. |
(6) | Interest and amortization on non-funding debt represents interest and amortization on a corporate line of credit as presented in our Consolidated Statements of Operations and Comprehensive Income (Loss). Interest and amortization on non-funding debt excludes interest income from mortgage loans held for sale and warehouse interest expense on warehouse facilities, which are both core to our operations and recorded in the “total net revenues” caption of our Consolidated Statements of Operations and Comprehensive Income (Loss). |
(7) | For the three months ended March 31, 2022 and 2021, other non-recurring expenses are comprised of employee related severances costs incurred to realign our staffing needs. For the year ended December 31, 2021, other non-recurring expenses include $16.0 million of employee-related severance costs as well as $1.6 million of expenses related to our acquisitions. |
(8) | Interest on Pre-Closing Bridge Notes represents the amortization of the discount recognized upon issuance of the Pre-Closing Bridge Notes which is amortized into interest expense under the effective interest method over the term of the Pre-Closing Bridge Notes. This expense is a non-cash expense, and we believe that it does not correlate to the performance of our business during the periods presented. |
(Amounts in thousands) |
Maturity |
Facility Size |
Amount Outstanding March 31, 2021 |
Amount Outstanding December 31, 2020 |
||||||||||||
Funding Facility 1 (1) |
May 18, 2022 | $ | 500,000 | $ | 129,479 | $ | 286,804 | |||||||||
Funding Facility 2 (2) |
October 31, 2022 | 250,000 | 219,678 | 171,649 | ||||||||||||
Funding Facility 3 (3) |
July 1, 2022 | 450,000 | 1,492 | 55,622 | ||||||||||||
Funding Facility 4 (4) |
January 30, 2023 | 750,000 | 113,638 | 409,616 | ||||||||||||
Funding Facility 5 (5) |
March 8, 2023 | 1,500,000 | 240,646 | 622,573 | ||||||||||||
Funding Facility 6 (6) |
August 31, 2022 | 400,000 | 3,510 | 4,184 | ||||||||||||
Funding Facility 7 (7) |
November 15, 2022 | 300,000 | 76,881 | 7,279 | ||||||||||||
Funding Facility 8 (8) |
March 8, 2023 | 500,000 | 58,424 | 94,181 | ||||||||||||
Funding Facility 9 (9) |
April 6, 2022 | 500,000 | — | 1,433 | ||||||||||||
Funding Facility 10 (10) |
July 5, 2022 | 500,000 | 58,658 | 14,576 | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total warehouse lines of credit |
$ | 5,650,000 | $ | 902,406 | $ | 1,667,917 | ||||||||||
|
|
|
|
|
|
(1) | Interest charged under the facility is at the interest rate charged on the note of the underlying collateral of the approved loan (“Note Rate”) minus 0.75%, which decreases to 1.25% with incentive capacity usage, and with a floor rate of 2.50%, as defined in the agreement. Cash collateral deposit of $10.0 million is maintained. Subsequent to March 31, 2022, the facility was amended to extend maturity to July 18, 2022. |
(2) | Interest charged under the facility is at the one month LIBOR plus 1.75%, with a floor rate of one month LIBOR at 1.00%, as defined in agreement. Cash collateral deposit of $2.5 million is maintained. |
(3) | Interest charged under the facility is at the respective one month LIBOR plus 1.75%, with a floor rate of 2.25%, as defined in the agreement. Cash collateral deposit of $4.5 million is maintained. Subsequent to March 31, 2022, the facility was amended to extend maturity to July 31, 2022. |
(4) | Interest charged under the facility is at the one month LIBOR plus 1.77%. There is no cash collateral deposit maintained as of March 31, 2022. |
(5) | Interest charged under the facility is at the one month LIBOR plus 1.25% - 2.50%, with a floor rate of 0.50%. There is no cash collateral deposit maintained as of March 31, 2022. Subsequent to March 31, 2022, the facility was amended so that interest charged is at the one month LIBOR plus 1.76% - 2.25%, to decrease capacity to $230.0 million, and to shorten maturity to June 28, 2022. The facility was not renewed beyond the amended maturity and was terminated as of June 28, 2022. |
(6) | Interest charged under the facility is at the LIBOR flat plus 1.50% (defined as a LIBOR rate with no additional spread). Cash collateral deposit of $4.5 million is maintained. |
(7) | Interest charged under the facility is at the one month LIBOR plus 1.75% - 2.25%, which decreases to one month LIBOR plus 1.63% with incentive capacity usage for conforming loans, with a floor rate of one month LIBOR at 0.38%. There is no cash collateral deposit maintained as of March 31, 2022. |
(8) | Interest charged under the facility is at the adjusted SOFR plus 1.60%-1.85% (defined as the sum of the Term SOFR plus the SOFR adjustment). Cash collateral deposit of $5.0 million is maintained. |
(9) | Interest charged under the facility is at the one month LIBOR plus 1.60%, with a floor rate of one month LIBOR at 0.50%, as defined in the agreement. There is no cash collateral deposit maintained as of March 31, 2022. Subsequent to March 31, 2022, the facility was not renewed upon its maturity date. |
(10) | Interest charged under the facility is at the LIBOR flat plus 1.88%, with a floor rate of one month LIBOR at 0.25%, as defined in the agreement. There is no cash collateral deposit maintained as of March 31, 2022. Subsequent to March 31, 2022, the Company did not extend the facility beyond maturity. |
Fiscal Quarter End |
Minimum Revenue Trigger |
|||
December 31, 2021 |
$ | 550,000,000 | ||
March 31, 2022 |
$ | 651,700,000 | ||
June 30, 2022 |
$ | 797,600,000 | ||
September 30, 2022 |
$ | 910,000,000 | ||
December 31, 2022 and each fiscal quarter thereafter |
$ | 1,100,000,000 |
Three Months Ended March 31, |
Year Ended December 31, | |||||||||||||||||||
(in thousands) | 2022 |
2021 |
2021 |
2020 |
2019 |
|||||||||||||||
Net cash provided by (used in) operating activities |
$ | 532,386 | $ | (1,511,038 | ) | $ | 361,215 | $ | (1,778,339 | ) | $ | (324,159 | ) | |||||||
Net cash (used in) provided by investing activities |
$ | (23,963 | ) | $ | (13,471 | ) | $ | (68,703 | ) | $ | 16,988 | $ | (13,467 | ) | ||||||
Net cash (used in) provided by financing activities |
$ | (769,257 | ) | $ | 1,575,517 | $ | 304,542 | $ | 2,090,466 | $ | 369,832 |
(Amounts in thousands) Contractual Obligations |
Payments Due by Period |
|||||||||||||||||||
Less than 1 year |
1-3 years |
3-5 years |
More than 5 years |
Total |
||||||||||||||||
2020 Credit Facility |
$ | — | $ | — | $ | — | $ | 150,000 | $ | 150,000 | ||||||||||
Operating lease commitments |
16,997 | 24,466 | 19,509 | 16,529 | 77,501 | |||||||||||||||
Finance lease commitments (1) |
1,046 | 1,101 | — | — | 2,147 | |||||||||||||||
Interest payments (2) |
12,873 | 25,782 | 25,535 | — | 64,190 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 30,916 | $ | 51,349 | $ | 45,044 | $ | 166,529 | $ | 293,838 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Finance lease commitments represent remaining future lease payments and include leased assets such as furniture and IT equipment. |
(2) | Represents estimates of future interest payments due under our 2020 Credit Facility based on the outstanding principal amount as of March 31, 2022. The amounts are inclusive of $1.4 million of interest in kind that was added to the principal balance. |
Name |
Age |
Position(s) | ||||
Executive Officers |
||||||
Vishal Garg |
44 | Chief Executive Officer and Director | ||||
Kevin Ryan |
51 | Chief Financial Officer and Interim President | ||||
Nicholas Calamari |
43 | General Counsel, Secretary | ||||
Paula Tuffin |
59 | General Counsel, Chief Compliance Officer | ||||
Richard Benson-Armer |
58 | Chief People, Performance, and Culture Officer | ||||
Non-Employee Directors |
||||||
Harit Talwar |
61 | Director, Chairman of the Board of Directors | ||||
Michael Farello |
57 | Director | ||||
Steven Sarracino |
45 | Director | ||||
Riaz Valani |
45 | Director | ||||
Prabhu Narasimhan |
42 | Director |
• | Align executive pay with our financial and operational performance; |
• | Attract, retain and motivate key executives critical to achieving our vision and strategy; |
• | Provide competitive total compensation opportunities; |
• | Recognize and reward outstanding company and individual performance; and |
• | Avoid compensation structures and incentives that encourage excessive risk-taking. |
Affirm Holdings | Guild Holdings Company | Opendoor Technologies | SoFi Technologies | |||
Bill.com Holdings | Lemonade | Oscar Health | Upstart Holdings | |||
Carvana Co. | LendingTree | PennyMac Financial Services | UWM Holdings | |||
ContextLogic | loanDepot | Vroom | ||||
Etsy | Mr. Cooper Group | Rocket Companies | WEX |
Name and Principal Position |
Year |
Salary ($) |
Bonus ($) |
Stock Option Awards ($) (1) |
Non-Equity Incentive Plan Compensation ($) |
Non-Qualified Deferred Compensation Plan Earnings ($) |
All Other Compensation ($) (3) |
Total ($) |
||||||||||||||||||||||||
Vishal Garg |
2021 | $ | 750,000 | — | — | — | — | — | $ | 750,000 | ||||||||||||||||||||||
Chief Executive Officer |
2020 | $ | 300,000 | $ | 25,000,000 | — | — | — | — | $ | 25,300,000 | |||||||||||||||||||||
Kevin Ryan |
2021 | $ | 928,030 | $ | 1,000,000 | — | — | — | — | $ | 1,928,030 | |||||||||||||||||||||
Chief Financial Officer |
||||||||||||||||||||||||||||||||
Sigurgeir Jonsson |
2021 | $ | 750,000 | $ | 750,000 | $ | 8,584,028 | — | — | — | $ | 10,084,028 | ||||||||||||||||||||
Head of Financial Products |
||||||||||||||||||||||||||||||||
Diane Yu (2) |
2021 | $ | 996,212 | $ | 1,000,000 | $ | 8,767,454 | — | — | — | $ | 10,763,666 | ||||||||||||||||||||
Former Chief Technology Officer |
||||||||||||||||||||||||||||||||
Sarah Pierce (3) |
2021 | $ | 856,061 | $ | 1,000,000 | $ | 17,737,000 | — | — | — | $ | 19,593,061 | ||||||||||||||||||||
Former Head of Sales and Operations |
(1) | The amounts in this column represent the aggregate grant date fair value of awards or equity plan compensation computed in accordance with FASB Accounting Standards Codification Topic 718. Assumptions used in the calculation of these amounts are described in Note 2 to Better’s consolidated financial statements attached to this proxy statement/prospectus. |
(2) | Ms. Yu separated from Better as of April 8, 2022. |
(3) | Ms. Pierce separated from Better as of February 3, 2022. |
Grant date |
Estimated future payouts under equity incentive plan awards |
All other stock awards: Number of shares of stock or units (#) |
All other option awards: Number of securities underlying options (#) |
Exercise or base price of option awards ($) |
Grant date fair value of stock and option awards(1) |
|||||||||||||||||||||||||||
Threshold (#) |
Target (#) |
Maximum (#) |
||||||||||||||||||||||||||||||
Vishal Garg |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Kevin Ryan |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Sigurgeir Jonsson |
1/4/2021 | — | — | — | — | 1,107,000 | $ | 5.06 | $ | 8,584,028 | ||||||||||||||||||||||
Diane Yu |
1/4/2021 | — | — | — | — | 1,130,000 | $ | 5.06 | $ | 8,767,454 | ||||||||||||||||||||||
Sarah Pierce |
6/29/2021 | — | — | — | — | 600,000 | $ | 26.46 | $ | 9,312,000 | ||||||||||||||||||||||
9/28/2021 | — | — | — | — | 500,000 | $ | 26.46 | $ | 8,425,000 |
(1) | The aggregate grant date fair value of awards presented in this column is calculated in accordance with FASB ASC 718. |
Stock Option Awards |
Stock Awards |
|||||||||||||||||||||||
Name |
Number of securities underlying unexercised stock options exercisable (#)(1) |
Number of securities underlying unexercised stock options unexercisable (#)(1) |
Stock option exercise price ($) |
Stock option expiration date |
Number of shares or units of stock that have not vested (#)(2) |
Market value of shares of units of stock that have not vested ($)(3) |
||||||||||||||||||
Vishal Garg |
5,458,333 | 541,667 | $ | 3.42 | Aug. 21, 2029 | — | — | |||||||||||||||||
1,458,333 | 541,667 | $ | 27.35 | Aug. 21, 2029 | — | — | ||||||||||||||||||
— | — | — | 1,083,334 | $ | 28,665,018 | |||||||||||||||||||
Kevin Ryan |
— | — | — | 837,250 | $ | 22,153,635 | ||||||||||||||||||
Sigurgeir Jonsson |
276,750 | 480,250 | $ | 5.06 | Jan. 4, 2031 | 93,012 | $ | 2,461,098 | ||||||||||||||||
Diane Yu |
— | — | — | 1,130,000 | $ | 29,899,800 | ||||||||||||||||||
— | — | — | — | — | ||||||||||||||||||||
Sarah Pierce |
417 | $ | 0.37 | Aug. 14, 2027 | — | |||||||||||||||||||
— | 600,000 | $ | 26.46 | Jun. 29, 2031 | — | — | ||||||||||||||||||
— | 500,000 | $ | 26.46 | Sep. 28, 2031 | — | — | ||||||||||||||||||
— | — | — | 393,751 | $ | 10,418,651 |
(1) | The unvested stock options set forth in this column vest 25% on the first anniversary of the grant date (or, for Mr. Ryan’s outstanding stock options, the first anniversary of his start date) and in equal monthly installments thereafter over the following three years, subject to the NEO’s continued employment through each vesting date. The unvested stock options in this column may, in accordance with the terms of the applicable award agreement, be exercised prior to the date upon which the stock option is vested. Upon such an “early exercise,” the holder thereof is delivered restricted stock which, as described further in footnote (2) below, is generally subject to restrictions that lapse in accordance with the vesting schedule applicable to the original stock option award. |
(2) | The restricted stock awards set forth in this column were delivered to the holder upon the early exercise of stock options as permitted under the terms of the applicable stock option award agreement. The shares of restricted stock delivered upon an early exercise are, pursuant to the terms of the applicable restricted stock award agreement, subject to the same vesting schedule as applicable to the original stock option award (i.e., 25% on the first anniversary of the vesting start date and in equal monthly installments thereafter over three years, subject to continued employment). In the event that the holder terminates employment prior to the vesting date, Better has the option to repurchase any unvested restricted shares subject to the award, as described above under “ Employee Loan Program |
(3) | Amounts in this column were calculated by multiplying the number of restricted shares subject to each award by $26.46 per share, which was the fair market value of our common stock as of December 31, 2021 as determined by the Board in compliance with Section 409A of the Internal Revenue Code of 1986, as amended. |
Stock Option Awards |
Stock Awards |
|||||||||||||||
Name |
Number of shares acquired on exercise |
Value realized on exercise ($)(1) |
Number of shares acquired on vesting (#) |
Value realized on vesting ($)(2) |
||||||||||||
Vishal Garg |
4,000,000 | $ | 0.00 | 916,666 | $ | 17,121,678 | ||||||||||
Kevin Ryan |
1,182,000 | $ | 0.00 | 344,750 | $ | 9,122,085 | ||||||||||
Sigurgeir Jonsson |
350,000 | $ | 0.00 | 276,750 | $ | 7,332,805 | ||||||||||
Diane Yu |
1,130,000 | $ | 0.00 | — | — | |||||||||||
Sarah Pierce |
658,782 | $ | 931,388 | 173,970 | $ | 3,296,691 |
(1) | Represents value of a share of Better common stock upon the date of exercise, less the applicable exercise price of the stock option, with “$0.00” representing an early exercise of an option where the value of the underlying shares of Better common stock delivered upon such exercise was less than the applicable exercise price. |
(2) | Represents value of restricted shares upon lapse of applicable vesting conditions. |
Name |
Fees Earned or Paid in Cash ($) |
Stock Option Awards ($) (1) |
Stock Awards ($) |
All Other Compensation ($) |
Total ($) |
|||||||||||||||
Gabrielle Toledano (2) |
— | — | $ | 2,914,119 | — | $ | 2,914,119 | |||||||||||||
All Other Non-Executive Directors(3) |
— | — | — | — | — |
(1) | The amounts in this column represent the aggregate grant date fair value of awards or equity plan compensation computed in accordance with FASB Accounting Standards Codification Topic 718. Assumptions used in the calculation of these amounts are described in Note 16 to Better’s consolidated financial statements included in this proxy statement/prospectus. As of December 31, 2021, our Non-Executive Directors held the following equity awards: Mr. Schildkrout, 526,386 stock options and 145,834 restricted shares, Mr. Date, 267,000 stock options and Ms. Toledano, 96,367 RSUs. |
(2) | Ms. Toledano resigned from the Better Board in April 2022. |
(3) | All Other Non-Executive Directors during 2021 include Aaron Schildkrout, Dinesh Chopra, Howard Newman, Michael Farello, Rajeev Date, Riaz Valani, Steven Sarracino and Zachary Frankel. Messrs. Chopra and Date resigned from the Better Board in January 2022 and Mr. Newman resigned from the Better Board in November 2021. |
• | each person who is known to be the beneficial owner of more than 5% of Aurora Class A ordinary shares or Aurora Class B ordinary shares or is expected to be the beneficial owner of more than 5% of shares of Better Home & Finance Class A common stock or more than 5% of shares of Better Home & Finance Class B common stock post-Business Combination; |
• | each of Aurora’s current executive officers and directors; |
• | each person who will become an executive officer or director of Better Home & Finance post-Business Combination; and |
• | all executive officers and directors of Aurora as a group pre-Business Combination, and all executive officers and directors of Better Home & Finance post-Business Combination. |
Pre-Business Combination and Issuance of Pre-Closing Bridge Conversion Shares |
Post-Business Combination and Issuance of Pre-Closing Bridge Conversion Shares |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
No Redemption |
Assuming Maximum Redemptions |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name and Address of Beneficial Owner (1) |
Number of Aurora Class A Ordinary Shares (2) |
% of Aurora Class A Ordinary Shares |
Number of Aurora Class B Ordinary Shares |
% of Aurora Class B Ordinary Shares |
% of Total Voting Power |
Number of Shares of Better Home & Finance Class A Common Stock |
% of Better Home & Finance Class A Common Stock |
Number of Shares of Better Home & Finance Class B Common Stock |
% of Shares of Better Home & Finance Class B Common Stock |
Number of Shares of Better Home & Finance Class C Common Stock |
% of Shares of Better Home & Finance Class C Common Stock |
% of Total Voting Power |
Number of Shares of Better Home & Finance Class A Common Stock |
% of Better Home & Finance Class A Common Stock |
Number of Shares of Better Home & Finance Class B Common Stock |
% of Shares of Better Home & Finance Class B Common Stock |
Number of Shares of Better Home & Finance Class C Common Stock |
% of Shares of Better Home & Finance Class C Common Stock |
% of Total Voting Power |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5% Holders |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Novator Capital Sponsor Ltd. (3)(4)(5) |
2,300,000 | 8.3 | % | 5,542,259 | 80.0 | % | 22.6 | % | 16,452,245 | 17.0 | % | — | — | — | — | * | 16,452,245 | 23.5 | % | — | — | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Unbound Holdco Ltd. (6) |
1,000,000 | 3.6 | % | 1,159,375 | 16.7 | % | 6.2 | % | 2,159,375 | 2.2 | % | — | — | — | — | * | 2,159,375 | 3.1 | % | — | — | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Entities affiliated with SoftBank Group (7) |
— | — | — | — | — | 14,506,577 | 15.0 | % | 59,404,245 | 9.1 | % | 50,493,423 | 100.0 | % | 9.4 | % | 11,985,615 | 17.2 | % | 59,404,245 | 9.1 | % | 53,014,385 | 100.0 | % | 9.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Entities Affiliated with Vishal Garg (8)(12) |
— | — | — | — | — | — | — | 112,876,784 | 17.3 | % | — | — | 16.5 | % | — | — | 112,876,784 | 17.3 | % | — | — | 16.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Entities Affiliated with Riaz Valani (9) |
— | — | — | — | — | — | — | 50,580,305 | 7.8 | % | — | — | 7.4 | % | — | — | 50,580,305 | 7.8 | % | — | — | 7.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Entities Affiliated with Activant Capital Group LLC (10) |
— | — | — | — | — | — | — | 58,677,349 | 9.0 | % | — | — | 8.6 | % | — | — | 58,677,349 | 9.0 | % | — | — | 8.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pine Brook Capital Partners II, LP (11) |
— | — | — | — | — | — | — | 47,648,254 | 7.3 | % | — | — | 7.0 | % | — | — | 47,648,254 | 7.3 | % | — | — | 7.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Directors and Executive Officers Pre-Business Combination |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Arnaud Massenet (4) |
150,000 | * | — | — | * | 150,000 | * | — | — | — | — | * | 150,000 | * | — | — | — | — | * | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Caroline Harding |
2,500 | * | — | — | * | 2,500 | * | — | — | — | — | * | 2,500 | * | — | — | — | — | * | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prabhu Narasimhan (4) |
50,000 | * | — | — | * | 50,000 | * | — | — | — | — | * | 50,000 | * | — | — | — | — | * | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thor Björgólfsson (5) |
2,300,000 | 8.3 | % | 5,542,259 | 80.0 | % | 22.6 | % | 16,452,245 | 17.0 | % | — | — | — | — | * | 16,452,245 | 23.5 | % | — | — | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shravin Mittal (6) |
1,000,000 | 3.6 | % | 1,159,375 | 16.7 | % | 6.2 | % | 2,159,375 | 2.2 | % | — | — | — | — | * | 2,159,375 | 3.1 | % | — | — | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Sangeeta Desai |
— | — | 124,219 | 1.8 | % | * | 124,219 | * | — | — | — | — | * | 124,219 | * | — | — | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael Edelstein |
— | — | 124,219 | 1.8 | % | * | 124,219 | * | — | — | — | — | * | 124,219 | * | — | — | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All Aurora directors and executive officers as a group (7 individuals) |
3,502,500 | 12.6 | % | 6,950,072 | 100 | % | 29.5 | % | 19,062,558 | 19.7 | % | — | — | — | — | * | 19,062,558 | 27.3 | % | — | — | — | — | * | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Directors and Executive Officers Post-Business Combination |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vishal Garg (8)(12) |
— | — | — | — | — | — | — | 112,876,784 | 17.3 | % | — | — | 16.5 | % | — | — | 112,876,784 | 17.3 | % | — | — | 16.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Riaz Valani (9) |
— | — | — | — | — | — | — | 50,580,305 | 7.8 | % | — | — | 7.4 | % | — | — | 50,580,305 | 7.8 | % | — | — | 7.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Nicholas Calamari (13) |
— | — | — | — | — | — | — | 6,938,772 | 1.1 | % | — | — | 1.0 | % | — | — | 6,938,772 | 1.1 | % | — | — | 1.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Kevin Ryan |
— | — | — | — | — | — | — | 3,471,653 | * | — | — | * | — | — | 3,471,653 | * | — | — | * | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paula Tuffin (14) |
— | — | — | — | — | — | — | 1,175,823 | * | — | — | * | — | — | 1,175,823 | * | — | — | * | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prabhu Narasimhan |
50,000 | * | — | — | * | 50,000 | * | — | — | — | — | * | 50,000 | * | — | — | — | — | * | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Steven Sarracino (15) |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael Farello |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Harit Talwar (16) |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All Better Home & Finance directors and executive officers as a group ([ ] individua |
* | Less than one percent |
(1) | Unless otherwise noted, the business address of each of those listed in the table above pre-Business Combination is 20 North Audley Street, London W1K 6LX, United Kingdom and post-Business Combination is 3 World Trade Center, 175 Greenwich Street, 59th Floor, New York, NY 10007. |
(2) | Prior to the Closing, holders of record of Aurora Class A ordinary shares and Aurora Class B ordinary shares are entitled to one vote for each share held on all matters to be voted on by Aurora shareholders and vote together as a single class, except as required by law; provided, that holders of Aurora Class B ordinary shares have the right to elect all of Aurora’s directors prior to the Closing, and holders of Aurora’s Class A ordinary shares are not entitled to vote on the election of directors during such time. As a result of and upon the effective time of the Domestication, each of the then-issued and outstanding Aurora Class A ordinary shares and Aurora Class B ordinary shares will convert automatically, on a one-for-one |
(3) | Novator Capital Sponsor Ltd. receives all shares of Better Home & Finance Class A common stock that are converted from Aurora ordinary shares in the maximum redemptions scenario. |
(4) | Novator Capital Sponsor Ltd. is the record holder of the Aurora Class A ordinary shares reported in this row. Arnaud Massenet and Prabhu Narasimhan may be deemed to beneficially own securities held by Novator Capital Sponsor Ltd. by virtue of their shared control over Novator Capital Sponsor Ltd. |
(5) | Novator Capital Sponsor Ltd. is the record holder of the Aurora Class B ordinary shares reported in this row. Thor Björgólfsson may be deemed to beneficially own securities held by Novator Capital Sponsor Ltd. by virtue of his control over Novator Capital Sponsor Ltd. Novator Capital Sponsor Limited is wholly owned by BB Trustees SA, as trustee of the irrevocable discretionary trust known as The Future Holdings Trust for which BB Trustees SA acts as trustee; the directors of such trust are Nicolas Killen, Jan Rottiers and Arnaud Cywies. Mr. Björgólfsson disclaims beneficial ownership of the shares owned by Novator Capital Sponsor Ltd. |
(6) | Unbound Holdco Ltd. is the record holder of the Aurora ordinary shares reported in this row. Shravin Mittal may be deemed to beneficially own securities held by Unbound Holdco Ltd. by virtue of his control over Unbound Holdco Ltd. The business address of Unbound Holdco Ltd. is 11-15 Seaton Place, St Helier, Jersey JE4 0QH. |
(7) | Consists of (a) a portion of Pre-Closing Bridge Conversion Shares in the amount of 14,506,577 (under the no redemptions scenario) or 11,985,615 (under the maximum redemptions scenario) shares of Better Home & Finance Class A common stock to be acquired in connection with the conversion of the Pre-Closing Bridge Notes, and held of record, by SB Northstar LP, (b) 59,404,245 (under both no redemptions and maximum redemptions scenarios) shares of Better Home & Finance Class B common stock held of record by SVF II Beaver (DE) LLC, and (c) a portion of Pre-Closing Bridge Conversion Shares in the amount of 50,493,423 (under the no redemptions scenario) or 53,014,385 (under the maximum redemptions scenario) shares of Better Home & Finance Class C common stock to be acquired in connection with the conversion of the Pre-Closing Bridge Notes due to regulatory restrictions, and held of record, by SB Northstar LP. As discussed earlier in this proxy statement/prospectus, in accordance with the SoftBank Subscription Agreement, the maximum number of Better Home & Finance Class A common stock owned by SoftBank cannot exceed 9.4% of the outstanding voting power of Better Home & Finance as of the Closing (without giving effect to the Voting Proxy described under “ Certain Relationships and Related Party Transactions—Better—Other Stockholder Agreements—SoftBank Agreements |
(8) | Consists of (a) 11,738,546 shares of Better Home & Finance Class B common stock held of record by 1/0 Real Estate LLC and (b) 85,834,137 shares of Better Home & Finance Class B common stock held of record by Vishal Garg, in each case, under both no redemptions and maximum redemptions. Vishal Garg is the controlling shareholder of 1/0 Holdco, LLC, which wholly owns 1/0 Real Estate, LLC. Therefore, Mr. Garg may be deemed to have voting power and dispositive power over the shares held by 1/0 Real Estate, LLC. Nicholas Calamari holds a more than five percent ownership interest in 1/0 Holdco, LLC, which wholly owns 1/0 Real Estate, LLC. The business address of 1/0 Real Estate LLC is 1 World Trade Center, Ste 8500, New York, NY 10007. |
(9) | Consists of (a) 24,602,552 shares of Better Home & Finance Class B common stock held of record by 1/0 Mortgage Investment, LLC and (b) 25,977,753 shares of Better Home & Finance Class B common stock held of record by Better Portfolio Holdings 1 LLC, in each case, under both no redemptions and maximum redemptions scenarios. Riaz Valani is the beneficiary of family trusts that own (i) Addison Investment Holdings LLC, which has a controlling interest in 1/0 Mortgage Investment, LLC, and (ii) Better Portfolio Holdings 1 LLC. Mr. Valani is the manager of 1/0 Services LLC, which in turn is the manager of 1/0 Mortgage Investment, LLC, and Better Portfolio Holdings 1 LLC. Therefore, Mr. Valani may be deemed the beneficial owner of the shares held by these entities. However, Mr. Valani disclaims beneficial ownership over |
the shares held by 1/0 Mortgage Investment, LLC, except to the extent of his pecuniary interest. In addition, Mr.Frankel holds a more than five percent ownership interest in 1/0 Mortgage Investment, LLC. The business address of 1/0 Mortgage Investment, LLC and Better Portfolio Holdings 1 LLC is 500 108th Avenue NE, Suite 1100, Bellevue, WA 98004. |
(10) | Consists of (a) 17,553,000 shares of Better Home & Finance Class B common stock held of record by Activant Holdings I, Ltd., (b) 6,845,076 shares of Better Home & Finance Class B common stock held of record by Activant Ventures III Opportunities Fund 1, LP, (c) 1,033,869 shares of Better Home & Finance Class B common stock held of record by Activant Ventures III Opportunities Fund 2, L.P., (d) 835,856 shares of Better Home & Finance Class B common stock held of record by Activant Ventures III Opportunities Fund 3, LP, (e) 1,340,859 shares of Better Home & Finance Class B common stock held of record by Activant Ventures III Opportunities Fund 4, L.P., (f) 5,849,277 shares of Better Home & Finance Class B common stock held of record by Activant Ventures III Opportunities Fund 6, LP, and (g) 25,219,411 shares of Better Home & Finance Class B common stock held of record by Activant Ventures III, L.P., in each case, under both no redemptions and maximum redemptions scenarios. Activant Ventures Advisors III, LLC is the general partner of Activant Ventures III Opportunities Fund 1, LP, Activant Ventures III Opportunities Fund 2, LP, Activant Ventures III Opportunities Fund 3, LP, Activant Ventures III Opportunities Fund 4, L.P., and Activant Ventures III Opportunities 6, LP, the general partner of the entities which own Activant Ventures III, L.P. Therefore, Activant Ventures Advisors III, LLC may be deemed to have voting power and dispositive power with respect to the shares hold by these entities. The business address of each of these entities is 323 Railroad Avenue, Greenwich, CT 06830. |
(11) | The business address of Pine Brook Capital Partners II, LP is 60 East 42nd Street, Suite 3014, New York, NY 10165. |
(12) | Includes 15,072,952 shares of Better Home & Finance Class B common stock issuable upon the exercise of Better Home & Finance Options (assuming net settlement) under both no redemptions and maximum redemptions scenarios. |
(13) | Includes 37,849 shares of Better Home & Finance Class B common stock issuable upon the exercise of Better Home & Finance Options (assuming net settlement) under both no redemptions and maximum redemptions scenarios. |
(14) | Consists of (a) 359,837 shares of Better Home & Finance Class B common stock held of record by Paula Tuffin, (b) 23,292 shares of Better Home & Finance Class B common stock issuable upon the exercise of Better Home & Finance Options (assuming net settlement), and (c) 786,872 shares of Better Home & Finance Class B common stock held of record in the Technology Stock Holding Master Trust/Series Tuffin 2021 Trust, in each case, under both no redemptions and maximum redemptions scenarios. |
(15) | Steve Sarracino is Principal of Activant Ventures Advisors III, LLC, which is the general partner of the related investment entities that hold interests in Better. Therefore, Mr. Sarracino has control of the shares held by the entities affiliated with Activant Ventures Advisors III, LLC. However, Mr. Sarracino disclaims beneficial ownership over the shares, and in all events disclaims pecuniary interest except to the extent of his economic interest. |
(16) | Does not reflect (i) 810,000 restricted stock units awarded to Harit Talwar on May 23, 2022, one-sixteenth of which will vest on the first day of each three-month period following May 1, 2022, with the first such quarterly vesting date to occur on August 1, 2022, or (ii) 810,000 restricted stock units awarded to Harit Talwar on May 23, 2022, which will be subject to both time- and performance-based vesting criteria, with the time-based vesting criteria to be satisfied on November 1, 2022, subject, in each case, to continuous service on Better’s board of directors through each such date. |
• | 1/0 Mortgage Investment, LLC (an entity associated with Better director Riaz Valani)—at least 25% |
• | Activant Ventures III Opportunities Fund 1, LP, Activant Ventures III Opportunities Fund 2, LP, Activant Ventures III Opportunities Fund 3, LP, Activant Ventures III Opportunities Fund 4, LP, Activant Ventures III Opportunities Fund 6, LP, Activant Ventures III, LP and Activant Holdings I, LTD. (an entity associated with Better director Steve Sarracino)—at least approximately 7.5% |
Related Person |
Aggregate Principal Balance ($) |
|||
Aaron Schildkrout (1) |
1,265,000 | |||
Vishal Garg |
41,029,200 | |||
Sigurgeir Jonsson (2) |
1,771,000 | |||
Sarah Pierce (3) |
2,277,000 | |||
Kevin Ryan |
5,980,920 | |||
Paula Tuffin |
253,000 | |||
Diane Yu (4) |
5,717,800 |
(1) | Although Mr. Schildkrout resigned from the Better Board on June 8, 2022, he continues as an advisor to Better. |
(2) | Mr. Jonsson transitioned to a new role at Better in the first half of 2022 and is no longer considered an executive officer. |
(3) | Ms. Pierce separated from Better on February 3, 2022. |
(4) | Ms. Yu separated from Better on April 8, 2022. |
Shares of Series D Preferred Stock |
Shares of Series D-2 Preferred Stock |
|||||||
Activant Ventures III, LP |
363,261 | 249,117 | ||||||
Activant Ventures III Opportunities Fund 2, LP |
— | 353,399 | ||||||
Activant Ventures III Opportunities Fund 6, LP |
1,999,411 | — |
Shares of Series C Preferred Stock |
Aggregate Purchase Price |
|||||||
Vishal Garg |
1,462,373 | $ | 4,999,999.53 | |||||
Activant Ventures III, L.P. |
6,434,441 | $ | 21,999,997.22 | |||||
Activant Ventures III Opportunities Fund 1, LP |
2,339,797 | $ | 7,999,999.92 |
Delaware |
Cayman Islands | |||
Stockholder/Shareholder Approval of Business Combinations |
Mergers generally require approval of a majority of all outstanding shares. Mergers in which less than 20% of the acquirer’s stock is issued generally do not require acquirer stockholder approval. Mergers in which one corporation owns 90% or more of a second corporation may be completed without the vote of the second corporation’s board of directors or stockholders. | Mergers require a special resolution and any other authorization as may be specified in the relevant articles of association. Parties holding certain security interests in the constituent companies must also consent. All mergers (other than parent/subsidiary mergers) require shareholder approval—there is no exception for smaller mergers. Where a bidder has acquired 90% or more of the shares in a Cayman Islands company, it can compel the acquisition of the shares of the remaining shareholders and thereby become the sole shareholder. A Cayman Islands company may also be acquired through a “scheme of arrangement” sanctioned by a Cayman Islands court and approved by 50%+1 in number and 75% in value of shareholders in attendance and voting at a shareholders’ meeting. | ||
Stockholder/Shareholder Votes for Routine Matters |
Generally, approval of routine corporate matters that are put to a stockholder vote require the | Under the Cayman Islands Companies Act and Aurora’s amended and restated memorandum |
Delaware |
Cayman Islands | |||
affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter. | and articles of association law, routine corporate matters may be approved by an ordinary resolution (being a resolution passed by a simple majority of the shareholders as being entitled to do so). | |||
Appraisal Rights |
Generally, a stockholder of a publicly traded corporation does not have appraisal rights in connection with a merger. | Minority shareholders that dissent from a merger are entitled to be paid the fair market value of their shares, which, if necessary, may ultimately be determined by the court. | ||
Inspection of Books and Records |
Any stockholder may inspect the corporation’s books and records for a proper purpose during the usual hours for business. | Shareholders generally do not have any rights to inspect or obtain copies of the register of shareholders or other corporate records of a company. | ||
Stockholder/Shareholder Lawsuits |
A stockholder may bring a derivative suit subject to procedural requirements (including adopting Delaware as the exclusive forum as per Organizational Documents Proposal D). | In the Cayman Islands, the decision to institute proceedings on behalf of a company is generally taken by the company’s board of directors. A shareholder may be entitled to bring a derivative action on behalf of the company, but only in certain limited circumstances. | ||
Fiduciary Duties of Directors |
Directors must exercise a duty of care and a duty of loyalty and good faith to the company and its stockholders. | A director owes fiduciary duties to a company, including to exercise loyalty, honesty and good faith to the company as a whole. In addition to fiduciary duties, directors of Aurora owe a duty of care, diligence and skill. Such duties are owed to the company but may be owed directly to creditors or shareholders in certain limited circumstances. | ||
Indemnification of Directors and Officers |
A corporation is generally permitted to indemnify its directors and officers acting in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation. | A Cayman Islands company generally may indemnify its directors or officers except with regard to fraud or willful default. | ||
Limited Liability of Directors |
Permits limiting or eliminating the monetary liability of a director to a corporation or its stockholders, except with regard to breaches of the duty of loyalty, intentional misconduct, unlawful repurchases or | Liability of directors may be unlimited, except with regard to their own fraud or willful default. |
Delaware |
Cayman Islands | |||
dividends, or improper personal benefit. |
||||
Business Combination or Antitakeover Statutes |
Section 203 is a default provision of the DGCL that prohibits a publicly held Delaware corporation from engaging in a business combination, such as a merger, with “interested stockholders” (a person or group owning 15% or more of the corporation’s voting stock) for three years following the date that person becomes an interested stockholder, unless: (i) before such stockholder becomes an “interested stockholder,” the board of directors approves the Business Combination or the transaction that results in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the outstanding voting stock of the corporation at the time of the transaction (excluding stock owned by certain persons); or (iii) at the time or after the stockholder became an interested stockholder, the board of directors and at least two-thirds of the disinterested outstanding voting stock of the corporation approves the transaction.Better Home & Finance has opted out of the protections of Section 203 of the DGCL. As a result, the statute does not apply to Better Home & Finance. |
There are none. |
• | 1% of the total number of Better Home & Finance common stock then outstanding; or |
• | the average weekly reported trading volume of Better Home & Finance common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
• | the issuer of the securities that was formerly a shell company has ceased to be a shell company; |
• | the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
• | the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and |
• | at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. |
• | not later than the 90th day; and |
• | not earlier than the 120th day, |
Page |
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Audited Financial statements |
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F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
Unaudited Interim Consolidated Financial Statements |
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F-24 |
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F-25 |
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F-26 |
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F-27 |
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F-28 |
Page No. |
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Audited Consolidated Financial Statements |
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F-45 | ||||
Consolidated Financial Statements: |
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F-46 | ||||
F-47 | ||||
F-48 | ||||
F-51 | ||||
F-53 | ||||
Unaudited Interim Consolidated Financial Statements |
||||
Unaudited Consolidated Financial Statements: |
||||
F-110 |
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F-111 |
||||
F-112 |
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F-114 |
||||
F-116 |
December 31, 2021 |
December 31, 2020 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash |
$ | $ | — | |||||
Related party receivable |
— | |||||||
Prepaid expenses and other current assets |
||||||||
|
|
|
|
|||||
Total Current Assets |
||||||||
|
|
|
|
|||||
Cash held in Trust Account |
— | |||||||
Deferred offering cost |
— | |||||||
|
|
|
|
|||||
Total Assets |
$ |
$ |
||||||
|
|
|
|
|||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued offering costs |
$ | $ | ||||||
Related party loans |
||||||||
|
|
|
|
|||||
Total Current Liabilities |
||||||||
|
|
|
|
|||||
Warrant Liability |
— | |||||||
Deferred underwriting fee payable |
— | |||||||
|
|
|
|
|||||
Total Liabilities |
||||||||
|
|
|
|
|||||
Commitments and Contingencies |
||||||||
Class A ordinary shares subject to possible redemption, |
— | |||||||
Shareholders’ Equity |
||||||||
Preference shares, $ |
— | |||||||
Class A ordinary shares, $ |
— | |||||||
Class B ordinary shares, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total Shareholders’ Equity |
||||||||
|
|
|
|
|||||
Total Liabilities and Shareholders’ Equity |
$ |
$ |
||||||
|
|
|
|
Year Ended December 31, 2021 |
For the Period from October 7, 2020 (Inception) through December 31, 2020 |
|||||||
Formation and operating costs |
$ | $ | ||||||
|
|
|
|
|||||
Loss from operations |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Other income (expense): |
||||||||
Interest earned on marketable securities held in Trust Account |
— | |||||||
Change in fair value of warrants |
— | |||||||
Change in fair value of over-allotment option liability |
— | |||||||
Offering costs allocated to warrants liability |
( |
) | — | |||||
|
|
|
|
|||||
Net loss |
$ |
( |
) |
$ |
( |
) | ||
|
|
|
|
|||||
Basic and diluted weighted average shares outstanding, Class A Common Stock subject to possible redemption |
— | |||||||
|
|
|
|
|||||
Basic and diluted net loss per share, Class A ordinary shares subject to possible redemption |
$ |
( |
) |
$ |
( |
) | ||
|
|
|
|
|||||
Basic and diluted weighted average shares outstanding, Non-Redeemable Class A and Class B Common Stock |
||||||||
|
|
|
|
|||||
Basic and diluted net loss per share, Non-Redeemable Class A and Class B Common Stock |
$ |
( |
) |
$ |
( |
) | ||
|
|
|
|
Class A |
Class B |
Total |
||||||||||||||||||||||||||
Ordinary Shares |
Amount |
Ordinary Shares |
Amount |
Additional Paid in Capital |
Accumulated Deficit |
Shareholders’ Equity |
||||||||||||||||||||||
Balance - December 31, 2020 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
Sale of |
— | — | — | |||||||||||||||||||||||||
Sale of |
— | — | — | |||||||||||||||||||||||||
Sale of Private Placement Warrants |
— | — | — | — | — | |||||||||||||||||||||||
Ordinary shares subject to redemption (as restated) |
( |
) | ( |
) | — | — | ( |
) | — | ( |
) | |||||||||||||||||
Surrender and cancellation of Founder Shares |
— | — | ( |
) | ( |
) | — | — | ||||||||||||||||||||
Over-allotment option liability |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Balance - December 31, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
Class A |
Class B |
Total |
||||||||||||||||||||||||||
Ordinary Shares |
Amount |
Ordinary Shares |
Amount |
Additional Paid in Capital |
Accumulated Deficit |
Shareholders’ Equity |
||||||||||||||||||||||
Balance - October 7, 2020 (Inception) |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||
Issuance of Class B ordinary shares to Sponsor |
— | — | — | |||||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Balance - December 31, 2020 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
Year Ended December 31, 2021 |
For the Period from October 7, 2020 (Inception) through December 31, 2020 |
|||||||
Cash Flows from Operating Activities: |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Change in fair value of warrant liability |
( |
) | — | |||||
Offering cost allocated to warrant liability |
— | |||||||
Interest earned on marketable securities held in Trust Account |
( |
) | — | |||||
Change in fair value of over-allotment option liability |
( |
) | — | |||||
Changes in operating assets and liabilities: |
||||||||
Payment of formation costs through issuance of Class B ordinary shares |
— | |||||||
Accounts Receivable |
( |
) | — | |||||
Prepaid expenses and other current assets |
( |
) | ( |
) | ||||
Accounts payable and accrued offering costs |
— | |||||||
Net cash used in operating activities |
( |
) |
( |
) | ||||
Cash Flows from Investing Activities |
||||||||
Investment of cash into Trust Account |
( |
) | ||||||
Net cash used in investing activities |
( |
) |
||||||
Cash Flows from Financing Activities: |
||||||||
Proceeds from sale of Units, net of underwriting discounts paid |
— | |||||||
Proceeds from sale of Private Placement Units |
— | |||||||
Proceeds from sale of Private Placement Warrants |
— | |||||||
Payment of offering costs |
— | ( |
) | |||||
Proceeds from promissory note - related party |
||||||||
Net cash provided by financing activities |
||||||||
Net Change in Cash |
||||||||
Cash - Beginning of period |
||||||||
Cash - End of period |
||||||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: |
||||||||
Deferred Offering Cost |
||||||||
Deferred offering costs paid directly by sponsor in exchange for issuance of Class B ordinary shares |
— | |||||||
Proceeds from Promissory Note with Related Party for Offering Cost |
— | |||||||
Initial classification of Class A ordinary share subject to possible redemption |
— | |||||||
Deferred underwriting fee payable |
— | |||||||
Initial Classification of Warrant liability |
— |
Year Ended December 31, 2021 |
For the Period from October 7, 2020 (Inception) through December 31, 2020 |
|||||||
Class A Common Stock subject to possible redemption |
||||||||
Numerator: Earnings attributable to Class A Common Stock subject to possible redemption |
$ | ( |
) | $ | ||||
|
|
|
|
|||||
Net earnings attributable to Class A Common Stock subject to possible redemption |
$ | ( |
) | $ | ||||
|
|
|
|
|||||
Denominator: Weighted average Class A Common Stock subject to possible redemption |
||||||||
Basic and diluted weighted average shares outstanding, Class A Common Stock subject to possible redemption |
||||||||
|
|
|
|
|||||
Basic and diluted net loss per share, Class A Common Stock subject to possible redemption |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
|||||
Non-Redeemable Class A and Class B Common Stock |
||||||||
Numerator: Net loss minus net earnings |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Less: Net earnings attributable to Class A Common Stock subject to possible redemption |
— | — | ||||||
|
|
|
|
|||||
Non-redeemable net loss |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
|||||
Denominator: Weighted average Non-Redeemable Class A and Class B Common Stock |
||||||||
Basic and diluted weighted average shares outstanding, Non-Redeemable Class A and Class B Common Stock |
||||||||
|
|
|
|
|||||
Basic and diluted net loss per share, Non-Redeemable Class A and Class B Common Stock |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
• | in whole and not in part; |
• | at a price of $ |
• | upon not less than |
• | if, and only if, the reported last sales price of the Class A ordinary shares equals or exceeds $ third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. |
• | in whole and not in part; |
• | at $ |
• | upon a minimum of |
• | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $10.00 per public share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any |
• | There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial shareholders, directors and officers have entered into agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, Novator private placement shares and any public shares they may acquire during or after this offering in connection with the completion of our initial business combination. |
Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
Level 3: | Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
||||||||||
Assets: |
||||||||||||
Investments held in Trust Account - money market funds |
$ | $ | — | $ | — | |||||||
Liabilities: |
||||||||||||
Derivative public warrant liabilities |
— | — | ||||||||||
Derivative private warrant liabilities |
— | — | ||||||||||
Total Fair Value |
$ | $ | — | $ | ||||||||
At March 8, 2021 (Initial Measurement) |
As of December 31, 2021 |
|||||||
Stock price |
||||||||
Strike price |
||||||||
Probability of completing a Business Combination |
% | % | ||||||
Remaining term (in years) |
||||||||
Volatility |
% | % | ||||||
Risk-free rate |
% | % | ||||||
Fair value of warrants |
At March 8, 2021 (Initial Measurement) |
||||
Unit price |
||||
Exercise price |
||||
Contractual term |
||||
Volatility |
% | |||
Risk-free rate |
% | |||
Fair value of over-allotment option |
Private Placement |
Public |
Warrant Liabilities |
||||||||||
Fair value as of December 31, 2020 |
$ | — | $ | — | $ | — | ||||||
Initial measurement at March 8, 2021 |
||||||||||||
Initial measurement of over-allotment warrants |
||||||||||||
Change in valuation inputs or other assumptions |
( |
) | ( |
) | ( |
) | ||||||
Fair value as of December 31, 2021 |
||||||||||||
March 31, 2022 (Unaudited) |
December 31, 2021 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash |
$ | $ | ||||||
Related party receivable |
||||||||
Prepaid expenses and other current assets |
||||||||
Total Current Assets |
||||||||
Cash held in Trust Account |
||||||||
Total Assets |
$ |
$ |
||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued offering costs |
$ | $ | ||||||
Related party loans |
||||||||
Total Current Liabilities |
||||||||
Warrant Liability |
||||||||
Deferred underwriting fee payable |
||||||||
Total Liabilities |
||||||||
Commitments and Contingencies |
||||||||
Class A ordinary shares subject to possible redemption, |
||||||||
Shareholders’ Equity |
||||||||
Preference shares, $ |
||||||||
Class A ordinary shares, $ |
||||||||
Class B ordinary shares, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total Shareholders’ Equity |
||||||||
Total Liabilities and Shareholders’ Equity |
$ |
$ |
||||||
Three Months Ended March 31, 2022 (Unaudited) |
Three Months Ended March 31, 2021 (Unaudited) |
|||||||
Formation and operating costs |
$ | $ | ||||||
Loss from operations |
( |
) |
( |
) | ||||
Other income (expense): |
||||||||
Interest earned on marketable securities held in Trust Account |
— | |||||||
Change in fair value of warrants |
( |
) | ||||||
Change in fair value of over-allotment option liability |
— | |||||||
Offering costs allocated to warrants liability |
— | ( |
) | |||||
Net income (loss) |
$ |
$ |
( |
) | ||||
Basic and diluted weighted average shares outstanding, Class A Common Stock subject to possible redemption |
||||||||
Basic and diluted net income (loss) per share, Class A ordinary shares subject to possible redemption |
$ |
$ |
( |
) | ||||
Basic and diluted weighted average shares outstanding, Non-Redeemable Class A and Class B Common Stock |
||||||||
Basic and diluted net income (loss) per share, Non-Redeemable Class A and Class B Common Stock |
$ |
$ |
( |
) | ||||
Class A |
Class B |
|||||||||||||||||||||||||||
Ordinary Shares |
Amount |
Ordinary Shares |
Amount |
Additional Paid in Capital |
Accumulated Deficit |
Total Shareholders’ Equity |
||||||||||||||||||||||
Balance—January 1, 2022 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
Net income (loss) |
— | — | — | — | — | |||||||||||||||||||||||
Balance—March 31, 2022 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
Ordinary Shares |
Amount |
Ordinary Shares |
Amount |
Additional Paid-in Capital |
Accumulated Deficit |
Shareholders’ Equity |
||||||||||||||||||||||
Balance—January 1, 2021 |
— |
$ |
— |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||
Sale of |
— | — | — | |||||||||||||||||||||||||
Sale of |
— | — | — | |||||||||||||||||||||||||
Sale of Private Placement Warrants |
— | — | — | — | — | |||||||||||||||||||||||
Ordinary shares subject to redemption (as restated) |
( |
) | ( |
) | — | — | ( |
) | — | ( |
) | |||||||||||||||||
Over-allotment option liability |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Balance—March 31, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
Three Months Ended March 31, 2022 |
Three Months Ended March 31, 2021 |
|||||||
Cash Flows from Operating Activities: |
||||||||
Net income (loss) |
$ | $ | ( |
) | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
Change in fair value of warrant liability |
( |
) | ||||||
Offering cost allocated to warrant liability |
— | |||||||
Changes in fair value of over-allotment option liability |
— | ( |
) | |||||
Changes in operating assets and liabilities: |
||||||||
Prepaid expenses and other current assets |
||||||||
Related party receivable |
— | |||||||
Accounts payable and accrued offering costs |
||||||||
Net cash used in operating activities |
( |
) |
( |
) | ||||
Cash Flows from Investing Activities |
||||||||
Investment of cash into Trust Account |
( |
) | ( |
) | ||||
Net cash used in investing activities |
( |
) |
( |
) | ||||
Cash Flows from Financing Activities: |
||||||||
Proceeds from sale of Units, net of underwriting discounts paid |
— | |||||||
Proceeds from sale of Private Placement Units |
— | |||||||
Proceeds from sale of Private Placement Warrants |
— | |||||||
Proceeds from promissory note — related party |
||||||||
Net cash provided by financing activities |
||||||||
Net Change in Cash |
( |
) | ||||||
Cash — Beginning of period |
||||||||
Cash — End of period |
$ |
$ |
||||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: |
||||||||
Deferred Offering Cost |
— | $ | ||||||
Proceeds from Related Party for Offering Cost |
— | $ | ||||||
Class A ordinary share subject to possible redemption |
— | $ | ||||||
Initial Classification of Warrant liability |
— | $ | ||||||
Deferred underwriting fee payable |
— | $ |
Three Months Ended |
||||||||
March 31, 2022 |
March 31, 2021 |
|||||||
Class A Common Stock subject to possible redemption |
||||||||
Numerator: Earnings (losses) attributable to Class A Common Stock subject to possible redemption |
$ | $ | ( |
) | ||||
Net earnings (losses) attributable to Class A Common Stock subject to possible redemption |
$ | $ | ( |
) | ||||
Denominator: Weighted average Class A Common Stock subject to possible redemption |
||||||||
Basic and diluted weighted average shares outstanding, Class A Common Stock subject to possible redemption |
||||||||
Basic and diluted net income (loss) per share, Class A Common Stock subject to possible redemption |
$ | $ | ( |
) | ||||
Non-Redeemable Class A and Class B Common Stock |
||||||||
Numerator: Net income (loss) minus net earnings |
||||||||
Net income (loss) |
$ | $ | ( |
) | ||||
Less: Net earnings (losses) attributable to Class A Common Stock subject to possible redemption |
— | — | ||||||
Non-redeemable net income (loss) |
$ | $ | ( |
) | ||||
Denominator: Weighted average Non-Redeemable Class A and Class B Common Stock |
||||||||
Basic and diluted weighted average shares outstanding, Non-Redeemable Class A and Class B Common Stock |
||||||||
Basic and diluted net income (loss) per share, Non-Redeemable Class A and Class B Common Stock |
$ | $ | ( |
) | ||||
• | in whole and not in part; |
• | at a price of $ |
• | upon not less than |
• | if, and only if, the reported last sales price of the Class A ordinary shares equals or exceeds $ |
• | in whole and not in part; |
• | at $ |
• | upon a minimum of |
• | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ 30 -trading day period ending |
• | There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial shareholders, directors and officers have entered into agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, Novator private placement shares and any public shares they may acquire during or after this offering in connection with the completion of our initial business combination. |
Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |
Level 3: | Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
||||||||||
Assets: |
||||||||||||
Investments held in Trust Account – money market funds |
$ | $ | — | $ | — | |||||||
Liabilities: |
||||||||||||
Derivative public warrant liabilities |
— | — | ||||||||||
Derivative private warrant liabilities |
— | — | ||||||||||
|
|
|
|
|
|
|||||||
Total Fair Value |
$ | $ | — | $ | ||||||||
|
|
|
|
|
|
At March 8, 2021 (Initial Measurement) |
As of December 31, 2021 |
As of March 31, 2022 |
||||||||||
Stock price |
||||||||||||
Strike price |
||||||||||||
Probability of completing a Business Combination |
% | % | % | |||||||||
Remaining term (in years) |
||||||||||||
Volatility |
% | % | % | |||||||||
Risk-free rate |
% | % | % | |||||||||
Fair value of warrants |
At March 8, 2021 (Initial Measurement) |
As of March 31, 2021 |
|||||||
Unit price |
||||||||
Exercise price |
||||||||
Contractual term |
||||||||
Volatility |
% | % | ||||||
Risk-free rate |
% | % | ||||||
Fair value of over-allotment option |
Level 3 |
Level 1 |
Warrant Liabilities |
||||||||||
Fair value as of December 31, 2020 |
$ | — | $ | — | $ | — | ||||||
Initial measurement at March 8, 2021 |
||||||||||||
Initial measurement of over-allotment warrants |
||||||||||||
Change in valuation inputs or other assumptions |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Fair value as of December 31, 2021 |
||||||||||||
Change in valuation inputs or other assumptions |
( |
) | ( |
) | ||||||||
Fair value as of March 31, 2022 |
||||||||||||
|
|
|
|
|
|
December 31, |
||||||||
(Amounts in thousands, except share and per share amounts) |
2021 |
2020 |
||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 938,319 | $ | 348,661 | ||||
Restricted cash |
40,555 | 33,124 | ||||||
Mortgage loans held for sale, at fair value |
1,851,161 | 2,433,351 | ||||||
Other receivables, net (including amounts from related parties of $37 and $188 as of December 31, 2021 and 2020, respectively) |
51,246 | 46,845 | ||||||
Property and equipment, net |
40,959 | 20,718 | ||||||
Right-of-use |
56,970 | — | ||||||
Internal use software and other intangible assets, net |
72,489 | 22,496 | ||||||
Goodwill |
19,811 | 10,995 | ||||||
Derivative assets, at fair value |
9,296 | 39,972 | ||||||
Prepaid expenses and other assets |
110,075 | 28,579 | ||||||
Loan commitment asset |
121,723 | — | ||||||
Total Assets |
$ | 3,312,604 | $ | 2,984,741 | ||||
Liabilities, Convertible Preferred Stock, and Stockholders’ Equity |
||||||||
Liabilities |
||||||||
Warehouse lines of credit |
$ | 1,667,917 | $ | 2,207,963 | ||||
Pre-Closing Bridge Notes |
477,333 | — | ||||||
Corporate line of credit, net |
149,022 | 69,065 | ||||||
Accounts payable and accrued expenses |
148,767 | 123,849 | ||||||
Escrow payable |
11,555 | 26,149 | ||||||
Derivative liabilities, at fair value |
2,382 | 25,314 | ||||||
Convertible preferred stock warrants |
31,997 | 25,799 | ||||||
Lease liabilities |
73,657 | — | ||||||
Other liabilities (includes $411 and $52 payable to related parties as of December 31, 2021 and 2020, respectively) |
76,158 | 47,588 | ||||||
Total Liabilities |
2,638,788 | 2,525,727 | ||||||
Commitments and contingencies (see Note 10) |
||||||||
Convertible preferred stock, $0.0001 par value; 197,085,530 shares authorized, 108,721,433 and 107,634,678 shares issued and outstanding as of December 31, 2021 and 2020, respectively, and $506,450 and $483,131 liquidation preference as of December 31, 2021 and 2020, respectively |
436,280 | 409,688 | ||||||
Stockholders’ Equity (Deficit) |
||||||||
Common stock $0.0001 par value; 355,309,046 and 343,059,046 shares authorized as of December 31, 2021 and 2020, respectively, and 99,067,159 and 81,239,084 shares issued and outstanding as of December 31, 2021 and 2020, respectively |
10 | 8 | ||||||
Notes receivable from stockholders |
(38,633 | ) | (365 | ) | ||||
Additional paid-in capital |
571,501 | 42,301 | ||||||
Retained earnings (accumulated deficit) |
(295,237 | ) | 7,522 | |||||
Accumulated other comprehensive loss |
(105 | ) | (140 | ) | ||||
Total Stockholders’ Equity (Deficit) |
237,536 | 49,326 | ||||||
Total Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) |
$ | 3,312,604 | $ | 2,984,741 | ||||
Year Ended December 31, |
||||||||||||
(Amounts in thousands, except share and per share amounts) |
2021 |
2020 |
2019 |
|||||||||
Revenues: |
||||||||||||
Mortgage platform revenue, net |
$ | 1,081,421 | $ | 834,530 | $ | 84,445 | ||||||
Other platform revenue |
133,749 | 39,539 | 4,911 | |||||||||
Net interest income (expense) |
||||||||||||
Interest income |
88,965 | 26,697 | 7,951 | |||||||||
Warehouse interest expense |
(69,929 | ) | (25,189 | ) | (8,136 | ) | ||||||
|
|
|
|
|
|
|||||||
Net interest income (expense) |
19,036 | 1,508 | (185 | ) | ||||||||
|
|
|
|
|
|
|||||||
Total net revenues |
1,234,206 | 875,577 | 89,171 | |||||||||
|
|
|
|
|
|
|||||||
Expenses: |
||||||||||||
Mortgage platform expenses |
710,132 | 299,164 | 66,326 | |||||||||
General and administrative expenses (includes amounts to related parties of $1,687, $3,234, and $1,973 for the years ended December 31, 2021, 2020, and 2019, respectively. See Note 9) |
232,669 | 159,096 | 35,244 | |||||||||
Marketing and advertising expenses (includes amounts to related parties of $575, none, and none for the years ended December 31, 2021, 2020, and 2019, respectively. See Note 9) |
249,275 | 83,554 | 27,204 | |||||||||
Technology and product development expenses |
143,951 | 57,333 | 21,210 | |||||||||
Other platform expenses |
140,479 | 24,210 | 4,483 | |||||||||
|
|
|
|
|
|
|||||||
Total expenses |
1,476,506 | 623,357 | 154,467 | |||||||||
Income (loss) from operations |
(242,300 | ) | 252,220 | (65,296 | ) | |||||||
Interest and other expense, net |
||||||||||||
Interest and amortization on non-funding debt |
(11,834 | ) | (50,967 | ) | (726 | ) | ||||||
Interest on Pre-Closing Bridge Notes |
(19,211 | ) | — | — | ||||||||
Change in fair value of convertible preferred stock warrants |
(32,790 | ) | (23,723 | ) | (1,287 | ) | ||||||
Change in fair value of bifurcated derivative |
— | 36,827 | — | |||||||||
|
|
|
|
|
|
|||||||
Total interest and other expense, net |
(63,835 | ) | (37,863 | ) | (2,013 | ) | ||||||
Income (loss) before income tax expense (benefit) |
(306,135 | ) | 214,357 | (67,309 | ) | |||||||
Income tax expense (benefit) |
(2,383 | ) | 42,302 | 271 | ||||||||
|
|
|
|
|
|
|||||||
Net income (loss) |
(303,752 | ) | 172,055 | (67,580 | ) | |||||||
|
|
|
|
|
|
|||||||
Other comprehensive income (loss): |
||||||||||||
Foreign currency translation adjustment, net of tax |
35 | (125 | ) | (13 | ) | |||||||
|
|
|
|
|
|
|||||||
Comprehensive income (loss) |
$ | (303,717 | ) | $ | 171,930 | $ | (67,593 | ) | ||||
|
|
|
|
|
|
|||||||
Per share data: |
||||||||||||
Income (loss) per share attributable to common stockholders: |
||||||||||||
Basic |
$ | (3.49 | ) | $ | 1.02 | $ | (0.97 | ) | ||||
|
|
|
|
|
|
|||||||
Diluted |
$ | (3.49 | ) | $ | 0.86 | $ | (0.97 | ) | ||||
|
|
|
|
|
|
|||||||
Weighted average common shares outstanding — basic |
86,984,646 | 73,121,017 | 69,906,868 | |||||||||
|
|
|
|
|
|
|||||||
Weighted average common shares outstanding — diluted |
86,984,646 | 119,639,199 | 69,906,868 | |||||||||
|
|
|
|
|
|
Convertible preferred stock |
Common Stock |
|||||||||||||||||||||||||||||||||||
(Amounts in thousands, except share and per share amounts) |
Shares |
Amount |
Issued and Outstanding |
Par Value |
Notes Receivables from Stockholders |
Additional Paid-In Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comprehensive Loss |
Total Stockholders’ Equity (Deficit) |
|||||||||||||||||||||||||||
Balance—December 31, 2020 |
107,634,678 | $ | 409,688 | 81,239,084 | $ | 8 | $ | (365 | ) | $ | 42,301 | $ | 7,522 | $ | (140 | ) | $ | 49,326 | ||||||||||||||||||
Cumulative effect from adoption of lease accounting standard |
— | — | — | — | — | — | 993 | — | 993 | |||||||||||||||||||||||||||
Exercise of convertible preferred stock warrants |
1,086,755 | 26,592 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Issuance of common stock |
— | — | 19,433,510 | 2 | — | 57,060 | — | — | 57,062 | |||||||||||||||||||||||||||
Cancellation or repurchase of common stock |
— | — | (1,605,435 | ) | — | — | (5,648 | ) | — | — | (5,648 | ) | ||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | 64,187 | — | — | 64,187 | |||||||||||||||||||||||||||
Issuance of notes receivable from stockholders |
— | — | — | — | (38,268 | ) | — | — | — | (38,268 | ) | |||||||||||||||||||||||||
Excess capital/proceeds from issuance of Pre-Closing Bridge Notes |
— | — | — | — | — | 291,878 | — | — | 291,878 | |||||||||||||||||||||||||||
Loan commitment asset |
— | — | — | — | — | 121,723 | — | — | 121,723 | |||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | (303,752 | ) | — | (303,752 | ) | |||||||||||||||||||||||||
Other comprehensive income—foreign currency translation adjustment, net of tax |
— | — | — | — | — | — | — | 35 | 35 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance—December 31, 2021 |
108,721,433 | $ | 436,280 | 99,067,159 | $ | 10 | $ | (38,633 | ) | $ | 571,501 | $ | (295,237 | ) | $ | (105 | ) | $ | 237,536 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock |
Common Stock |
|||||||||||||||||||||||||||||||||||
(Amounts in thousands, except share and per share amounts) |
Shares |
Amount |
Issued and Outstanding |
Par Value |
Notes Receivables from Stockholders |
Additional Paid-In Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comprehensive Loss |
Total Stockholders’ Equity (Deficit) |
|||||||||||||||||||||||||||
Balance—December 31, 2019 |
92,534,721 | $ | 212,232 | 72,579,660 | $ | 7 | $ | (148 | ) | $ | 15,219 | $ | (160,481 | ) | $ | (15 | ) | $ | (145,418 | ) | ||||||||||||||||
Beneficial conversion feature upon issuance of 2020 Convertible Notes |
— | — | — | — | — | 5,044 | — | — | 5,044 | |||||||||||||||||||||||||||
Issuance of Series D Preferred Stock, net of issuance costs of $0.1 million |
8,129,479 | 136,657 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Issuance of Series D-2 Preferred Stock and Series D-3 Preferred Stock upon conversion of 2020 Convertible Notes |
6,970,478 | 60,799 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Issuance of common stock |
— | — | 16,771,293 | 2 | — | 1,695 | — | — | 1,697 | |||||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | 20,321 | — | — | 20,321 | |||||||||||||||||||||||||||
Repurchase of common stock |
— | — | (7,711,869 | ) | (1 | ) | — | (249 | ) | — | — | (250 | ) | |||||||||||||||||||||||
Cancellation of common stock |
(400,000 | ) | — | (4,052 | ) | (4,052 | ) | |||||||||||||||||||||||||||||
Issuance of common stock warrants |
— | — | — | — | — | 271 | — | — | 271 | |||||||||||||||||||||||||||
Issuance of notes receivable from stockholders |
— | — | — | — | (217 | ) | — | — | — | (217 | ) | |||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | 172,055 | — | 172,055 | |||||||||||||||||||||||||||
Other comprehensive loss—foreign currency translation adjustment, net of tax |
— | — | — | — | — | — | — | (125 | ) | (125 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance—December 31, 2020 |
107,634,678 | $ | 409,688 | 81,239,084 | $ | 8 | $ | (365 | ) | $ | 42,301 | $ | 7,522 | $ | (140 | ) | $ | 49,326 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Preferred Stock |
Common Stock |
|||||||||||||||||||||||||||||||||||
(Amounts in thousands, except share and per share amounts) |
Shares |
Amount |
Shares Issued and Outstanding |
Par Value |
Notes Receivables from Stockholder |
Additional Paid-In Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comprehensive Loss |
Total Stockholders’ Equity (Deficit) |
|||||||||||||||||||||||||||
Balance—January 1, 2019 |
66,709,218 | $ | 125,252 | 72,199,853 | $ | 7 | $ | (305 | ) | $ | 11,240 | $ | (92,901 | ) | $ | (2 | ) | $ | (81,961 | ) | ||||||||||||||||
Issuance of Series C Preferred Stock, net of issuance costs of $1.0 million and warrants of $0.3 million |
25,825,503 | 86,980 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Issuance of common stock |
— | — | 3,672,177 | — | — | 518 | — | — | 518 | |||||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | 1,107 | — | — | 1,107 | |||||||||||||||||||||||||||
Cancellation or repurchase of common stock |
— | — | (3,292,370 | ) | — | — | (126 | ) | — | — | (126 | ) | ||||||||||||||||||||||||
Issuance of common stock warrants |
— | — | — | — | — | 179 | — | — | 179 | |||||||||||||||||||||||||||
Maturity of notes receivable from stockholders |
— | — | — | — | 257 | — | — | 257 | ||||||||||||||||||||||||||||
Issuance of notes receivable from stockholders |
— | — | — | — | (100 | ) | — | — | — | (100 | ) | |||||||||||||||||||||||||
Issuance of common stock to predecessor stockholder |
— | — | — | — | — | 704 | — | — | 704 | |||||||||||||||||||||||||||
Gain on settlement with predecessor stockholder |
— | — | — | — | — | 1,597 | — | — | 1,597 | |||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | (67,580 | ) | — | (67,580 | ) | |||||||||||||||||||||||||
Other comprehensive loss—foreign currency translation adjustment, net of tax |
— | — | — | — | — | — | — | (13 | ) | (13 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance—December 31, 2019 |
92,534,721 | $ | 212,232 | 72,579,660 | $ | 7 | $ | (148 | ) | $ | 15,219 | $ | (160,481 | ) | $ | (15 | ) | $ | (145,418 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
(Amounts in thousands) |
2021 |
2020 |
2019 |
|||||||||
Cash Flows from Operating Activities: |
||||||||||||
Net (loss) income |
$ | (303,752 | ) | $ | 172,055 | $ | (67,580 | ) | ||||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: |
||||||||||||
Depreciation of property and equipment |
7,647 | 3,484 | 999 | |||||||||
Amortization of internal use software |
19,573 | 6,412 | 3,340 | |||||||||
Non-cash interest and amortization of debt issuance costs and discounts |
19,592 | 46,272 | 217 | |||||||||
Change in fair value of convertible preferred stock warrants |
32,790 | 23,723 | 1,287 | |||||||||
Change in fair value of bifurcated derivative |
— | (36,827 | ) | — | ||||||||
Stock-based compensation |
55,215 | 19,301 | 987 | |||||||||
Provision for loan repurchase reserve |
10,102 | 7,438 | — | |||||||||
Change in fair value of derivatives |
7,744 | (13,636 | ) | (1,829 | ) | |||||||
Mortgage servicing rights retained in connection with loan sales |
— | (65,135 | ) | (6,035 | ) | |||||||
Change in fair value of mortgage servicing rights |
— | 18,690 | (279 | ) | ||||||||
Change in fair value of mortgage loans held for sale |
67,678 | (78,436 | ) | (4,549 | ) | |||||||
Change in operating assets and liabilities: |
||||||||||||
Originations of mortgage loans held for sale |
(51,280,393 | ) | (21,959,265 | ) | (4,140,402 | ) | ||||||
Proceeds from sale of mortgage loans held for sale |
51,794,907 | 19,968,682 | 3,887,555 | |||||||||
Operating lease right-of-use |
24,752 | — | — | |||||||||
Operating lease obligations |
(11,742 | ) | — | — | ||||||||
Other receivables, net |
(8,233 | ) | (35,747 | ) | (3,224 | ) | ||||||
Prepaid expenses and other assets |
(79,519 | ) | (18,921 | ) | (8,253 | ) | ||||||
Accounts payable and accrued expenses |
7,553 | 108,746 | 8,994 | |||||||||
Escrow payable |
(14,594 | ) | 21,084 | 4,613 | ||||||||
Other liabilities |
11,895 | 33,741 | — | |||||||||
|
|
|
|
|
|
|||||||
Net cash provided by (used in) operating activities |
361,215 | (1,778,339 | ) | (324,159 | ) | |||||||
|
|
|
|
|
|
|||||||
Cash Flows from Investing Activities: |
||||||||||||
Purchase of property and equipment |
(15,722 | ) | (12,399 | ) | (7,047 | ) | ||||||
Capitalization of internal use software |
(52,926 | ) | (18,557 | ) | (6,420 | ) | ||||||
Acquisitions of businesses, net of cash acquired |
(5,074 | ) | — | — | ||||||||
Proceeds from sale of mortgage servicing rights |
5,019 | 47,944 | — | |||||||||
|
|
|
|
|
|
|||||||
Net cash (used in) provided by investing activities |
(68,703 | ) | 16,988 | (13,467 | ) | |||||||
|
|
|
|
|
|
|||||||
Cash Flows from Financing Activities: |
||||||||||||
Borrowings on warehouse lines of credit |
50,500,028 | 21,975,742 | 4,128,151 | |||||||||
Repayments of warehouse lines of credit |
(51,040,074 | ) | (20,121,857 | ) | (3,871,319 | ) | ||||||
Repayments on finance lease liabilities |
(955 | ) | (622 | ) | — | |||||||
Borrowings on corporate line of credit |
80,000 | 44,000 | 26,000 | |||||||||
Proceeds from issuance of Pre-Closing Bridge Notes |
458,122 | — | — | |||||||||
Excess capital/proceeds from issuance of Pre-Closing Bridge Notes |
291,878 | — | — | |||||||||
Payment of debt issuance costs |
(425 | ) | (1,618 | ) | (602 | ) | ||||||
Proceeds from issuance of 2020 Convertible Notes |
— | 58,209 | — | |||||||||
Proceeds from the issuance of convertible preferred stock |
— | 136,750 | 88,300 | |||||||||
Payment of convertible preferred stock issuance costs |
— | (93 | ) | (996 | ) | |||||||
Repayment of notes receivable from stockholders |
— | — | 257 | |||||||||
Issuance of notes receivable to stockholders |
— | (217 | ) | (100 | ) | |||||||
Proceeds from exercise of stock options |
18,791 | 1,879 | 214 | |||||||||
Payment to predecessor stockholder |
— | (250 | ) | — | ||||||||
Proceeds from stock options exercised not vested |
2,825 | 2,845 | 52 | |||||||||
Repurchase and cancellation of common stock |
(5,648 | ) | (4,302 | ) | (125 | ) | ||||||
|
|
|
|
|
|
|||||||
Net cash provided by financing activities |
304,542 | 2,090,466 | 369,832 | |||||||||
Effects of currency translation on cash, cash equivalents, and restricted cash |
35 | (137 | ) | (13 | ) | |||||||
|
|
|
|
|
|
|||||||
Net Increase in Cash, Cash Equivalents, and Restricted Cash |
597,089 | 328,978 | 32,193 | |||||||||
Cash, cash equivalents, and restricted cash—Beginning of year |
381,785 | 52,807 | 20,614 | |||||||||
|
|
|
|
|
|
|||||||
Cash, cash equivalents, and restricted cash—End of year |
$ | 978,874 | $ | 381,785 | $ | 52,807 | ||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
(Amounts in thousands) |
2021 |
2020 |
2019 |
|||||||||
Cash and cash equivalents, end of year |
$ | 938,319 | $ | 348,661 | $ | 42,569 | ||||||
Restricted cash, end of year |
40,555 | 33,124 | 10,238 | |||||||||
|
|
|
|
|
|
|||||||
Total cash, cash equivalents and restricted cash end of year |
$ | 978,874 | $ | 381,785 | $ | 52,807 | ||||||
|
|
|
|
|
|
|||||||
Supplemental Disclosure of Cash Flow Information: |
||||||||||||
Interest paid |
$ | 78,809 | $ | 30,023 | $ | 8,519 | ||||||
Income taxes paid |
$ | 35,774 | $ | 20,032 | $ | 246 | ||||||
Non-Cash Investing and Financing Activities: |
||||||||||||
Extinguishment of promissory notes in exchange of issuance of common stock to predecessor stockholder |
$ | — | $ | — | $ | 2,301 | ||||||
Issuance of common stock warrants |
$ | — | $ | 271 | $ | 324 | ||||||
Issuance of convertible preferred stock warrants |
$ | — | $ | 201 | $ | 267 | ||||||
Conversion of convertible notes to Series D Preferred Stock |
$ | — | $ | 60,799 | $ | — | ||||||
Receivable from registrar for issuance of stock options |
$ | — | $ | — | $ | 201 | ||||||
Capitalization of stock-based compensation related to internal use software |
$ | 8,972 | $ | 1,020 | $ | 120 | ||||||
Vesting of stock options early exercised in prior periods |
$ | 1,154 | $ | 176 | $ | 104 | ||||||
Holdback related to sale of mortgage |
$ | — | $ | 4,000 | $ | — | ||||||
Issuance of notes receivable from stockholders |
$ | 38,268 | $ | — | $ | — | ||||||
Loan commitment asset |
$ | 121,723 | $ | — | $ | — | ||||||
Cashless exercise of convertible preferred stock warrants |
$ | 26,592 | $ | — | $ | — | ||||||
Property and equipment financed by capital leases |
$ | — | $ | 3,761 | $ | — | ||||||
Deferred acquisition consideration |
$ | 3,875 | $ | — | $ | — |
1. |
ORGANIZATION AND NATURE OF THE BUSINESS |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
• | Revenue for the lease payments, which includes the sales price of the home, which is included within other platform revenue on the consolidated statements of operations and comprehensive income (loss). |
• | Expenses for the cost of the home, including transaction closing costs, which is included within other platform expenses on the consolidated statements of operations and comprehensive income (loss); |
• | Net investment in the lease, which is included within prepaid expenses and other assets on the consolidated balance sheets, which consists of the minimum lease payments not yet received and the purchase price of the home to be financed through a mortgage. |
a) | Mortgage platform revenue, net includes revenues generated from the Company’s mortgage production process. The components of mortgage platform revenue, net are as follows: |
i. | Net gain on sale of loans—This represents the premium the Company receives in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market. Net gain on sale of loans includes unrealized changes in the fair value of LHFS which are recognized on a loan by loan basis as part of current period earnings until the loan is sold on the |
secondary market. The fair value of LHFS is measured based on observable market data. Also included within net gain on sale of loans is the day one recognition of the fair value of MSRs and any subsequent changes in the measurement of the fair value of the MSRs for loans sold servicing retained, including any gain or loss on subsequent sales of MSRs. |
ii. | Integrated relationship revenue—Includes fees that the Company receives for originating loans on behalf of an integrated relationship partner which are recognized as revenue upon the integrated relationship partner’s funding of the loan. Some of the loans originated on behalf of the integrated relationship partner are purchased by the Company. Subsequent changes in fair value of loans purchased by the Company are included as part of current period earnings. These loans may be sold in the secondary market at the Company’s discretion for which any gain on sale is included in this account. For loans sold on the secondary market, the integrated relationship partner will receive a portion of the execution proceeds. A portion of the execution proceeds that is to be allocated to the integrated relationship partner is accrued as a reduction of integrated relationship revenue when the loan is initially purchased from the integrated relationship partner. |
iii. | Servicing income—Includes the related income earned from servicing of loans, including loans sold servicing retained and interim servicing requirements. |
iv. | Changes in fair value of IRLCs and forward sale commitments—IRLCs include the fair value upon issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market. Fair value of forward sale commitments hedging IRLC and LHFS are measured based on quoted prices for similar assets. |
v. | Lender credits and points—This represents charges or discounts given to borrowers upon the closing of the mortgage process. Lender credits and points related to the production of a mortgage are recognized as a component of the fair value of IRLCs. |
b) | Other platform revenue consists of revenue from the Company’s additional homeownership offerings which primarily consist of title insurance, settlement services, other homeownership offerings, and revenue from the Cash Offer Program. |
c) | Net interest income (expense)—Includes interest income from LHFS calculated based on the note rate of the respective loan as well as interest expense on warehouse lines of credit. |
a) | Expected Volatility—The Company estimated volatility for option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the options’ expected term. |
b) | Expected Term—The expected term of the Company’s options represents the period that the stock-based awards are expected to be outstanding. The Company has elected to use the midpoint of the stock options vesting term and contractual expiration period to compute the expected term, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. |
c) | Risk-Free Interest Rate—The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a term that is equal to the options’ expected term at the grant date. |
d) | Dividend Yield—The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero. |
As of January 1, 2021 |
||||||||||||
(Amounts in thousands) |
Balance as of December 31, 2020 |
Adjustments due to ASC 842 |
Balance as of January 1, 2021 |
|||||||||
Accounts Receivable |
$ | 46,845 | $ | 5,915 | $ | 52,760 | ||||||
Property and equipment, net |
20,718 | 6,736 | 27,454 | |||||||||
Right-of-use |
— | 65,889 | 65,889 | |||||||||
|
|
|
|
|
|
|||||||
Total Assets |
$ | 67,563 | $ | 78,540 | $ | 146,103 | ||||||
|
|
|
|
|
|
|||||||
Accounts payable and accrued expenses |
$ | 123,849 | $ | 10,880 | $ | 134,729 | ||||||
Other liabilities |
47,588 | (2,898 | ) | 44,690 | ||||||||
Lease liabilities |
— | 69,566 | 69,566 | |||||||||
|
|
|
|
|
|
|||||||
Total Liabilities |
171,437 | 77,548 | 248,985 | |||||||||
|
|
|
|
|
|
|||||||
Retained earnings |
7,522 | 993 | 8,515 | |||||||||
|
|
|
|
|
|
|||||||
Total Stockholders’ Equity |
$ | 7,522 | $ | 993 | $ | 8,515 | ||||||
|
|
|
|
|
|
3. |
MORTGAGE LOANS HELD FOR SALE AND WAREHOUSE LINES OF CREDIT |
December 31, |
||||||||||||||||
(Amounts in thousands) |
Maturity |
Facility Size |
2021 |
2020 |
||||||||||||
Funding Facility 1 (1) |
March 18, 2022 | $ | 500,000 | $ | 286,804 | $ | 222,809 | |||||||||
Funding Facility 2 (2) |
October 31, 2022 | 250,000 | 171,649 | 187,512 | ||||||||||||
Funding Facility 3 (3) |
September 15, 2021 | — | — | 130,158 | ||||||||||||
Funding Facility 4 (4) |
July 1, 2022 | 450,000 | 55,622 | 144,330 | ||||||||||||
Funding Facility 5 (5) |
November 30, 2021 | — | — | 88,065 | ||||||||||||
Funding Facility 6 (6) |
January 25, 2022 | 1,250,000 | 409,616 | 396,178 | ||||||||||||
Funding Facility 7 (7) |
March 8, 2023 | 1,500,000 | 622,573 | 945,100 | ||||||||||||
Funding Facility 8 (8) |
August 31, 2022 | 400,000 | 4,184 | 39,192 | ||||||||||||
Funding Facility 9 (9) |
November 15, 2022 | 300,000 | 7,279 | 54,619 | ||||||||||||
Funding Facility 10 (10) |
March 9, 2022 | 750,000 | 94,181 | — | ||||||||||||
Funding Facility 11 (11) |
April 6, 2022 | 500,000 | 1,433 | — | ||||||||||||
Funding Facility 12 (12) |
July 5, 2022 | 500,000 | 14,576 | — | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total warehouse lines of credit |
$ | 6,400,000 | $ | 1,667,917 | $ | 2,207,963 | ||||||||||
|
|
|
|
|
|
(1) |
Interest charged under the facility is at the interest rate charged on the note of the underlying collateral of the approved loan (“Note Rate”) minus 0.75%, which decreases to 1.25% with incentive capacity usage, and with a floor rate of 2.50%, as defined in the agreement. Cash collateral deposit of $10.0 million is maintained. Subsequent to December 31, 2021, the facility was amended to extend maturity to May 18, 2022. |
(2) |
Interest charged under the facility is at the one month LIBOR plus 1.75%, with a floor rate of one month LIBOR at 1.00%, as defined in agreement. Cash collateral deposit of $2.5 million is maintained. |
(3) |
As of December 31, 2021, the facility was not renewed beyond its maturity of September 15, 2021, and thus the Company cannot draw subsequent to this date; however, the facility allows for outstanding amounts to remain on the line until the underlying loans are sold and the facility is subsequently paid. The facility size prior to maturity was $175 million. The facility had a remaining balance of none as of December 31, 2021. |
(4) |
Interest charged under the facility is at the respective one month LIBOR plus 1.75%, with a floor rate of 2.25%, as defined in the agreement. Cash collateral deposit of $4.5 million is maintained. |
(5) |
Interest charged under the facility is at the daily adjusting LIBOR plus 2.00% (determined by dividing the Daily LIBOR Rate in effect on such day by 1.00 minus the Reserve Requirement), with a floor rate of one month LIBOR at 0.25%, as defined in the agreement. There is no cash collateral deposit maintained as of December 31, 2021. The facility was not renewed beyond maturity. The facility size prior to maturity was $100 million. |
(6) |
Interest charged under the facility is at the one month LIBOR plus 1.65%. There is no cash collateral deposit maintained as of December 31, 2021. Subsequent to December 31, 2021, the facility was amended so that interest charged is at the one month LIBOR plus 1.77%, to decrease capacity to $750.0 million, and to extend maturity to January 30, 2023. |
(7) |
Interest charged under the facility is at the one month LIBOR plus 1.25% - 2.50%, with a floor rate of 0.50%. There is no cash collateral deposit maintained as of December 31, 2021. Subsequent to December 31, 2021, the facility was amended to decrease capacity to $230.0 million, to shorten maturity to May 31, 2022, and so that interest charged is at the one month LIBOR plus 1.76% - 2.25%. |
(8) |
Interest charged under the facility is at the LIBOR flat plus 1.50% (defined as a LIBOR rate with no additional spread). Cash collateral deposit of $4.5 million is maintained. |
(9) |
Interest charged under the facility is at the one month LIBOR plus 1.75% - 2.25%, which decreases to one month LIBOR plus 1.63% with incentive capacity usage for conforming loans, with a floor rate of one month LIBOR at 0.38%. There is no cash collateral deposit maintained as of December 31, 2021. |
(10) |
Interest charged under the facility is at the adjusted LIBO plus 1.60% (defined as an interest rate per annum equal to the LIBO Rate on such day multiplied by the Statutory Reserve Rate on such day). Cash collateral deposit of $7.5 million is maintained. Subsequent to December 31, 2021, the facility was amended so that interest charged is at the adjusted SOFR plus 1.60% - 1.85% (defined as the sum of the Term SOFR Rate plus the SOFR adjustment), to decrease capacity to $500.0 million, to decrease cash collateral to $5.0 million, and to extend maturity to March 8, 2023. |
(11) |
Interest charged under the facility is at the one month LIBOR plus 1.60%, with a floor rate of one month LIBOR at 0.50%, as defined in the agreement. There is no cash collateral deposit maintained as of December 31, 2021. Subsequent to December 31, 2021, the facility was not renewed beyond maturity. |
(12) |
Interest charged under the facility is at the LIBOR flat plus 1.88%, with a floor rate of one month LIBOR at 0.25%, as defined in the agreement. There is no cash collateral deposit maintained as of December 31, 2021. |
December 31, |
||||||||
(Amounts in thousands) |
2021 |
2020 |
||||||
Funding Facility 1 |
$ | 309,003 | $ | 242,927 | ||||
Funding Facility 2 |
186,698 | 228,639 | ||||||
Funding Facility 3 |
— | 132,450 | ||||||
Funding Facility 4 |
67,106 | 154,323 | ||||||
Funding Facility 5 |
— | 92,581 | ||||||
Funding Facility 6 |
439,767 | 409,839 | ||||||
Funding Facility 7 |
681,521 | 988,702 |
December 31, |
||||||||
(Amounts in thousands) |
2021 |
2020 |
||||||
Funding Facility 8 |
$ | 5,016 | $ | 42,819 | ||||
Funding Facility 9 |
9,828 | 55,770 | ||||||
Funding Facility 10 |
107,571 | — | ||||||
Funding Facility 11 |
4,420 | — | ||||||
Funding Facility 12 |
16,666 | — | ||||||
|
|
|
|
|||||
Total LHFS pledged as collateral |
1,827,596 | 2,348,050 | ||||||
Company-funded LHFS |
5,944 | — | ||||||
|
|
|
|
|||||
Total LHFS |
1,833,540 | 2,348,050 | ||||||
Fair value adjustment |
17,621 | 85,301 | ||||||
|
|
|
|
|||||
Total LHFS at fair value |
$ | 1,851,161 | $ | 2,433,351 | ||||
|
|
|
|
4. |
MORTGAGE SERVICING RIGHTS |
Year Ended December 31, |
||||||||
(Amounts in thousands) |
2021 |
2020 |
||||||
Fair value at beginning of period |
$ | — | $ | 6,869 | ||||
MSRs retained in connection with loan sales |
— | 65,135 | ||||||
Changes in fair value (1) |
— | (18,690 | ) | |||||
Sale of MSRs |
— | (53,314 | ) | |||||
|
|
|
|
|||||
Balance at end of period |
$ | — | $ | — | ||||
|
|
|
|
(1) |
Changes in fair value are due to changes in valuation inputs and assumptions, which primarily represent changes in discount rates and prepayment speed inputs used in valuation models, primarily due to changes in interest rates, and other changes, including realization of expected cash flows. |
5. |
PROPERTY AND EQUIPMENT |
As of December 31, |
||||||||
(Amounts in thousands) |
2021 |
2020 |
||||||
Computer and hardware |
$ | 23,850 | $ | 14,851 | ||||
Furniture and equipment |
4,559 | 3,035 | ||||||
Leasehold improvements |
19,866 | 4,047 | ||||||
Finance lease assets |
3,761 | 3,761 | ||||||
|
|
|
|
|||||
Total property and equipment |
52,035 | 25,694 | ||||||
Less: Accumulated depreciation |
(11,076 | ) | (4,976 | ) | ||||
|
|
|
|
|||||
Property and equipment, net |
$ | 40,959 | $ | 20,718 | ||||
|
|
|
|
6. |
LEASES |
(Amounts in thousands) |
Balance Sheet Caption |
As of December 31, 2021 |
||||
Assets: |
||||||
Operating lease right-of-use |
Right-of-use |
$ | 56,970 | |||
Finance lease right-of-use |
Property and equipment, net | 2,683 | ||||
|
|
|||||
Total leased assets |
$ | 59,653 | ||||
|
|
|||||
Liabilities: |
||||||
Operating lease liabilities |
Lease liabilities | $ | 73,657 | |||
Finance lease liabilities |
Other liabilities | 2,184 | ||||
|
|
|||||
Total lease liabilities |
$ | 75,841 | ||||
|
|
(Amounts in thousands) |
Year Ended December 31, 2021 |
|||
Operating lease cost |
$ | 16,539 | ||
Short-term lease cost |
406 | |||
Variable lease cost |
3,209 | |||
|
|
|||
Total operating lease cost |
$ | 20,154 | ||
|
|
Year Ended December 31, |
||||||||||||
(Amounts in thousands) |
2021 |
2020 |
2019 |
|||||||||
Mortgage platform expenses |
$ | 13,363 | $ | 13,073 | $ | 5,230 | ||||||
General and administrative expenses |
2,485 | 6,852 | 1,659 | |||||||||
Marketing and advertising expenses |
159 | 170 | 312 | |||||||||
Technology and product development expenses (1) |
2,053 | 2,549 | 1,374 | |||||||||
Other platform expenses |
2,094 | 192 | 101 | |||||||||
|
|
|
|
|
|
|||||||
Total operating lease costs |
$ | 20,154 | $ | 22,836 | $ | 8,676 | ||||||
|
|
|
|
|
|
Year Ended December 31, 2021 |
||||||||||||
(Amounts in thousands) |
Depreciation and Amortization |
Interest Expense |
Total |
|||||||||
Total finance lease cost |
$ | 520 | $ | 439 | $ | 959 | ||||||
|
|
|
|
|
|
(Amounts in thousands) |
Year Ended December 31, 2021 |
|||
Cash paid for amounts included in measurement of operating lease liabilities |
$ | 15,177 | ||
Right-of-use |
||||
Upon adoption of ASC 842 |
$ | 65,889 | ||
New leases entered into during the year |
$ | 15,834 |
(Amounts in thousands) |
As of December 31, 2021 |
|||
Operating leases |
||||
Weighted average remaining lease term (in years) |
6.1 | |||
Weighted average discount rate |
5.1 | % | ||
Finance leases |
||||
Weighted average remaining lease term (in years) |
1.3 | |||
Weighted average discount rate |
16.2 | % |
(Amounts in thousands) |
Finance Leases |
Operating Leases |
Total |
|||||||||
2022 |
$ | 1,394 | $ | 20,051 | $ | 21,445 | ||||||
2023 |
1,101 | 14,694 | 15,795 | |||||||||
2024 |
— | 12,238 | 12,238 | |||||||||
2025 |
— | 11,833 | 11,833 | |||||||||
2026 |
— | 9,229 | 9,229 | |||||||||
2027 and beyond |
— | 17,956 | 17,956 | |||||||||
|
|
|
|
|
|
|||||||
Total undiscounted fixed minimum lease cost payments |
2,495 | 86,001 | 88,496 | |||||||||
Less amount representing interest |
(311 | ) | (12,344 | ) | (12,655 | ) | ||||||
|
|
|
|
|
|
|||||||
Total lease obligation |
$ | 2,184 | $ | 73,657 | $ | 75,841 | ||||||
|
|
|
|
|
|
(Amounts in thousands) |
Total |
|||
2021 |
$ | 11,979 | ||
2022 |
11,510 | |||
2023 |
11,015 | |||
2024 |
11,137 | |||
2025 |
11,016 | |||
Thereafter |
21,602 | |||
|
|
|||
Total |
$ | 78,259 | ||
|
|
(Amounts in thousands) |
Year Ended December 31, 2021 |
|||
Other platform revenue - Cash Offer Program |
$ | 30,557 | ||
Other platform expenses - Cash Offer Program |
30,720 | |||
|
|
|||
Gross Margin |
$ | (163 | ) | |
|
|
7. |
GOODWILL AND INTERNAL USE SOFTWARE AND OTHER INTANGIBLE ASSETS, NET |
(Amounts in thousands) |
As of Acquisition Date |
|||
Cash and cash equivalents |
$ | 781 | ||
Finite lived intangibles - Intellectual property and other |
3,943 | |||
Indefinite lived intangibles - Licenses and other |
277 | |||
Goodwill |
3,317 | |||
Other assets (1) |
2,088 | |||
Accounts payable and accrued expenses (1) |
(5,512 | ) | ||
Other liabilities (1) |
(3,510 | ) | ||
|
|
|||
Total recognized assets and liabilities |
$ | 1,384 | ||
|
|
(1) |
Carrying value approximates fair value given their short-term maturity periods |
(Amounts in thousands) |
As of Acquisition Date |
|||
Cash and cash equivalents |
$ | 1,739 | ||
Finite lived intangibles - Intellectual property and other |
2,601 | |||
Indefinite lived intangibles - Licenses and other |
1,038 | |||
Goodwill |
4,420 | |||
Other assets (1) |
1,478 | |||
Accounts payable and accrued expenses (1) |
(1,172 | ) | ||
|
|
|||
Total recognized assets and liabilities |
$ | 10,104 | ||
|
|
(1) |
Carrying value approximates fair value given their short-term maturity periods |
(Amounts in thousands) |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
||||||
Balance at beginning of year |
$ | 10,995 | $ | 10,995 | ||||
Goodwill acquired (Trussle and Property Partners acquisitions) |
7,737 | — | ||||||
Measurement period adjustment |
1,269 | — | ||||||
Effect of foreign currency exchange rate changes |
(190 | ) | — | |||||
|
|
|
|
|||||
Balance at end of year |
$ | 19,811 | $ | 10,995 | ||||
|
|
|
|
As of December 31, 2021 |
||||||||||||||||
(Amounts in thousands, except useful lives) |
Weighted Average Useful Lives (in years) |
Gross Carrying Value |
Accumulated Amortization |
Net Carrying Value |
||||||||||||
Intangible assets with finite lives |
||||||||||||||||
Internal use software and website development |
3.0 | $ | 96,155 | $ | (32,832 | ) | $ | 63,323 | ||||||||
Intellectual property and other |
7.5 | 6,384 | (320 | ) | 6,064 | |||||||||||
|
|
|
|
|
|
|||||||||||
Total Intangible assets with finite lives, net |
102,539 | (33,152 | ) | 69,387 | ||||||||||||
Intangible assets with indefinite lives |
||||||||||||||||
Domain name |
1,820 | — | 1,820 | |||||||||||||
Licenses and other |
1,282 | — | 1,282 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total Internal use software and other intangible assets, net |
$ | 105,641 | $ | (33,152 | ) | $ | 72,489 | |||||||||
|
|
|
|
|
|
As of December 31, 2020 |
||||||||||||||||
(Amounts in thousands, except useful lives) |
Weighted Average Useful Lives (in years) |
Gross Carrying Value |
Accumulated Amortization |
Net Carrying Value |
||||||||||||
Intangible assets with finite lives |
||||||||||||||||
Internal use software and website development |
3.0 | $ | 34,256 | $ | (13,580 | ) | $ | 20,676 | ||||||||
|
|
|
|
|
|
|||||||||||
Total Intangible assets with finite lives, net |
34,256 | (13,580 | ) | 20,676 | ||||||||||||
Intangible assets with indefinite lives |
||||||||||||||||
Domain name |
1,820 | — | 1,820 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total Internal use software and other intangible assets, net |
$ | 36,076 | $ | (13,580 | ) | $ | 22,496 | |||||||||
|
|
|
|
|
|
(Amounts in thousands) |
Total |
|||
2022 |
$ | 29,086 | ||
2023 |
25,472 | |||
2024 |
11,561 | |||
2025 |
882 | |||
2026 and thereafter |
2,386 | |||
|
|
|||
Total |
$ | 69,387 | ||
|
|
8. |
CORPORATE LINE OF CREDIT AND CONVERTIBLE NOTES |
a. |
Mandatory contingent put feature (mandatory prepayment) |
b. | Voluntary prepayment feature |
c. | Mandatory contingent put feature (rights of investor upon default) |
d. | Conversion features that are contingent redemption features in substance |
i. | Qualified financing conversion—2020 Convertible Notes principal and accrued interest automatically convert into Series D Preferred Stock upon a qualified financing event, meaning a transaction or series of transactions pursuant to which the Company issues and sells shares of its preferred stock for aggregate gross proceeds of at least $50 million. |
ii. | Change of control—Allows investors to convert the outstanding principal and accrued interest into Common B or Common B-1 Stock upon a change of control or sale of the Company (see Note 13). |
iii. | Initial Public Offering—Allows the investors to convert the outstanding principal and accrued interest into Common B or Common B-1 Stock upon an initial public offering (see Note 13). |
iv. | Direct Listing—Allows investors to convert the outstanding principal and accrued interest into Common B Stock upon a direct listing. |
e. | Voluntary conversion feature |
(Amounts in dollars, except noted otherwise) |
Range |
|||
Valuation assumptions: |
||||
Fair value of Series C Preferred Stock |
$3.48 - 4.10 |
|||
Expected volatility |
50.0 - 85.0% |
|||
Risk-free interest rate |
0.15 - 1.52% |
|||
Risk discount factor |
0.82 - 0.86 |
|||
Discount term (months) |
5.6 - 8.8 |
(Amounts in thousands) |
As of Issuance |
|||
Principal |
$ | 58,209 | ||
Less: Debt discount - BCF |
(5,044 | ) | ||
Less: Debt discount - Bifurcated derivative |
(36,827 | ) | ||
|
|
|||
Net carrying value of 2020 Convertible Notes |
$ | 16,338 | ||
|
|
|||
Equity Component (1) |
$ | 5,044 | ||
|
|
(1) |
Represents the proceeds allocated to the BCF debt discount, recorded within additional paid-in capital on the consolidated balance sheet. |
(Amounts in thousands) |
Before Conversion |
Conversion Impact |
After Conversion (2) |
|||||||||
Consolidated Balance Sheets |
| |||||||||||
2020 Convertible Notes principal |
$ | 58,209 | $ | (58,209 | ) | $ | — | |||||
Accrued interest |
2,590 | (2,590 | ) | — | ||||||||
Debt discount - BCF |
(4,637 | ) | 4,637 | — | ||||||||
Debt discount - Bifurcated derivative |
(33,854 | ) | 33,854 | — | ||||||||
Bifurcated derivative liability |
17,695 | (17,695 | ) | — | ||||||||
|
|
|
|
|
|
|||||||
Total Liabilities |
$ |
40,003 |
$ |
(40,003 |
) |
$ |
— |
|||||
|
|
|
|
|
|
|||||||
Convertible preferred stock |
$ | — | $ | 60,799 | $ | 60,799 | ||||||
Additional Paid-in Capital - BCF |
$ | 5,044 | $ | — | $ | 5,044 | ||||||
|
|
|
|
|
|
|||||||
Total Stockholders’ Equity (Deficit) |
$ |
5,044 |
$ |
— |
$ |
5,044 |
||||||
|
|
|
|
|
|
|||||||
Consolidated Statements of Operations and Comprehensive Income (Loss) |
||||||||||||
Change in fair value of bifurcated derivative |
$ | 19,132 | $ | 17,695 | $ | 36,827 | ||||||
Interest Expense (1) |
(5,970 | ) | (38,491 | ) | (44,461 | ) | ||||||
|
|
|
|
|
|
|||||||
Total Interest and Other Expense, Net |
$ |
13,162 |
$ |
(20,796 |
) |
$ |
(7,634 |
) | ||||
|
|
|
|
|
|
(1) |
Includes $2.6 million of interest expense related to the 8% coupon rate. The remaining $41.9 million relates to amortization and derecognition of the BCF and bifurcated derivative debt discounts. |
(2) |
Represents the amounts that are included in the consolidated balance sheets as of December 31, 2020, and recognized in the consolidated statement of operations and comprehensive income (loss) during the year ended December 31, 2020. |
9. |
RELATED PARTY TRANSACTIONS |
10. |
COMMITMENTS AND CONTINGENCIES |
11. |
RISKS AND UNCERTAINTIES |
12. |
NET INCOME (LOSS) PER SHARE |
Year Ended December 31, |
||||||||||||
(Amounts in thousands, except for share and per share amounts) |
2021 |
2020 |
2019 |
|||||||||
Basic net income (loss) per share: |
||||||||||||
Net income (loss) |
$ | (303,752 | ) | $ | 172,055 | $ | (67,580 | ) | ||||
Income allocated to participating securities |
— | (97,223 | ) | — | ||||||||
|
|
|
|
|
|
|||||||
Net income (loss) attributable to common stockholders - Basic |
$ | (303,752 | ) | $ | 74,832 | $ | (67,580 | ) | ||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
(Amounts in thousands, except for share and per share amounts) |
2021 |
2020 |
2019 |
|||||||||
Diluted net income (loss) per share: |
||||||||||||
Net income (loss) attributable to common stockholders - Basic |
$ | (303,752 | ) | $ | 74,832 | $ | (67,580 | ) | ||||
Interest expense and change in fair value of bifurcated derivatives on convertible notes |
— | 7,634 | — | |||||||||
Income allocated to participating securities |
— | 20,985 | — | |||||||||
|
|
|
|
|
|
|||||||
Net income (loss) income attributable to common stockholders - Diluted |
$ | (303,752 | ) | $ | 103,451 | $ | (67,580 | ) | ||||
|
|
|
|
|
|
|||||||
Shares used in computation: |
||||||||||||
Weighted average common shares outstanding |
86,984,646 | 73,121,017 | 69,906,868 | |||||||||
Weighted-average effect of dilutive securities: |
||||||||||||
Assumed exercise of stock options |
— | 8,299,861 | — | |||||||||
Assumed exercise of warrants |
— | 651,785 | — | |||||||||
Assumed conversion of convertible preferred stock |
— | 37,566,536 | — | |||||||||
|
|
|
|
|
|
|||||||
Diluted weighted-average common shares outstanding |
86,984,646 | 119,639,199 | 69,906,868 | |||||||||
|
|
|
|
|
|
|||||||
Earnings (loss) per share attributable to common stockholders: |
||||||||||||
Basic |
(3.49 | ) | $ | 1.02 | $ | (0.97 | ) | |||||
|
|
|
|
|
|
|||||||
Diluted |
(3.49 | ) | $ | 0.86 | $ | (0.97 | ) | |||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
(Amounts in thousands) |
2021 |
2020 |
2019 |
|||||||||
Convertible preferred stock (2) |
108,721 | — | 92,535 | |||||||||
Pre-Closing Bridge Notes |
214,787 | — | — | |||||||||
Options to purchase common stock (1) |
34,217 | 19,100 | 26,032 | |||||||||
Warrants to purchase convertible preferred stock (1) |
3,948 | 4,437 | 3,814 | |||||||||
Warrants to purchase common stock (1) |
1,875 | — | 375 | |||||||||
|
|
|
|
|
|
|||||||
Total |
363,548 | 23,537 | 122,756 | |||||||||
|
|
|
|
|
|
(1) |
Securities have an antidilutive effect under the treasury stock method. |
(2) |
Not applicable under the treasury stock method and therefore antidilutive. |
13. |
FAIR VALUE MEASUREMENTS |
December 31, 2021 |
||||||||||||||||
(Amounts in thousands) |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||
Mortgage loans held for sale, at fair value |
$ | — | $ | 1,851,161 | $ | — | $ | 1,851,161 | ||||||||
Derivative assets, at fair value (1) |
— | 812 | 8,484 | 9,296 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Assets |
$ | — | $ | 1,851,973 | $ | 8,484 | $ | 1,860,457 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivative liabilities, at fair value (1) |
$ | — | $ | 1,466 | $ | 916 | $ | 2,382 | ||||||||
Convertible preferred stock warrants (3) |
— | — | 31,997 | 31,997 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | — | $ | 1,466 | $ | 32,913 | $ | 34,379 | ||||||||
|
|
|
|
|
|
|
|
December 31, 2020 |
||||||||||||||||
(Amounts in thousands) |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||
Mortgage loans held for sale, at fair value |
$ | — | $ | 2,433,351 | $ | — | $ | 2,433,351 | ||||||||
Derivative assets, at fair value (2) |
— | — | 39,972 | 39,972 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Assets |
$ | — | $ | 2,433,351 | $ | 39,972 | $ | 2,473,323 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivative liabilities, at fair value (2) |
$ | — | $ | 25,314 | $ | — | $ | 25,314 | ||||||||
Convertible preferred stock warrants (3) |
— | — | 25,799 | 25,799 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | — | $ | 25,314 | $ | 25,799 | $ | 51,113 | ||||||||
|
|
|
|
|
|
|
|
(1) |
As of December 31, 2021, derivative assets and liabilities represent both IRLCs and forward sale commitments. |
(2) |
As of December 31, 2020, derivative assets and liabilities represent IRLCs and forward sale commitments, respectively. |
(3) |
Fair value is based on the intrinsic value of the Company’s underlying stock price at each balance sheet date and includes certain assumptions with regard to volatility. |
(Amounts in thousands) |
December 31, 2021 |
|||
Balance at beginning of year |
$ | 39,972 | ||
Change in fair value of IRLCs |
(32,404 | ) | ||
|
|
|||
Balance at end of year |
$ | 7,568 | ||
|
|
December 31, |
||||||||
(Amounts in thousands) |
2021 |
2020 |
||||||
Balance at beginning of year |
$ | 25,799 | $ | 1,875 | ||||
Issuances |
— | 201 | ||||||
Exercises |
(26,592 | ) | — | |||||
Change in fair value of convertible preferred stock warrants |
32,790 | 23,723 | ||||||
|
|
|
|
|||||
Balance at end of year |
$ | 31,997 | $ | 25,799 | ||||
|
|
|
|
(Amounts in thousands) |
Notional Value |
Derivative Asset |
Derivative Liability |
|||||||||
Balance as of December 31, 2021 |
||||||||||||
IRLCs |
$ | 2,560,577 | $ | 8,484 | $ | 916 | ||||||
Forward commitments |
$ | 2,818,700 | 812 | 1,466 | ||||||||
|
|
|
|
|||||||||
Total |
$ | 9,296 | $ | 2,382 | ||||||||
|
|
|
|
|||||||||
Balance as of December 31, 2020 |
||||||||||||
IRLCs |
$ | 4,965,468 | $ | 39,972 | $ | — | ||||||
Forward commitments |
$ | 5,150,000 | — | 25,314 | ||||||||
|
|
|
|
|||||||||
Total |
$ | 39,972 | $ | 25,314 | ||||||||
|
|
|
|
(Amounts in thousands) |
Gross Amount of Recognized Assets |
Gross Amount of Recognized Liabilities |
Net Amounts Presented in the Consolidated Balance Sheet |
|||||||||
Offsetting of Forward Commitments - Assets |
||||||||||||
Balance as of: |
||||||||||||
December 31, 2021: |
$ | 2,598 | $ | (1,786 | ) | $ | 812 | |||||
Offsetting of Forward Commitments - Liabilities |
||||||||||||
Balance as of: |
||||||||||||
December 31, 2021: |
$ | 282 | $ | (1,748 | ) | $ | (1,466 | ) | ||||
December 31, 2020 |
$ | — | $ | (25,314 | ) | $ | (25,314 | ) |
December 31, 2021 |
||||||||
(Amounts in dollars, except percentages) |
Range |
Weighted Average |
||||||
Level 3 Financial Instruments: |
||||||||
IRLCs |
||||||||
Pull-through factor |
5.01% - 99.43% |
83.5 | % | |||||
Convertible preferred stock warrants |
||||||||
Risk free rate |
0.19% - 0.73% |
0.27 | % | |||||
Volatility rate |
32.8% - 120.3% |
65.0 | % | |||||
Expected term (years) |
0.5 - 2.0 |
0.7 | ||||||
Fair value of common stock |
6.80 - 29.42 |
$14.91 |
December 31, 2020 |
||||||||
(Amounts in dollars, except percentages) |
Range |
Weighted Average |
||||||
Level 3 Financial Instruments: |
||||||||
IRLCs |
||||||||
Pull-through factor |
19.4% - 100.0% |
81.4 | % | |||||
Convertible preferred stock warrants |
||||||||
Risk free rate |
0.10% - 0.13% |
0.12 | % | |||||
Volatility rate |
22.2% - 111.1% |
70.0 | % | |||||
Expected term (years) |
1.0 - 2.0 |
1.6 | ||||||
Fair value of common stock |
$7.91 - $12.91 |
$9.91 |
As of December 31, |
||||||||||||||||
2021 |
2020 |
|||||||||||||||
(Amounts in thousands) |
Carrying Amount |
Fair Value |
Carrying Amount |
Fair Value |
||||||||||||
Corporate line of credit |
$ | 149,022 | $ | 161,417 | $ | 69,065 | $ | 86,362 |
14. |
INCOME TAXES |
Year Ended December 31, |
||||||||||||
(Amounts in thousands) |
2021 |
2020 |
2019 |
|||||||||
U.S. |
$ | (303,705 | ) | $ | 211,456 | $ | (68,294 | ) | ||||
Foreign |
(2,430 | ) | 2,901 | 985 | ||||||||
|
|
|
|
|
|
|||||||
Income (loss) before income tax expense |
$ | (306,135 | ) | $ | 214,357 | $ | (67,309 | ) | ||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
(Amounts in thousands) |
2021 |
2020 |
2019 |
|||||||||
Current Income Tax Expense (Benefit): |
||||||||||||
Federal |
$ | (6,145 | ) | $ | 25,309 | $ | — | |||||
Foreign |
2,888 | 763 | 271 | |||||||||
State and local |
1,118 | 16,344 | — | |||||||||
|
|
|
|
|
|
|||||||
Total Current Income Tax Expense (Benefit) |
(2,139 | ) | 42,416 | 271 | ||||||||
|
|
|
|
|
|
|||||||
Deferred Income Tax Expense (Benefit): |
||||||||||||
Federal |
(43,545 | ) | 21,430 | (12,729 | ) | |||||||
Foreign |
(2,556 | ) | (114 | ) | — | |||||||
State and local |
(15,613 | ) | 2,004 | (4,231 | ) | |||||||
Valuation Allowance |
61,470 | (23,434 | ) | 16,960 | ||||||||
|
|
|
|
|
|
|||||||
Total Deferred Income Tax Expense (Benefit) |
(244 | ) | (114 | ) | — | |||||||
|
|
|
|
|
|
|||||||
Income Tax Expense (Benefit) |
$ | (2,383 | ) | $ | 42,302 | $ | 271 | |||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Statutory corporate tax rate |
21.00 | % | 21.00 | % | 21.00 | % | ||||||
State and local tax |
4.74 | % | 6.76 | % | 4.97 | % | ||||||
Stock-based compensation |
-2.38 | % | 0.84 | % | — | % | ||||||
Fair value of warrants |
-2.25 | % | 2.32 | % | — | % | ||||||
Pre-Closing Bridge Notes |
-1.32 | % | — | % | — | % | ||||||
Others |
-0.41 | % | 0.94 | % | -1.17 | % | ||||||
R&D tax credit |
2.25 | % | -1.99 | % | — | % | ||||||
Unrecognized tax benefits |
-0.77 | % | 0.80 | % | — | % | ||||||
Change in valuation allowance |
-20.08 | % | -10.93 | % | -25.20 | % | ||||||
|
|
|
|
|
|
|||||||
Effective Tax Rate |
0.78 | % | 19.74 | % | -0.40 | % | ||||||
|
|
|
|
|
|
• | the sustainability of future profitability required to realize the deferred income tax assets, |
• | the cumulative net income or losses in the consolidated statements of operations and comprehensive income in recent years |
As of December 31, |
||||||||
(Amounts in thousands) |
2021 |
2020 |
||||||
Deferred Income Tax Assets |
||||||||
Net operating loss |
$ | 86,009 | $ | 12,014 | ||||
Non-qualified stock options |
4,341 | 2,790 | ||||||
Reserves |
4,866 | 1,324 | ||||||
Loan repurchase reserve |
4,656 | 1,929 | ||||||
Accruals |
3,447 | 3,671 | ||||||
Deferred revenue |
5,311 | — | ||||||
Other |
3,326 | 1,369 | ||||||
|
|
|
|
|||||
Total Deferred Income Tax Assets |
111,956 | 23,097 | ||||||
|
|
|
|
As of December 31, |
||||||||
(Amounts in thousands) |
2021 |
2020 |
||||||
Deferred Income Tax Liabilities |
||||||||
Internal use software |
$ | (14,128 | ) | $ | (5,072 | ) | ||
Intangible assets |
(1,259 | ) | — | |||||
Depreciation |
(3,193 | ) | — | |||||
Other |
(251 | ) | (468 | ) | ||||
|
|
|
|
|||||
Total Deferred Income Tax Liabilities |
(18,831 | ) | (5,540 | ) | ||||
|
|
|
|
|||||
Net Deferred Tax Asset before Valuation Allowance |
93,125 | 17,557 | ||||||
Less: Valuation Allowance |
(92,766 | ) | (17,443 | ) | ||||
|
|
|
|
|||||
Deferred Income Tax Assets, Net |
$ | 359 | $ | 114 | ||||
|
|
|
|
Year Ended December 31, |
||||||||||||
(Amounts in thousands) |
2021 |
2020 |
2019 |
|||||||||
Unrecognized tax benefits - January 1 |
$ | 1,710 | $ | — | $ | — | ||||||
Gross increases - tax positions in prior period |
— | — | — | |||||||||
Gross decreases - tax positions in prior period |
(1,080 | ) | — | — | ||||||||
Gross increases - tax positions in current period |
3,440 | 1,710 | — | |||||||||
Settlement |
— | — | — | |||||||||
Lapse of statute of limitations |
— | — | — | |||||||||
|
|
|
|
|
|
|||||||
Unrecognized tax benefits - December 31 |
$ | 4,070 | $ | 1,710 | $ | — | ||||||
|
|
|
|
|
|
15. |
CONVERTIBLE PREFERRED STOCK |
As of |
||||||||||||||||
December 31, 2021 |
December 31, 2020 |
|||||||||||||||
Amounts in thousands, except share amounts) |
Shares Authorized |
Shares Issued and outstanding |
Shares Authorized |
Shares Issued and outstanding |
||||||||||||
Series D Preferred Stock |
8,564,688 | 7,782,048 | 8,564,688 | 7,782,028 | ||||||||||||
Series D-1 Preferred Stock |
8,564,688 | — | 8,564,688 | — | ||||||||||||
Series D-2 Preferred Stock |
6,970,478 | 6,671,168 | 6,970,478 | 6,671,168 | ||||||||||||
Series D-3 Preferred Stock |
299,310 | 299,310 | 299,310 | 299,310 | ||||||||||||
Series D-4 Preferred Stock |
347,451 | 347,451 | 347,451 | 347,451 | ||||||||||||
Series D-5 Preferred Stock |
347,451 | — | 347,451 | — | ||||||||||||
Series C Preferred Stock |
43,495,421 | 32,761,731 | 43,495,421 | 31,674,996 | ||||||||||||
Series C-1 Preferred Stock |
43,495,421 | 2,924,746 | 43,495,421 | 2,924,746 | ||||||||||||
Series C-2 Preferred Stock |
6,093,219 | 4,586,357 | 6,093,219 | 4,586,357 | ||||||||||||
Series C-3 Preferred Stock |
6,458,813 | 2,737,502 | 6,458,813 | 2,737,502 | ||||||||||||
Series C-4 Preferred Stock |
710,294 | 710,294 | 710,294 | 710,294 | ||||||||||||
Series C-5 Preferred Stock |
6,093,219 | 1,506,862 | 6,093,219 | 1,506,862 | ||||||||||||
Series C-6 Preferred Stock |
6,458,813 | 3,721,311 | 6,458,813 | 3,721,311 | ||||||||||||
Series C-7 Preferred Stock |
3,217,220 | 1,462,373 | 3,217,220 | 1,462,373 | ||||||||||||
Series B Preferred Stock |
13,005,760 | 9,351,449 | 13,005,760 | 9,351,449 | ||||||||||||
Series B-1 Preferred Stock |
4,100,000 | 3,654,311 | 4,100,000 | 3,654,311 | ||||||||||||
Series A Preferred Stock |
30,704,520 | 22,661,786 | 30,704,520 | 22,661,786 | ||||||||||||
Series A-1 Preferred Stock |
8,158,764 | 7,542,734 | 8,158,764 | 7,542,734 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total convertible preferred stock |
197,085,530 | 108,721,433 | 197,085,530 | 107,634,678 | ||||||||||||
|
|
|
|
|
|
|
|
(Amounts in thousands, except no. warrants and strike prices) |
No. Warrants |
|||||||||||||||||||||||||||
December 31, |
||||||||||||||||||||||||||||
Issuance |
Share Class |
Issue Date |
Expiration Date |
2021 |
2020 |
Strike |
Valuation at Issuance |
|||||||||||||||||||||
September 2018 |
Series C Preferred | 9/28/2018 | 9/28/2028 | 756,500 | 756,500 | $ | 1.81 | $ | 170 | |||||||||||||||||||
February 2019 |
Series C Preferred | 2/6/2019 | 9/28/2028 | 50,320 | 50,320 | $ | 1.81 | $ | 12 | |||||||||||||||||||
March 2019 |
Series C Preferred | 3/29/2019 | 3/29/2026 | 375,000 | 375,000 | $ | 3.42 | $ | 87 | |||||||||||||||||||
April 2019 |
Series C Preferred | 4/17/2019 | 4/17/2029 | 1,169,899 | 1,169,899 | $ | 3.42 | $ | 313 | |||||||||||||||||||
March 2020 |
Series C Preferred | 3/25/2020 | 3/25/2027 | 134,212 | 1,500,000 | $ | 5.00 | $ | 201 | |||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Total |
2,485,931 | 3,851,719 | ||||||||||||||||||||||||||
|
|
|
|
December 31, |
||||||||||||||||
2021 |
2020 |
|||||||||||||||
(Amounts in thousands, except per share amounts) |
Fair value per share |
Fair Value |
Fair value per share |
Fair Value |
||||||||||||
September 2018 |
$ | 13.70 | $ | 10,364 | $ | 8.51 | $ | 6,438 | ||||||||
February 2019 |
$ | 13.70 | 689 | $ | 8.51 | 428 | ||||||||||
March 2019 |
$ | 12.54 | 4,703 | $ | 6.74 | 2,528 | ||||||||||
April 2019 |
$ | 12.54 | 14,671 | $ | 6.74 | 7,885 | ||||||||||
March 2020 |
$ | 11.70 | 1,570 | $ | 5.68 | 8,520 | ||||||||||
|
|
|
|
|||||||||||||
Total |
$ | 31,997 | $ | 25,799 | ||||||||||||
|
|
|
|
16. |
STOCKHOLDERS’ EQUITY (DEFICIT) |
As of December 31, |
||||||||||||||||||||||||
2021 |
2020 |
|||||||||||||||||||||||
(Amounts in thousands, except share amounts) |
Shares Authorized |
Shares Issued and outstanding |
Par Value |
Shares Authorized |
Shares Issued and outstanding |
Par Value |
||||||||||||||||||
Common A Stock |
8,000,000 | 8,000,000 | $ | 1 | 8,000,000 | 8,000,000 | $ | 1 | ||||||||||||||||
Common B Stock |
192,457,901 | 56,089,586 | 5 | 192,457,901 | 56,089,586 | 5 | ||||||||||||||||||
Common B-1 Stock |
77,517,666 | — | — | 77,517,666 | — | — | ||||||||||||||||||
Common O Stock |
77,333,479 | 34,977,573 | 4 | 65,083,479 | 17,149,498 | 2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total common stock |
355,309,046 | 99,067,159 | $ | 10 | 343,059,046 | 81,239,084 | $ | 8 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands, except warrants, price, and per share amounts) |
||||||||||||||||||||||||
Issuance |
Share Class |
Issue Date |
Expiration Date |
No. Warrants |
Strike |
Valuation at Issuance |
||||||||||||||||||
March 2019 |
Common B | 3/29/2019 | 3/29/2026 | 375,000 | $ | 0.71 | $ | 179 | ||||||||||||||||
March 2020 |
Common B | 3/25/2020 | 3/25/2027 | 1,500,000 | $ | 3.42 | $ | 271 | ||||||||||||||||
|
|
|||||||||||||||||||||||
Total equity warrants |
1,875,000 | |||||||||||||||||||||||
|
|
17. |
STOCK-BASED COMPENSATION |
(Amounts in thousands, except options, prices, and averages) |
Number of Options |
Weighted Average Exercise Price |
Intrinsic Value |
Weighted Average Remaining Term |
||||||||||||
Stock Options: |
||||||||||||||||
Outstanding—January 1, 2021 |
37,416,140 | $ | 4.79 | |||||||||||||
Options granted |
13,847,394 | $ | 11.33 | |||||||||||||
Options exercised |
(19,471,764 | ) | $ | 4.61 | ||||||||||||
Options cancelled (forfeited) |
(4,992,418 | ) | $ | 3.44 | ||||||||||||
Options cancelled (expired) |
(164,026 | ) | $ | 1.83 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Outstanding—December 31, 2021 |
26,635,326 | $ | 8.23 | $ | 414,319 | 8.2 | ||||||||||
|
|
|
|
|
|
|
|
(Amounts in thousands, except options, prices, and averages) |
Number of Options |
Weighted Average Exercise Price |
Intrinsic Value |
Weighted Average Remaining Term |
||||||||||||
Vested and exercisable—December 31, 2021 |
9,453,768 | $ | 7.40 | $ | 172,760 | 7.5 | ||||||||||
Options expected to vest |
17,116,590 | $ | 7.20 | $ | 330,491 | 8.6 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Options vested and expected to vest—December 31, 2021 |
26,570,358 | $ | 7.30 | $ | 503,251 | 8.2 | ||||||||||
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||||||||||||||
2021 |
2020 |
2019 |
||||||||||||||||||||||
(Amounts in dollars, except percentages) |
Range |
Weighted Average |
Range |
Weighted Average |
Range |
Weighted Average |
||||||||||||||||||
Fair value of common stock |
$ | 10.66 - $26.46 |
$ | 15.46 | $ | 1.40 - $10.48 |
$ | 6.30 | $ | 0.77 - 1.34 |
$ | 1.12 | ||||||||||||
Expected volatility |
63.42 - 73.69 |
% | 65.8 | % | 38.26 - 73.23 |
% | 50.30 | % | 32.50 - 32.90 |
% | 32.70 | % | ||||||||||||
Expected term (years) |
5.0 - 6.3 |
6.0 | 5 - 6.1 |
5.9 | 5 - 6.3 |
5.9 | ||||||||||||||||||
Risk-free interest rate |
0.43% - 1.19 |
% | 0.73 | % | 0.29 - 1.69 |
% | 0.68 | % | 1.34 - 2.52 |
% | 1.73 | % |
(Amounts in thousands, except shares and averages) |
Number of Shares |
Weighted Average Grant Date Fair Value |
||||||
Unvested—December 31, 2020 |
— | $ | — | |||||
RSUs granted |
8,889,986 | $ | 26.46 | |||||
RSUs vested |
(68,146 | ) | $ | 26.46 | ||||
RSUs cancelled and forfeited |
(1,067,220 | ) | $ | 26.46 | ||||
|
|
|||||||
Unvested—December 31, 2021 |
7,754,620 | |||||||
|
|
Year Ended December 31, |
||||||||||||
(Amounts in thousands) |
2021 |
2020 |
2019 |
|||||||||
Mortgage platform expenses |
$ | 13,671 | $ | 2,739 | $ | 163 | ||||||
General and administrative expenses |
27,559 | 15,138 | 519 | |||||||||
Marketing and advertising expenses |
1,159 | 306 | 20 | |||||||||
Technology and product development expenses (1) |
11,172 | 1,076 | 123 | |||||||||
Other platform expenses |
1,654 | 42 | 4 | |||||||||
|
|
|
|
|
|
|||||||
Total stock-based compensation expense |
$ | 55,215 | $ | 19,301 | $ | 829 | ||||||
|
|
|
|
|
|
(1) |
Technology and product development expense excludes $9.0 million, $1.0 million and $0.1 million of stock-based compensation expense, which was capitalized (see Note 7) for the years ended December 31, 2021, 2020, and 2019, respectively. |
18. |
REGULATORY REQUIREMENTS |
19. |
SUBSEQUENT EVENTS |
March 31, |
December 31, |
|||||||
(Amounts in thousands, except share and per share amounts) |
2022 |
2021 |
||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 683,218 | $ | 938,319 | ||||
Restricted cash |
34,557 | 40,555 | ||||||
Mortgage loans held for sale, at fair value (including amounts purchased from related parties of $3,803 and none as of March 31, 2022 and December 31, 2021, respectively) |
1,043,469 | 1,851,161 | ||||||
Other receivables, net (including amounts from related parties of $19 and $37 as of March 31, 2022 and December 31, 2021, respectively) |
48,426 | 51,246 | ||||||
Property and equipment, net |
45,158 | 40,959 | ||||||
Right-of-use |
54,021 | 56,970 | ||||||
Internal use software and other intangible assets, net |
79,554 | 72,489 | ||||||
Goodwill |
19,566 | 19,811 | ||||||
Derivative assets, at fair value |
19,428 | 9,296 | ||||||
Prepaid expenses and other assets |
140,379 | 110,075 | ||||||
Loan commitment asset |
121,723 | 121,723 | ||||||
|
|
|
|
|||||
Total Assets |
$ | 2,289,499 | $ | 3,312,604 | ||||
|
|
|
|
|||||
Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) |
||||||||
Liabilities |
||||||||
Warehouse lines of credit |
$ | 902,406 | 1,667,917 | |||||
Pre-Closing Bridge Notes |
539,935 | 477,333 | ||||||
Corporate line of credit, net |
148,117 | 149,022 | ||||||
Accounts payable and accrued expenses |
143,162 | 148,767 | ||||||
Escrow payable |
8,057 | 11,555 | ||||||
Derivative liabilities, at fair value |
16,484 | 2,382 | ||||||
Convertible preferred stock warrants |
23,720 | 31,997 | ||||||
Lease liabilities |
69,755 | 73,657 | ||||||
Other liabilities (includes $260 and $411 payable to related parties as of March 31, 2022 and December 31, 2021, respectively) |
75,778 | 76,158 | ||||||
|
|
|
|
|||||
Total Liabilities |
1,927,414 | 2,638,788 | ||||||
|
|
|
|
|||||
Commitments and contingencies (see Note 9) |
||||||||
Convertible preferred stock, $0.0001 par value; 197,085,530 shares authorized, 108,721,433 shares issued and outstanding as of both March 31, 2022 and December 31, 2021, and $508,141 and $506,450 liquidation preference as of March 31, 2022 and December 31, 2021, respectively |
436,280 | 436,280 | ||||||
Stockholders’ Equity (Deficit) |
||||||||
Common stock $0.0001 par value; 355,309,046 shares authorized as of both March 31, 2022 and December 31, 2021, and 98,925,978 and 99,067,159 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively |
10 | 10 | ||||||
Notes receivable from stockholders |
(44,592 | ) | (38,633 | ) | ||||
Additional paid-in capital |
593,694 | 571,501 | ||||||
Retained earnings (accumulated deficit) |
(622,938 | ) | (295,237 | ) | ||||
Accumulated other comprehensive loss |
(369 | ) | (105 | ) | ||||
|
|
|
|
|||||
Total Stockholders’ Equity (Deficit) |
(74,195 | ) | 237,536 | |||||
|
|
|
|
|||||
Total Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) |
$ | 2,289,499 | $ | 3,312,604 | ||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(Amounts in thousands, except share and per share amounts) |
2022 |
2021 |
||||||
Revenues: |
||||||||
Mortgage platform revenue, net |
$ | 78,542 | $ | 405,979 | ||||
Cash offer program revenue |
107,224 | — | ||||||
Other platform revenue |
18,300 | 21,162 | ||||||
Net interest income (expense) |
||||||||
Interest income |
9,313 | 14,040 | ||||||
Warehouse interest expense |
(7,406 | ) | (15,486 | ) | ||||
|
|
|
|
|||||
Net interest income (expense) |
1,907 | (1,446 | ) | |||||
|
|
|
|
|||||
Total net revenues |
205,973 | 425,695 | ||||||
|
|
|
|
|||||
Operating Expenses: |
||||||||
Mortgage platform expenses |
185,777 | 158,537 | ||||||
Cash offer program expenses |
107,707 | — | ||||||
Other platform expenses |
38,933 | 16,218 | ||||||
General and administrative expenses (includes amounts to related parties of $501 and $397 for the three months ended March 31, 2022 and 2021, respectively. See Note 8) |
62,763 | 49,654 | ||||||
Marketing and advertising expenses (includes amounts to related parties of $9 and none for the three months ended March 31, 2022 and 2021, respectively. See Note 8) |
36,880 | 45,817 | ||||||
Technology and product development expenses |
42,561 | 25,855 | ||||||
|
|
|
|
|||||
Total operating expenses |
474,621 | 296,081 | ||||||
Income (loss) from operations |
(268,648 | ) | 129,614 | |||||
Interest and other expense, net |
||||||||
Interest and amortization on non-funding debt |
(3,372 | ) | (1,826 | ) | ||||
Interest on Pre-Closing Bridge Notes |
(62,602 | ) | — | |||||
Change in fair value of convertible preferred stock warrants |
8,277 | (45,293 | ) | |||||
|
|
|
|
|||||
Total interest and other expense, net |
(57,697 | ) | (47,119 | ) | ||||
Income (loss) before income tax expense |
(326,345 | ) | 82,495 | |||||
Income tax expense |
1,356 | 289 | ||||||
|
|
|
|
|||||
Net income (loss) |
(327,701 | ) | 82,206 | |||||
|
|
|
|
|||||
Other comprehensive income (loss): |
||||||||
Foreign currency translation adjustment, net of tax |
(264 | ) | 15 | |||||
|
|
|
|
|||||
Comprehensive income (loss) |
$ | (327,965 | ) | $ | 82,221 | |||
|
|
|
|
|||||
Per share data: |
||||||||
Income (loss) per share attributable to common stockholders: |
||||||||
Basic |
$ | (3.50 | ) | $ | 0.43 | |||
|
|
|
|
|||||
Diluted |
$ | (3.50 | ) | $ | 0.40 | |||
|
|
|
|
|||||
Weighted average common shares outstanding — basic |
93,665,693 | 82,232,519 | ||||||
|
|
|
|
|||||
Weighted average common shares outstanding — diluted |
93,665,693 | 205,846,213 | ||||||
|
|
|
|
Convertible preferred stock |
Common Stock |
|||||||||||||||||||||||||||||||||||
(Amounts in thousands, except share and per share amounts) |
Shares |
Amount |
Issued and Outstanding |
Par Value |
Notes Receivables from Stockholders |
Additional Paid-In Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comprehensive Loss |
Total Stockholders’ Equity (Deficit) |
|||||||||||||||||||||||||||
Balance—December 31, 2021 |
108,721,433 | $ | 436,280 | 99,067,159 | $ | 10 | $ | (38,633 | ) | $ | 571,501 | $ | (295,237 | ) | $ | (105 | ) | $ | 237,536 | |||||||||||||||||
Issuance of common stock |
— | — | 716,087 | — | — | 6,981 | — | — | 6,981 | |||||||||||||||||||||||||||
Cancellation or repurchase of common stock |
— | — | (857,268 | ) | — | — | (2,339 | ) | — | — | (2,339 | ) | ||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | 17,551 | — | — | 17,551 | |||||||||||||||||||||||||||
Issuance of notes receivable from stockholders |
— | — | — | — | (5,959 | ) | — | — | — | (5,959 | ) | |||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | (327,701 | ) | — | (327,701 | ) | |||||||||||||||||||||||||
Other comprehensive income—foreign currency translation adjustment, net of tax |
— | — | — | — | — | — | — | (264 | ) | (264 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance—March 31, 2022 |
108,721,433 | $ | 436,280 | 98,925,978 | $ | 10 | $ | (44,592 | ) | $ | 593,694 | $ | (622,938 | ) | $ | (369 | ) | $ | (74,195 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock |
Common Stock |
|||||||||||||||||||||||||||||||||||
(Amounts in thousands, except share and per share amounts) |
Shares |
Amount |
Issued and Outstanding |
Par Value |
Notes Receivables from Stockholders |
Additional Paid-In Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comprehensive Loss |
Total Stockholders’ Equity (Deficit) |
|||||||||||||||||||||||||||
Balance—December 31, 2020 |
107,634,678 | $ | 409,688 | 81,239,084 | 8 | $ | (365 | ) | $ | 42,301 | $ | 7,522 | $ | (140 | ) | $ | 49,326 | |||||||||||||||||||
ASC 842 transition impact |
— | — | — | — | — | — | 993 | — | 993 | |||||||||||||||||||||||||||
Issuance of common stock |
— | — | 17,356,246 | 2 | — | 34,044 | — | — | 34,046 | |||||||||||||||||||||||||||
Cancellation of common stock |
— | — | (133,425 | ) | — | — | (364 | ) | — | — | (364 | ) | ||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | 11,123 | — | — | 11,123 | |||||||||||||||||||||||||||
Issuance of notes receivable from stockholders |
— | — | — | — | (27,781 | ) | — | — | — | (27,781 | ) | |||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | 82,206 | — | 82,206 | |||||||||||||||||||||||||||
Other comprehensive loss—foreign currency translation adjustment |
— | — | — | — | — | — | — | 15 | 15 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance—March 31, 2021 | 107,634,678 | $409,688 | 98,461,905 | $10 | $(28,146) | $87,104 | $90,721 | $(125) | $149,564 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
||||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Cash Flows from Operating Activities: |
||||||||
Net (loss) income |
$ | (327,701 | ) | $ | 82,206 | |||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: |
||||||||
Depreciation of property and equipment |
3,810 | 1,465 | ||||||
Amortization of internal use software |
8,343 | 3,032 | ||||||
Non-cash interest and amortization of debt issuance costs and discounts |
62,697 | 72 | ||||||
Change in fair value of convertible preferred stock warrants |
(8,277 | ) | 45,293 | |||||
Stock-based compensation |
14,251 | 10,001 | ||||||
Provision for loan repurchase reserve |
6,741 | 3,960 | ||||||
Change in fair value of derivatives |
3,970 | 8,034 | ||||||
Change in operating assets and liabilities |
||||||||
Originations of mortgage loans held for sale |
(6,324,924 | ) | (13,340,923 | ) | ||||
Proceeds from sale of mortgage loans held for sale |
7,071,076 | 11,547,135 | ||||||
Change in fair value of mortgage loans held for sale |
56,203 | 42,208 | ||||||
Operating lease right-of-use |
2,949 | 14,473 | ||||||
Operating lease obligations |
(3,902 | ) | (2,896 | ) | ||||
Other receivables, net |
3,065 | 21,024 | ||||||
Prepaid expenses and other assets |
(30,303 | ) | (10,393 | ) | ||||
Accounts payable and accrued expenses |
(2,724 | ) | 43,814 | |||||
Escrow payable |
(3,497 | ) | 1,811 | |||||
Other liabilities |
609 | 18,646 | ||||||
|
|
|
|
|||||
Net cash provided by (used in) operating activities |
532,386 | (1,511,038 | ) | |||||
|
|
|
|
|||||
Cash Flows from Investing Activities: |
||||||||
Purchase of property and equipment |
(8,009 | ) | (3,317 | ) | ||||
Capitalization of internal use software |
(12,107 | ) | (10,154 | ) | ||||
Deferred acquisition consideration |
(3,847 | ) | — | |||||
|
|
|
|
|||||
Net cash used in investing activities |
(23,963 | ) | (13,471 | ) | ||||
|
|
|
|
|||||
Cash Flows from Financing Activities: |
||||||||
Borrowings on warehouse lines of credit |
6,091,782 | 12,995,204 | ||||||
Repayments of warehouse lines of credit |
(6,857,293 | ) | (11,432,252 | ) | ||||
Repayments on finance lease liabilities |
(264 | ) | (224 | ) | ||||
Proceeds from exercise of stock options |
1,025 | 6,263 | ||||||
Proceeds from stock options exercised not vested |
(2,168 | ) | 6,890 | |||||
Repurchase and cancellation of common stock |
(2,339 | ) | (364 | ) | ||||
|
|
|
|
|||||
Net cash (used in) provided by financing activities |
(769,257 | ) | 1,575,517 | |||||
|
|
|
|
|||||
Effects of currency translation on cash, cash equivalents, and restricted cash |
(265 | ) | 15 | |||||
|
|
|
|
|||||
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash |
(261,099 | ) | 51,023 | |||||
Cash, cash equivalents, and restricted cash—Beginning of period |
978,874 | 381,785 | ||||||
|
|
|
|
|||||
Cash, cash equivalents, and restricted cash—End of period |
$ | 717,775 | $ | 432,808 | ||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Cash and cash equivalents, end of period |
$ | 683,218 | $ | 381,099 | ||||
Restricted cash, end of period |
$ | 34,557 | $ | 51,709 | ||||
|
|
|
|
|||||
Total cash, cash equivalents and restricted cash end of period |
$ | 717,775 | $ | 432,808 | ||||
|
|
|
|
|||||
Supplemental Disclosure of Cash Flow Information: |
||||||||
Interest paid |
$ | 10,683 | $ | 17,312 | ||||
Income taxes paid |
$ | 635 | $ | 743 | ||||
Non-Cash Investing and Financing Activities: |
||||||||
Capitalization of stock-based compensation related to internal use software |
$ | 3,301 | $ | 1,122 | ||||
Vesting of stock options early exercised in prior periods |
$ | 4,878 | $ | 694 | ||||
Issuance of notes receivable from stockholders |
$ | 5,959 | $ | 27,781 |
1. |
ORGANIZATION AND NATURE OF THE BUSINESS |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
• | Revenue for the lease payments, which includes the sales price of the home, which is included within cash buyer program revenue on the consolidated statements of operations and comprehensive income (loss). |
• | Expenses for the cost of the home, including transaction closing costs, which is included within cash offer program expenses on the consolidated statements of operations and comprehensive income (loss); |
• | Net investment in the lease, which is included within prepaid expenses and other assets on the consolidated balance sheets, which consists of the minimum lease payments not yet received and the purchase price of the home to be financed through a mortgage. |
a) | Mortgage platform revenue, net includes revenues generated from the Company’s mortgage production process. See Note 3. The components of mortgage platform revenue, net are as follows: |
i. | Net gain on sale of loans—This represents the premium the Company receives in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market. Net gain on sale of loans includes unrealized changes in the fair value of LHFS which are recognized on a loan by loan basis as part of current period earnings until the loan is sold on the secondary market. The fair value of LHFS is measured based on observable market data. Also included within net gain on sale of loans is the day one recognition of the fair value of MSRs and any subsequent changes in the measurement of the fair value of the MSRs for loans sold servicing retained, including any gain or loss on subsequent sales of MSRs. |
ii. | Integrated relationship revenue—Includes fees that the Company receives for originating loans on behalf of an integrated relationship partner which are recognized as revenue upon the integrated relationship partner’s funding of the loan. Some of the loans originated on behalf of the integrated relationship partner are purchased by the Company. Subsequent changes in fair value of loans purchased by the Company are included as part of current period earnings. These loans may be sold in the secondary market at the Company’s discretion for which any gain on sale is included in this account. For loans sold on the secondary market, the integrated relationship partner will receive a portion of the execution proceeds. A portion of the execution proceeds that is to be allocated to the integrated relationship partner is accrued as a reduction of integrated relationship revenue when the loan is initially purchased from the integrated relationship partner. |
iii. | Changes in fair value of IRLCs and forward sale commitments—IRLCs include the fair value upon issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market. Fair value of forward sale commitments hedging IRLC and LHFS are measured based on quoted prices for similar assets. |
b) | Cash offer program revenue—The Company’s product offering includes a Cash Offer Program where the Company works with a Buyer to identify and purchase a home directly from a property Seller. The |
Company will then subsequently sell the home to the Buyer. The Buyer may lease the home from the Company while the Buyer and Company go through the customary closing process to transfer ownership of the home to the Buyer. Arrangements where the Buyer leases the home from the Company are accounted for under ASC 842 while arrangements where the Buyer does not lease the home are accounted for under ASC 606. The Buyer does not directly or indirectly contract with the Seller. See Note 3. |
c) | Other platform revenue consists of revenue from the Company’s additional homeownership offerings which primarily consist of title insurance, settlement services, and other homeownership offerings. See Note 3. |
d) | Net interest income (expense)—Includes interest income from LHFS calculated based on the note rate of the respective loan as well as interest expense on warehouse lines of credit. |
As of January 1, 2021 |
||||||||||||
(Amounts in thousands) |
Balance as of December 31, 2020 |
Adjustments due to ASC 842 |
Balance as of January 1, 2021 |
|||||||||
Accounts Receivable |
$ | 46,845 | $ | 5,915 | $ | 52,760 | ||||||
Property and equipment, net |
20,718 | 6,736 | 27,454 | |||||||||
Right-of-use |
— | 65,889 | 65,889 | |||||||||
|
|
|
|
|
|
|||||||
Total Assets |
$ | 67,563 | $ | 78,540 | $ | 146,103 | ||||||
|
|
|
|
|
|
|||||||
Accounts payable and accrued expenses |
$ | 123,849 | $ | 10,880 | $ | 134,729 | ||||||
Other liabilities |
47,588 | (2,898 | ) | 44,690 | ||||||||
Lease liabilities |
— | 69,566 | 69,566 | |||||||||
|
|
|
|
|
|
|||||||
Total Liabilities |
$ | 171,437 | $ | 77,548 | $ | 248,985 | ||||||
|
|
|
|
|
|
|||||||
Retained earnings |
7,522 | 993 | 8,515 | |||||||||
|
|
|
|
|
|
|||||||
Total Stockholders’ Equity |
$ | 7,522 | $ | 993 | $ | 8,515 | ||||||
|
|
|
|
|
|
Three Months Ended March 31, 2021 |
||||||||||||
(Amounts in thousands) |
As Previously Reported |
Adjustments due to ASC 842 |
As Adjusted |
|||||||||
Cash Flows from Operating Activities: |
||||||||||||
Net income |
$ | 82,316 | $ | (110 | ) | $ | 82,206 | |||||
Adjustments to reconcile net income to net cash used in operating activities: |
||||||||||||
Depreciation of property and equipment |
1,224 | 241 | 1,465 | |||||||||
Change in operating assets and liabilities |
||||||||||||
Operating lease right-of-use |
— | 14,473 | 14,473 | |||||||||
Operating lease obligations |
— | (2,896 | ) | (2,896 | ) | |||||||
Other receivables, net |
21,031 | (7 | ) | 21,024 | ||||||||
Accounts payable and accrued expenses |
54,733 | (10,919 | ) | 43,814 | ||||||||
Other liabilities |
19,204 | (558 | ) | 18,646 | ||||||||
|
|
|
|
|
|
|||||||
Net cash used in operating activities (1) |
$ | 178,508 | $ | 224 | $ | 178,732 | ||||||
|
|
|
|
|
|
|||||||
Cash Flows from Financing Activities: |
||||||||||||
Repayments on finance lease liabilities |
— | (224 | ) | (224 | ) | |||||||
|
|
|
|
|
|
|||||||
Net cash provided by financing activities (2) |
$ | — | $ | (224 | ) | $ | (224 | ) | ||||
|
|
|
|
|
|
(1) |
Amount represents the impact of adoption, resulting in a net decrease in cash used in operating activities. |
(2) |
Amount represents the impact of adoption, resulting in a net decrease in cash provided by financing activities. |
3. |
REVENUE AND SALES-TYPE LEASES |
Three Months Ended March 31, |
||||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Net gain (loss) on sale of loans |
$ | (19,587 | ) | $ | 279,459 | |||
Integrated partnership revenue (loss) |
(4,170 | ) | 10,669 | |||||
Changes in fair value of IRLCs and forward sale commitments |
102,299 | 115,851 | ||||||
|
|
|
|
|||||
Total mortgage platform revenue, net |
$ | 78,542 | $ | 405,979 | ||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Revenue related to ASC 606 |
$ | 2,106 | $ | — | ||||
Revenue related to ASC 842 |
105,118 | — | ||||||
|
|
|
|
|||||
Total cash offer program revenue |
$ | 107,224 | $ | — | ||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Title insurance |
$ | 5,528 | $ | 9,862 | ||||
Settlement services |
3,535 | 8,922 | ||||||
Other homeownership offerings |
9,237 | 2,378 | ||||||
|
|
|
|
|||||
Total other platform revenue |
$ | 18,300 | $ | 21,162 | ||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Cash offer program revenue |
$ | 105,118 | $ | — | ||||
Cash offer program expenses |
$ | 105,605 | $ | — |
4. |
MORTGAGE LOANS HELD FOR SALE AND WAREHOUSE LINES OF CREDIT |
(Amounts in thousands) |
Maturity |
Facility Size |
March 31, 2022 |
December 31, 2021 |
||||||||||||
Funding Facility 1 (1) |
May 18, 2022 | $ | 500,000 | $ | 129,479 | $ | 286,804 | |||||||||
Funding Facility 2 (2) |
October 31, 2022 | 250,000 | 219,678 | 171,649 | ||||||||||||
Funding Facility 3 (3) |
July 1, 2022 | 450,000 | 1,492 | 55,622 | ||||||||||||
Funding Facility 4 (4) |
January 30, 2023 | 750,000 | 113,638 | 409,616 | ||||||||||||
Funding Facility 5 (5) |
March 8, 2023 | 1,500,000 | 240,646 | 622,573 | ||||||||||||
Funding Facility 6 (6) |
August 31, 2022 | 400,000 | 3,510 | 4,184 | ||||||||||||
Funding Facility 7 (7) |
November 15, 2022 | 300,000 | 76,881 | 7,279 | ||||||||||||
Funding Facility 8 (8) |
March 8, 2023 | 500,000 | 58,424 | 94,181 | ||||||||||||
Funding Facility 9 (9) |
April 6, 2022 | 500,000 | — | 1,433 | ||||||||||||
Funding Facility 10 (10) |
July 5, 2022 | 500,000 | 58,658 | 14,576 | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total warehouse lines of credit |
$ | 5,650,000 | $ | 902,406 | $ | 1,667,917 | ||||||||||
|
|
|
|
|
|
(1) |
Interest charged under the facility is at the interest rate charged on the note of the underlying collateral of the approved loan (“Note Rate”) minus 0.75%, which decreases to 1.25% with incentive capacity usage, and with a floor rate of 2.50%, as defined in the agreement. Cash collateral deposit of $10.0 million is maintained. Subsequent to March 31, 2022, the facility was amended to extend maturity to July 18, 2022. |
(2) |
Interest charged under the facility is at the one month LIBOR plus 1.75%, with a floor rate of one month LIBOR at 1.00%, as defined in agreement. Cash collateral deposit of $2.5 million is maintained. |
(3) |
Interest charged under the facility is at the respective one month LIBOR plus 1.75%, with a floor rate of 2.25%, as defined in the agreement. Cash collateral deposit of $4.5 million is maintained. Subsequent to March 31, 2022, the facility was amended to extend maturity to July 31, 2022. |
(4) |
Interest charged under the facility is at the one month LIBOR plus 1.77%. There is no cash collateral deposit maintained as of March 31, 2022. |
(5) |
Interest charged under the facility is at the one month LIBOR plus 1.25% - 2.50%, with a floor rate of 0.50%. There is no cash collateral deposit maintained as of March 31, 2022. Subsequent to March 31, 2022, the facility was amended so that interest charged is at the one month LIBOR plus 1.76% - 2.25%, to decrease capacity to $230.0 million, and to shorten maturity to June 28, 2022. The facility was not renewed beyond the amended maturity and was terminated as of June 28, 2022. |
(6) |
Interest charged under the facility is at the LIBOR flat plus 1.50% (defined as a LIBOR rate with no additional spread). Cash collateral deposit of $4.5 million is maintained. |
(7) |
Interest charged under the facility is at the one month LIBOR plus 1.75% - 2.25%, which decreases to one month LIBOR plus 1.63% with incentive capacity usage for conforming loans, with a floor rate of one month LIBOR at 0.38%. There is no cash collateral deposit maintained as of March 31, 2022. |
(8) |
Interest charged under the facility is at the adjusted SOFR plus 1.60% - 1.85% (defined as the sum of the Term SOFR Rate plus the SOFR adjustment). Cash collateral deposit of $5.0 million is maintained. |
(9) |
Interest charged under the facility is at the one month LIBOR plus 1.60%, with a floor rate of one month LIBOR at 0.50%, as defined in the agreement. There is no cash collateral deposit maintained as of March 31, 2022. Subsequent to March 31, 2022, the facility was not renewed upon its maturity date. |
(10) |
Interest charged under the facility is at the LIBOR flat plus 1.88%, with a floor rate of one month LIBOR at 0.25%, as defined in the agreement. There is no cash collateral deposit maintained as of March 31, 2022. Subsequent to March 31, 2022, the Company did not extend the facility beyond maturity. |
(Amounts in thousands) |
March 31, 2022 |
December 31, 2021 |
||||||
Funding Facility 1 |
$ | 152,918 | $ | 309,003 | ||||
Funding Facility 2 |
225,379 | 186,698 | ||||||
Funding Facility 3 |
12,196 | 67,106 | ||||||
Funding Facility 4 |
140,112 | 439,767 | ||||||
Funding Facility 5 |
296,582 | 681,521 | ||||||
Funding Facility 6 |
4,915 | 5,016 | ||||||
Funding Facility 7 |
92,502 | 9,828 | ||||||
Funding Facility 8 |
69,420 | 107,571 | ||||||
Funding Facility 9 |
4,146 | 4,420 | ||||||
Funding Facility 10 |
66,039 | 16,666 | ||||||
|
|
|
|
|||||
Total LHFS pledged as collateral |
1,064,209 | 1,827,596 | ||||||
Company-funded LHFS |
17,842 | 5,944 | ||||||
|
|
|
|
|||||
Total LHFS |
1,082,051 | 1,833,540 | ||||||
Fair value adjustment |
(38,582 | ) | 17,621 | |||||
|
|
|
|
|||||
Total LHFS at fair value |
$ | 1,043,469 | $ | 1,851,161 | ||||
|
|
|
|
5. |
GOODWILL AND INTERNAL USE SOFTWARE AND OTHER INTANGIBLE ASSETS, NET |
(Amounts in thousands) |
Three Months Ended March 31, 2022 |
Three Months Ended March 31, 2021 |
||||||
Balance at beginning of year |
$ | 19,811 | $ | 10,995 | ||||
Effect of foreign currency exchange rate changes |
(245 | ) | — | |||||
|
|
|
|
|||||
Balance at end of year |
$ | 19,566 | $ | 10,995 | ||||
|
|
|
|
As of March 31, 2022 |
||||||||||||||||
(Amounts in thousands, except useful lives) |
Weighted Average Useful Lives (in years) |
Gross Carrying Value |
Accumulated Amortization |
Net Carrying Value |
||||||||||||
Intangible assets with finite lives |
||||||||||||||||
Internal use software and website development |
3.0 | $ | 111,762 | $ | (40,936 | ) | $ | 70,826 | ||||||||
Intellectual property and other |
7.5 | 6,207 | (545 | ) | 5,661 | |||||||||||
|
|
|
|
|
|
|||||||||||
Total Intangible assets with finite lives, net |
117,969 | (41,481 | ) | 76,487 | ||||||||||||
Intangible assets with indefinite lives |
||||||||||||||||
Domain name |
1,820 | — | 1,820 | |||||||||||||
Licenses and other |
1,247 | — | 1,247 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total Internal use software and other intangible assets, net |
$ | 121,036 | $ | (41,481 | ) | $ | 79,554 | |||||||||
|
|
|
|
|
|
As of December 31, 2021 |
||||||||||||||||
(Amounts in thousands, except useful lives) |
Weighted Average Useful Lives (in years) |
Gross Carrying Value |
Accumulated Amortization |
Net Carrying Value |
||||||||||||
Intangible assets with finite lives |
||||||||||||||||
Internal use software and website development |
3.0 | $ | 96,155 | $ | (32,832 | ) | $ | 63,323 | ||||||||
Intellectual property and other |
7.5 | 6,384 | (320 | ) | 6,064 | |||||||||||
|
|
|
|
|
|
|||||||||||
Total Intangible assets with finite lives, net |
102,539 | (33,152 | ) | 69,387 | ||||||||||||
Intangible assets with indefinite lives |
||||||||||||||||
Domain name |
1,820 | — | 1,820 | |||||||||||||
Licenses and other |
1,282 | — | 1,282 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total Internal use software and other intangible assets, net |
$ | 105,641 | $ | (33,152 | ) | $ | 72,489 | |||||||||
|
|
|
|
|
|
6. |
PREPAID EXPENSES AND OTHER ASSETS |
As of March 31, |
As of December 31, |
|||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Net investment in lease |
$ | 41,230 | $ | 11,058 | ||||
Tax receivables |
19,620 | 39,327 | ||||||
Prefunded loans in escrow |
20,404 | 12,148 | ||||||
Merger transaction costs |
15,237 | 14,263 | ||||||
Inventory—Homes |
3,642 | 1,122 | ||||||
Other prepaid expenses |
40,246 | 32,157 | ||||||
|
|
|
|
|||||
Total prepaid expenses and other assets |
$ | 140,379 | $ | 110,075 | ||||
|
|
|
|
7. |
CORPORATE LINE OF CREDIT AND CONVERTIBLE NOTES |
8. |
RELATED PARTY TRANSACTIONS |
9. |
COMMITMENTS AND CONTINGENCIES |
10. |
RISKS AND UNCERTAINTIES |
Three Months Ended March 31, |
||||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Loan repurchase reserve at beginning of period |
$ | 17,540 | $ | 7,438 | ||||
Provision |
6,741 | 4,132 | ||||||
Charge-offs |
(5,337 | ) | (172 | ) | ||||
|
|
|
|
|||||
Loan repurchase reserve at end of period |
$ | 18,944 | $ | 11,398 | ||||
|
|
|
|
11. |
NET INCOME (LOSS) PER SHARE |
Three Months Ended March 31, |
||||||||
(Amounts in thousands, except for share and per share amounts) |
2022 |
2021 |
||||||
Basic net income (loss) per share: |
||||||||
Net income (loss) |
$ | (327,701 | ) | $ | 82,206 | |||
Income allocated to participating securities |
— | (46,664 | ) | |||||
|
|
|
|
|||||
Net income (loss) attributable to common stockholders - Basic |
$ | (327,701 | ) | $ | 35,542 | |||
|
|
|
|
|||||
Diluted net income (loss) per share: |
||||||||
Net income (loss) attributable to common stockholders - Basic |
$ | (327,701 | ) | $ | 35,542 | |||
Interest expense and change in fair value of bifurcated derivatives on convertible notes |
— | — | ||||||
Income allocated to participating securities |
— | 46,664 | ||||||
|
|
|
|
|||||
Net income (loss) income attributable to common stockholders - Diluted |
$ | (327,701 | ) | $ | 82,206 | |||
|
|
|
|
|||||
Shares used in computation: |
||||||||
Weighted average common shares outstanding |
93,665,693 | 82,232,519 | ||||||
Weighted-average effect of dilutive securities: |
||||||||
Assumed exercise of stock options |
— | 14,906,243 | ||||||
Assumed exercise of warrants |
— | 1,072,773 | ||||||
Assumed conversion of convertible preferred stock |
— | 107,634,678 | ||||||
|
|
|
|
|||||
Diluted weighted-average common shares outstanding |
93,665,693 | 205,846,213 | ||||||
|
|
|
|
|||||
Earnings (loss) per share attributable to common stockholders: |
||||||||
Basic |
(3.50 | ) | $ | 0.43 | ||||
|
|
|
|
|||||
Diluted |
(3.50 | ) | $ | 0.40 | ||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Convertible preferred stock (2) |
107,635 | — | ||||||
Pre-Closing Bridge notes |
252,533 | — | ||||||
Options to purchase common stock (1) |
2,593 | 25,194 | ||||||
Warrants to purchase convertible preferred stock (1) |
2,880 | 1,622 | ||||||
|
|
|
|
|||||
Total |
365,641 | 26,816 | ||||||
|
|
|
|
(1) |
Securities have an antidilutive effect under the treasury stock method. |
(2) |
Not applicable under the treasury stock method and therefore antidilutive. |
12. |
FAIR VALUE MEASUREMENTS |
March 31, 2022 |
||||||||||||||||
(Amounts in thousands) |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||
Mortgage loans held for sale, at fair value |
$ | — | $ | 1,043,469 | $ | — | $ | 1,043,469 | ||||||||
Derivative assets, at fair value (1) |
— | 18,311 | 1,117 | 19,428 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Assets |
$ | — | $ | 1,061,780 | $ | 1,117 | $ | 1,062,897 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivative liabilities, at fair value (1) |
$ | — | $ | 44 | $ | 16,440 | $ | 16,484 | ||||||||
Convertible preferred stock warrants (2) |
— | — | 23,720 | 23,720 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | — | $ | 44 | $ | 40,160 | $ | 40,204 | ||||||||
|
|
|
|
|
|
|
|
December 31, 2021 |
||||||||||||||||
(Amounts in thousands) |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||
Mortgage loans held for sale, at fair value |
$ | — | $ | 1,851,161 | $ | — | $ | 1,851,161 | ||||||||
Derivative assets, at fair value (1) |
— | 812 | 8,484 | 9,296 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Assets |
$ | — | $ | 1,851,973 | $ | 8,484 | $ | 1,860,457 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivative liabilities, at fair value (1) |
$ | — | $ | 1,466 | $ | 916 | $ | 2,382 | ||||||||
Convertible preferred stock warrants (2) |
— | — | 31,997 | 31,997 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
$ | — | $ | 1,466 | $ | 32,913 | $ | 34,379 | ||||||||
|
|
|
|
|
|
|
|
(1) |
As of March 31, 2022 and December 31, 2021, derivative assets and liabilities represent both IRLCs and forward sale commitments. |
(2) |
Fair value is based on the intrinsic value of the Company’s underlying stock price at each balance sheet date and includes certain assumptions with regard to volatility. |
Three Months Ended March 31, |
||||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Balance at beginning of period |
$ | 7,568 | $ | 39,972 | ||||
Change in fair value of IRLCs |
(22,891 | ) | (76,943 | ) | ||||
|
|
|
|
|||||
Balance at end of period |
$ | (15,323 | ) | $ | (36,971 | ) | ||
|
|
|
|
Three Months Ended March 31, |
||||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Balance at beginning of period |
$ | 31,997 | $ | 25,799 | ||||
Change in fair value of convertible preferred stock warrants |
(8,277 | ) | 45,293 | |||||
|
|
|
|
|||||
Balance at end of period |
$ | 23,720 | $ | 71,092 | ||||
|
|
|
|
(Amounts in thousands) |
Notional Value |
Derivative Asset |
Derivative Liability |
|||||||||
Balance as of March 31, 2022 |
||||||||||||
IRLCs |
$ | 940,842 | $ | 1,117 | $ | 16,440 | ||||||
Forward commitments |
$ | 1,194,350 | 18,311 | 44 | ||||||||
|
|
|
|
|||||||||
Total |
$ | 19,428 | $ | 16,484 | ||||||||
|
|
|
|
|||||||||
Balance as of December 31, 2021 |
||||||||||||
IRLCs |
$ | 2,560,577 | $ | 8,484 | $ | 916 | ||||||
Forward commitments |
$ | 2,818,700 | 812 | 1,466 | ||||||||
|
|
|
|
|||||||||
Total |
$ | 9,296 | $ | 2,382 | ||||||||
|
|
|
|
(Amounts in thousands) |
Gross Amount of Recognized Assets |
Gross Amount of Recognized Liabilities |
Net Amounts Presented in the Condensed Consolidated Balance Sheet |
|||||||||
Offsetting of Forward Commitments - Assets |
||||||||||||
Balance as of: |
||||||||||||
March 31, 2022: |
$ | 18,831 | $ | (520 | ) | $ | 18,311 | |||||
December 31, 2021 |
$ | 2,598 | $ | (1,786 | ) | $ | 812 | |||||
Offsetting of Forward Commitments - Liabilities |
||||||||||||
Balance as of: |
||||||||||||
March 31, 2022: |
$ | — | $ | (44 | ) | $ | (44 | ) | ||||
December 31, 2021 |
$ | 282 | $ | (1,748 | ) | $ | (1,466 | ) |
March 31, 2022 |
||||||||
(Amounts in dollars, except percentages) |
Range |
Weighted Average |
||||||
Level 3 Financial Instruments: |
||||||||
IRLCs |
||||||||
Pull-through factor |
10.84% - 100.0% |
87.9 | % | |||||
Convertible preferred stock warrants |
||||||||
Risk free rate |
2.40% - 2.42% |
2.41 | % | |||||
Volatility rate |
33.8% - 119.9% |
65.0 | % | |||||
Expected term (years) |
5.0 - 6.5 |
5.7 | ||||||
Fair value of common stock |
6.94 - 7.54 |
$6.99 |
December 31, 2021 |
||||||||
(Amounts in dollars, except percentages) |
Range |
Weighted Average |
||||||
Level 3 Financial Instruments: |
||||||||
IRLCs |
||||||||
Pull-through factor |
5.01% - 99.43% |
83.5 | % | |||||
Convertible preferred stock warrants |
||||||||
Risk free rate |
0.19% - 0.73% |
0.27 | % | |||||
Volatility rate |
32.8% - 120.3% |
65.0 | % | |||||
Expected term (years) |
0.5 - 2.0 |
0.7 | ||||||
Fair value of common stock |
6.80 - 29.42 |
$14.91 |
March 31, 2022 |
December 31, 2021 |
|||||||||||||||
(Amounts in thousands) |
Carrying Amount |
Fair Value |
Carrying Amount |
Fair Value |
||||||||||||
Loan commitment asset |
$ | 121,723 | $ | 180,120 | $ | 121,723 | $ | 121,723 | ||||||||
Pre-Closing Bridge Notes |
$ | 539,935 | $ | 363,179 | $ | 477,333 | $ | 458,122 | ||||||||
Corporate line of credit |
$ | 148,117 | $ | 157,081 | $ | 149,022 | $ | 161,417 |
13. |
INCOME TAXES |
14. |
CONVERTIBLE PREFERRED STOCK |
As of |
||||||||||||||||
March 31, 2022 |
December 31, 2021 |
|||||||||||||||
Amounts in thousands, except share amounts) |
Shares Authorized |
Shares Issued and outstanding |
Shares Authorized |
Shares Issued and outstanding |
||||||||||||
Series D Preferred Stock |
8,564,688 | 7,782,048 | 8,564,688 | 7,782,048 | ||||||||||||
Series D-1 Preferred Stock |
8,564,688 | — | 8,564,688 | — | ||||||||||||
Series D-2 Preferred Stock |
6,970,478 | 6,671,168 | 6,970,478 | 6,671,168 | ||||||||||||
Series D-3 Preferred Stock |
299,310 | 299,310 | 299,310 | 299,310 | ||||||||||||
Series D-4 Preferred Stock |
347,451 | 347,451 | 347,451 | 347,451 | ||||||||||||
Series D-5 Preferred Stock |
347,451 | — | 347,451 | — | ||||||||||||
Series C Preferred Stock |
43,495,421 | 32,761,731 | 43,495,421 | 32,761,731 | ||||||||||||
Series C-1 Preferred Stock |
43,495,421 | 2,924,746 | 43,495,421 | 2,924,746 | ||||||||||||
Series C-2 Preferred Stock |
6,093,219 | 4,586,357 | 6,093,219 | 4,586,357 | ||||||||||||
Series C-3 Preferred Stock |
6,458,813 | 2,737,502 | 6,458,813 | 2,737,502 | ||||||||||||
Series C-4 Preferred Stock |
710,294 | 710,294 | 710,294 | 710,294 | ||||||||||||
Series C-5 Preferred Stock |
6,093,219 | 1,506,862 | 6,093,219 | 1,506,862 | ||||||||||||
Series C-6 Preferred Stock |
6,458,813 | 3,721,311 | 6,458,813 | 3,721,311 | ||||||||||||
Series C-7 Preferred Stock |
3,217,220 | 1,462,373 | 3,217,220 | 1,462,373 | ||||||||||||
Series B Preferred Stock |
13,005,760 | 9,351,449 | 13,005,760 | 9,351,449 | ||||||||||||
Series B-1 Preferred Stock |
4,100,000 | 3,654,311 | 4,100,000 | 3,654,311 | ||||||||||||
Series A Preferred Stock |
30,704,520 | 22,661,786 | 30,704,520 | 22,661,786 | ||||||||||||
Series A-1 Preferred Stock |
8,158,764 | 7,542,734 | 8,158,764 | 7,542,734 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total convertible preferred stock |
197,085,530 | 108,721,433 | 197,085,530 | 108,721,433 | ||||||||||||
|
|
|
|
|
|
|
|
(Amounts in thousands, except no. warrants and strike prices) |
||||||||||||||||||||||||||||
No. Warrants |
||||||||||||||||||||||||||||
Issuance |
Share Class |
Issue Date |
Expiration Date |
March 31, 2022 |
December 31, 2021 |
Strike |
Valuation at Issuance |
|||||||||||||||||||||
September 2018 |
Series C Preferred | 9/28/2018 | 9/28/2028 | 756,500 | 756,500 | $ | 1.81 | $ | 170 | |||||||||||||||||||
February 2019 |
Series C Preferred | 2/6/2019 | 9/28/2028 | 50,320 | 50,320 | $ | 1.81 | $ | 12 | |||||||||||||||||||
March 2019 |
Series C Preferred | 3/29/2019 | 3/29/2026 | 375,000 | 375,000 | $ | 3.42 | $ | 87 | |||||||||||||||||||
April 2019 |
Series C Preferred | 4/17/2019 | 4/17/2029 | 1,169,899 | 1,169,899 | $ | 3.42 | $ | 313 | |||||||||||||||||||
March 2020 |
Series C Preferred | 3/25/2020 | 3/25/2027 | 134,212 | 134,212 | $ | 5.00 | $ | 201 | |||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Total |
2,485,931 | 2,485,931 | ||||||||||||||||||||||||||
|
|
|
|
March 31, 2022 |
December 31, 2021 |
|||||||||||||||
(Amounts in thousands, except per share amounts) |
Fair value per share |
Fair Value |
Fair value per share |
Fair Value |
||||||||||||
September 2018 |
$ | 10.32 | $ | 7,807 | $ | 13.70 | $ | 10,364 | ||||||||
February 2019 |
$ | 10.32 | 519 | $ | 13.70 | 689 | ||||||||||
March 2019 |
$ | 9.23 | 3,461 | $ | 12.54 | 4,703 | ||||||||||
April 2019 |
$ | 9.23 | 10,798 | $ | 12.54 | 14,671 | ||||||||||
March 2020 |
$ | 8.45 | 1,134 | $ | 11.70 | 1,570 | ||||||||||
|
|
|
|
|||||||||||||
Total |
$ | 23,720 | $ | 31,997 | ||||||||||||
|
|
|
|
15. |
STOCKHOLDERS’ EQUITY (DEFICIT) |
As of March 31, 2022 |
As of December 31, 2021 |
|||||||||||||||||||||||
(Amounts in thousands, except share amounts) |
Shares Authorized |
Shares Issued and outstanding |
Par Value |
Shares Authorized |
Shares Issued and outstanding |
Par Value |
||||||||||||||||||
Common A Stock |
8,000,000 | 8,000,000 | $ | 1 | 8,000,000 | 8,000,000 | $ | 1 | ||||||||||||||||
Common B Stock |
192,457,901 | 56,089,586 | 5 | 192,457,901 | 56,089,586 | 5 | ||||||||||||||||||
Common B-1 Stock |
77,517,666 | — | — | 77,517,666 | — | — | ||||||||||||||||||
Common O Stock |
77,333,479 | 34,836,392 | 4 | 77,333,479 | 34,977,573 | 4 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total common stock |
355,309,046 | 98,925,978 | $ | 10 | 355,309,046 | 99,067,159 | $ | 10 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands, except warrants, price, and per share amounts) |
||||||||||||||||||||||||
Issuance |
Share Class |
Issue Date |
Expiration Date |
No. Warrants |
Strike |
Valuation at Issuance |
||||||||||||||||||
March 2019 |
Common B | 3/29/2019 | 3/29/2026 | 375,000 | $ | 0.71 | $ | 179 | ||||||||||||||||
March 2020 |
Common B | 3/25/2020 | 3/25/2027 | 1,500,000 | $ | 3.42 | $ | 271 | ||||||||||||||||
|
|
|||||||||||||||||||||||
Total equity warrants |
1,875,000 | |||||||||||||||||||||||
|
|
16. |
STOCK-BASED COMPENSATION |
Three Months Ended March 31, |
||||||||
(Amounts in thousands) |
2022 |
2021 |
||||||
Mortgage platform expenses |
$ | 2,237 | $ | 2,734 | ||||
Cash offer program expenses |
— | — | ||||||
Other platform expenses |
360 | 304 | ||||||
General and administrative expenses |
7,143 | 5,325 | ||||||
Marketing expenses |
170 | 339 | ||||||
Technology and product development expenses (1) |
4,341 | 1,299 | ||||||
|
|
|
|
|||||
Total stock-based compensation expense |
$ | 14,251 | $ | 10,001 | ||||
|
|
|
|
(1) |
Technology and product development expense excludes $3.3 million and $1.1 million of stock-based compensation expense, which was capitalized (see Note 5) for the three months ended March 31, 2022 and 2021, respectively |
17. |
REGULATORY REQUIREMENTS |
18. |
SUBSEQUENT EVENTS |
Page |
||||||
ARTICLE I CERTAIN DEFINITIONS | ||||||
Section 1.1 |
A-3 | |||||
Section 1.2 |
A-22 | |||||
Section 1.3 |
A-22 | |||||
ARTICLE II THE MERGERS; CLOSING | ||||||
Section 2.1 |
A-22 | |||||
Section 2.2 |
A-23 | |||||
Section 2.3 |
A-23 | |||||
Section 2.4 |
A-24 | |||||
Section 2.5 |
A-25 | |||||
Section 2.6 |
A-25 | |||||
Section 2.7 |
A-26 | |||||
ARTICLE III EFFECTS OF THE MERGERS ON THE COMPANY CAPITAL STOCK AND EQUITY AWARDS | ||||||
Section 3.1 |
A-26 | |||||
Section 3.2 |
A-28 | |||||
Section 3.3 |
A-30 | |||||
Section 3.4 |
A-31 | |||||
Section 3.5 |
A-31 | |||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY | ||||||
Section 4.1 |
A-32 | |||||
Section 4.2 |
A-32 | |||||
Section 4.3 |
A-32 | |||||
Section 4.4 |
A-33 | |||||
Section 4.5 |
A-33 | |||||
Section 4.6 |
A-34 | |||||
Section 4.7 |
A-35 | |||||
Section 4.8 |
A-36 | |||||
Section 4.9 |
A-37 | |||||
Section 4.10 |
A-37 | |||||
Section 4.11 |
A-37 | |||||
Section 4.12 |
A-37 | |||||
Section 4.13 |
A-39 | |||||
Section 4.14 |
A-41 | |||||
Section 4.15 |
A-42 | |||||
Section 4.16 |
A-44 | |||||
Section 4.17 |
A-44 | |||||
Section 4.18 |
A-44 | |||||
Section 4.19 |
A-45 | |||||
Section 4.20 |
A-45 | |||||
Section 4.21 |
A-46 | |||||
Section 4.22 |
A-47 | |||||
Section 4.23 |
A-47 | |||||
Section 4.24 |
A-48 | |||||
Section 4.25 |
A-48 | |||||
Section 4.26 |
A-48 | |||||
Section 4.27 |
A-48 |
Page |
||||||
Section 4.28 |
A-49 | |||||
Section 4.29 |
A-49 | |||||
Section 4.30 |
A-50 | |||||
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB | ||||||
Section 5.1 |
A-50 | |||||
Section 5.2 |
A-50 | |||||
Section 5.3 |
A-51 | |||||
Section 5.4 |
A-52 | |||||
Section 5.5 |
A-52 | |||||
Section 5.6 |
A-52 | |||||
Section 5.7 |
A-53 | |||||
Section 5.8 |
A-53 | |||||
Section 5.9 |
A-54 | |||||
Section 5.10 |
A-54 | |||||
Section 5.11 |
A-54 | |||||
Section 5.12 |
A-54 | |||||
Section 5.13 |
A-56 | |||||
Section 5.14 |
A-56 | |||||
Section 5.15 |
A-56 | |||||
Section 5.16 |
A-57 | |||||
Section 5.17 |
A-58 | |||||
Section 5.18 |
A-58 | |||||
Section 5.19 |
A-58 | |||||
Section 5.20 |
A-59 | |||||
Section 5.21 |
A-59 | |||||
Section 5.22 |
A-59 | |||||
Section 5.23 |
A-60 | |||||
ARTICLE VI COVENANTS OF THE COMPANY | ||||||
Section 6.1 |
A-60 | |||||
Section 6.2 |
A-62 | |||||
Section 6.3 |
A-63 | |||||
Section 6.4 |
A-63 | |||||
Section 6.5 |
A-63 | |||||
Section 6.6 |
A-63 | |||||
ARTICLE VII COVENANTS OF ACQUIROR | ||||||
Section 7.1 |
A-64 | |||||
Section 7.2 |
A-65 | |||||
Section 7.3 |
A-65 | |||||
Section 7.4 |
A-66 | |||||
Section 7.5 |
A-66 | |||||
Section 7.6 |
A-67 | |||||
Section 7.7 |
A-68 | |||||
Section 7.8 |
A-68 | |||||
Section 7.9 |
A-69 | |||||
Section 7.10 |
A-69 | |||||
Section 7.11 |
A-70 |
Page |
||||||
ARTICLE VIII JOINT COVENANTS | ||||||
Section 8.1 |
A-71 | |||||
Section 8.2 |
A-72 | |||||
Section 8.3 |
A-75 | |||||
Section 8.4 |
A-75 | |||||
ARTICLE IX CONDITIONS TO OBLIGATIONS | ||||||
Section 9.1 |
A-75 | |||||
Section 9.2 |
A-76 | |||||
Section 9.3 |
A-77 | |||||
ARTICLE X TERMINATION/EFFECTIVENESS | ||||||
Section 10.1 |
A-77 | |||||
Section 10.2 |
A-78 | |||||
ARTICLE XI MISCELLANEOUS | ||||||
Section 11.1 |
A-78 | |||||
Section 11.2 |
A-79 | |||||
Section 11.3 |
A-79 | |||||
Section 11.4 |
A-80 | |||||
Section 11.5 |
A-80 | |||||
Section 11.6 |
A-80 | |||||
Section 11.7 |
A-80 | |||||
Section 11.8 |
A-80 | |||||
Section 11.9 |
A-81 | |||||
Section 11.10 |
A-81 | |||||
Section 11.11 |
A-81 | |||||
Section 11.12 |
A-81 | |||||
Section 11.13 |
A-82 | |||||
Section 11.14 |
A-82 | |||||
Section 11.15 |
A-82 | |||||
Section 11.16 |
A-83 | |||||
Section 11.17 |
A-83 | |||||
Section 11.18 |
A-83 | |||||
Exhibits |
||||||
Exhibit A | Form of Certificate of Incorporation of Acquiror upon Domestication | |||||
Exhibit B | Form of Bylaws of Acquiror upon Domestication | |||||
Exhibit C | Form of Amended and Restated IPO Insider Letter Agreement | |||||
Exhibit D | Form of Registration Rights Agreement | |||||
Exhibit E | Form of Incentive Equity Plan | |||||
Exhibit F | Form of Restricted Stock Unit Award | |||||
Exhibit G | Form of Stock Option Grant | |||||
Exhibit H | Form of Employee Stock Purchase Plan |
Section | 2.2 Effects of the Mergers . |
AURORA ACQUISITION CORP. | ||
By: | /s/ Arnaud Massenet | |
Name: Arnaud Massenet | ||
Title: Chief Executive Officer |
AURORA MERGER SUB I, INC. | ||
By: | /s/ Caroline Harding | |
Name: Caroline Harding | ||
Title: President |
BETTER HOLDCO, INC. | ||
By: | /s/ Kevin Ryan | |
Name: Kevin Ryan | ||
Title: Chief Financial Officer |
1. | Defined Terms . Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Merger Agreement. |
2. | Amendments . The parties acknowledge and agree that: |
3. | No Other Amendments to Merger Agreement . The Parties acknowledge and agree that, on and after the date hereof, each reference in the Merger Agreement to “this Agreement”, “herein”, “hereof”, “hereunder” or words of similar import shall mean and be a reference to the Merger Agreement as amended hereby. Except as otherwise expressly provided herein, all of the terms and conditions of the Merger Agreement remain unchanged and continue in full force and effect. |
4. | Miscellaneous . The provisions of Sections 11.2 – 11.17 (inclusive) of the Merger Agreement are incorporated into, and shall apply to, this Amendment, mutatis mutandis. |
BETTER HOLDCO, INC. | ||
By: | /s/ Kevin Ryan | |
Name: Kevin Ryan | ||
Title: Chief Financial Officer |
AURORA ACQUISITION CORP. | ||
By: | /s/ Prabhu Narasimhan | |
Name: Prabhu Narasimhan | ||
Title: Chief Investment Officer |
AURORA MERGER SUB I, INC. | ||
By: | /s/ Caroline Harding | |
Name: Caroline Harding | ||
Title: Director |
1. | Defined Terms . Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Merger Agreement. |
2. | Amendments . The parties acknowledge and agree that Exhibit A to the Merger Agreement (Form of Certificate of Incorporation of Acquiror upon Domestication Annex A attached to this Amendment, which eliminates the Lock-Up Provision. |
3. | No Other Amendments to Merger Agreement . The Parties acknowledge and agree that, on and after the date hereof, each reference in the Merger Agreement to “this Agreement”, “herein”, “hereof”, “hereunder” or words of similar import shall mean and be a reference to the Merger Agreement as amended hereby. Except as otherwise expressly provided herein, all of the terms and conditions of the Merger Agreement remain unchanged and continue in full force and effect. |
4. | Miscellaneous . The provisions of Sections 11.2 – 11.17 (inclusive) of the Merger Agreement are incorporated into, and shall apply to, this Amendment, mutatis mutandis. |
BETTER HOLDCO, INC. | ||
By: | /s/ Kevin Ryan | |
Name: Kevin Ryan | ||
Title: Chief Financial Officer |
AURORA ACQUISITION CORP. | ||
By: | /s/ Arnaud Massenet | |
Name: Arnaud Massenet | ||
Title: Chief Executive Officer |
AURORA MERGER SUB I, INC. | ||
By: | /s/ Caroline Harding | |
Name: Caroline Harding | ||
Title: President |
BETTER HOLDCO, INC. | ||
By: | /s/ Kevin Ryan | |
Name: Kevin Ryan | ||
Title: Chief Financial Officer |
AURORA ACQUISITION CORP. | ||
By: | /s/ Prabhu Narasimhan | |
Name: Prabhu Narasimhan | ||
Title: Chief Investment Officer |
AURORA MERGER SUB I, INC. | ||
By: | /s/ Caroline Harding | |
Name: Caroline Harding | ||
Title: Director |
|
[Name], |
[●][Position of Authorized Officer] |
AURORA ACQUISITION CORP. | ||
By: | | |
Name: | ||
Title: |
Page |
||||||
D-1 | ||||||
1.1 | D-1 | |||||
1.2 | D-1 | |||||
1.3 | D-2 | |||||
1.4 | D-2 | |||||
1.5 | D-2 | |||||
1.6 | D-2 | |||||
1.7 | D-3 | |||||
1.8 | D-3 | |||||
1.9 | D-4 | |||||
1.10 | D-4 | |||||
1.11 | D-5 | |||||
D-10 | ||||||
2.1 | D-10 | |||||
2.2 | D-10 | |||||
2.3 | D-11 | |||||
2.4 | D-11 | |||||
2.5 | D-11 | |||||
2.6 | D-11 | |||||
2.7 | D-11 | |||||
2.8 | D-11 | |||||
2.9 | D-12 | |||||
2.10 | D-12 | |||||
D-12 | ||||||
3.1 | D-12 | |||||
3.2 | D-12 | |||||
D-13 | ||||||
4.1 | D-13 | |||||
4.2 | D-13 | |||||
4.3 | D-13 | |||||
4.4 | D-14 | |||||
4.5 | D-14 | |||||
4.6 | D-14 | |||||
4.7 | D-14 | |||||
4.8 | D-14 | |||||
4.9 | D-14 | |||||
4.10 | D-15 | |||||
4.11 | D-15 | |||||
D-15 | ||||||
5.1 | D-15 | |||||
5.2 | D-15 | |||||
5.3 | D-15 |
Page |
||||||
D-16 | ||||||
6.1 | D-16 | |||||
6.2 | D-16 | |||||
6.3 | D-16 | |||||
6.4 | D-17 | |||||
6.5 | D-17 | |||||
6.6 | D-18 | |||||
6.7 | D-18 | |||||
6.8 | D-18 | |||||
6.9 | D-18 | |||||
6.10 | D-18 | |||||
D-19 | ||||||
7.1 | D-19 | |||||
7.2 | D-20 | |||||
D-20 | ||||||
8.1 | D-20 | |||||
8.2 | D-20 | |||||
D-20 | ||||||
9.1 | D-20 | |||||
9.2 | D-20 | |||||
9.3 | D-20 | |||||
9.4 | D-21 | |||||
9.5 | D-21 | |||||
9.6 | D-21 | |||||
9.7 | D-21 | |||||
D-21 |
1 |
Note to Draft : Governance Guidelines to contain resignation policy. |
Dated: [●], 202[●] |
[●] |
[Corporate Secretary] |
MAJOR ACQUIROR SHAREHOLDERS: | ||
NOVATOR CAPITAL SPONSOR LIMITED | ||
By: |
/s/ Jan Rottiers | |
Name: Jan Rottiers | ||
Title: Director | ||
By: |
/s/ Pericles Spyrou | |
Name: Pericles Spyrou | ||
Title: Director | ||
SHRAVIN MITTAL | ||
/s/ Shravin Mittal | ||
UNBOUND HOLDCO LTD. | ||
By: |
/s/ Shravin Mittal | |
Name: Shravin Mittal | ||
Title: Director |
ACQUIROR: | ||
AURORA ACQUISITION CORP. | ||
By: |
/s/ Arnaud Massenet | |
Name: Arnaud Massenet | ||
Title: Chief Executive Officer |
COMPANY: | ||
BETTER HOLDCO, INC. | ||
By: |
/s/ Kevin Ryan | |
Name: Kevin Ryan | ||
Title: Chief Financial Officer |
MAJOR COMPANY STOCKHOLDERS: |
VISHAL GARG |
/s/ Vishal Garg |
KEVIN RYAN |
/s/ Kevin Ryan |
DIANE YU |
/s/ Diane Yu |
NICHOLAS CALAMARI |
/s/ Nicholas Calamari |
PAULA TUFFIN |
/s/ Paula Tuffin |
SARAH PIERCE |
/s/ Sarah Pierce |
SIGURGEIR JONSSON |
/s/ Sigurgeir Jonsson |
MICHAEL FARELLO |
/s/ Michael Farello |
ZACHARY FRANKEL |
/s/ Zachary Frankel |
STEVEN SARRACINO |
/s/ Steven Sarracino |
AARON SCHILDKROUT |
/s/ Aaron Schildkrout |
RIAZ VALANI |
/s/ Riaz Valani |
1/0 MORTGAGE INVESTMENT, LLC | ||
By: | /s/ Gwendolyn Moy | |
Name: Gwendolyn Moy | ||
Title: Authorized Signatory |
1/0 REAL ESTATE, LLC | ||
By: | /s/ Vishal Garg | |
Name: Vishal Garg | ||
Title: President |
ALLY VENTURES, A BUSINESS UNIT OF ALLY FINANCIAL INC. | ||
By: | /s/ Peter Greene | |
Name: Peter Greene | ||
Title: Head of M&A and Ally Ventures |
ACTIVANT VENTURES III OPPORTUNITIES FUND 1, LP | ||
By: | Activant Ventures Advisors III, LLC, its General Partner | |
By: | /s/ Steven Sarracino | |
Name: Steven Sarracino | ||
Title: Member |
ACTIVANT VENTURES III OPPORTUNITIES FUND 2, LP | ||
By: | Activant Ventures Advisors III, LLC, its General Partner | |
By: | /s/ Steven Sarracino | |
Name: Steven Sarracino | ||
Title: Member |
ACTIVANT VENTURES III OPPORTUNITIES FUND 3, LP | ||
By: | /s/ Steven Sarracino | |
Name: Steven Sarracino | ||
Title: Member |
ACTIVANT VENTURES III OPPORTUNITIES FUND 4, LP | ||
By: | Activant Ventures Advisors III, LLC, its General Partner | |
By: | /s/ Steven Sarracino | |
Name: Steven Sarracino | ||
Title: Member |
ACTIVANT VENTURES III OPPORTUNITIES FUND 6, LP | ||
By: | Activant Ventures Advisors III, LLC, its General Partner | |
By: | /s/ Steven Sarracino | |
Name: Steven Sarracino | ||
Title: Member |
ACTIVANT VENTURES III, LP | ||
By: | Activant Ventures Advisors III, LLC, its General Partner | |
By: | /s/ Steven Sarracino | |
Name: Steven Sarracino | ||
Title: Member |
ACTIVANT HOLDINGS I, LTD. | ||
By: | /s/ Steven Sarracino | |
Name: Steven Sarracino | ||
Title: Member |
BETTER PORTFOLIO HOLDINGS 1 LLC | ||
By: | /s/ Riaz Valani | |
Name: Riaz Valani | ||
Title: Member |
LCG4 BEST, L.P. | ||
By: | /s/ Michael Farello | |
Name: Michael Farello | ||
Title: Authorized person |
COMPANY: | ||
BETTER HOLDCO, INC. | ||
By: | /s/ Kevin Ryan | |
Name: Kevin Ryan | ||
Title: Chief Financial Officer |
ACQUIROR: | ||
AURORA ACQUISITION CORP. | ||
By: | /s/ Arnaud Massenet | |
Name: Arnaud Massenet | ||
Title: Chief Executive Officer |
COMPANY: [ ] |
By: | | |
Name: | ||
Title: |
STOCKHOLDERS: [ENTITY [BETA] STOCKHOLDERS] |
By: | | |
Name: | ||
Title: |
[INDIVIDUAL [BETA] STOCKHOLDERS] |
By: | | |
Name: | ||
NOVATOR CAPITAL SPONSOR LIMITED | ||
By: | | |
Name: Jan Rottiers | ||
Title: Director | ||
NOVATOR CAPITAL SPONSOR LIMITED | ||
By: | | |
Name: Pericles Spyrou | ||
Title: Director |
By: | | |
Name: | ||
Title: |
ISSUER: | ||
AURORA ACQUISITION CORP |
By: | /s/ Arnaud Massenet | |
Name: Arnaud Massenet | ||
Title: Chief Executive Officer |
Accepted and agreed this 10th day of May, 2021. |
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SUBSCRIBER: |
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SB Northstar LP |
Signature of Joint Subscriber, if applicable: | |
By: |
By: | |
Name: |
Name: | |
Title: |
Title: | |
Date: May 10, 2021 |
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Name of Subscriber: |
Name of Joint Subscriber, if applicable: | |
SB Northstar LP |
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(Please print. Please indicate name and capacity of person signing above) |
(Please Print. Please indicate name and capacity of person signing above) | |
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Name in which securities are to be registered (if different from the name of Subscriber listed directly above): |
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Email Address: |
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If there are joint investors, please check one: |
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☐ Joint Tenants with Rights of Survivorship |
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☐ Tenants-in-Common |
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☐ Community Property |
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Subscriber’s EIN: |
Joint Subscriber’s EIN: | |
Business Address-Street: |
Mailing Address-Street (if different): | |
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City, State, Zip: |
City, State, Zip: | |
Attn: |
Attn: | |
Telephone No.: |
Telephone No.: | |
Facsimile No.: |
Facsimile No.: | |
Aggregate Number of Shares subscribed for: |
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See Section 1.1 and 1.2 of Subscription Agreement |
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Aggregate Purchase Amount: See Section 1.1 of Subscription Agreement |
A. | QUALIFIED INSTITUTIONAL BUYER STATUS |
(Please check the applicable subparagraphs): |
1. | ☐ | We are a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “ Securities Act QIB | ||||
2. | ☐ | We are subscribing for the Shares as a fiduciary or agent for one or more investor accounts, and each owner of such account is a QIB. |
B. | ACCREDITED INVESTOR STATUS (Please check the applicable subparagraphs): |
1. | ☐ | We are an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) and have marked and initialed the appropriate box on the following pages indicating the provision under which we qualify as an “accredited investor.” | ||||
2. | ☐ | We are not a natural person. |
C. | AFFILIATE STATUS (Please check the applicable box) |
SUBSCRIBER: |
☐ | Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; |
☐ | Any broker or dealer registered pursuant to section 15 of the Exchange Act; |
☐ | Any insurance company as defined in section 2(a)(13) of the Securities Act; |
☐ | Any investment company registered under the Investment Company Act or a business development company as defined in section 2(a)(48) of the Investment Company Act; |
☐ | Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act or Rural Business Investment Company as defined in Section 384A of the Consolidated Farm and Rural Development Act; |
☐ | Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; |
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“ Family of investment companies 18f-2 under the Investment Company Act) shall be deemed to be a separate investment company and (b) investment companies shall be deemed to have the same adviser (or depositor) if their advisers (or depositors) are majority-owned subsidiaries of the same parent, or if one investment company’s adviser (or depositor) is a majority-owned subsidiary of the other investment company’s adviser (or depositor) |
☐ | Any employee benefit plan within the meaning of Title I of the ERISA, if (i) the investment decision is made by a plan fiduciary, as defined in section 3(21) of ERISA, which is either a bank, a savings and loan association, an insurance company, or a registered investment adviser, (ii) the employee benefit plan has total assets in excess of $5,000,000 or, (iii) such plan is a self-directed plan, with investment decisions made solely by persons that are “accredited investors”; |
☐ | Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act; |
☐ | Any (i) corporation, limited liability company or partnership, (ii) Massachusetts or similar business trust, or (iii) organization described in section 501(c)(3) of the Internal Revenue Code, in each case that was not formed for the specific purpose of acquiring the securities offered and that has total assets in excess of $5,000,000; |
☐ | Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; |
☐ | Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of calculating a natural person’s net worth: (a) the person’s primary residence shall not be included as an asset; (b) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability; |
☐ | Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; |
☐ | Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Section 230.506(b)(2)(ii) of Regulation D under the Securities Act; or |
☐ | Any entity in which all of the equity owners are “accredited investors.” |
☐ | Any entity, of a type not listed in paragraph (a)(1), (2), (3), (7), or (8) of Rule 501 of the Securities Act, not formed for the specific purpose of acquiring the securities offered, owning investments in excess of $5,000,000; |
☐ | Any natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the Securities and Exchange Commission (the “ Commission |
(i) | The certification, designation, or credential arises out of an examination or series of examinations administered by a self-regulatory organization or other industry body or is issued by an accredited educational institution; |
(ii) | The examination or series of examinations is designed to reliably and validly demonstrate an individual’s comprehension and sophistication in the areas of securities and investing; |
(iii) | Persons obtaining such certification, designation, or credential can reasonably be expected to have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of a prospective investment; and |
(iv) | An indication that an individual holds the certification or designation is either made publicly available by the relevant self-regulatory organization or other industry body or is otherwise independently verifiable; |
☐ | Any natural person who is a “knowledgeable employee,” as defined in rule 3c-5(a)(4) under the Investment Company Act of 1940 (17 CFR 270.3c-5(a)(4)), of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in section 3 of such act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of such act; |
☐ | Any “family office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1): |
(i) | With assets under management in excess of $5,000,000, |
(ii) | That is not formed for the specific purpose of acquiring the securities offered, and |
(iii) | Whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment; |
☐ | Any “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1)), of a family office meeting the requirements in paragraph (a)(12) of Rule 501 of the Securities Act and whose prospective investment in the issuer is directed by such family office pursuant to paragraph (a)(12)(iii) of Rule 501 of the Securities Act. |
ISSUER: | ||
AURORA ACQUISITION CORP. | ||
By: | /s/ Prabhu Narasimhan | |
Name: Prabhu Narasimhan | ||
Title: Chief Investment Officer | ||
SUBSCRIBER: | ||
SB NORTHSTAR LP | ||
By: | /s/ Samuel Merksamer | |
Name: Samuel Merksamer | ||
Title: Director | ||
COMPANY: | ||
BETTER HOLDCO, INC. | ||
By: | /s/ Kevin Ryan | |
Name: Kevin Ryan | ||
Title: Chief Financial Officer |
Accepted and agreed this 30th day of November, 2021. | ||||||||
SUBSCRIBER: | ||||||||
SB Northstar LP | Signature of Joint Subscriber, if applicable: | |||||||
By: | /s/ Samuel Merksamer |
By: | | |||||
Name: Samuel Merksamer | Name: | | ||||||
Title: Director | Title: | |
Date: November 30, 2021 | ||||||||
Name of Subscriber: | Name of Joint Subscriber, if applicable: | |||||||
SB NORTHSTAR LP |
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(Please print. Please indicate name and | (Please Print. Please indicate name and | |||||||
capacity of person signing above) | capacity of person signing above) | |||||||
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Name in which securities are to be registered | ||||||||
(if different from the name of Subscriber listed | ||||||||
directly above): | |
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Email Address: | |
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If there are joint investors, please check one: | ||||||||
☐ Joint Tenants with Rights of Survivorship | ||||||||
☐ Tenants-in-Common |
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☐ Community Property |
Subscriber’s EIN: 98-1615422 |
Joint Subscriber’s EIN: |
Business Address-Street: | Mailing Address-Street (if different): | |||||||
C/o Walkers Corporate Limited | | |||||||
190 Elgin Avenue, George Town | | |||||||
City, State, Zip: Grand Cayman, Cayman Islands | City, State, Zip: | | ||||||
Attn: Hasan Sabri | Attn: | |||||||
Telephone No.: | +44 750 205 3710 | Telephone No.: | | |||||
Facsimile No.: | N/A | Facsimile No.: | |
Issuer: |
The Acquiror | |
Title of Securities: |
1.0% senior subordinated unsecured convertible promissory note, due 2027 (the “Notes”) | |
Aggregate Principal Amount: |
$750,000,000, subject to a dollar-for-dollar | |
Funding |
The Notes will be funded by the Investors at the Closing as set forth under the heading “Closing” | |
Subordination |
The Notes are subordinated in right of payment (pursuant to subordination provisions and the intercreditor agreement referred to below) to the prior payment in full of all amounts under senior or secured obligations of the Company or its subsidiaries, including the Company’s Second Amended and Restated Loan and Security Agreement, dated as of November 19, 2021, by and among the Company, certain of its subsidiaries, Biscay GSTF III, LLC, and the lenders party thereto from time to time (the “Guggenheim Senior Facilities”). | |
Guarantors |
Substantially all of the existing and futures subsidiaries of the Company (other than regulated mortgage and insurance subsidiaries) that guarantee the Guggenheim Senior Facilities | |
Interest Rate |
The Notes will bear interest on a 30/360 day count basis, payable semiannually on a PIK basis (or at the Company’s option, in cash), at an interest rate of 1.0% per annum. | |
Closing |
Closing will occur on a date that is within 45 days of the closing of the Transactions (the “Closing Date”). There shall only be one (1) Closing Date. Such funding will be made by the Investors in proportion to their commitments in respect of the Aggregate Principal Amount of Notes. Subject to certain limitations, the Company shall have the |
option not to draw down the entire funding on the Closing Date. The only conditions precedent to closing on the Closing Date shall be as set forth under the heading “Conditions Precedent” below. In no circumstance shall the Company be obligated to draw down on the commitments. | ||
Notice |
The Company shall send the Investors a notice at least 5 Business Days prior to the Closing Date of the amount of funding the Company intends to drawn down and the amount of Notes to be issued on the Closing Date. | |
Maturity Date |
All principal and accrued but unpaid interest on each of the Notes will become due and payable 5 years from the date of issuance. | |
Optional Prepayment |
The Notes may not be voluntarily prepaid. Notwithstanding the foregoing, the Notes may be redeemed at the option of the Company (the “Early Redemption”), at a redemption price of 115% of par plus accrued interest in cash, at any time if the last reported sale price of the common stock has been at least 130% of the conversion price then in effect for at least 20 trading days, whether or not consecutive, during any 30 consecutive trading day period (including on the last trading day of such period) ending on, and including, the trading day immediately preceding the date of notice of optional redemption. The Notes are entitled to conversion following a notice of redemption, with a customary make-whole adjustment calculated in accordance with a customary public company-style grid. | |
Mandatory Prepayment |
If the Company undergoes a “fundamental change” (defined using the SoFi convertible notes as a precedent), then the Company shall redeem the Notes at a repurchase price of 100% of principal amount plus accrued and unpaid interest. For the avoidance of doubt, all mandatory prepayment requirements applicable to the Notes will be subordinated to obligations under the Company’s senior and/or secured debt or warehouse facilities from time to time (including, the Guggenheim Senior Facilities), subject to and in accordance with the terms set forth under “Subordination and Intercreditor Provisions” below. | |
Conversion |
The Investors shall, at any time on or after the first anniversary of the closing of the Transactions, have the option to cause a full or partial conversion of the principal amount of the Notes and accrued but unpaid interest to be converted into shares of the Company’s publicly-traded common stock. Upon conversion, each $1,000 of principal and applicable accrued and unpaid interest through the date of conversion shall entitle the holder of the Note to receive a number of shares equal to (a) $1,000 divided by (b) subject to the following sentence, a dollar amount equal to a 115% of the average Daily VWAP over the 20 VWAP Trading Days immediately prior to the first anniversary of the closing of the Transactions (such amount in (b), the “Conversion Price”). If the average Daily VWAP referred to above is less than $8, for purposes of the calculations above the VWAP shall be $8.00 and if the average Daily VWAP is greater than $12.00, for purposes of the calculation above the VWAP shall be $12.00. |
For purposes of this provision, “Daily VWAP” shall mean for any VWAP Trading Day, the per share volume-weighted average price of the Common Stock as displayed under the heading “Bloomberg VWAP” on Bloomberg page “[insert ticker] <EQUITY> AQR” (or, if such page is not available, its equivalent successor page) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such VWAP Trading Day (or, if such volume-weighted average price is unavailable, the market value of one share of Common Stock on such VWAP Trading Day, determined, using a volume-weighted average price method, by a nationally recognized independent investment banking firm selected by the Company). The Daily VWAP will be determined without regard to after-hours trading or any other trading outside of the regular trading session. “VWAP Trading Day” shall a day on which (A) there is no VWAP Market Disruption Event (to be customarily defined); and (B) trading in the Common Stock generally occurs on the principal U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then traded. If the Common Stock is not so listed or traded, then “VWAP Trading Day” means a Business Day. The Conversion Rate shall be adjusted pursuant to customary anti-dilution adjustments (with reference to the Documentation Principles) to be agreed by the parties, including, subject to certain customary exceptions, upon the declaration of stock dividends, splits and combinations; the issuance of certain rights, options and warrants; the occurrence of certain spin-offs and distributed property; payment of cash dividends or distributions, tender offers or exchange offers. The Notes are not convertible at the Company’s option. The Company shall have the option to settle conversion in either cash, stock or a mixture of cash and stock in its sole discretion. The Notes will also be convertible upon customary events, such as a fundamental change or common stock change, in accordance with the Documentation Principles. In the event the Notes become convertible prior to the first anniversary of the closing of the Transactions, the Conversion Price will be deemed to be $11.50 (subject to any applicable adjustment). Conversions of the Notes will be subject to a customary make-whole adjustment in the event of customary make-whole fundamental change events, in accordance with the Documentation Principles. |
Additional Financing |
The Company shall have the right to obtain other sources of funding, whether via public market financing or otherwise (the “Additional Financing Arrangement”), and such Additional Financing Arrangement shall not, unless otherwise agreed, reduce the Investors’ total commitment amount for the Notes, which commitment amount shall remain available for the Company to draw upon throughout the funding term specified in the definitive documentation for the purchase of the Notes. | |
Covenants |
Customary covenants limited to continuation of Exchange Act reporting post-Transaction Closing, maintenance of corporate existence, limitation on mergers/consolidations/sale of all or substantially all assets, and similar matters, in accordance with the Documentation Principles. | |
Conditions Precedent |
Limited to delivery of the Notes to the Investors, against payment therefor, no defaults, confirmation of corporate authority, no third-party consents and no violations of organizational documents, material contracts or applicable law. Notwithstanding anything to the contrary herein, subject to (1) closing of the Transactions, (2) compliance with the terms of Section 1.3(b) of the Sponsor Subscription Agreement and Section 1.4(b) of the PIPE Subscription Agreement, as applicable, and (3) Section 1.4 of the Sponsor Subscription Agreement and Section 1.5 of the PIPE Subscription Agreement, as applicable, there shall be no conditions precedent to drawdown on the Closing Date other than those set forth in the immediately preceding sentence. | |
Events of Default |
Payment related defaults, failure to comply with obligations in connection with conversion or redemptions, failure to comply with merger/consolidation/sale of all or substantially all assets limitations, failure to comply with other obligations under the indenture subject to a grace period, cross default at a level equal to $100,000,000 and certain bankruptcy related events, consistent with the definitions in accordance with the Documentation Principles. | |
Subordination and Intercreditor Provisions |
At the request of the Company, the Investors (in their capacity as holders of the Notes) shall enter into a customary New York law governed subordination agreement on terms customary for deeply subordinated junior indebtedness and Investors (in their capacity as holders of the Notes) shall negotiate in good faith such agreement with the applicable senior lenders from time to time, including the following provisions: • the Notes shall be subordinated in right of payment to senior debt on customary terms, including that any payments on the Notes are subject to the absence of a default; • any enforcement actions in respect of the Notes shall be subject to a 270-day standstill; and• such other provisions as the applicable senior lenders may reasonably request. |
Transfers and Assignments |
Holders of the Notes shall have the right to transfer all or a part of the Notes as follows: (i) to any affiliate of such holder, without the Company’s consent, (ii) without the Company’s consent, to any non-affiliate transferees who (A) individually do not, and following such transfer will not, own more than 20% of the total principal amount of Notes then-outstanding and (B) agree in writing to refrain from certain trading activities during, or with respect to, the valuation period for establishing the Conversion Price for the Notes (in a form to be agreed by the parties and included in the Notes), (iii) with the Company’s consent (such consent not to be unreasonably withheld or delayed), and (iv) without the Company’s consent, to the extent a payment Event of Default is continuing; provided that any such transfer is done in compliance with a valid exemption under the Securities Act of 1933, as amended, and all other applicable federal state and other securities laws. Under no circumstances will the Company be required to make the Notes eligible for trading through the facilities of The Depository Trust Company. | |
Documentation Principles |
Except as specifically set forth in this term sheet, the Notes shall have terms set out in the SoFi Technologies, Inc. 0.00% convertible senior notes due 2026. | |
Registration Rights |
The Investors shall have demand and shelf registration rights with respect to any shares issued as a result of conversion of the Notes on the same terms as contemplated by the Registration Rights Agreement attached to the Merger Agreement. | |
Governing Law |
State of New York |
ISSUER: | ||
AURORA ACQUISITION CORP. | ||
By: |
/s/ Arnaud Massenet | |
Name: Arnaud Massenet | ||
Title: Chief Executive Officer | ||
SPONSOR: | ||
NOVATOR CAPITAL SPONSOR LTD. | ||
By: |
/s/ Pericles Spyrou | |
Name: Pericles Spyrou | ||
Title: Director | ||
By: |
/s/ Jan Rottiers | |
Name: Jan Rottiers | ||
Title: Director | ||
SPONSOR GUARANTOR: | ||
SIGNED FOR AND ON BEHALF OF BB TRUSTEES SA, AS TRUSTEE OF THE FUTURE HOLDINGS TRUST | ||
By: |
/s/ Jan Rottiers | |
Name: Jan Rottiers | ||
Title: Director | ||
By: |
/s/ Arnaud Cywie | |
Name: Arnaud Cywie | ||
Title: Director |
Accepted and agreed this 10th day of May, 2021. |
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SUBSCRIBER: |
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NOVATOR CAPITAL SPONSOR LTD. |
Signature of Joint Subscriber, if applicable: | |
By: /s/ Jan Rottiers |
By: /s/ Pericles Spyrou | |
Name: Jan Rottiers |
Name: Pericles Spyrou | |
Title: Director |
Title: Director | |
Date: May 10 2021 |
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Name of Subscriber: |
Name of Joint Subscriber, if applicable: | |
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(Please print. Please indicate name and capacity of person signing above) |
(Please Print. Please indicate name and capacity of person signing above) | |
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Name in which securities are to be registered (if different from the name of Subscriber listed directly above): |
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Email Address: |
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If there are joint investors, please check one: |
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☐ Joint Tenants with Rights of Survivorship |
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☐ Tenants-in-Common |
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☐ Community Property |
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Subscriber’s EIN: |
Joint Subscriber’s EIN: | |
Business Address-Street: |
Mailing Address-Street (if different): | |
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City, State, Zip: |
City, State, Zip: | |
Attn: |
Attn: | |
Telephone No.: |
Telephone No.: | |
Facsimile No.: |
Facsimile No.: |
A. | QUALIFIED INSTITUTIONAL BUYER STATUS |
(Please check the applicable subparagraphs): |
1. | ☐ | We are a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “ Securities Act QIB | ||||
2. | ☐ | We are subscribing for the Shares as a fiduciary or agent for one or more investor accounts, and each owner of such account is a QIB. |
B. | ACCREDITED INVESTOR STATUS (Please check the applicable subparagraphs): |
1. | ☐ | We are an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) and have marked and initialed the appropriate box on the following pages indicating the provision under which we qualify as an “accredited investor.” | ||||
2. | ☐ | We are not a natural person. |
C. | AFFILIATE STATUS (Please check the applicable box) |
SUBSCRIBER: |
☐ | Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; |
☐ | Any broker or dealer registered pursuant to section 15 of the Exchange Act; |
☐ | Any insurance company as defined in section 2(a)(13) of the Securities Act; |
☐ | Any investment company registered under the Investment Company Act or a business development company as defined in section 2(a)(48) of the Investment Company Act; |
☐ | Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act or Rural Business Investment Company as defined in Section 384A of the Consolidated Farm and Rural Development Act; |
☐ | Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; |
1 |
“ Family of investment companies 18f-2 under the Investment Company Act) shall be deemed to be a separate investment company and (b) investment companies shall be deemed to have the same adviser (or depositor) if their advisers (or depositors) are majority-owned subsidiaries of the same parent, or if one investment company’s adviser (or depositor) is a majority-owned subsidiary of the other investment company’s adviser (or depositor) |
☐ | Any employee benefit plan within the meaning of Title I of the ERISA, if (i) the investment decision is made by a plan fiduciary, as defined in section 3(21) of ERISA, which is either a bank, a savings and loan association, an insurance company, or a registered investment adviser, (ii) the employee benefit plan has total assets in excess of $5,000,000 or, (iii) such plan is a self-directed plan, with investment decisions made solely by persons that are “accredited investors”; |
☐ | Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act; |
☐ | Any (i) corporation, limited liability company or partnership, (ii) Massachusetts or similar business trust, or (iii) organization described in section 501(c)(3) of the Internal Revenue Code, in each case that was not formed for the specific purpose of acquiring the securities offered and that has total assets in excess of $5,000,000; |
☐ | Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; |
☐ | Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of calculating a natural person’s net worth: (a) the person’s primary residence shall not be included as an asset; (b) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability; |
☐ | Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; |
☐ | Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Section 230.506(b)(2)(ii) of Regulation D under the Securities Act; or |
☐ | Any entity in which all of the equity owners are “accredited investors.” |
☐ | Any entity, of a type not listed in paragraph (a)(1), (2), (3), (7), or (8) of Rule 501 of the Securities Act, not formed for the specific purpose of acquiring the securities offered, owning investments in excess of $5,000,000; |
☐ | Any natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the Securities and Exchange Commission (the “ Commission |
(i) | The certification, designation, or credential arises out of an examination or series of examinations administered by a self-regulatory organization or other industry body or is issued by an accredited educational institution; |
(ii) | The examination or series of examinations is designed to reliably and validly demonstrate an individual’s comprehension and sophistication in the areas of securities and investing; |
(iii) | Persons obtaining such certification, designation, or credential can reasonably be expected to have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of a prospective investment; and |
(iv) | An indication that an individual holds the certification or designation is either made publicly available by the relevant self-regulatory organization or other industry body or is otherwise independently verifiable; |
☐ | Any natural person who is a “knowledgeable employee,” as defined in rule 3c-5(a)(4) under the Investment Company Act of 1940 (17 CFR 270.3c-5(a)(4)), of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in section 3 of such act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of such act; |
☐ | Any “family office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1): |
(i) | With assets under management in excess of $5,000,000, |
(ii) | That is not formed for the specific purpose of acquiring the securities offered, and |
(iii) | Whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment; |
☐ | Any “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1)), of a family office meeting the requirements in paragraph (a)(12) of Rule 501 of the Securities Act and whose prospective investment in the issuer is directed by such family office pursuant to paragraph (a)(12)(iii) of Rule 501 of the Securities Act. |
ISSUER: | ||
AURORA ACQUISITION CORP. | ||
By: | /s/ Prabhu Narasimhan | |
Name: Prabhu Narasimhan Title: Chief Investment Officer | ||
SPONSOR: | ||
NOVATOR CAPITAL SPONSOR LTD. | ||
By: | /s/ Pericles Spyrou | |
Name: Pericles Spyrou Title: Director | ||
SPONSOR GUARANTOR: | ||
BB TRUSTEES SA, AS TRUSTEE OF THE FUTURE HOLDINGS TRUST | ||
By: | /s/ Arnaud Cywie | |
Name: Arnaud Cywie Title: Director | ||
By: | /s/ Jan Rottiers | |
Name: Jan Rottiers Title: Director |
COMPANY: | ||
BETTER HOLDCO, INC. | ||
By: | /s/ Kevin Ryan | |
Name: Kevin Ryan Title: Chief Financial Officer |
Accepted and agreed this 30th day of November, 2021. |
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SUBSCRIBER: | ||
NOVATOR CAPITAL SPONSOR LTD. | Signature of Joint Subscriber, if applicable: | |
By: /s/ Pericles Spyrou |
By: | |
Name: Pericles Spyrou | Name: | |
Title: Director | Title: | |
Date: November 30, 2021 | ||
Name of Subscriber: |
Name of Joint Subscriber, if applicable: | |
(Please print. Please indicate name and capacity of person signing above) |
(Please Print. Please indicate name and capacity of person signing above) | |
Name in which securities are to be registered (if different from the name of Subscriber listed directly above): |
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Email Address: |
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If there are joint investors, please check one: |
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☐ Joint Tenants with Rights of Survivorship |
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☐ Tenants-in-Common |
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☐ Community Property |
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Subscriber’s EIN: |
Joint Subscriber’s EIN: | |
Business Address-Street: |
Mailing Address-Street (if different): | |
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City, State, Zip: |
City, State, Zip: | |
Attn: |
Attn: | |
Telephone No.: |
Telephone No.: | |
Facsimile No.: |
Facsimile No.: |
Issuer: |
The Acquiror |
Title of Securities: |
1.0% senior subordinated unsecured convertible promissory note, due 2027 (the “Notes”) |
Aggregate Principal Amount: |
$750,000,000, subject to a dollar-for-dollar |
Funding |
The Notes will be funded by the Investors at the Closing as set forth under the heading “Closing” |
Subordination |
The Notes are subordinated in right of payment (pursuant to subordination provisions and the intercreditor agreement referred to below) to the prior payment in full of all amounts under senior or secured obligations of the Company or its subsidiaries, including the Company’s Second Amended and Restated Loan and Security Agreement, dated as of November 19, 2021, by and among the Company, certain of its subsidiaries, Biscay GSTF III, LLC, and the lenders party thereto from time to time (the “Guggenheim Senior Facilities”). |
Guarantors |
Substantially all of the existing and futures subsidiaries of the Company (other than regulated mortgage and insurance subsidiaries) that guarantee the Guggenheim Senior Facilities |
Interest Rate |
The Notes will bear interest on a 30/360 day count basis, payable semiannually on a PIK basis (or at the Company’s option, in cash), at an interest rate of 1.0% per annum. |
Closing |
Closing will occur on a date that is within 45 days of the closing of the Transactions (the “Closing Date”). There shall only be one (1) Closing Date. |
Such funding will be made by the Investors in proportion to their commitments in respect of the Aggregate Principal Amount of Notes. Subject to certain limitations, the Company shall have the option not to draw down the entire funding on the Closing Date. The only conditions precedent to closing on the Closing Date shall be as set |
forth under the heading “Conditions Precedent” below. In no circumstance shall the Company be obligated to draw down on the commitments. |
Notice |
The Company shall send the Investors a notice at least 5 Business Days prior to the Closing Date of the amount of funding the Company intends to drawn down and the amount of Notes to be issued on the Closing Date. |
Maturity Date |
All principal and accrued but unpaid interest on each of the Notes will become due and payable 5 years from the date of issuance. |
Optional Prepayment |
The Notes may not be voluntarily prepaid. Notwithstanding the foregoing, the Notes may be redeemed at the option of the Company (the “Early Redemption”), at a redemption price of 115% of par plus accrued interest in cash, at any time if the last reported sale price of the common stock has been at least 130% of the conversion price then in effect for at least 20 trading days, whether or not consecutive, during any 30 consecutive trading day period (including on the last trading day of such period) ending on, and including, the trading day immediately preceding the date of notice of optional redemption. The Notes are entitled to conversion following a notice of redemption, with a customary make-whole adjustment calculated in accordance with a customary public company-style grid. |
Mandatory Prepayment |
If the Company undergoes a “fundamental change” (defined using the SoFi convertible notes as a precedent), then the Company shall redeem the Notes at a repurchase price of 100% of principal amount plus accrued and unpaid interest. For the avoidance of doubt, all mandatory prepayment requirements applicable to the Notes will be subordinated to obligations under the Company’s senior and/or secured debt or warehouse facilities from time to time (including, the Guggenheim Senior Facilities), subject to and in accordance with the terms set forth under “Subordination and Intercreditor Provisions” below. |
Conversion |
The Investors shall, at any time on or after the first anniversary of the closing of the Transactions, have the option to cause a full or partial conversion of the principal amount of the Notes and accrued but unpaid interest to be converted into shares of the Company’s publicly-traded common stock. Upon conversion, each $1,000 of principal and applicable accrued and unpaid interest through the date of conversion shall entitle the holder of the Note to receive a number of shares equal to (a) $1,000 divided by (b) subject to the following sentence, a dollar amount equal to a 115% of the average Daily VWAP over the 20 VWAP Trading Days immediately prior to the first anniversary of the closing of the Transactions (such amount in (b), the “Conversion Price”). |
If the average Daily VWAP referred to above is less than $8, for purposes of the calculations above the VWAP shall be $8.00 and if the average Daily VWAP is greater than $12.00, for purposes of the calculation above the VWAP shall be $12.00. |
For purposes of this provision, “Daily VWAP” shall mean for any VWAP Trading Day, the per share volume-weighted average price of the Common Stock as displayed under the heading “Bloomberg VWAP” on Bloomberg page “[insert ticker] <EQUITY> AQR” (or, if such page is not available, its equivalent successor page) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such VWAP Trading Day (or, if such volume-weighted average price is unavailable, the market value of one share of Common Stock on such VWAP Trading Day, determined, using a volume-weighted average price method, by a nationally recognized independent investment banking firm selected by the Company). The Daily VWAP will be determined without regard to after-hours trading or any other trading outside of the regular trading session. |
“VWAP Trading Day” shall a day on which (A) there is no VWAP Market Disruption Event (to be customarily defined); and (B) trading in the Common Stock generally occurs on the principal U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then traded. If the Common Stock is not so listed or traded, then “VWAP Trading Day” means a Business Day. |
The Conversion Rate shall be adjusted pursuant to customary anti-dilution adjustments (with reference to the Documentation Principles) to be agreed by the parties, including, subject to certain customary exceptions, upon the declaration of stock dividends, splits and combinations; the issuance of certain rights, options and warrants; the occurrence of certain spin-offs and distributed property; payment of cash dividends or distributions, tender offers or exchange offers. |
The Notes are not convertible at the Company’s option. The Company shall have the option to settle conversion in either cash, stock or a mixture of cash and stock in its sole discretion. |
The Notes will also be convertible upon customary events, such as a fundamental change or common stock change, in accordance with the Documentation Principles. In the event the Notes become convertible prior to the first anniversary of the closing of the Transactions, the Conversion Price will be deemed to be $11.50 (subject to any applicable adjustment). |
Conversions of the Notes will be subject to a customary make-whole adjustment in the event of customary make-whole fundamental change events, in accordance with the Documentation Principles. |
Additional Financing |
The Company shall have the right to obtain other sources of funding, whether via public market financing or otherwise (the “Additional Financing Arrangement”), and such Additional Financing Arrangement shall not, unless otherwise agreed, reduce the Investors’ total commitment amount for the Notes, which commitment amount shall remain available for the Company to draw upon throughout the funding term specified in the definitive documentation for the purchase of the Notes. |
Covenants |
Customary covenants limited to continuation of Exchange Act reporting post-Transaction Closing, maintenance of corporate existence, limitation on mergers/consolidations/sale of all or substantially all assets, and similar matters, in accordance with the Documentation Principles. |
Conditions Precedent |
Limited to delivery of the Notes to the Investors, against payment therefor, no defaults, confirmation of corporate authority, no third-party consents and no violations of organizational documents, material contracts or applicable law. Notwithstanding anything to the contrary herein, subject to (1) closing of the Transactions, (2) compliance with the terms of Section 1.3(b) of the Sponsor Subscription Agreement and Section 1.4(b) of the PIPE Subscription Agreement, as applicable, and (3) Section 1.4 of the Sponsor Subscription Agreement and Section 1.5 of the PIPE Subscription Agreement, as applicable, there shall be no conditions precedent to drawdown on the Closing Date other than those set forth in the immediately preceding sentence. |
Events of Default |
Payment related defaults, failure to comply with obligations in connection with conversion or redemptions, failure to comply with merger/consolidation/sale of all or substantially all assets limitations, failure to comply with other obligations under the indenture subject to a grace period, cross default at a level equal to $100,000,000 and certain bankruptcy related events, consistent with the definitions in accordance with the Documentation Principles. |
Subordination and Intercreditor Provisions |
At the request of the Company, the Investors (in their capacity as holders of the Notes) shall enter into a customary New York law governed subordination agreement on terms customary for deeply subordinated junior indebtedness and Investors (in their capacity as holders of the Notes) shall negotiate in good faith such agreement with the applicable senior lenders from time to time, including the following provisions: |
• | the Notes shall be subordinated in right of payment to senior debt on customary terms, including that any payments on the Notes are subject to the absence of a default; |
• | any enforcement actions in respect of the Notes shall be subject to a 270-day standstill; and |
• | such other provisions as the applicable senior lenders may reasonably request. |
Transfers and Assignments |
Holders of the Notes shall have the right to transfer all or a part of the Notes as follows: (i) to any affiliate of such holder, without the Company’s consent, (ii) without the Company’s consent, to any non-affiliate transferees who (A) individually do not, and following such transfer will not, own more than 20% of the total principal amount of Notes then-outstanding and (B) agree in writing to refrain from certain trading activities during, or with respect to, the valuation period for establishing the Conversion Price for the Notes (in a form to be agreed by the parties and included in the Notes), (iii) with the Company’s consent (such consent not to be unreasonably withheld or |
delayed), and (iv) without the Company’s consent, to the extent a payment Event of Default is continuing; provided that any such transfer is done in compliance with a valid exemption under the Securities Act of 1933, as amended, and all other applicable federal state and other securities laws. Under no circumstances will the Company be required to make the Notes eligible for trading through the facilities of The Depository Trust Company. |
Documentation Principles |
Except as specifically set forth in this term sheet, the Notes shall have terms set out in the SoFi Technologies, Inc. 0.00% convertible senior notes due 2026. |
Registration Rights |
The Investors shall have demand and shelf registration rights with respect to any shares issued as a result of conversion of the Notes on the same terms as contemplated by the Registration Rights Agreement attached to the Merger Agreement. |
Governing Law |
State of New York |
ISSUER: | ||
AURORA ACQUISITION CORP. |
By: |
/s/ Arnaud Massenet | |
Name: Arnaud Massenet | ||
Title: Chief Executive Officer |
SPONSOR: | ||
NOVATOR CAPITAL SPONSOR LTD. |
By: |
/s/ Pericles Spyrou | |
Name: Pericles Spyrou | ||
Title: Director | ||
By: |
/s/ Jan Rottiers | |
Name: Jan Rottiers | ||
Title: Director |
SPONSOR GUARANTOR: | ||
SIGNED FOR AND ON BEHALF OF BB TRUSTEES SA, AS TRUSTEE OF THE FUTURE HOLDINGS TRUST |
By: |
/s/ Jan Rottiers | |
Name: Jan Rottiers | ||
Title: Director | ||
By: |
/s/ Arnaud Cywie | |
Name: Arnaud Cywie | ||
Title: Director | ||
Accepted and agreed this 10th day of May, 2021. |
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SUBSCRIBER: |
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NOVATOR CAPITAL SPONSOR LTD. |
Signature of Joint Subscriber, if applicable: | |
By: /s/ Jan Rottiers |
By: /s/ Pericles Spyrou | |
Name: Jan Rottiers |
Name: Pericles Spyrou | |
Title: Director |
Title: Director | |
Date: May 10, 2021 |
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Name of Subscriber: |
Name of Joint Subscriber, if applicable: | |
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(Please print. Please indicate name and capacity of person signing above) |
(Please Print. Please indicate name and capacity of person signing above) | |
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Name in which securities are to be registered (if different from the name of Subscriber listed directly above): |
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Email Address: |
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If there are joint investors, please check one: |
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☐ Joint Tenants with Rights of Survivorship |
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☐ Tenants-in-Common |
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☐ Community Property |
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Subscriber’s EIN: |
Joint Subscriber’s EIN: | |
Business Address-Street: |
Mailing Address-Street (if different): | |
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City, State, Zip: |
City, State, Zip: | |
Attn: |
Attn: | |
Telephone No.: |
Telephone No.: | |
Facsimile No.: |
Facsimile No.: | |
Aggregate Number of Shares subscribed for: |
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See sections 1.1 and 1.2 of the Redemption Subscription Agreement | ||
Backstop Purchase: See sections 1.1 and 1.2 of the Redemption Subscription Agreement |
A. | QUALIFIED INSTITUTIONAL BUYER STATUS (Please check the applicable subparagraphs): | |||||
1. | ☐ | We are a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “ Securities Act QIB | ||||
2. | ☐ | We are subscribing for the Subject Shares as a fiduciary or agent for one or more investor accounts, and each owner of such account is a QIB. | ||||
*** OR *** | ||||||
B. | ACCREDITED INVESTOR STATUS (Please check the applicable subparagraphs): | |||||
1. | ☐ | We are an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) and have marked and initialed the appropriate box on the following pages indicating the provision under which we qualify as an “accredited investor.” | ||||
2. | ☐ | We are not a natural person. | ||||
*** AND *** | ||||||
C. | AFFILIATE STATUS (Please check the applicable box) SUBSCRIBER: | |||||
☐ | is: | |||||
☐ | is not: | |||||
an “affiliate” (as defined in Rule 144 under the Securities Act) of the Issuer or acting on behalf of an affiliate of the Issuer. |
☐ | Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; |
☐ | Any broker or dealer registered pursuant to section 15 of the Exchange Act; |
☐ | Any insurance company as defined in section 2(a)(13) of the Securities Act; |
☐ | Any investment company registered under the Investment Company Act or a business development company as defined in section 2(a)(48) of the Investment Company Act; |
☐ | Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act or Rural Business Investment Company as defined in Section 384A of the Consolidated Farm and Rural Development Act; |
☐ | Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; |
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“ Family of investment companies 18f-2 under the Investment Company Act) shall be deemed to be a separate investment company and (b) investment companies shall be deemed to have the same adviser (or depositor) if their advisers (or depositors) are majority-owned subsidiaries of the same parent, or if one investment company’s adviser (or depositor) is a majority-owned subsidiary of the other investment company’s adviser (or depositor) |
☐ | Any employee benefit plan within the meaning of Title I of the ERISA, if (i) the investment decision is made by a plan fiduciary, as defined in section 3(21) of ERISA, which is either a bank, a savings and loan association, an insurance company, or a registered investment adviser, (ii) the employee benefit plan has total assets in excess of $5,000,000 or, (iii) such plan is a self-directed plan, with investment decisions made solely by persons that are “accredited investors”; |
☐ | Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act; |
☐ | Any (i) corporation, limited liability company or partnership, (ii) Massachusetts or similar business trust, or (iii) organization described in section 501(c)(3) of the Internal Revenue Code, in each case that was not formed for the specific purpose of acquiring the securities offered and that has total assets in excess of $5,000,000; |
☐ | Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; |
☐ | Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of calculating a natural person’s net worth: (a) the person’s primary residence shall not be included as an asset; (b) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability; |
☐ | Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; |
☐ | Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Section 230.506(b)(2)(ii) of Regulation D under the Securities Act; or |
☐ | Any entity in which all of the equity owners are “accredited investors.” |
☐ | Any entity, of a type not listed in paragraph (a)(1), (2), (3), (7), or (8) of Rule 501 of the Securities Act, not formed for the specific purpose of acquiring the securities offered, owning investments in excess of $5,000,000; |
☐ | Any natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the Securities and Exchange Commission (the “ Commission |
(i) | The certification, designation, or credential arises out of an examination or series of examinations administered by a self-regulatory organization or other industry body or is issued by an accredited educational institution; |
(ii) | The examination or series of examinations is designed to reliably and validly demonstrate an individual’s comprehension and sophistication in the areas of securities and investing; |
(iii) | Persons obtaining such certification, designation, or credential can reasonably be expected to have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of a prospective investment; and |
(iv) | An indication that an individual holds the certification or designation is either made publicly available by the relevant self-regulatory organization or other industry body or is otherwise independently verifiable; |
☐ | Any natural person who is a “knowledgeable employee,” as defined in rule 3c-5(a)(4) under the Investment Company Act of 1940 (17 CFR 270.3c-5(a)(4)), of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in section 3 of such act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of such act; |
☐ | Any “family office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1): |
(i) | With assets under management in excess of $5,000,000, |
(ii) | That is not formed for the specific purpose of acquiring the securities offered, and |
(iii) | Whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment; |
☐ | Any “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1)), of a family office meeting the requirements in paragraph (a)(12) of Rule 501 of the Securities Act and whose prospective investment in the issuer is directed by such family office pursuant to paragraph (a)(12)(iii) of Rule 501 of the Securities Act. |
ISSUER: | ||
AURORA ACQUISITION CORP. | ||
By: | /s/ Prabhu Narasimhan | |
Name: Prabhu Narasimhan | ||
Title: Chief Investment Officer |
SPONSOR: | ||
NOVATOR CAPITAL SPONSOR LTD. | ||
By: | /s/ Pericles Spyrou | |
Name: Pericles Spyrou | ||
Title: Director |
SPONSOR GUARANTOR: | ||
BB TRUSTEES SA, AS TRUSTEE OF THE FUTURE HOLDINGS TRUST | ||
By: | /s/ Arnaud Cywie | |
Name: Arnaud Cywie | ||
Title: Director |
By: | /s/ Jan Rottiers | |
Name: Jan Rottiers | ||
Title: Director |
Agreed and accepted as of the date first above written: | ||
COMPANY: | ||
BETTER HOLDCO, INC. | ||
By: | /s/ Kevin Ryan | |
Name: Kevin Ryan | ||
Title: Chief Financial Officer |
1. | Mandatory Redemption of Acquiror Private Placement Warrants . Notwithstanding anything to the contrary in the Warrant Agreement, dated March 3, 2021, between Acquiror and Continental Stock Transfer & Trust Company (the “Warrant Agreement Section 4 of the Warrant Agreement). |
2. | Forfeiture of Acquiror Private Placement Warrants . Sponsor shall forfeit upon the Closing fifty percent (50%) of the Acquiror Private Placement Warrants held by Sponsor as of the date of this Agreement. Notwithstanding anything to the contrary contained herein, no fraction of an Acquiror Private Placement Warrant will be forfeited by Sponsor by virtue of this Agreement, and the number of the Acquiror Private Placement Warrants to be so forfeited shall instead be rounded down to the nearest whole Acquiror Private Placement Warrants. |
3. | Locked-Up Promote |
a. | Twenty percent (20%) of the Domesticated Class A Common Stock that were issued to Sponsor in the Domestication in exchange for the Founder Shares or any shares into which such Domesticated Class A Common Stock are converted (such amount, as it may be reduced through expiration of the transfer restrictions set forth in this Section 3(a) , the “Locked-Up Promoteone-third (1/3) of such amount, prior to any such reduction, the “Locked-Up Tranche |
Amount Subject to Transfer Restriction |
Expiration of Section 3(a) Transfer Restriction | |
One (1) Locked-Up Tranche |
Date on which the VWAP for any twenty (20) Trading Days during any consecutive thirty (30) Trading Day period exceeds $12.50 per share | |
One (1) Locked-Up Tranche |
Date on which the VWAP for any twenty (20) Trading Days during any consecutive thirty (30) Trading Day period exceeds $15.00 per share. | |
One (1) Locked-Up Tranche |
Date on which the VWAP for any twenty (20) Trading Days during any consecutive thirty (30) Trading Day period exceeds $17.50 per share |
b. | If within five (5) years following Closing, a transaction that constitutes a Change in Control Transaction is consummated, then (x) any then-remaining Locked-Up Promote shall cease to be subject to Section 3(a) and (y) if in such transaction the Surviving Corporation or its stockholders have the right to receive consideration implying a value per share Acquiror Class A Common Stock of: |
d. | The number of Domesticated Class A Common Stock that constitute the Locked Up Promote and the per share prices set forth in this Section 3 shall be equitably adjusted for any stock dividends, stock splits, stock combinations, recapitalizations or other similar transactions. |
4. | For purposes of this Agreement: |
5. | Third Party Beneficiary . It is understood and agreed that the Company shall be a third party beneficiary of this Agreement. The prior written consent of the Company shall be required in order to amend or waive the terms and conditions set forth in this Agreement and the Company shall have the right to enforce this Agreement directly to the extent it may deem such enforcement necessary or advisable to protect its rights under this Agreement. |
6. | Entire Agreement . This Agreement constitutes the entire agreement among the parties to this Agreement relating to the transactions contemplated hereby and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the parties hereto or any of their respective Subsidiaries relating to the transactions contemplated hereby. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the transactions contemplated hereby exist between such parties except as expressly set forth in this Agreement. |
7. | Amendments and Assignments . This Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed in the same manner as this Agreement and which makes reference to this Agreement; provided however |
8. | Notice . Any notice, consent or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing and shall be sent in the same manner as provided in Section 11.3 of the Merger Agreement, with notices to Acquiror and the Company being sent to the addresses set forth therein, and with notices to Sponsor being sent to the addresses set forth on the first page of this Agreement (and with copies to the following (which shall not constitute notice)): |
9. | Termination . This Agreement shall terminate at such time, if any, as the Merger Agreement is terminated in accordance with its terms, and upon such termination this Agreement shall be null and void and of no effect whatsoever, and the parties hereto shall have no obligations under this Agreement; provided |
10. | Miscellaneous . This Agreement shall be governed, enforced, construed and interpreted in a manner consistent with the provisions of the Merger Agreement. The provisions set forth in Sections 11.13 (Severability Jurisdiction; Waiver of Jury Trial Enforcement mutatis mutandis |
NOVATOR CAPITAL SPONSOR LIMITED | ||
By: |
/s/ Jan Rottiers | |
Name: |
Jan Rottiers | |
Title: |
Director | |
By: |
/s/ Pericles Spyrou | |
Name: |
Pericles Spyrou | |
Title: |
Director |
AURORA ACQUISITION CORP. | ||
By: |
/s/ Arnaud Massenet | |
Name: |
Arnaud Massenet | |
Title: |
Chief Executive Officer |
1. | Defined Terms . Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Sponsor Agreement. |
2. | Amendment . The Parties acknowledge and agree that Section 2 (Forfeiture of Acquiror Private Placement Warrants |
3. | No Other Amendments to Sponsor Agreement . The Parties acknowledge and agree that, on and after the date hereof, each reference in the Sponsor Agreement to “this Agreement”, “herein”, “hereof”, “hereunder” or words of similar import shall mean and be a reference to the Sponsor Agreement as amended hereby. Except as otherwise expressly provided herein, all of the terms and conditions of the Sponsor Agreement remain unchanged and continue in full force and effect. |
4. | Miscellaneous . The provisions of Sections 5 – 10 (inclusive) of the Sponsor Agreement are incorporated into, and shall apply to, this Amendment, mutatis mutandis. |
AURORA ACQUISITION CORP. | ||
By: | /s/ Arnaud Massenet | |
Name: Arnaud Massenet | ||
Title: Chief Executive Officer | ||
NOVATOR CAPITAL SPONSOR, LTD. | ||
By: | /s/ Pericles Spyrou | |
Name: Pericles Spyrou | ||
Title: Director |
1. | The Sponsor and each Insider hereby agrees that in the event that the Company fails to consummate a Business Combination within 24 months from the closing of the Public Offering, or such later period approved by the Company’s shareholders in accordance with the Company’s amended and restated memorandum and articles of association (the “ Charter Offering Shares Novator Private Placement Shares per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account (as defined below), including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Offering Shares and Novator Private Placement Shares, which redemption will completely extinguish all Public Shareholders’ and holders of Novator Private Placement Shares’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as |
reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and other requirements of applicable law. The Sponsor and each Insider agrees not to propose any amendment to the Charter to (a) modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination or the Company’s obligation to redeem 100% of the Offering Shares and Novator Private Placement Shares if the Company does not complete a Business Combination within the time period set forth in the Charter or (b) with respect to any other provision relating to shareholders’ rights or pre-initial Business Combination activity, unless the Company provides Public Shareholders with the opportunity to redeem their shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account (excluding any amounts then on deposit in the Trust Account that are allocable to the Novator Private Placement Shares), including interest earned on the funds held in the Trust Account (which interest shall be net of taxes payable and excluding any interest earned on the funds held in the Trust Account that are allocable to the Novator Private Placement Shares) and not previously released to the Company to pay its franchise and income taxes, divided by the number of then outstanding Offering Shares. |
2. | As required by Nasdaq rules, the undersigned acknowledges and agrees that prior to entering into a definitive agreement for a Business Combination or subsequent transaction with a target business, such transaction must be approved by a majority of the Company’s disinterested independent directors and the Company, or a committee of independent directors, must, to the extent required by applicable law or based upon the direction of the Company’s board of directors or a committee thereof, obtain an opinion from an independent investment banking firm or another entity that commonly renders valuation opinions that such Business Combination or transaction is fair to the Company from a financial point of view. |
3. | During the period commencing on the date of the Underwriting Agreement and ending 180 days after such date, the Sponsor and each Insider shall not, without the prior written consent of the Underwriter, sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, any Units, shares underlying such Units, Novator Private Placement Units, Founder Shares, Warrants, Private Placement Warrants, Novator Private Placement Warrants or any securities convertible into, or exercisable or exchangeable for, shares owned by it, him or her publicly announce any intention to effect any transaction specified herein. The provisions of this paragraph will not apply if the release or waiver is effected solely to permit a transfer not for consideration and the transferee has agreed in writing to be bound by the same terms described in this Amended and Restated Letter Agreement to the extent and for the duration that such terms remain in effect at the time of the transfer. |
4. | In the event of the liquidation of the Trust Account upon the failure of the Company to consummate its initial Business Combination within the time period set forth in the Charter, the Sponsor (the “ Indemnitor Target Securities Act |
5. | To the extent that the Underwriter does not exercise its over-allotment option to purchase up to an additional 3,300,000 Units within 45 days from the date of the Prospectus (and as further described in the Prospectus) in full, the Sponsor agrees to forfeit, at no cost, a number of Founder Shares in the aggregate equal to 825,000 multiplied by a fraction (i) the numerator of which is 3,300,000 minus the number of Units purchased by the Underwriter upon the exercise of its over- allotment option, and (ii) the denominator of which is 3,300,000. For clarity, the forfeiture shall yield the result that the Initial Shareholders will own an aggregate of 20% of the Company’s issued and outstanding shares of Capital Stock after the Public Offering (including the Novator Private Placement Shares and assuming that the Initial Shareholders do not purchase any Units in the Public Offering). |
6. | The Sponsor and each Insider hereby agrees and acknowledges that: (i) the Underwriter and the Company would be irreparably injured in the event of a breach by such Sponsor or an Insider of its, his or her obligations under paragraphs 1, 2, 3, 4, 5, 6, 7(a), 7(b) and, solely as to each D&O Insider, 8, as applicable, of this Amended and Restated Letter Agreement, (ii) monetary damages may not be an adequate remedy for such breach and (iii) the non-breaching party shall be entitled to injunctive relief, in addition to any other remedy that such party may have in law or in equity, in the event of such breach. |
7. (a) | The Sponsor and each Insider agrees that it, he or she shall not Transfer any Founder Shares (or shares issuable upon conversion thereof) or Novator Private Placement Shares (or shares issuable upon conversion thereof) until the earlier of (A) one year after the completion of the Company’s initial Business Combination or (B) subsequent to the Company’s initial Business Combination, (x) if the last reported sale price equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial Business Combination or (y) the date on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the Company’s shareholders having the right to exchange their shares for cash, securities or other property (the “Founder Shares Lock-up Period |
(b) | Notwithstanding anything to the contrary set forth in paragraph 7(a) (which Section 7(a) is inapplicable to the Private Placement Warrants and the Novator Private Placement Warrants (and the shares issued or issuable upon the exercise thereof)), the Sponsor and each Insider agrees that it, he or she shall not Transfer any Private Placement Warrants or Novator Private Placement Warrants (or shares issued or issuable upon the exercise thereof) until 30 days after the completion of the Company’s initial Business Combination (the “ Private Placement Warrants Lock-up PeriodNovator Private Placement Warrants Lock-up PeriodLock-up Period, the “Lock-up Periods |
(c) | Notwithstanding anything to the contrary set forth in paragraphs 7(a) and (b), Transfers of the Founder Shares, Novator Private Placement Shares, Private Placement Warrants, Novator Private Placement Warrants and shares issued or issuable upon the exercise or conversion thereof and, with respect to the Founder Shares, Private Placement Warrants and shares issued or issuable upon the exercise or conversion thereof, that are held by the Sponsor, any Insider or any of their permitted transferees (that have complied with this paragraph 7(c)), are permitted (a) to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, the Sponsor; (b) in the case of an individual, by gift to a member of such individual’s immediate family or to a trust, the beneficiary of which is a member of such individual’s immediate family, an affiliate of such individual or to a charitable organization; (c) in the case of an individual, by virtue of the laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of an initial Business Combination at prices no greater than the price at which the Founder Shares, Novator Private Placement Shares, Private Placement Warrants, Novator Private Placement Warrants or shares were originally purchased; (f) to an entity that is an affiliate of the holder; (g) in the event of the Company’s liquidation prior to the completion of an initial Business Combination; (h) by virtue of the laws of the Cayman Islands, the Company’s Memorandum and Articles of Association (as amended or amended and restated) or the Sponsor’s limited liability company agreement upon dissolution of the Sponsor; (i) in the event of the Company’s liquidation, merger, capital stock exchange, reorganization or other similar transaction which results in all of the Company’s shareholders having the right to exchange their shares for cash, securities or other property subsequent to the completion of an initial Business Combination; or (j) to the Company for no value for cancellation in connection with the consummation of the initial Business Combination; |
provided, however, that, in the case of clauses (a) through (f) or (h), these permitted transferees must enter into a written agreement with the Company agreeing to be bound by the transfer restrictions in this paragraph 7 and the other restrictions contained in this Amended and Restated Letter Agreement. |
8. | Each of the Insiders who is or is nominated to be a director or officer of the Company (each, a “ D&O Insider S-K, promulgated under the Securities Act. Each D&O Insider’s questionnaire furnished to the Company and the Underwriter is true and accurate in all material respects. Each D&O Insider represents and warrants that: it, he or she is not subject to or a respondent in any legal action for, any injunction, cease-and-desist |
9. | Except as disclosed in the Prospectus, neither the Sponsor nor any Insider, nor any affiliate of any Insider, shall receive from the Company any finder’s fee, reimbursement, consulting fee, monies in respect of any repayment of a loan or other compensation prior to, or in connection with any services rendered in order to effectuate, the consummation of the Company’s initial Business Combination (regardless of the type of transaction that it is). |
10. | The Company and each Insider represents and warrants, severally and not jointly, that it, he or she has full right and power, without violating any agreement to which it, he or she is bound (including, without limitation, any non- competition or non-solicitation agreement with any employer or former employer), to enter into this Amended and Restated Letter Agreement and, as applicable, to serve as an officer and/or director on the board of directors of the Company and hereby consents to being named in the Prospectus as an officer and/or director of the Company. |
11. | As used herein, (i) “ Business Combination Business Day Novator Private Placement Units Novator Private Placement Warrants Capital Stock Founder Shares Initial Shareholders |
and any Insider that holds Founder Shares prior to the consummation of the Public Offering; (viii) “ Private Placement Warrants Public Shareholders Trust Account Transfer |
12. | The Company will maintain an insurance policy or policies providing directors’ and officers’ liability insurance, and each D&O Insider shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any of the Company’s directors or officers. |
13. | This Amended and Restated Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Amended and Restated Letter Agreement may not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision, except by a written instrument executed by all parties hereto; provided that any amendment of Section 15 shall require the written consent of the Acquired Company. |
14. | No party hereto may assign either this Amended and Restated Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other parties. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Amended and Restated Letter Agreement shall be binding on the Company, the Sponsor and each Insider and their respective successors, heirs and assigns and permitted transferees. |
15. | Nothing in this Amended and Restated Letter Agreement shall be construed to confer upon, or give to, any person or corporation other than the parties hereto any right, remedy or claim under or by reason of this Amended and Restated Letter Agreement or of any covenant, condition, stipulation, promise or agreement hereof. All covenants, conditions, stipulations, promises and agreements contained in this Amended and Restated Letter Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors, heirs, personal representatives and assigns and permitted transferees. |
(a) | the Acquired Company shall be a third party beneficiary of Section 3 , Section 6 and Section 7 with respect to any shares of common stock of the Company that are subject to such Sections; |
(b) | the prior written consent of the Acquired Company shall be required in order to waive the restrictions set forth in Section 3 , Section 6 and Section 7 ; and |
(c) | the Acquired Company shall have the right to enforce Section 3 , Section 6, Section 7 , Section 13 and this Section 15 directly to the extent it may deem such enforcement necessary or advisable to protect its rights under such Sections; |
16. | This Amended and Restated Letter Agreement may be executed in any number of original, facsimile or other electronic counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. |
17. | This Amended and Restated Letter Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Amended and Restated Letter Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Amended and Restated Letter Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable. |
18. | This Amended and Restated Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Amended and Restated Letter Agreement shall be brought and enforced in the courts of New York City, in the State of New York, and irrevocably submit to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waive any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum. |
19. | Any notice, consent or request to be given in connection with any of the terms or provisions of this Amended and Restated Letter Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or facsimile or e-mail transmission. |
20. | This Amended and Restated Letter Agreement shall terminate on the earlier of (i) the expiration of the Lock-up Periods or (ii) the liquidation of the Company; provided that paragraph 4 of this Amended and Restated Letter Agreement shall survive such liquidation. |
NOVATOR CAPITAL SPONSOR LTD. | ||
By: |
/s/ Jan Rottiers | |
Name: |
Jan Rottiers | |
Title: |
Director | |
By: |
/s/ Pericles Spyrou | |
Name: |
Pericles Spyrou | |
Title: |
Director | |
INSIDERS | ||
By: |
/s/ Thor Björgólfsson | |
Name: |
Thor Björgólfsson | |
By: |
/s/ Arnaud Massenet | |
Name: |
Arnaud Massenet | |
By: |
/s/ Prabhu Narasimhan | |
Name: |
Prabhu Narasimhan | |
By: |
/s/ Shravin Mittal | |
Name: |
Shravin Mittal | |
By: |
/s/ Sangeeta Desai | |
Name: |
Sangeeta Desai | |
By: |
/s/ Michael Edelstein | |
Name: |
Michael Edelstein | |
By: |
/s/ Caroline Harding | |
Name: |
Caroline Harding |
AURORA ACQUISITION CORP. | ||
By: |
/s/ Arnaud Massenet | |
Name: |
Arnaud Massenet | |
Title: |
Chief Executive Officer |
1. | With respect to the Founder, the permitted Transfers in Section 3.2 of the Company Support Agreement shall also include any pledge by the Founder or his affiliates or associates (the “ Founder Related Entities ”) of shares of Acquiror Common Stock beneficially owned by the Founder or the Founder Related Entities following the Closing, in an aggregate principal amount of up to $150,000,000, to support loans made to the Founder or the Founder Related Entities by third-party lenders or depository institutions. |
2. | It is understood and agreed that the Founder shall, promptly following the Closing, contribute an amount equal to the total after-Tax Cash Consideration received by the Founder, if any, pursuant to the terms of Section 3.1 of the Merger Agreement to (i) any 501(c) Organization or (ii) U.S. Political Organization, as determined in the Founder’s sole discretion. |
(a) | For purposes of this Section 2 : |
(i) | “ 501(c) Organization ” means an entity that is exempt from taxation under Section 501(c)(3) or Section 501(c)(4) (or any successor provisions) of the U.S. Internal Revenue Code of 1986, as amended (the “Code ”), including any fund, foundation, trust or other organization that may be established by the Founder and qualifies as an entity exempt from taxation under 501(c) of the Code. |
(ii) | “ U.S. Political Organization ” means any entity sponsored by or endorsing political candidates, parties, campaigns, or issues or positions on any legislation or Law. |
3. | Article IV of the Company Support Agreement shall be incorporated herein by reference and made applicable, mutatis mutandis |
Sincerely, | ||
AURORA ACQUISITION CORP. | ||
By: | /s/ Arnaud Massenet | |
Name: | Arnaud Massenet | |
Title: | Chief Executive Officer |
Principal Amount: U.S. $4,000,000 |
Dated as of February 23, 2022 |
AURORA ACQUISITION CORP | ||
By: | /s/ Caroline Harding | |
Name: | Caroline Harding | |
Title: | Chief Financial Officer |
1 |
NTD |
2 |
NTD |
1 |
NTD |
2 |
NTD |
BETTER HOLDCO, INC. | ||
By | /s/ Kevin Ryan | |
Name: Kevin Ryan | ||
Title: Chief Financial Officer | ||
Notice: Better HoldCo, Inc. | ||
Attention: Kevin Ryan | ||
Address: 175 Greenwich St., 59th Floor New York, NY 10007 | ||
Email Address: Kryan@better.com | ||
AURORA ACQUISITION CORP. | ||
By | /s/ Prabhu Narasimhan | |
Name: Prabhu Narasimhan | ||
Title: Chief Investment Officer | ||
Notice: Aurora Acquisition Corp. | ||
Attention: Khurram Kayani | ||
Address: 20 North Audley Street, London, W1K 6LX, UK | ||
Email Address: Khurram@novatorcapital.com |
PURCHASERS: | ||
SB NORTHSTAR LP | ||
By: | /s/ Samuel Merksamer | |
Name: Samuel Merksamer | ||
Title: Director | ||
NOVATOR CAPITAL SPONSOR LTD | ||
By: | /s/ Pericles Spyrou | |
Name: Pericles Spyrou | ||
Title: Director | ||
Notice: Novator Capital Sponsor Ltd | ||
Attention: Khurram Kayani | ||
Address: 20 North Audley Street, London, W1K 6LX, UK | ||
Email Address: Khurram@novatorcapital.com |
Purchaser |
Consideration and Principal Amount of Promissory Note |
|||
SB Northstar LP |
$ | 650,000,000.00 | ||
Novator Capital Sponsor Ltd. |
$ | 100,000,000.00 | ||
|
|
|||
TOTAL |
$ |
750,000,000.00 |
A. | QUALIFIED INSTITUTIONAL BUYER STATUS | |||
(Please check the applicable subparagraphs): | ||||
1. | ☐ | We are a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “ Securities Act QIB | ||
2. | ☐ | We are subscribing for the Securities as a fiduciary or agent for one or more investor accounts, and each owner of such account is a QIB. | ||
*** OR *** | ||||
B. | ACCREDITED INVESTOR STATUS (Please check the applicable subparagraphs): | |||
1. | ☐ | We are an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) and have marked and initialed the appropriate box on the following pages indicating the provision under which we qualify as an “accredited investor.” | ||
2. | ☐ | We are not a natural person. | ||
*** AND *** | ||||
C. | AFFILIATE STATUS (Please check the applicable box) | |||
PURCHASER: | ||||
☐ is: | ||||
☐ is not: | ||||
an “affiliate” (as defined in Rule 144 under the Securities Act) of the [the Company][SPAC] or acting on behalf of an affiliate of the [the Company][SPAC]. |
☐ | Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; |
☐ | Any broker or dealer registered pursuant to section 15 of the Exchange Act; |
☐ | Any insurance company as defined in section 2(a)(13) of the Securities Act; |
☐ | Any investment company registered under the Investment Company Act or a business development company as defined in section 2(a)(48) of the Investment Company Act; |
☐ | Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act or Rural Business Investment Company as defined in Section 384A of the Consolidated Farm and Rural Development Act; |
☐ | Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; |
☐ | Any employee benefit plan within the meaning of Title I of the ERISA, if (i) the investment decision is made by a plan fiduciary, as defined in section 3(21) of ERISA, which is either a bank, a savings and loan association, an insurance company, or a registered investment adviser, (ii) the employee benefit plan has total assets in excess of $5,000,000 or, (iii) such plan is a self-directed plan, with investment decisions made solely by persons that are “accredited investors”; |
1 |
“ Family of investment companies Rule 18f-2 under the Investment Company Act) shall be deemed to be a separate investment company and (b) investment companies shall be deemed to have the same adviser (or depositor) if their advisers (or depositors) are majority-owned subsidiaries of the same parent, or if one investment company’s adviser (or depositor) is a majority-owned subsidiary of the other investment company’s adviser (or depositor). |
☐ | Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act; |
☐ | Any (i) corporation, limited liability company or partnership, (ii) Massachusetts or similar business trust, or (iii) organization described in section 501(c)(3) of the Internal Revenue Code, in each case that was not formed for the specific purpose of acquiring the securities offered and that has total assets in excess of $5,000,000; |
☐ | Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; |
☐ | Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of calculating a natural person’s net worth: (a) the person’s primary residence shall not be included as an asset; (b) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability; |
☐ | Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; |
☐ | Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Section 230.506(b)(2)(ii) of Regulation D under the Securities Act; or |
☐ | Any entity in which all of the equity owners are “accredited investors.” |
☐ | Any entity, of a type not listed in paragraph (a)(1), (2), (3), (7), or (8) of Rule 501 of the Securities Act, not formed for the specific purpose of acquiring the securities offered, owning investments in excess of $5,000,000; |
☐ | Any natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the Securities and Exchange Commission (the “ Commission |
(i) | The certification, designation, or credential arises out of an examination or series of examinations administered by a self-regulatory organization or other industry body or is issued by an accredited educational institution; |
(ii) | The examination or series of examinations is designed to reliably and validly demonstrate an individual’s comprehension and sophistication in the areas of securities and investing; |
(iii) | Persons obtaining such certification, designation, or credential can reasonably be expected to have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of a prospective investment; and |
(iv) | An indication that an individual holds the certification or designation is either made publicly available by the relevant self-regulatory organization or other industry body or is otherwise independently verifiable; |
☐ | Any natural person who is a “knowledgeable employee,” as defined in rule 3c-5(a)(4) under the Investment Company Act of 1940 (17 CFR 270.3c-5(a)(4)), of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in section 3 of such act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of such act; |
☐ | Any “family office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1): |
(i) | With assets under management in excess of $5,000,000, |
(ii) | That is not formed for the specific purpose of acquiring the securities offered, and |
(iii) | Whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment; |
☐ | Any “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1)), of a family office meeting the requirements in paragraph (a)(12) of Rule 501 of the Securities Act and whose prospective investment in the issuer is directed by such family office pursuant to paragraph (a)(12)(iii) of Rule 501 of the Securities Act. |
No. BPN-[NUMBER |
Date of Issuance | |
US$[PRINCIPAL AMOUNT] |
[DATE] |
Better HoldCo, Inc. | ||
By: | ||
Name: | ||
Title: | ||
Purchaser: | ||
By: | ||
Name: | ||
Title: |
No. BPN-001 |
Date of Issuance | |
US$650,000,000.00 |
December 2, 2021 |
Better HoldCo, Inc. | ||
By: |
/s/ Kevin Ryan | |
Name: |
Kevin Ryan | |
Title: |
Chief Financial Officer | |
Purchaser: SB Northstar LP | ||
By: |
/s/ Samuel Merksamer | |
Name: |
Samuel Merksamer | |
Title: |
Director |
No. BPN-002 |
Date of Issuance | |
US$100,000,000.00 |
December 2, 2021 |
Better HoldCo, Inc. | ||
By: | /s/ Kevin Ryan | |
Name: | Kevin Ryan | |
Title: | Chief Financial Officer | |
Purchaser: Novator Capital Sponsor Ltd. | ||
By: | /s/ Pericles Spyrou | |
Name: | Pericles Spyrou | |
Title: | Director |
Very truly yours, | ||||||
Stockholder Name: | ||||||
Number and Class of Owned Shares: |
||||||
Accepted as of the day and year first above written: |
BETTER HOLDCO, INC. | ||
By: | | |
Name: | ||
Title: | ||
AURORA ACQUISITION CORP. | ||
By: | | |
Name: | ||
Title: |
Item 20. |
Indemnification of directors and officers. |
Item 21. |
Exhibits and Financial Statements Schedules. |
99.5** | Consent of Prabhu Narasimhan to be named as a director. | |
99.8** | Consent of Riaz Valani to be named as a director. | |
99.9** | Consent of Michael Farello to be named as a director. | |
99.10 | Consent of Harit Talwar to be named as a director. | |
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |
107** | Filing Fee Table. |
* | To be filed by amendment. |
** | Previously filed. |
+ |
Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. |
++ |
Schedules and exhibits have been omitted pursuant to Item 601(a)(6) of Regulation S-K. |
Item 22. |
Undertakings. |
2. | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. |
3. | The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
4. | The registrant undertakes that every prospectus: (1) that is filed pursuant to the immediately preceding paragraph, or (2) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof. |
5. | The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. |
6. | The undersigned Registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective. |
AURORA ACQUISITION CORP. | ||
By: | /s/ Arnaud Massenet | |
Name: Arnaud Massenet | ||
Title: Chief Executive Officer |
Signature |
Title |
Date | ||
/ S / ARNAUD MASSENET Arnaud Massenet |
Chief Executive Officer (Principal Executive Officer) |
July 13, 2022 | ||
* Caroline Harding |
Chief Financial Officer and Director (Principal Financial and Principal Accounting Officer) |
July 13, 2022 | ||
* Thor Björgólfsson |
Chairman |
July 13, 2022 | ||
* Shravin Mittal |
Director |
July 13, 2022 | ||
* Sangeeta Desai |
Director |
July 13, 2022 | ||
* Michael Edelstein |
Director |
July 13, 2022 |
*By: | Arnaud Massenet | |
/s/ Arnaud Massenet | ||
Arnaud Massenet Attorney-in-Fact |
/s/ Donald J. Puglisi |
Donald J. Puglisi Authorized Representative July 13, 2022 |