FORT WAYNE, Ind. and WASHINGTON, July 11,
2019 /PRNewswire/ -- Capitol Investment Corp. IV (NYSE: CIC;
"Capitol"), a public investment vehicle, Nesco Holdings, LP ("Nesco
Owner") and Nesco Holdings I, Inc. ("Nesco"), a leading provider of
specialty rental equipment to the electric utility, telecom and
rail end-markets, today entered into an amendment to their
previously announced merger agreement.
Pursuant to the amendment, the merger consideration to be issued
to Nesco Owner was reduced and the sponsors of Capitol agreed to
cancel an additional number of their initial shares in connection
with the transaction, in addition to certain other amendments.
Based on the amended merger agreement and assuming no
redemptions, the combined company will have an initial enterprise
value of approximately $1,037
million, based on approximately 69.0 million fully diluted
shares of common stock outstanding at $10.00, estimated net debt of approximately
$405 million and an adjustment for
certain net operating loss carryforwards. This is a reduction of
$50 million compared to the initial
enterprise value of approximately $1,087
million based on approximately 63.0 million fully diluted
shares of common stock outstanding at $10.00 under the original terms of the
transaction and based on updated net debt balances.
With the new adjustment in purchase price and after accounting
for the business plan acceleration initiatives and the impact of an
announced acquisition as outlined in a supplement to Capitol's
proxy statement/prospectus dated June 24,
2019, the implied multiple is 5.7x 2020 estimated Adjusted
EBITDA of $190 million.
At closing, current stockholders of Capitol and current Nesco
shareholders will hold approximately 67% and 33%, respectively, of
the issued and outstanding shares of the combined company's common
stock, assuming no public shareholders of Capitol exercise
redemption rights.
The following outlines the amendments to the merger
agreement:
- The $75,000,000 cash previously
disclosed as payable to Nesco Owner out of the transaction proceeds
was eliminated and replaced with common stock consideration at
$10.00 per share, or 7,500,000 shares
regardless of redemptions.
- Excluding the 7,500,000 additional shares referred to above,
the aggregate common stock consideration to Nesco Owner was reduced
by 3,303,597 shares as Nesco Owner's contribution to the
$50 million enterprise value
reduction.
- Earnout consideration to Nesco Owner was increased by 1,651,798
shares. The incremental earnout shares will be forfeited if during
the seven-year period following the closing of the transaction, the
trading price of Capitol's common stock exceeds $19.00 per share for any 20 trading days during a
30 consecutive trading day period or if a sale transaction of the
combined company occurs in which the consideration paid per share
to holders of common stock exceeds $19.00 per share. All earnout shares will be
issued to Nesco Owner at the closing of the transaction, but will
be forfeited if the applicable prices are not achieved.
- The sponsors of Capitol have contributed to the enterprise
value reduction by subjecting an additional 696,403 shares to
cancellation or an additional lock-up.
- Of that amount, 348,202 shares will be subject to an earn-out
such that if during the seven-year period following the closing of
the transaction, the trading price of Capitol's common stock
exceeds $19.00 per share for any 20
trading days during a 30 consecutive trading day period or if a
sale transaction of the combined company occurs in which the
consideration paid per share to holders of common stock exceeds
$19.00 per share. If such trading
price is not achieved or such sale transaction does not occur, in
each case, during the seven-year period following the closing of
the transaction, such incremental lock-up shares will be forfeited
for no consideration.
- Nesco Owner has agreed that it and/or one or more affiliates
will purchase an aggregate of 2,500,000 shares of Capitol common
stock at the closing of the transaction at a price per share of
$10.00.
- Nesco Owner will now have the right to designate up to four
persons to be appointed or nominated for election to the board of
directors of Capitol if it and its affiliates own at least 45% of
the common shares, subject to reduction based on the aggregate
ownership of Nesco Owner and its successors and assigns, as
compared to the original right to designate up to three persons.
The board will consist of between seven and nine members depending
on Nesco Owner's pro forma ownership.
Capitol and Nesco expect to enter into certain amendments to
their agreements with their underwriters and financial advisors,
reducing fees to such parties payable upon closing of the
transaction by approximately $10
million. Under the amended merger agreement, up to
$10 million of such fee reduction
will be included as cash available to Capitol for purposes of
satisfying the condition to closing of the transaction that Capitol
have at least $265 million of cash
available after giving effect to payment of amounts that Capitol
may be required to pay to any redeeming shareholders upon
consummation of the transaction.
Additionally, the sponsors of Capitol and Nesco Owner have
indicated that they and/or their affiliates may purchase an
additional number of Capitol shares from Capitol upon consummation
of the transaction to meet the minimum cash closing condition or to
better capitalize the company for its post-closing working capital
or other needs. It would be in the Capitol sponsors' and Nesco
Owner's discretion as to whether to make such purchases.
As announced previously, Nesco and Capitol entered into a
definitive agreement in which Nesco will become a publicly listed
company. The transaction is expected to close in July 2019. For additional information on the
amendments to the merger agreement, see the Current Report in Form
8-K to be filed by Capitol, which will be available on the SEC's
website at www.sec.gov, or Capitol's website at
www.capinvestment.com.
Additional Information and Where to Find It
Capitol has filed a definitive proxy statement/prospectus, as
supplemented, and other relevant documents with the SEC to be used
at its annual meeting of stockholders to approve the proposed
transaction with Nesco. The proxy statement/prospectus and
supplements have been mailed to stockholders of record as of
May 20, 2019. INVESTORS AND SECURITY
HOLDERS OF CAPITOL AND NESCO ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS, SUPPLEMENTS AND OTHER RELEVANT DOCUMENTS THAT
HAVE BEEN FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Investors and security holders will be able to obtain
free copies of the proxy statement/prospectus, supplements and
other documents containing important information about Capitol and
Nesco through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the SEC by
Capitol and/or Nesco when and if available, can be obtained free of
charge on Capitol's website at www.capinvestment.com or by
directing a written request to Capital Investment Corp. IV, 1300 N
17th Street, Suite 820, Arlington
VA 22209 or by emailing info@capinvestment.com.
Participants in the Solicitation
Capitol and Nesco and their respective directors and executive
officers, under SEC rules, may be deemed to be participants in the
solicitation of proxies of Capitol's stockholders in connection
with the proposed business combination. Investors and security
holders may obtain more detailed information regarding the names
and interests in the proposed transaction of Capitol's directors
and officers in Capitol's filings with the SEC, including the
definitive proxy statement/prospectus and Capitol's Annual Report
on Form 10-K for the fiscal year ended December 31, 2018, which was filed with the SEC
on March 4, 2019. Information
regarding the persons who may, under SEC rules, be deemed
participants in the solicitation of proxies to Capitol's
shareholders in connection with the proposed business combination
is set forth in the proxy statement/prospectus. Additional
information regarding the interests of participants in the
solicitation of proxies in connection with the proposed business
combination is also included in the proxy statement/prospectus.
No Offer or Solicitation
This communication shall neither constitute an offer to sell or
the solicitation of an offer to buy any securities, nor shall there
be any sale of securities in any jurisdiction in which the offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such
jurisdiction.
About Nesco
Nesco is one of the largest providers of specialty equipment,
parts, tools, accessories and services to the electric utility
transmission and distribution, telecommunications and rail markets
in North America. Nesco offers its
specialized equipment to a diverse customer base for the
maintenance, repair, upgrade and installation of critical
infrastructure assets including electric lines, telecommunications
networks and rail systems. Nesco's coast-to-coast rental
fleet of approximately 4,000 units includes aerial devices, boom
trucks, cranes, digger derricks, pressure drills, stringing gear,
hi-rail equipment, repair parts, tools and accessories. For
more information, please visit
https://nescospecialty.com.
About Capitol Investment Corp. IV
Capitol Investment Corp. IV is a public investment vehicle
formed for the purpose of effecting a merger, acquisition or
similar business combination. Capitol is led by Chairman and
Chief Executive Officer Mark D. Ein,
and President and Chief Financial Officer L. Dyson Dryden. Capitol's securities are
quoted on the New York Stock Exchange under the ticker symbols CIC,
CIC WS and CIC.U. The company, which raised $402.5 million of cash proceeds in an initial
public offering in August 2017, is
the Capitol team's fourth publicly traded investment vehicle.
The Capitol team's three prior deals are all in the top 10 of the
best performing SPACs out of over 130 raised since October 2009 in terms of total returns since
merger. The first, Capitol Acquisition Corp., created Two
Harbors Investment Corp. (NYSE: "TWO"), a leading mortgage real
estate investment trust (REIT) and the second, Capitol Acquisition
Corp. II, merged with Lindblad Expeditions, Inc. (NASDAQ: "LIND"),
a global leader in expedition travel. The third vehicle,
Capitol Acquisition Corp. III, merged with Cision Ltd. (NYSE:
"CISN"), a leading global provider of cloud-based earned media
solutions. For more information, please visit
https://capinvestment.com.
Forward Looking Statements
This press release includes "forward looking statements" within
the meaning of the "safe harbor" provisions of the United States
Private Securities Litigation Reform Act of 1995 and within the
meaming of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended.
When used in this press release, the words "estimates,"
"projected," "expects," "anticipates," "forecasts," "plans,"
"intends," "believes," "seeks," "may," "will," "should," "future,"
"propose" and variations of these words or similar expressions (or
the negative versions of such words or expressions) are intended to
identify forward-looking statements. These forward-looking
statements are not guarantees of future performance, conditions or
results, and involve a number of known and unknown risks,
uncertainties, assumptions and other important factors, many of
which are outside Capitol's or Nesco's management's control, that
could cause actual results or outcomes to differ materially from
those discussed in the forward-looking statements. Important
factors, among others, that may affect actual results or outcomes
include: the inability to complete the transactions contemplated by
the proposed business combination; the inability to recognize the
anticipated benefits of the proposed business combination, which
may be affected by, among other things, the amount of cash
available following any redemptions by Capitol stockholders; the
ability to meet the NYSE's listing standards following the
consummation of the transactions contemplated by the proposed
business combination; costs related to the proposed business
combination; Nesco's ability to execute on its plans to develop and
market new products and the timing of these development programs;
Nesco's estimates of the size of the markets for its solutions; the
rate and degree of market acceptance of Nesco's solutions; the
success of other competing technologies that may become available;
Nesco's ability to identify and integrate acquisitions; the
performance and security of Nesco's services; potential litigation
involving Capitol or Nesco; and general economic and market
conditions impacting demand for Nesco's services. Other factors
include the possibility that the proposed transaction does not
close, including due to the failure to receive required security
holder approvals, or the failure of other closing conditions. These
factors are detailed in the proxy statement/prospectus.
Neither Capitol nor Nesco undertake any obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
Contact:
L. Dyson Dryden
President and Chief Financial Officer
Capitol Investment Corp. IV
(646) 661-2002
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SOURCE Capitol Investment Corp. IV; Nesco Holdings I, Inc.