The Transaction includes a fully-committed equity capital commitment of up to $125 million from Nomura Securities International, Inc.

Hennessy Capital Acquisition Corp. III, Daniel Hennessy’s third SPAC focused on the industrial sector, announced this morning it has entered into a definitive agreement and to acquire NRC Group Holdings, a portfolio company of private equity firm, J.F. Lehman & Co.  The proposed transaction has an anticipated initial enterprise value of approximately $748 million.

NRC Group is a global provider of comprehensive environmental, compliance and waste management services to the marine and rail transportation, general industrial and energy markets.

The transaction has a lot of moving parts to it, so we’ve tried to simplify the details and provide an outline below. Additionally, there will be an investor conference call tomorrow at 10:00 a.m. Eastern time:

Toll-free dial-in number: (877) 407-0789
International dial-in number: (201) 689-8562
Conference ID: 13681067

TRANSACTION DETAILS

CONSIDERATION

Cash Component

• The dollar amount remaining in the Company’s trust account after redemptions
• The amount raised in connection with the PIPE Investment (see below), which amount is expected to be $100.0 million
• The amount raised if the Company conducts a private placement pursuant to the Backstop Commitment (see below)
• The amount raised, if any, pursuant to the JFL Subscription Agreement (see below)
• Minus the Company’s expenses incurred in connection with the proposed Business Combination;

Equity Component

• Shares equal to Total Purchase Price minus the Cash Component

PIPE

• $75.0 million of the Hennessy III’s Series A Convertible Cumulative Preferred Stock, plus an additional $25.0 million of additional Preferred Stock and/or Hennessy III’s common stock in a private placement.
• Additionally, Hennessy III has received commitments from Nomura (the Backstop. See below) to purchase up to $25.0 million of Company common stock through open market or privately negotiated transactions with third parties

BACKSTOP – Nomura Securities International, Inc.

• Nomura has agreed to purchase:
  • Up to $25.0 million worth of shares of Company common stock
• Nomura will purchase the shares through open market or privately negotiated transactions with third parties (including forward contracts), and/or a private placement at a purchase price of $10.25 per share of Company common stock.
• $75.0 million worth of Preferred Stock (subject to a possible increase of up to an additional $25.0 million if the Company is unable to enter into one or more backstop and/or subscription agreements prior to the Closing)

JFL SUBSCRIPTION AGREEMENT

• The JFL Subscription Agreement provides that JFLCo or one or more of its affiliated investment funds may elect to purchase:
  1.  Up to 300,000 shares of Preferred Stock for a per share price of $97.00
  2.  Up to 1,951,220 shares of Company common stock for a per share price of $10.25
  3.  An additional number of shares of Company common stock as determined in accordance with the terms of the JFL Subscription Agreement

FOUNDERS SHARES AND PRIVATE PLACEMENT WARRANTS

• The Sponsors of Hennessy III will forfeit and cancel 1,920,000 founder shares
• Exchange 9,600,000 outstanding private placement warrants for 1,920,000 newly issued shares of Company common stock.

ESTIMATED REDEMPTION PRICE

• Based on funds in the trust account of approximately $261.3 million on June 21, 2018, the estimated per share redemption price would have been approximately $10.18

ADVISORS

• HCAC was advised on the transaction by Credit Suisse Securities (USA) LLC and Stifel as capital markets advisors
• Nomura Securities International, Inc. as financial advisor and committed equity financing provider
• Sidley Austin LLP and Ellenoff Grossman & Schole LLP as legal counsel.