Warrant Tender Offer

Early this morning, Legacy Acquisition Corp. (LGC), filed a number of new documents, including a new preliminary proxy for their combination vote and a new presentation.  However, also filed was an 8-K that announced Legacy will pursue the possibility of effecting a tender offer for all its outstanding warrants post-business combination close.

A warrant tender is not guaranteed, but it’s definitely now on the table and if its in an 8-K, there’s a better than average possibility it will happen.  However, there are no details provided, such as at what price, but Legacy does have 30,000,000 million warrants outstanding for 1/2 share, or 15,000,000 shares upon exercise.

Side Letter

Additionally, Legacy entered into a Side Letter with Blue Impact regarding the forfeiture of Founder Shares in the event of trust redemptions.  The details of which are that if at the closing the funds in trust will be less than $270,000,000, then Legacy’s sponsor will surrender a number of its Founder shares (Class F common stock) according to the following calculation:

• • Cancellation of one (1) share of Class F common stock of the Purchaser for each $40 shortfall in the amount of funds available in the Trust Fund below $270,000,000, up to a maximum of 3,750,000 Forfeited Class F Shares.

The filing gives an example as well which I’ve summarized below:

• For example, if after giving effect to the exercise of redemption rights by the redeeming stockholders of the Purchaser the amount of funds available in the Trust Fund at the time of the consummation of the Transactions is $260,000,000, then the number of Forfeited Class F Shares to be surrendered and forfeited by the Sponsor Designee shall be 250,000.
  • ($270,000,000 – $260,000,000 = $10,000,000/40 = 250,000 Class F shares to be cancelled)

Since the max that can be forfeited is 3,750,000 Founder Shares, that means that if $150 million is left in trust, the maximum amount of shares (3,750,000) will be forfeited and cancelled. $150,000,000/40 = 3,750,000 shares).  However, keep in mind that there is a condition to closing of a minimum $120 million.  As a reminder, Legacy’s Sponsor currently own 7,500,000 Founder shares (at IPO) and 17,500,000 private placement warrants.

All told, these changes are a positive. The warrant tender cleans up the post-combination cap table and (hopefully) at a decent price for warrant holders.  We’ll have to wait and see the tender offer details though.  Stay tuned.