PROPOSED BUSINESS COMBINATION: Atlas Intermediate Holdings, LLC
ESTIMATED CURRENT FUNDS in TRUST: $204.8 Million*
CURRENT PER SHARE REDEMPTION PRICE: $10.24*
ENTERPRISE VALUE: $706.9
*SPACInsider estimate a/o 2-9-20
Boxwood Merger Corp. proposes to combine with Atlas Intermediate Holdings LLC (“Atlas”), a provider of professional testing, inspection, engineering and consulting services. Atlas is currently a portfolio company of Bernhard Capital Partners, a services-focused private equity management firm established in 2013.
Headquartered in Austin, Texas, Atlas provides technical services that help its public and private sector clients test, inspect, certify, plan, design and manage a wide variety of projects across the transportation, commercial, industrial, government, education and other nonresidential markets. Its highly technical infrastructure services are delivered through a nationwide footprint, as its approximately 2,100 highly-skilled, technical staff of scientists, engineers, inspectors and other field experts operate from over 140 offices located across 40 states. Atlas clients include government agencies, quasi-public entities, schools, hospitals, utilities and airports, as well as private sector clients across a variety of industries and approximately 95% of Atlas’ revenues are generated from clients that have tenures longer than 10 years.
Upon the closing of the proposed transaction, the Company will be led by Atlas’ management team, including Chief Executive Officer L. Joe Boyer and Chief Financial Officer Walter Powell, who will continue to serve in their respective roles. Stephen Kadenacy, Chairman and Chief Executive Officer of Boxwood, will become Atlas’ Executive Chairman upon the closing of the transaction.
Immediately following the proposed transaction, Boxwood intends to change its name to Atlas Technical Consultants, Inc. (“Atlas Technical”) and its shares of Class A common stock are expected to continue to be listed on The Nasdaq Stock Market under the ticker symbol “ATCX.”
The combined company will be organized in an “Up-C” structure in which the business of Atlas Intermediate and its subsidiaries (“Atlas”) will be held by Holdings and will continue to operate through the subsidiaries of Atlas Intermediate, and in which the Company’s only direct assets will consist of Holdings Units.
- The purchase price to be paid by the Buyer is $617 million
- The Buyer will pay off the existing debt of the Seller which is anticipated to be approximately $160 million
- The Seller will receive aggregate consideration of $457 million, which shall consist of:
- Between $260 million and $337 million of cash and
- Between $120 million and $197 million of Holdings Units, with each such unit valued at $10.00 per unit (the “Rollover Units”), and
- Class B common stock. (For each Holdings Unit received by the Seller as consideration, the Company will issue to the Seller one share of Class B common stock)
- Between $260 million and $337 million of cash and
- The final amount of cash and the value of the Rollover Units and Class B common stock is dependent on the amount of money remaining in the Company’s trust account following any redemptions, and the amount of additional proceeds (if any) raised by the Company through equity financing sources prior to the Closing (the “Available Equity”).
SPONSOR SHARES AND WARRANTS
- No surrender of sponsor shares and warrants
NOTABLE CONDITIONS TO CLOSING:
- The expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
- Available Equity of at least $100 million immediately prior to the Closing
- The Seller’s obligation to consummate the business combination is subject to the pro forma debt to equity ratio remaining below the specified threshold and the value of the Rollover Units and Class B Common Stock not exceeding $197 million in the aggregate.
NOTABLE CONDITIONS TO TERMINATION
The Agreement may be terminated if the Closing has not occurred by February 19, 2020
- On August 12, 2019, the Company entered into a debt commitment letter with Macquarie Capital (USA) Inc. (“Macquarie Capital”), Macquarie Capital Funding LLC (“Macquarie Funding”) and Natixis, New York Branch (together with Macquarie Capital and Macquarie Funding, the “Commitment Parties”).
- The Commitment Parties have agreed to provide for Credit Facilities in the aggregate principal amount of up to $400 million, consisting of:
- A senior secured first lien term loan facility in an aggregate principal amount of up to $290 million (the “First Lien Term Facility”)
- A senior secured first lien revolving credit facility in an aggregate principal amount of $40 million (the “Revolving Facility”) and
- A senior secured second lien term loan facility in an aggregate principal amount of up to $70 million (together with the First Lien Term Facility, the “Term Loan Facilities”), made available to Buyer.
- If there is immediately prior to the Closing, Available Equity of (i) greater than $100 million and less than or equal to $160 million, the principal amount of the Term Loan Facilities will be reduced by the difference between the Available Equity and $100 million, with such reduction to be allocated between such facilities as determined by the Commitment Parties in their sole discretion
- If there is immediately prior to closing, Available Equity of (ii) greater than $160 million:
- The number of Rollover Units received by the Seller will be reduced (and the cash consideration to be paid to such party will be correspondingly increased) by an amount equal to 20% of the difference between the Available Equity and $160 million and
- The principal amount of the Term Loan Facilities will be reduced by an amount equal to 80% of the difference between the Available Equity and $160 million, with such reduction to be allocated between such facilities as determined by the Commitment Parties until such time as the principal amount of the Term Loan Facilities is reduced to $270 million.
- Furthermore, to the extent the principal amount of the Term Loan Facilities has been reduced to $270 million, the value of the Rollover Units received by the Seller will be reduced until their value is equal to $120 million, and thereafter the principal amounts of the Term Loan Facilities may be reduced further.
On 1/23/20, Boxwood Merger Corp. announced that they have secured additional financing of up to $155 million from GSO Capital Partners, the credit arm of Blackstone (“GSO”). The financing will include both common and non-convertible preferred equity and in addition, Bernhard Capital Partners (“BCP”) has agreed to an increased equity rollover of up to $50 million. Furthermore, the debt commitment letter with Macquarie and Natixis has been amended and as a final cherry on top, the Sponsors have agreed to forfeit a number of their Founder Shares in the event the net proceeds is less than $50 million at closing. Finally, GSO will have the right to appoint one non-voting observer to Boxwood’s Boards of Directors. Details below:
As for GSO’s financing, the particulars of the non-convertible preferred are that they will purchase up to $145 million of a new class of Series A Senior Preferred Units of Atlas TC Holdings LLC, a wholly-owned subsidiary of Boxwood which will indirectly own 100% of Atlas, at a price of $1,000 per unit. Additionally, the Preferred Units will have:
- A liquidation preference of $1,000 per unit plus accrued and unpaid dividends
- Pay a dividend of 5% per annum, plus either an additional 6.25% per annum in cash or 7.25% per annum in additional Preferred Units, at Holdings’ option, payable quarterly in arrears.
- The Preferred Units will be non-convertible and will be redeemable by Atlas TC Holdings beginning two years after the closing of the business combination at a price equal to 103% of their liquidation preference and beginning three years after the closing at a price equal to their liquidation preference.
GSO will also purchase up to $10 million in shares of Class A common stock of Boxwood, at $10.00 per share.
Furthermore, Boxwood has also entered into an amendment to the unit purchase agreement for the business combination (the “Amended Purchase Agreement”). The amendment provides for an increase in BCP’s potential rollover equity in Atlas by up to an additional $50 million of common units of Holdings, at $10.00 per unit.
Forfeiture of Sponsor Shares
Additionally, if the aggregate net proceeds of any investment in Boxwood, Holdings or Target, other than that anticipated to be received from GSO for the Preferred Units, together with the funds remaining in the Trust Account following the Redemptions, is less than $50.0 million, Boxwood agreed to cancel for no consideration 1,750,000 Founder Shares held by the Sponsor (of the 5,000,000 held at IPO).
Boxwood has also entered into an amendment to the debt commitment letter with Macquarie Capital and Natixis, New York Branch (collectively, the “Commitment Parties”) where they have agreed to reduce the aggregate principal amount of the credit facilities from up to $400 million to up to $321 million. This is by reducing the aggregate principal amount available under the senior secured first lien term loan facility from $290 million to $281 million and eliminating the senior secured second lien term loan facility, which would have been available for an aggregate principal amount of up to $70 million.
- Greenhill & Co. and Macquarie Capital are acting as financial advisors to Boxwood
- BofA Merrill Lynch, Morgan Stanley, Macquarie Capital and Helena Capital Advisors are acting as capital markets advisors to Boxwood.
- Boxwood has secured committed debt financing for the transaction from Macquarie Capital and Natixis.
- Winston & Strawn LLP and Atrium LLP are serving as legal advisors to Boxwood
- Kirkland & Ellis LLP is acting as legal advisor to Atlas.
BOXWOOD MERGER CORP. MANAGEMENT & BOARD
Stephen M. Kadenacy, 50
Chief Executive Officer & Director
Mr. Kadenacy served as President of AECOM from October 2014 until June 2017 and as Chief Operating Officer from October 2016 until June 2017. Prior to that, he served as AECOM’s Chief Financial Officer from October 2011 until October 2015 and as Senior Vice President, Corporate Finance from May 2008 to September 2011. Prior to joining AECOM, Mr. Kadenacy was with the accounting firm KPMG LLP in San Francisco since 1996. Mr. Kadenacy previously served on the Board of Directors and Audit Committee of ABM Industries Inc. Mr. Kadenacy holds a Bachelor’s degree in economics from the University of California at Los Angeles and a Masters of Business Administration from the University of Southern California.
Daniel E. Esters, 52
Chief Financial Officer & Director
Mr. Esters spent 24 years serving in a variety of capacities at several investment banking firms where he accumulated extensive transaction experience including origination, due diligence assessment, structuring, negotiation and marketing of a wide range of merger and acquisitions, debt financings, restructurings and public equity offerings. From August 2014 to September 2018, Mr. Esters served as a managing director of M&A Capital LLC, a boutique investment banking firm and independent sponsor. From May 1996 to August 2014, he served in the Investment Banking department of Jefferies LLC, where his last role was as Managing Director within the firm’s financial sponsor group. Previously, Mr. Esters served with the Investment Banking department of PaineWebber, Inc. and with the audit practice of accounting firm Price Waterhouse LLC, where he earned his C.P.A. license. Mr. Esters holds a Bachelor’s degree in economics from the University of California at Los Angeles and a Masters of Business Administration from the UCLA Anderson School of Management.
Duncan Murdoch, 47
Chief Investment Officer
Mr. Murdoch has over 20 years of private equity and investment banking experience. Mr. Murdoch is currently a Senior Managing Director within the Principal Transactions Group for Macquarie Capital, based in New York, but will terminate his employment with Macquarie Capital prior to joining us. While at Macquarie Capital during the period from 2001 to the present, Mr. Murdoch led numerous investments and acquisitions on behalf of Macquarie Capital and funds managed by affiliates of Macquarie Capital across multiple sectors, including infrastructure, business services, environmental services, aerospace, and consumer. Prior to that, Mr. Murdoch worked for BMO Nesbitt Burns Inc. in Toronto, for Macquarie in Sydney in their Corporate Advisory Group, and for the Justices in the Commercial Division of the Supreme Court of New South Wales. Mr. Murdoch has served on the board of directors of numerous companies, including Brek Manufacturing Company, Utility Service Partners, Inc., Puralube, Inc., Icon Parking Systems, Smarte Carte, Inc., DNEG, Anaergia Inc., MST Global, and Skis Rossignol S.A.. Mr. Murdoch holds a Masters of Business Administration from Stanford University, a Bachelor of Laws (First Class Honors) from the University of Sydney and a Bachelor of Economics from the University of Sydney.
David Lee, 50
Mr. Lee is currently the Manager of Co-Counsel, LLC and serves as lead legal counsel to certain financial sponsors (and their portfolio companies) and owners of U.S. middle market companies. Prior to founding Co-Counsel in October 2017, he served as Special Counsel at Jenner & Block LLP from October 2015 to September 2017, as Chief Executive Officer and Co-Founder of 10x Market, LLC from January 2013 to October 2015, and as Partner at DLA Piper LLP from December 2010 to December 2012. Prior to that, he served as Partner at Mayer Brown LLP from January 2007 to December 2010, as Partner at Kaye Scholer LLP from 2005 to 2006, as Partner at Kirkland & Ellis LLP from 2002 to 2004 and as Associate at Kirkland & Ellis LLP from 1996 to 2002. Mr. Lee holds a Bachelor’s degree in political science from the University of Chicago and a law degree from Northwestern University School of Law.
Board of Directors
Joseph E. Reece, 57
Mr. Reece has more than 30 years of experience advising public and private corporations, boards, financial sponsors and institutional investors on strategy, financing, and mergers and acquisitions. Mr. Reece is the Founder and Chief Executive Officer of Helena Advisors, LLC, a Merchant Bank based in Los Angeles founded in 2015, where in addition to principal investing, he provides CEO level counseling focused on long-term value creation. Previously, Mr. Reece was also the Executive Vice Chairman of UBS Securities, LLC (“UBS”) from 2017 through September of 2018. He also served as the Head of Corporate Client Solutions for the Americas for UBS from October 2017 through March 2018. Prior to that, he spent 18 years with Credit Suisse where he provided investment banking, capital market advisory services, and merger and acquisition advice across a broad range of industries. He held a number of senior management positions across the Investment Bank at Credit Suisse, including the Global Head of Equity Capital Markets, the Global Head of the Industrials Group and sat on both the Global Equities Management Committee and the Investment Banking Management Committee. Mr. Reece began his career at the SEC as Staff Counsel ultimately rising to become Special Counsel for the SEC’s Division of Corporation Finance and subsequently practiced law with Skadden Arps based in Los Angeles in the Corporate Practice Group. Mr. Reece holds a Bachelor of Science, a Masters of Business Administration and a Juris Doctor from the University of Akron and a LL.M from the Georgetown University Law Center. Mr. Reece currently serves as a member of the board of directors of RumbleOn, Inc. (Nasdaq: RMBL), Georgetown University Law Center, the Foundation of the University of Akron and Chair-ity. In addition to his previous service on the Board of UBS Securities, LLC during his tenure at UBS, Mr. Reece also served on the Boards of CST Brands, Inc. and LSB Industries, Inc. from 2015 to 2017.
Richard A. Gadbois, 60
Mr. Gadbois is currently Chairman of HS Group, a $2 billion Asia alternative asset management-seeding firm and a director at Argyle Street Management Limited Hong Kong, where he has served since 2008. Mr. Gadbois also currently serves as a senior advisor to Oakmont Corporation, a $2.5 billion family office. Mr. Gadbois currently serves on the advisory board of Main Management, LLC, a San Francisco-based investment management firm, where he co-founded the firm’s Core Endowment Portfolio in 2007. Mr. Gadbois served as the Chief Executive Officer of Roth Asset Management, Inc. from 2010 to 2013 at which time he also co-founded GROW Partners LLC, a privately-owned hedge fund sponsor, and served as Managing Director of EAM Investors, LLC, a majority-employee-owned, institutionally-focused investment management boutique. From 2001 to 2006 Mr. Gadbois co-founded and served as President of Vantis Capital Management LLC, a long-short equity fund with offices in New York and Los Angeles. Prior to this, Mr. Gadbois served as a Senior Vice President with Merrill Lynch, Pierce, Fenner & Smith Incorporated from 1994 to 2001, where he advised insiders at public companies in the United States and Europe. Mr. Gadbois began his career at EF Hutton, Inc. in 1980 and later opened the west coast office for the Corporate Executive Services Group at Prudential Securities in 1989. Mr. Gadbois holds a Bachelor’s degree in economics from the University of California at Santa Barbara and is a Founder and Trustee Emeritus of the Sage Hill School. Mr. Gadbois has served on the Investment Committee for the Orange County Community Foundation and the Pacific Symphony for more than 10 years.
Alan P. Krusi, 63
Mr. Krusi was President, Strategic Development of AECOM Technology Corporation, a global provider of professional technical and management support services, from October 2011 until his retirement in March 2015. He served as Executive Vice President for Corporate Development of AECOM Technology Corporation from August 2008 until October 2011. From 2003 until 2008 Mr. Krusi served as President of Earth Tech, Inc., an engineering, consulting, and construction services firm owned by Tyco International. From 2002 to 2003, Mr. Krusi served as CEO of RealEnergy, Inc., a company providing onsite cogeneration to commercial and industrial customers. From 1999 to 2002, Mr. Krusi served as President of the Construction Services division of URS Corporation, where he oversaw an international construction services business specializing in construction management and program management. Prior to his employment with URS, and over a period of twenty-two years, Mr. Krusi held a number of technical and management positions within the engineering and construction industries. Mr. Krusi currently also serves on the Board of Directors of Alacer Gold Corp. (TSX: ASR), Granite Construction Incorporated (NYSE: GVA), Comfort Systems USA, Inc. (NYSE: FIX) and Lithko Contracting, LLC. Mr. Krusi also served on the Board of Directors of Blue Earth, Inc. from September 2014 to June 2016. Mr. Krusi is a graduate of the University of California at Santa Barbara and is a Registered Geologist, Certified Engineering Geologist, and Licensed General Contractor in the State of California. Mr. Krusi has nearly forty years of experience in the construction and engineering industries, including experience in executive management positions for public companies.