LF Capital Acquisition Corporation *

LF Capital Acquisition Corporation *

Oct 19, 2020 by viktoria.v

PROPOSED BUSINESS COMBINATION: LandSea Homes


ESTIMATED CURRENT FUNDS in TRUST: $129.1 million*
CURRENT PER SHARE REDEMPTION PRICE: $10.57*
ENTERPRISE VALUE: $630.5 billion

*SPACInsider estimate 

LF Capital Acquisition Corp. proposes to merge with LandSea Homes Incorporated, a high-growth residential homebuilder based in Newport Beach, CA that is focused on entry-level and move-up price points in attractive markets throughout California and Arizona.

Landsea Homes designs and builds best-in-class, high-performance homes and sustainable master-planned communities in some of the most desirable markets in the United States. The company has developed homes and communities in New York, Boston, New Jersey, Arizona and throughout California in Silicon Valley, Los Angeles and Orange County. Landsea Homes builds suburban, single-family detached and attached homes, mid- and high-rise properties and master-planned communities.

Landsea Homes was founded in 2013 by Landsea Green Properties Co., Ltd. (“LGP” or the “Parent”), a publicly traded company listed on the Hong Kong Stock Exchange (HKSE: 106), to build homes exclusively for the U.S. domestic market. LGP will not receive any cash proceeds in the merger and is expected to own 67.4% of Landsea Homes at the closing of the merger.

Landsea Homes Key Investment Highlights

  • Growth-Oriented Homebuilder in Core Markets of California and Arizona: Focused on building entry-level and move-up homes in high-growth markets that reflect modern living and enhance a customer’s lifestyle. Strategically desirable portfolio of land positions and communities creates significant value.
  • Differentiated Through its High-Performance Homes (HPH) Product Offering: Deliver home automation (through its strategic partnership with a “Big Five” technology company), sustainability and energy savings. The HPH platform is rooted in innovation that attracts today’s homebuyers.
  • Favorable Growth Dynamics in the Real Estate Market: More homebuyers are entering the market due to COVID-related and work-from-home reasons, including better mortgage rates/prices, disliking current home layout or needing a larger home. Millennials have become the largest cohort of buyers in the U.S. and prefer customization options with new homes over renovated older homes.
  • Robust and Proven Financial Profile: For the twelve months ended June 30, 2020, Landsea Homes had net orders of 1,302 homes, 932 deliveries, 856 homes in backlog and generated $641 million in total revenue. Tangible book value as of June 30, 2020 was $484 million.
  • Experienced Management Team with Entrepreneurial Culture: Deep expertise in executing acquisitions and developing high-quality communities.

The transaction is expected to close in the fourth quarter of 2020 and will remain Nasdaq-listed under the new ticker symbols “LSEA,” “LSEAW,” and “LSEAU”.


TRANSACTION SUMMARY

LF Capital will acquire Landsea Homes for $344 million in total consideration, to be paid fully via 32,557,303 newly issued shares of LF Capital’s Class A common stock, representing an attractive price to tangible book value multiple of 0.84x. Assuming no redemptions by LF Capital’s public stockholders in connection with the merger, the combined company will have a pro forma equity value of $510 million, pro forma net debt of $121 million, representing a conservative 16% net debt-to-net book capitalization ratio, and pro forma tangible book value of $608 million.

LF Capital has entered into forward purchase agreements with certain investors to purchase up to $35 million shares of common stock in the aftermarket.

WARRANTS

In connection with the proposed merger, LF Capital will seek an amendment to its existing public warrants, which significantly reduces potential dilution from the capital structure, such that at the closing of the merger:

  • Each public warrant will entitle the holder thereof to purchase one-tenth of one share of Class A common stock instead of entitling the holder thereof to purchase one share of Class A common stock and
  • Each holder of public warrants issued and outstanding immediately prior to the closing of the merger will be entitled to receive from LF Capital a one-time payment of $1.85 per public warrant as soon as reasonably practicable following the closing of the merger.
  • The warrant amendment requires the approval of holders of at least 65% of the outstanding public warrants, and the closing of the merger is not conditioned on approval of the warrant amendment.

LF-Capital-transaction-summary-8-31-20-5


INTENDED WARRANT AMENDMENT

The Company has agreed to seek approval of the holders of at least 65% of the Company’s public warrants to effect an amendment to the warrant agreement related to the public warrants such that, as of the closing of the Merger:

  • (i) each issued and outstanding public warrant, which currently entitles each holder thereof to purchase one share of Parent Class A Stock at an exercise price of $11.50 per share, will become exercisable for one-tenth of one share at an exercise price of $1.15 per one-tenth share ($11.50 per whole share) and
  • (ii) each holder of public warrants issued and outstanding immediately prior to the closing of the Merger will be entitled to receive from the Company a one-time payment of $1.85 per public warrant, contingent upon the consummation of the closing.

SPONSOR SHARES AND AT-RISK WARRANTS

The Sponsor agreed to:

  • Forfeit to the Company for no consideration 2,260,000 warrants held by the Sponsor
  • Forfeit to the Company for no consideration 600,000 shares of Class B common stock held by the Sponsor
  • Transfer to the Seller for no consideration 2,200,000 warrants
  • Transfer to the Seller for no consideration 500,000 shares of Class A common stock held by the Sponsor following the conversion upon consummation of the Merger of 500,000 shares of Class B common stock held by the Sponsor
  • Defer the conversion of 500,000 shares of its Class B common stock contingent upon the valuation of the Class A common stock reaching certain thresholds during the twenty-four month period following the closing of the Merger.
  • Exercise any warrants held by the Sponsor to purchase Class A common stock solely on a cashless basis

WAIVER AGREEMENTS

Concurrent with the execution of the Merger Agreement, the Company, the Seller and Landsea, entered into waiver agreements (the “Waiver Agreements”) with certain holders of the Company’s shares of Class B common stock

  • Agreed to waive their redemption rights with respect to any Class A common stock they may own
  • Waive certain of their anti-dilution and conversion and redemption rights with respect to their shares of Class B common stock, and
  • Convert their shares of Class B common stock into shares of Class A common stock on a one-for-one basis

Concurrent with the execution of the Merger Agreement, the Company also entered into a Waiver Agreement with certain funds managed by BlackRock that hold shares of Class B common stock

  • Agreed to waive certain of their anti-dilution rights with respect to their shares of Class B common stock, and
  • Acknowledged that the shares of Class B common stock held by the Blackrock Holders convert into shares of the Class A common stock on a one-for-one basis upon the consummation of the Merger

NOTABLE CONDITIONS TO CLOSING

  • The amount in the Company’s trust account equally or exceeding $90,000,000, after deducting certain transaction expenses and other costs

NOTABLE CONDITIONS TO TERMINATION

  • By mutual written consent of the Company and the Seller if the closing has not occurred on or prior to September 22, 2020, or, if the stockholders of the Company approve extending the date by which the Company must complete its initial business combination to a date that is after September 22, 2020, then the earlier of such new date or December 22, 2020 (the “Outside Date”).

ADVISORS

  • B. Riley FBR and Raymond James & Associates, Inc. are acting as financial advisors for LF Capital.
  • B. Riley FBR and Barclays are acting as placement agents for LF Capital.
  • Dechert LLP is acting as legal counsel for LF Capital.
  • Rothschild & Co is acting as exclusive financial advisor to Landsea Homes.
  • Gibson, Dunn & Crutcher LLP is acting as legal counsel for Landsea Homes.
  • Barclays is acting as capital markets advisor to Landsea Homes.
  • Gateway Group is serving as communications advisor to Landsea Homes.

LF CAPITAL MANAGEMENT & BOARD


Executive Officers

Philippe De Backer, 61 [Resigned 7/22/20]
CEO and Director

Mr. De Backer is a Co-Founder and Chairman of Clearly, a native integrated digital bank. Mr. De Backerhas worked since 1992 with Bain & Company, a leading global consulting firm, in various roles in the financial services sector in all segments of banking and capital markets. Mr. De Backer served as an Advisory Partner at Bain & Company from January 2016 until August 2017. Previously, Mr. De Backer was the Senior Partner in charge of Bain & Company’s Global Financial Services Group from 2010 to 2015 and the Managing Director in charge of Bain & Company’s European Financials Services Group from 2004 to 2007. Mr. De Backer’s experience includes all facets of strategy and development, ranging from corporate strategy to operations improvement. In particular, Mr. De Backer has extensive personal experience in mergers and acquisitions while working with client banks on repeated acquisitions in numerous different geographies. Prior to joining Bain & Company, Mr. De Backer was the CEO of ADB, an electronics company which is part of the Siemens Group from 1983 to 1988. This CEO role provided Mr. De Backerextensive experience in high-tech particularly in the field of artificial intelligence. Following Mr. De Backer’s service at ADB he was the Managing Partner at Carre, Orban & Partners (later Korn Ferry) (NYSE: KFY), a European based consultancy firm from 1988 to 1993 as well as the Head of Organizational practice from 1989 to 1993. Mr. De Backer has co-authored four books on management which include Maximum Leadership, Go East, Management Audit and most recently Reinvent Retail Banking. Mr. De Backer has authored many articles in specialized financial services publications and is a frequent keynote speaker at global business conferences. Mr. De Backer is a graduate of Colgate University where he received a Bachelor of Arts in economics with high honors, magna cum laude and Phi Beta Kappa. Mr. De Backeralso holds an MBA from the Amos Tuck School at Dartmouth College.


Scott Reed, 48 [Appointed CEO, Resigned as CFO 7/23/20]
President, CFO and Director 

Mr. Reed is the co-founder of BankCap Partners, a private equity firm that focuses on investments in the U.S. commercial banking space, and has served as a Partner and Director of BankCap Partners since May 2006. Mr. Reed has over 20 years in the financial services and strategic consulting industries. As a Partner at BankCap, Mr. Reed focuses on transaction sourcing, structuring and processing, capital raising activities and oversight of BankCap’s portfolio investments. Mr. Reed began his career as a derivatives trader at Swiss Bank Corporation from 1992 to 1995. Mr. Reed worked as a consultant at Bain & Company from 1997 to 2000. Mr. Reed was an investment banker in the Financial Institutions Group at Bear Stearns from 2000 to 2002. Prior to founding BankCap, Mr. Reed was Senior Vice President, Director of Corporate Strategy and Planning of Carreker Corporation, a financial technology company based in Dallas. Mr. Reed is a graduate of the University of Virginia with a B.S. in Commerce and a B.A. in History. Mr. Reed received his MBA from the Amos Tuck School at Dartmouth College, where he was an Edward Tuck Scholar. Mr. Reed currently serves as a director of Silvergate Capital Corporation and Vista Bancshares (as well as a director of each of the two institutions’ underlying commercial banks) and previously served as a director of Xenith Bankshares and the institutions underlying commercial bank.

Alberto Bianchinotti, 43 [Appointed CFO 7/23/20]
CFO

Mr. Bianchinotti is a Certified Public Accountant and has been assisting in the oversight of the finance and operations of the Company since December 2017 through his firm AM Knight Financial Services. Mr. Bianchinotti has over 20 years of experience in the financial services field and started his career at Anchin Accountants and Advisors in 1999, where he ran audit and tax engagements for hedge fund and private equity fund clients. He became controller of Merlin Biomed Investment Advisers in 2004 and in 2007 became Chief Financial Officer of Merlin Biomed Private Equity Advisers. He founded AM Knight Financial Services in 2013, focusing on startup and smaller financial services companies. He received his B.S. in accounting from Binghamton University in 1999 and became a Certified Public Accountant in 2001.


Board of Directors

Baudouin Prot, 73
Chairman of the Board

Mr. Prot served as the Chairman of BNP Paribas SA, one of the largest banks in the world, from June 2011 to December 2014. Previous to that Mr. Prot served as a member of the Board at BNP Paribas SA from June 2000 to June 2011 prior to his appointment as Chairman of the Board. Mr. Prot served as the Chief Executive Officer and President of BNP Paribas SA from June 2003 to June 2011. Between 2003 and 2014 the French bank tripled its shareholders’ equity (from €25.7B to €77.1B), doubled revenues (from €18B to €39B) and doubled headcount (from 89,000 to 185,000 employees). During his tenure as Chairman and CEO of BNP Paribas, implemented a successful expansion strategy in the U.S. via its U.S.-based subsidiary, BancWest, including: (i) $1.2B acquisition of Community First Bankshares, Inc.; (ii) $1.36B acquisition of Commercial Federal Corporation and (3) $245M acquisition of USDB Bancorp. Mr. Prot served as Chief Operating Officer at BNP Paribas SA from 1996 to 2003. Early in his career, Mr. Prot was at the French Treasury, from 1976 to 1980. Mr. Prot had the rank of inspecteur des finances in the French Ministry of Finance and the Ministry of industry until 1983. Mr. Prot joined Banque Nationale de Paris in 1983 where he served in various positions until 2014, including Executive Vice-President and Chief Executive Officer. Mr. Prot currently serves as an Independent Director of Veolia Environment, S.A. (EPA: VIE), Kering SA (EPA: KER), Foncia Group S.A. and BGL BNP Paribas S.A. Mr. Prot previously served as an Independent Director of Lafarge S.A., and as a Director of Erbe SA (Belgium) and Pargesa. Mr. Prot previously served as Chairman of Association Francaise des Banques. Mr. Prot was named “Financier of the Year” for the successful integration of BNL in 2006 and again in 2009. Mr. Prot was the recipient of the Foreign Policy Association award (USA) for “Corporate Social Responsibility” in 2007. Mr. Prot was named “Strategist of the Year” by the financial daily newspaper La Tribune for the integration of the Fortis in 2009. In 2010, the Institutional Investor magazine named Mr. Prot “Best European Banking CEO”. Mr. Prot has been named Officer of the Legion of Honor and Officer of the National Order of Merit. Mr. Prot is an alumnus of the HEC Business School where he received an MBA in 1972 and the National Scholl of Administration (ENA) from where he graduated in 1976.


Elias Farhat, 51
Director

Mr. Farhat is the Chief Strategy Officer for Candriam Investors Group, an asset management company with over $120 billion under management and has served in this role since October 2016. He is also member of Candriam’s Group Strategy Committee and of its Executive Committee. From 2003 to 2016, Mr. Farhat was a Partner of Capital E, a private equity and real estate firm, and held several board and advisory positions at portfolio companies with ties to Capital E. Mr. Farhat was also the Founder and Managing Partner of Velocity Advisors, a Private Equity advisory which sourced and structured transactions on behalf of institutional investors. From 1990 to 2002, Mr. Farhat was Vice President and Partner at Bain & Company where he spent 12 years as a management consultant across Europe, the US and Latin America. At Bain, Mr. Farhat has advised boards, CEOs and senior management of Fortune 1000 companies as well as several buyout funds on a broad range of strategic, operational, financial and organizational issues. He has led Bain’s Private Equity Group activities in the Southern US region and was involved in its Investment Committee. Mr. Farhat currently serves as a Director of Lakeside Advisors. Mr. Farhat previously served as a Director of Huron Inc. and CBI. Mr. Farhat is a graduate of Ecole Supérieure des Sciences Economiques et Commerciales (ESSEC) in Paris.


Gregory P. Wilson, 65
Director

Mr. Wilson has served since January 2006 as Founder and President of Gregory P. Wilson Consulting, a consulting firm focused on policy and regulatory reform efforts since the financial crisis, including implementation of the Dodd-Frank Act and international financial regulatory developments. Mr. Wilson serves as a Senior Adviser to the Bipartisan Policy Center’s Financial Regulatory Reform Initiative as well as the Financial Services Roundtable (FSR) and its Chief Risk Officer Council. He was Co-Director of the FSR’s Blue Ribbon Commission on Financial Competitiveness in 2007. Mr. Wilson serves on the International Institute of Finance’s Special Committee on Effective Regulation, and he has been a past lecturer at the National Defense University’s Industrial College of the Armed Services (ICAS). From January 2015 to April 2018, Mr. Wilson served as an independent director of the Atlantic Trust Company, N.A., based in Atlanta, Georgia, a wholly-owned subsidiary of the Canadian Imperial Bank of Commerce (NYSE: CM) (CIBC). Mr. Wilson also serves on the Board of Advisers to the American Association of Bank Directors. Previously, Mr. Wilson was an Expert Partner and Senior Adviser at McKinsey & Company in its financial services practice based in Washington, D.C. During almost twenty-five years at McKinsey, Mr. Wilson served both private sector and numerous public sector clients around the world, including central bankers, ministers of finance, and financial regulators on issues of financial crisis management, regulatory reform, financial sector restructuring, and financial center competitiveness. Prior to joining McKinsey in 1989, Mr. Wilson served Secretaries of the Treasury James A. Baker III and Nicholas F. Brady as their Deputy Assistant Secretary for Financial Institutions Policy from 1986 to 1989, where he focused on resolving the savings and loan crisis and developing regulatory reforms. Mr. Wilson has authored or co-authored numerous books, including Managing to the New Regulatory Reality?—?Doing Business under the Dodd-Frank Act, Dangerous Markets: Managing in Financial Crises, and has been a frequent contributor to the American Banker, the McKinsey Quarterly, and other publications. Mr. Wilson graduated magna cum laude from Ohio Wesleyan University in 1974 with a B.A. in history as well as politics and government. Mr. Wilson has authored or co-authored numerous books, including Managing to the New Regulatory Reality?—?Doing Business under the Dodd-Frank Act, Dangerous Markets: Managing in Financial Crises, and has been a frequent contributor to the American Banker, the McKinsey Quarterly, and other publications. Mr. Wilson graduated magna cum laude from Ohio Wesleyan University in 1974 with a B.A. in history as well as politics and government.


Djemi Traboulsi, 51
Director

Djemi Traboulsi is President of Capital E Advisors, Capital E Private Equity Group’s US research arm. Mr. Traboulsi has been active in the firm’s private equity business since 2002. He currently serves on boards and advisory boards of companies with ties to Capital E. From 1991 to 2001, Mr. Traboulsi was Managing Director of Kenmar International, where he was instrumental in helping develop the firm’s alternative investment group. Prior to 1991, Mr. Traboulsi held various M&A and Corporate Finance positions with Mabon, Nugent & Co. in New York. Mr. Traboulsi holds a B.A. in Business Administration from the American University of Paris, and he has attended the Leonard N. Stern School of Business at New York University.


James Erwin, 73
Director

Jim Erwin has been a Managing Partner in Erwin, Graves & Associates, L.P. (now Erwin, Graves & Jones, L.P.) since its founding in 2001. In this role he has participated in the organization, capitalization and direction of several private and public companies. Prior to 2001 he had a 30-year distinguished career in banking and finance. In 2007 Mr. Erwin was an organizer and a lead investor in First Private Bank of Texas which opened for business with $30 million initial capital on May 1, 2007. He continued active involvement as a director of First Private until its sale to IberiaBank in 2014 and remained on advisory board of IberiaBank Texas until 2016. He also currently serves as a member of the investment advisory committee of Teakwood Capital and on the Advisory Board of CrossFirst Bank of Texas. Previously he served as a director of Trammell Crow Company from its IPO in 1997 until its sale to CB Richard Ellis Co. in December, 2006 and was a director of Carreker Corporation from May 2001 until its sale to CheckFree, Inc. in April, 2007. His involvement on these boards included serving as lead director and chairman of audit, compensation, governance and nominating committees. He previously served as a director of Texas Capital Bancshares from May, 2001 to May, 2005 including active involvement in its IPO during this period and he also served on the boards of Select Payment Processing, Inc. and DeviceFidelity, Inc. Mr. Erwin retired from Bank of America in June, 2000 after a career that began at First National Bank in Dallas in 1970 and continued through a series of acquisitions and mergers to conclude with his role as Vice Chairman Texas and Senior Client Executive Southwest for Bank of America. His experience spans a diverse range of domestic and international banking and corporate finance and executive management including four years of living and working in London and responsibilities that included: London Branch Manager; chief financial officer of First National Bank in Dallas; chairman of the London merchant bank, First Dallas, Ltd; president and director of InterFirst Bank Dallas; vice chairman and director of FirstRepublic Bank; and Head of Operations and Technology for NationsBank Corporation. Mr. Erwin has a B.S. degree in Industrial Engineering from the University of Oklahoma (May 1967) and an M.B.A. from The University of Texas at Austin (May, 1969). Prior to his career in banking he was a Project Engineer for Shell Oil Company in Houston and Assistant to the President of National Western Life Insurance Company in Austin. He has also has an extensive civic service record, including serving as Chairman of the Dallas Regional Chamber of Commerce and The Dallas Opera, on the Board of the Dallas Foundation, and on the Board of Visitors of the University of Oklahoma College of Engineering. He continues to serve on the Finance and Audit Committee of the Dallas Regional Chamber and on the Board of Trustees of The Dallas Opera.


Karen Wendel, 59
Director

Ms. Wendel served as the Chief Executive Officer and board member of IdenTrust from May 2003 to February 2016, a global identity solutions company, from 2003?–?2016. Ms. Wendel led IdenTrust through a major transformation in a complex, fragmented market. In her corporate and board roles during her 13 years at IdenTrust, Ms. Wendel was instrumental in the corporate strategy for growth through mergers, capital restructuring and technical due diligence associated with integrated acquired companies, successfully completing and delivering an exit for IdenTrust’s investors. Prior to IdenTrust, Ms. Wendel was Chief Executive Officer and a board member for eFinance Coporation from 2001?–?2003. Ms. Wendel led the strategic planning, market positioning and execution tactics for eFinance and delivered an exit for her investors. Ms. Wendel is a former partner at the Capital Markets Company (CAPCO), a Belgium-based consulting firm. Ms. Wendel is the former head of the U.S. Financial Services Practice at Gemini Consulting. Ms. Wendel has expertise in Cyber Security, Identity Solutions, Security Regulations, ISO Global Standards, e-Commerce, e-Healthcare, PKI Digital Certificates and Blockchain. Ms. Wendel is an author on financial management, payments and supply chain integration; an advisor to U.S. government agencies and the European Union on emerging technologies for payments and transaction processing; and a keynote speaker at major international banking conferences. Ms. Wendel earned degrees in International Relations and Economics from Brigham Young University.