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Tuscan Holdings Corporation II *

Tuscan Holdings Corporation II *

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: Surf Air Mobility Inc.

ENTERPRISE VALUE: $1.42 million
ANTICIPATED SYMBOL: tbd

Tuscan Holdings Corporation II proposes to combine with Surf Air Mobility Inc., a Los Angeles-based electric aviation and air travel company reinventing flying through the power of electrification.

  • The company intends to bring electrified aircraft to market at scale in order to substantially reduce the cost and environmental impact of flying.
  • The management team has deep experience and expertise across aviation, electrification, and consumer technology.
  • SAM has a number of notable advisors including Arianna Huffington (founder Huffington Post), Fred Reid (former Virgin America CEO, President Delta and Lufthansa), Jonathan Mildenhall (founder 21st Century Brands, former Airbnb CMO), Dr. David Agus (founder/CEO Ellison Institute), and Matthew Anderson (former Roku CMO). Surf Air Mobility is the parent company of Surf Air Inc.
  • SAM has entered into a 3 party agreement with AeroTEC, a premier aircraft development and integration company and magniX, a leader in electric propulsion; AeroTEC to develop proprietary powertrain technology for SAM and magniX to supply electric propulsion units (“EPUs”) for SAM’s launch product, a hybrid electric powertrain, initially designed for the Cessna Grand Caravan.
  • SAM has entered into a binding agreement (the “Southern Agreement”) to acquire Southern Airways Corporation and expects to complete its acquisition of Southern concurrently with closing of the merger with Tuscan Holdings Corp. II.
  • Southern Airways Express is the largest passenger operator of Cessna Grand Caravans in the US, serving over 300,000 customers across 39 cities with over 60,000 flights in 2021, and is expected to expand SAM’s air mobility platform nationwide.

SUBSEQUENT EVENT – 9/2/22 – LINK

  • The Amendment extends the date by which the business conditions must be met to the earlier of the Closing Date and the Outside Date (each as defined in the Merger Agreement) and provides that Tuscan must provide notice of termination within ten business days of such date.
  • The Amendment reduces the maximum amount of fees and expenses incurred by Tuscan that will be reimbursed by the Company, if the Merger Agreement is terminated because the business conditions have not been satisfied and certain other conditions are met, from $650,000 to $400,000.

EXTENSION – 6/21/22 – LINK

  •  The shareholders approved the extension from June 30, 2022 to December 31, 2022.
    • The Sponsor will lend to Tuscan $0.10 per share for first three months of the Extension and then $0.033 per share for each additional month of the Extension needed to consummate an initial business combination through the Extended Date for each public share that is not converted in connection with the stockholder vote to approve the Extension.
    • 39,400 shares were redeemed for $407,192.13 in cash.

EXTENSION – 3/29/22 – LINK

  • The company approved the extension amendment to complete a business combination from September 30, 2021, to December 31, 2021.
    • At the meeting, 6,650,144 shares were redeemed for $10.194/Share
  • With the extension, the sponsor contributed $265,750.10 to the trust account for each share remaining in the trust account.

EXTENSION – 9/28/21 – LINK

  • The company approved the extension amendment to complete a business combination from September 30, 2021, to December 31, 2021.
    • At the meeting, 2,284,305 shares were redeemed for $10.094/Share
  • With the extension, the sponsor contributed $1,240,695.50 to the trust account for each share remaining in the trust account.

EXTENSION – 4/14/21 – LINK

  • The company approved the extension amendment to complete a business combination from April 16, 2021, to September 30, 2021.
    • At the meeting, 2,499,097 shares were redeemed for $10.094/Share

TRANSACTION

  • The proposed transaction reflects an implied pro forma equity value of $1.42 billion, assuming full payment of earnout.
  • The transaction is expected to provide up to $467 million in gross cash proceeds to SAM, including committed capital from strategic and financial investors including iHeartMedia, and Partners For Growth, and an equity line from Global Emerging Markets (GEM), as well as from THCA’s cash in trust (assuming no exercise of THCA stockholder redemption rights).
  • SAM has entered into a binding agreement (the “Southern Agreement”) to acquire Southern Airways Corporation and expects to complete its acquisition of Southern concurrently with closing of the merger with Tuscan Holdings Corp. II.

PIPE

  • There is no PIPE for this Transaction.

LOCK-UP

Sponsor Lock-Up:

  • Tuscan’s sponsor, Tuscan Holdings Acquisition II, LLC, entered into a Confidentiality and Lockup Agreement with Parentco, pursuant to which
    • (i) 95% of the Immediately Vested Founder Shares issued to the sponsor will not transferrable until the date that is the earlier of
      • (x) the one-year anniversary of the Closing and
      • (y) the last trading day where the VWAP of the Parentco Common Stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period following the Closing, and
      • (ii) 95% of the remaining shares of Parentco Common Stock issued to the sponsor in respect of the founder’s shares will not be transferable until the date that is the one-year anniversary of the Closing.

Company Lock-Up:

  • 95% of the shares of Parentco Common Stock issued to the directors, officers and affiliates of the Company as of immediately prior to the Second Effective Time will not be transferrable until the date that is the earlier of
    • (x) the one-year anniversary of the Closing and
    • (y) the last trading day where the VWAP of the Parentco Common Stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period following the Closing, but in any event not before the date that is four months after the Closing.

EARNOUT

  • The Merger Agreement provides for the payment of up to an aggregate of 38,000,000 additional shares of Parentco Common Stock (including amounts issuable to the security holders of the Company and Southern) as earnout consideration.
  • Parentco will issue to the holders of the Ordinary Shares of the Company as of the Second Effective Time:
    • (i) 6,125,000 shares of Parentco Common Stock, if, as disclosed in the Annual Report on Form 10-K for the fiscal year ending December 31, 2023, for Parentco filed with the SEC, Parentco’s total audited revenue is at least $200,000,000 or the VWAP of the Parentco Common Stock is at least $12.00 for 20 out of 30 trading days after the six-month anniversary of the Closing and prior to the 5-year anniversary of the Closing;
    • (ii) 6,125,000 shares of Parentco Common Stock, if, as disclosed in the Annual Report on Form 10-K for the fiscal year ending December 31, 2024 for Parentco filed with the SEC, Parentco’s total audited revenue is at least $425,000,000 or the VWAP of the Parentco Common Stock is at least $14.00 for 20 out of 30 trading days after the one-year anniversary of the Closing and prior to the 5-year anniversary of the Closing;
    • (iii) 6,125,000 shares of Parentco Common Stock, if Parentco or any of its subsidiaries receives certification from the Federal Aviation Administration (“FAA”) for a hybrid-electric propulsion system for the Cessna Model 208B Grand Caravan EX aircraft (“Caravan”) or the VWAP of the Parentco Common Stock is at least $16.00 for 20 out of 30 trading days after the one-year anniversary of the Closing and prior to the 5-year anniversary of the Closing; and
    • (iv) 6,125,000 shares of Parentco Common Stock, if Parentco or any of its subsidiaries receives certification from the FAA for a fully-electric propulsion system for the Caravan or the VWAP of the Parentco Common Stock is at least $16.00 for 20 out of 30 trading days after the one-year anniversary of the Closing and prior to the 5-year anniversary of the Closing.
  • In addition, Parentco will issue to the holders of the Ordinary Shares of the Company as of the Second Effective Time 8,750,000 shares of Parentco Common Stock, if the Commercial and Strategic Arrangement Condition is not satisfied prior to the Closing, but is satisfied after the Closing and prior to December 31, 2022.
  • The remaining 4,750,000 shares of Parentco Common Stock comprising the earnout consideration likewise are issuable to the stockholders of Southern upon satisfaction of the earnout conditions described above.

SPONSOR AGREEMENT

  • The Sponsor Letter Agreement provides for certain forfeiture and vesting conditions to be applicable to the 4,312,500 shares of Parentco Common Stock issuable in respect of the founder’s shares, as follows:
    • (i) 50% of the shares (or 2,156,250 shares) shall be immediately vested from and after the First Effective Time (the “Immediately Vested Founder Shares”)
    • (ii) upon each of the first four tranches of earnout consideration being earned, 5% of the shares (or 215,625 shares) shall become vested and no longer subject to forfeiture (for an aggregate of 862,500 shares), and
    • (iii) the At-Risk Sponsor shares that are not transferred or distributed, and any shares that do not become vested because the corresponding tranche of the earnout consideration is not earned, shall be forfeited to Parentco.

NOTABLE CONDITIONS TO CLOSING

  • The obligations of the Surf Entities to consummate the Transactions are conditioned upon the available cash being equal to or greater than $300,000,000.
    • In determining available cash, $400,000,000 of the Equity Line will be deemed to be received by Parentco substantially concurrently with the Closing and the funds invested under the SAFE Agreements will be deemed received by Parentco substantially concurrently with the Closing.
    • Because the funds under the Equity Line are deemed received at the Closing, but may not be funded until after the Closing if at all, the available cash closing condition may be satisfied even if the actual cash on hand is substantially less than $300,000,000.
  • The aggregate consideration payable at the Closing (including amounts issuable to the security holders of the Company and Southern) is a number of shares of Parentco Common Stock equal to:
    • (i) $850,000,000, less
      • (B) the amount of indebtedness of the Company and its subsidiaries (including any SAFE Agreements of the Company as to which the holder thereof has agreed to settle such agreement solely in cash, and excluding indebtedness of Southern and its subsidiaries) in excess of $15,000,000, plus
      • (C) if the Commercial and Strategic Arrangement Condition (as defined in the Merger Agreement) is satisfied as of or prior to the Closing, $100,000,000, divided by
    • (ii) $10.00 (“Company Closing Share Consideration”).

NOTABLE CONDITIONS TO TERMINATION

  • The Merger Agreement may be terminated at any time prior to the Closing by either Tuscan or the Company, if the First Effective Time has not occurred on or before November 17, 2022 (the “Outside Date”).
  • Or by either Tuscan or the Company, if a governmental authority has enacted, issued, or entered any ruling (whether temporary, preliminary or permanent) which has become final and non-appealable and has the effect of making consummation of the First Merger or the Second Merger, illegal or otherwise preventing or prohibiting consummation of the First Merger or the Second Merger.
  • If at the time of termination of the Merger Agreement, Tuscan was entitled to terminate the Merger Agreement because the agreement for the Southern Acquisition had been validly terminated, the Company will reimburse Tuscan for 50% of its out-of-pocket expenses reasonably incurred in connection with the transactions, up to $250,000.
  • In addition, if at the time of termination of the Merger Agreement, Tuscan was entitled to terminate the Merger Agreement because certain business conditions had been satisfied as of September 30, 2022, the Company will reimburse Tuscan for its out-of-pocket expenses reasonably incurred in connection with the transactions, up to $650,000.

ADVISORS

  • No advisors were listed.

MANAGEMENT & BOARD


Executive Officers

Stephen A. Vogel, 70
Chairman and Chief Executive Officer

Mr. Vogel has over 40 years of operating and private equity experience. He has served as General Partner of Vogel Partners, LLP, a private investment firm, since 1996. Since November 2018, he has served as Chairman and Chief Executive Officer of Tuscan I, a blank check company seeking to consummate an initial business combination in the cannabis industry. Since May 2018, he has also served as President of Twelve Seas Investment Company, a blank check company seeking to consummate an initial business combination, and has served as a director since June 2018. From December 2016 until February 2018, Mr. Vogel was Executive Chairman of Forum Merger Corporation, a blank check company that completed its initial public offering in April 2017. Forum completed its initial business combination in February 2018 with C1 Investment Corp. and in connection with the consummation of the business combination changed its name to ConvergeOne Holdings, Inc. (NASDAQ: CVON). Mr. Vogel began his career in 1971 as President, Chief Executive Officer and co-founder of Synergy Gas Corp., a retail propane distribution company. After selling Synergy Gas Corp. to Northwestern Corp. in 1995, Mr. Vogel co-founded EntreCapital Partners, a private equity firm that focused on companies facing operational or management challenges, and served until 1999. Additionally, he was a venture partner at EnerTech Capital Partners, an energy focused venture capital firm, from 1999 to 2002, and an operating partner at Tri-Artisan Capital Partners, LLC, an investment bank, from 2004 to 2006. Mr. Vogel also served as Chief Executive Officer of Grameen America, a not-for-profit organization that provides microloans to low-incomeborrowers in the United States, from 2008 to 2013. He was on the board of Netspend (NASDAQ: NTSP), a leader for prepaid stored value platforms, from 2011 to 2013. Mr. Vogel was a member of the Board of Trustees at Montefiore Medical Center and Children’s Hospital for over 20 years and served on the Board of Trustees at Lighthouse International, a non-profit organization. Mr. Vogel is a past Trustee of the Horace Mann School and previously served on the Board of Directors of the National Propane Gas Association. Mr. Vogel received a BS degree from Syracuse University School of Management.


Richard O. Rieger, 61
Chief Financial Officer

Mr. Rieger has served as a member of the board of directors of Tuscan I since February 2019. Mr. Rieger has over 33 years of investment experience. Since January 2016, he has served as the President of Inkblot Capital, LLC, which is a family office. Prior to this, Mr. Rieger was a Principal, Member of the Executive Committee and Co-Chief Investment Officer of Kingdon Capital Management LLC (“Kingdon”) from 1992 to September 2014 and then served as a consultant to Kingdon until December 2015. He joined Kingdon in December 1992 as a Portfolio Manager and was named Co-Director of Domestic Equity Research in March 1995 and the Chief Investment Officer in May 2002. From January 1992 to December 1992, Mr. Rieger worked as a securities Analyst and a Portfolio Manager for Glickenhaus & Co., an investment manager. Prior to this, Mr. Rieger served as an Analyst for several investment firms, including Ladenburg Thalmann & Co. Inc., Allen & Company and Sloate, Weisman, Murray & Co. Mr. Rieger is on the Photography Committee at the Museum of Modern Art and the Investment Committee of Ethical Cultural Fieldston School. He previously served on the board of the University Settlement House in New York City and was a trustee at the Ethical Cultural Fieldston School and the Rippowam Cisqua School in Bedford NY. Mr.Rieger received a BA from the University of Michigan.


 

Board of Directors

Michael Auerbach, 43
Director

Mr. Auerbach has served as a member of the board of directors of Tuscan I since February 2019. Since July 2012, Mr. Auerbach has served as Senior Vice President of Albright Stonebridge Group, a global strategy firm. Since 2012, he also serves as a General Partner of Subversive Capital, a venture capital firm. From September 2009 to July 2012, he was Vice President, Social Risk Consulting at Control Risks, a global risk consulting firm. From September 2010 to January 2011, he was also an Adjunct Professor at The New School for Social Research. From 2007 to 2009, he was Chief Executive Officer of Social Risks, LLC, a consulting firm. From 2005 to 2007, he was Associate Director for The Century Foundation, a progressive, non-partisan think tank. He began his career in technology in 1993 when he founded Panopticon, a venture capital incubator concentrating on internet and mobile technology, and served as its Chief Executive Officer until January 2004. Mr. Auerbach sits on the boards of Privateer Holdings, Inc., Tilray, Inc, Duco Advisors, Inc., JackPocket, Inc. and MainBase, SA. Mr. Auerbach is a former term member at the Council on Foreign Relations, a national security fellow at the Truman National Security Project and sits on the board of the Theodore C. Sorensen Center for International Peace and Justice. Mr. Auerbach received a B.A. from The New School for Social Research and a M.A. from Columbia University.


David H. Dickstein, 70
Director

Mr. Dicskstein is a seasoned investor, investing in a variety of instruments ranging from equities and bonds to real estate ventures and other special purpose acquisition corporations. Since 1971, Mr. Dickstein has been with Jacobson Hat Co. Inc., currently serving as its Corporate Treasurer and Import Director. Founded in 1930, Jacobson Hat Co. offers the widest variety of headwear in the world. Mr. Dickstein has co-managed all aspects of the business, including finance, over his 48 years with the Company. Mr. Dickstein has also been a partner of 310 Penn LLC ,which owns and operates commercial properties and residential rental properties, since 2009. He has served as Treasurer and President of the Scranton JCC, and serves on the finance committee of Temple Hesed of Scranton. He is a former Executive Committee member of the Board of Directors of the Scranton Chapter of the American Red Cross, and currently is a member of the Board and Executive Committee for the Jewish Home of Northeastern PA. He also serves on the Board and Finance Committee of Elan Gardens, a non-profit assisted living facility in Clarks Summit, Pennsylvania. Mr. Dickstein received a BS in Industrial Engineering from Lehigh University.


Sila Calderón [Appointed 7/20/20]
Independent Director

A bio was not provided.