Tag Archives: blank check

Third and Fourth James Graf blank check companies file for IPOs

Not to be outdone by Tilman Fertitta, James Graf has also filed initial public offerings for his third and fourth SPAC (also known as a blank check company). The second ($225 million) filed to go public two weeks ago.



Graf Acquisition Corp III will be a $300 million IPO, while Graf Acquisition IV will be a $150 million IPO. All three will have the same management teams and objectives and be based in The Woodlands.

Graf Acquisition Corp I ($244 million IPO Oct 2018) completed its initial business combination with Velodyne Lidar in September 2020 for $1.5 billion.

Mr. Graf has also been involved in several other SPACs

  • Platinum Eagle Acquisition Corp ($325m IPO Jan 2018) – reverse takeover of Houston-based Target Hospitality for $1.3 billion in Mar 2019.
  • Double Eagle Acquisition Corp ($500m IPO Sept 2015) – combined with William Scotsman for $1.1 billion in Nov 2017.
  • Silver Eagle Acquisition Corp ($325m IPO July 2013) – combined with Videocon d2h for $273 million in March 2015.
  • Global Eagle Acquisition Corp ($190m IPO May 2011) – combined with Global Eagle Entertainment in Jan 2013.

S-1 filing Graf Acquisition III

S-1 filing Graf Acquisition IV

Mining blank check company files for $300 million IPO

ESM Acquisition Corporation has filed for a $300 million initial public offering (IPO).  The company has its head office in the River Oaks area.



The CEO of the company is Sir Mick Davis, who was the CFO of mining group Billiton plc (the predecessor to BHP Group) and the CEO of Xstrata plc, an Anglo-Swiss mining company that merged with Glencore plc in 2013. Until July 2019, Mr. Davis was the CEO and Treasurer of the British Conservative Party. He was born in South Africa but has British nationality. He is based in London.

The Chairman is John Raymond, who is Co-Founder and CEO of The Energy and Minerals Group, a leading natural resources-focused private equity firm, based in Houston. It manages funds of approximately $10 billion.

The company is seeking a “target that is positioned to benefit from the global transition towards a low carbon economy… In particular a target that explores for, mines, processes and/or refines commodities that are critical in order to achieve de-carbonization. Among other commodities, this may include cobalt, copper, graphite, lithium, manganese, nickel, palladium, platinum, rhodium, vanadium, rare earth elements, and/or other directly related raw materials.”

The company plans to list on the NYSE. Credit Suisse is the sole bookrunner on the deal.

S-1 filing – ESM Acquisition Corporation

 

Houston blank check company finds acquisition target

Houston blank check company, Peridot Acquisition Corp, has agreed to buy Li-Cycle for $1.1 billion in a reverse takeover. Li-Cycle is a lithium-ion battery recycling company, based in Toronto.



Peridot went public in September 2020 with the aim of finding an acquisition in the environmental infrastructure or renewables sector, so Li-Cycle definitely fits the bill.

Li-Cycle aims to recycle electric vehicles batteries. In addition to end of lifecycle recycling, 5%-10% of battery production is rejected as waste during the manufacturing process. As EV production ramps, Li-Cycle sees a big and growing market. It uses a non-thermal process to recycle the batteries, allowing it to recover 95% of the battery mass.

Li-Cycle is still in a start-up phase. It currently has three locations in North America that shred and mechanically separate batteries. The company is also developing a hub in Rochester, New York that will produce, at scale, lithium carbonate, Nickel Sulphate and other high-grade minerals for resale.

It has signed 40 commercial contracts with suppliers, including over $900 million in contracted off-take.

The deal values Li-Cycle at 10 times 2023 projected EBITDA. At close, the business will have $566 million in cash on hand. That will allow Li-Cycle to fund the capital expenditures required to complete its business plan.

The combined company will be led by Li-Cycle CEO Ajay Kochhar. Fellow co-founder Tim Johnson will be the Executive Chairman. Peridot CEO Alan Levande will join the Board, as will Scott Prochazka, ex-CEO of Centerpoint Energy.

SEC filing – Peridot Li-Cycle acquisition

 

Two more Houston blank check companies file for IPOs

On Friday 12 February, a record 28 blank check companies filed for Initial Public Offerings (IPO), including two old favorites in Houston. Tilman Fertitta filed for his 4th blank check company, Landcadia Holdings IV, while Graf Acquisition Corp filed their 2nd.



In case you are wondering why Friday was so popular it’s because it was the last day a company with a calendar year-end can file for an IPO using a September 2020 balance sheet.

Landcadia and Graf History

Landcadia Holdings IV filed for a $500 million IPO. As before, the shareholders are Tilman Fertitta and Jefferies. As before, they are seeking companies that operate in the consumer, dining, hospitality, entertainment and gaming industries.

  • Landcadia III just went public in October 2020 and raised $500 million in its IPO. Last month it agreed to buy The Hillman Group for $2.64 billion in a reverse takeover.
  • Landcadia II raised $275 million in May 2019 and acquired Golden Nugget Online Gaming (a Fertitta company) in December 2020.
  • Landcadia I raised $250 million in June 2016 and acquired Waitr in November 2018.

Graf Acquisition Corp II filed for a $225 million IPO, same as the first Graf IPO that was completed in October 2018. The CEO is James Graf. Graf I completed its reverse takeover of Velodyne Lidar in September 2020.

Popularity of SPACs

Special Purpose Acquisition Companies (SPACs) or blank check companies as they are also known, have really taken off in the past couple of years, mainly because of the disadvantages in the traditional IPO route where the process is long (6-7 months) and the valuation (i.e. price) at completion is uncertain.

Furthermore, the investment bankers like their IPOs to be heavily oversubscribed and for the share price to ‘pop’ on the first day of trading. But that means that the selling shareholders have effectively given up part of their returns to the new shareholders.

In contrast, a blank check company can go public in 2-3 months and then spend the next few months negotiating a deal in secret with a potential target company. In this way, both the original sponsor and the shareholders of the target can generate a better return.

S-1 Landcadia Holdings IV

S-1 Graf Acquisition Corp II

Fertitta Entertainment to go public via reverse takeover

Fertitta Entertainment Inc (‘FEI’), the parent company of Landry’s restaurants and Golden Nugget casinos is to go public through a reverse takeover of FAST Acquisition, a blank check company.

The transaction values FEI at $6.6 billion enterprise valuation.



Tilman Fertitta, the sole owner of FEI, will continue to the be the Chairman and CEO of the company and will remain the largest shareholder, owning about 59% after the deal closes.

The business operates 446 full service restaurants such as Morton’s steakhouse, De Frisco’s, Saltgrass and Rainforest Cafe. It also owns 5 Golden Nugget Casinos in Atlantic City, Las Vegas, Laughlin, Lake Charles and Biloxi.

Both the restaurants and the casinos seem to be holding up better than its publicly-traded competitors.  For the third quarter of 2020, revenues for the restaurant division were $494 million, down 32% on the same quarter in 2019. However, adjusted EBITDA was $101 million, down only 17% on the corresponding period.

For the casinos, third quarter revenues dropped 30% to $176 million. However, adjusted EBITDA only dropped by $6 million to $72.5 million (41.1% margin).

FEI also owns 79.9% of the voting rights of Golden Nugget Online Gaming. This business was sold by FEI in December 2020  to a blank check company that had been launched by Mr. Fertitta (Landcadia Holdings II).

Landry’s was public before

Landry’s originally went public in 1993 when it had 9 restaurants. In 2010, the business had 200 restaurants and Mr. Fertitta took it private in a $1.4 billion transaction.

Mr. Fertitta had considered going public via an Initial Public Offering (IPO) but decided that he could access capital markets faster and with more certainty if it did a deal with FAST.  The blank check company went public in August 2020 and was led by Sandy Beall, an experienced restauranteur and hospitality founder.

FEI also owns the Houston Rockets. That business is not part of the transaction.

The deal is expected to close in the second quarter of 2021.

SEC filing – FEI FAST acquisition

 

Houston blank check company agrees to reverse takeover

Landcadia Holdings III, the third blank check company taken public by Tilman Fertitta and Jefferies, has agreed to a reverse takeover with The Hillman Group. The deal values Hillman at $2.64 billion.



Landcadia III went public in October 2020. At the time, the company said that it intended to search for opportunities in the consumer, dining, hospitality, entertainment and gaming industries. Landcadia I became Waitr Holdings (online food ordering and delivery) while Landcadia II recently closed on its deal and became Golden Nugget Online Gaming.  In a left turn, Hillman is not involved in these sectors at all. It distributes hardware to retailers.

Hillman distributes fasteners and work gear to Lowe’s, Home Deport and Walmart. It also has 32,500 machines that cut keys, fobs and perform knife sharpening. Impressively, the business has grown organically in 55 of the 56 years it has been in existence. The one year it didn’t grow was 2009 when sales fell 5%.

The deal is expected to close in the second quarter of 2021. After the close, Mr. Fertitta will have no role in the company, other than being a small shareholder. The company will be based in Cincinnati.

SEC filing – Landcadia III Hillman transaction

Three Houston blank check companies file to go public

Three Houston-area blank check companies have filed to go public in the last few days. This is part of a record year for such companies. According to the Wall Street Journal, blank check companies have raised $41 billion so far this year, compared to $14 billion last year.



Landcadia Holdings III

Landcadia Holdings III filed to go public. This is the third blank check company launched by Tilman Fertitta, CEO of Landry’s and Richard Handler, the CEO of Jefferies. They plan to raise $500 million. As before, the company plans to acquire a business in the consumer, dining, hospitality or entertainment sectors.

Landcadia Holdings went public in 2016 and acquired Waitr Holdings, an online food ordering and delivery service, in 2018 for $308 million. The business has had a rough ride since (3 CEO’s and 3 CFO’s), though the pandemic has been good for the business.

Landcadia Holdings II went public in May 2019. It is in the process of buying the Golden Nugget Online Gaming business from Landry’s.

Genesis Park Acquisition

Genesis Park Acquisition Corp has filed for a $200 million IPO. The company is led by chairman David Siegel, who is also Executive Chairman of an ultra-low-cost airline carrier, Sun Country Airlines. Together with CEO Paul Hobby (the Founding Partner of PE firm Genesis Park LP), they are seeking a business in the aviation sector with an enterprise value of between $500 million and $1 billion.  The CFO is Jonathan Baliff, former CFO and CEO at Bristow.

Delwinds Insurance

Delwinds Insurance Acquisition has also filed for a $200 million IPO. It is a blank check company formed by The Gray Insurance Company. CEO Andrew Poole is an investment consultant at Gray while CFO Bryce Quin, is a process improvement specialist at Gray. They previously led a blank check company called Tiberius that went public in 2018. It subsequently acquired International General Insurance earlier this year.

Delwinds plans to target businesses in the insurance technology sector or brokers or carriers that use insurance technology (i.e using data analytics or artificial intelligence to better price risk or automate back offices procedures).

Recently gone public

Peridot Acquisition Corp became the latest Houston-area blank check company to go public when it raised $300 million, effective September 23, 2020. The business was formed by Carnelian Energy Capital and is seeking a business with a positive environmental impact.

Industrial Tech Acquisitions raised $75 million in early September. It is searching for industrial and energy technology businesses with an enterprise value of between $250 million and $500 million.

Graf Industrial, which went public in October 2018, is in the process of acquiring Velodyne Lidar, based in San Jose.

 

 

Environmental blank check company files for IPO

Peridot Acquisition Corp is the latest Houston blank check company to file for an Initial Public Offering (IPO). The company plans to raise $300 million. It has its head office in the River Oaks area.



The company is looking to buy a business that focuses on environmentally sound infrastructure, industrial applications and disruptive technologies that eliminate or mitigate greenhouse gas emissions. The target should have an enterprise value of between $800 million and $2 billion.

Examples given include:

  • Clean fuel transportation, electrification and energy efficiency.
  • Environmental infrastructure (e.g recycling).
  • Carbon capture, utilization and storage.
  • Renewables.

Carnelian, a PE firm based in Houston, is backing the company. It has $1.8 billion in cumulative equity commitments in traditional E&P companies.

Management team

Alan Levande is the CEO of the company.  Most recently, he was the co-CEO of Covey Park Energy, a natural gas company that was sold to Comstock Resources (owned by Jerry Jones of the Dallas Cowboys) for $2.2 billion in June 2019. Prior to that, Mr Levande was a Co-Founder and Senior Managing Director at Tenaska Capital Management LLC, a $4 billion private equity manager focused on investments in the power and energy sectors, from 2003 to 2012.

Markus Specks is the CFO. He was most recently a Managing Director with Värde Partners, a global alternative investment advisor managing approximately $14 billion in assets, where he was employed from July 2008 to June 2020.

UBS Investment Bank and Barclays are the joint bookrunners on the deal.

Houston-area blank check companies

The company joins a stampede of blank check companies that have gone or are planning to go public this year. In Houston;

SEC filing – S-1 Peridot