Boxwood Merger Corp. (BWMC) Secures Additional Financing

January 30th vote date is still on….

Boxwood Merger Corp. (BWMC), which is scheduled to hold their shareholder vote to complete their combination with Atlas Intermediate Holdings LLC (“Atlas”) on January 30th, announced this morning 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.   One other final note from this morning’s filing is that GSO will have the right to appoint one non-voting observer to Boxwood’s Boards of Directors.

If you recall, Boxwood was originally scheduled to hold their shareholder vote back on December 12th, 2019.  However, prior to that vote, Boxwood’s share price took a tumble when it went “ex-redemption” date, trading as low as $8.60, which is usually indicative of a significant amount of impending redemptions.  As a result, Boxwood adjourned and moved their vote to January to allow them time to shore up their transaction.  With these additional changes, the deal is now fully financed, so it’s “go time” at next week’s vote.  However, it will still be interesting to see where the share trades both ahead of the vote and after.  There should still be a good chunk of redemptions, which should also reduce the float, but now that the deal is fully financed and Atlas has the cash it needs for its accretive M&A strategy, it shouldn’t be as dramatic a drop in share price. Keep in mind that Atlas is scheduled to close its acquisition of Long Engineering, Inc., in February.

A summary of changes is found below and you can find the 8-K HERE:

Non-Convertible Preferred

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.

Common Stock

GSO will also purchase up to $10 million in shares of Class A common stock of Boxwood, at $10.00 per share.

Rollover Equity

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).

Debt Commitment

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.

As a reminder, 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.”

ADVISORS

• 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.