Better must also cover up to $15 million in expenses for Aurora, half of which must be delivered within five days of this agreement, and the remainder in two $3.75 million tranches on January 2 and March 8. This last tranche is due should the merger be terminated.
Better has had a challenging year, which is likely why it has gradually become the oldest announced SPAC deal yet to complete – the next four oldest deals all involve either crypto or China. Better and Aurora announced their $6.7 billion transaction 15 months ago in May 2021.
But, in April 2022, Better revealed that rather than generating $122.9 million in net income in 2021 as it predicted at the time of its announcement, it suffered a -$303.8 million net loss on the year. In multiple waves of layoffs, the digital mortgage marketplace has since parted ways with about 3,900 of its 8,900 employees.
A former executive also filed a lawsuit against Better alleging the company misrepresented its business and prospects to secure the Aurora deal. So far, Aurora is not alleging the same, although this additional compensation going the SPAC’s way would seem to tacitly put some blame on the company.
Better announced a management shakeup in July, and thus could right the ship in time to still get the original transaction done, although the housing market is cooling at the same time. But, this amendment also waives certain financial exclusivity to Aurora, allowing Better to discuss “alternative financing structures” with Soft Bank affiliate SB Northstar.
Soft Bank was an existing investor in Better, and committed to $1.5 billion in financing in connecting with this transaction, including a $750 million bridge note that was delivered upfront in an earlier deal revision in November.
It is perhaps surprising that Better’s valuation has not been changed through the various revisions to the merger, despite the company itself changing shape quite significantly since the deal was announced. But, for now, the deal marches on.