B. Riley Principal Merger Corporation
PROPOSED BUSINESS COMBINATION: Alta Equipment Holdings Inc.
ESTIMATED CURRENT FUNDS in TRUST: $146.0 million*
CURRENT PER SHARE REDEMPTION PRICE: $10.15*
ENTERPRISE VALUE: $550 million
*SPACInsider estimate a/o 2-7-20
B. Riley Principal Merger Corp. proposes to merge with Alta Equipment Holdings Inc. (“Alta”), a provider of industrial and construction equipment and related services.
BRPM intends to change its name to Alta Equipment Group Inc. (“Alta Equipment”) and intends to apply to list its shares of common stock on The New York Stock Exchange under the ticker symbol “ALTG.” Alta Equipment is anticipated to have pro forma revenue of $900 million for the year ended December 31, 2019, after taking into account the effect of the acquisition of two dealers by Alta contingent on the closing of the business combination which are currently under non-binding letter of intent and pending negotiation of definitive agreements (the “Potential Acquisitions”).
Founded in 1984, Alta owns and operates as one of the largest integrated equipment dealership platforms in the U.S., providing diversified product and service offerings across the industrial and heavy construction equipment markets for an array of manufacturers including Hyster-Yale Materials Handling, Inc., AB Volvo, and JCB Co., Ltd., among more than 30 others. Alta’s business model consists of populating its geographies with new, used and rental equipment and contracting with its vast customer base to provide product support and services.
Following the consummation of the business combination and the closing of the Potential Acquisitions, Alta Equipment will operate in 43 locations across Michigan, Illinois, New England, New York and Florida. The business combination is expected to accelerate Alta’s acquisition strategy, including its geographical market expansion plans.
The business combination is expected to close in the first quarter of 2020.
Management Team & Board
- The Alta Equipment executive management team will continue to be led by Chief Executive Officer, Ryan Greenawalt.
- The board of directors is expected to include Mr. Greenawalt, who will serve as Chairman, and Dan Shribman, Chief Investment Officer of B. Riley Financial and the Chief Financial Officer of BRPM.
Transaction Terms & Financing
BRPM will pay off the existing gross debt of Alta, which is anticipated to be approximately $295 million, and Alta’s equityholders, which include Greenawalt (the “Sellers”), will receive aggregate consideration with a value equal to $119 million, which will consist of (i) $43 million in cash and (ii) $76 million of shares of the Company’s common stock, or 7,600,000 shares valued at $10.00 per share.
Concurrently with and contingent upon the closing of the business combination and pending negotiation of definitive agreements, Alta intends to consummate the acquisition of two entities, each of which is currently under non-binding letter of intent, for an aggregate purchase price of approximately $95 million, to be funded by equity and debt proceeds raised by the Company in connection with the business combination.
The approximately $550 million business combination is expected to be funded through a combination of equity and debt financings, including:
- $300 million in a new asset-based revolving credit facility being arranged by JPMorgan Chase Bank, N.A., of which approximately $140 million will be drawn at closing;
- $170 million in a new term loan credit facility under documentation with a syndication of institutional investors;
- $35 million of common stock committed to be sold in a private placement with certain institutional and accredited investors; and
- $25 million of units consisting of one share of common stock and one-half of one redeemable warrant to be sold to B. Riley Principal Investments or its designees at $10.00 per unit in a private placement pursuant to a forward purchase agreement.
Proceeds from the financings will be used to complete the Potential Acquisitions and to repay all existing Alta indebtedness. In addition, Mr. Greenawalt and management will roll a substantial majority of their equity interests in Alta into Alta Equipment common stock.
PIPE
- 3,500,000 shares of Class A common stock at $10.00 per share for an aggregate of $35,000,000
- As an inducement, the PIPE investors that are not affiliated with B. Riley Financial, Inc. will receive:
- an aggregate of 142,895 additional shares of the Company’s Class A common stock (the “incentive shares”)
- and an aggregate of 1,018,125 of the Company’s warrants
- and the Sponsor will forfeit an equal number of shares of Class B common stock (the “founder shares”)
FOUNDER SHARES AND PRIVATE PLACEMENT PURCHASE
- 3,593,750 at IPO: 142,895 Founder Shares to be forfeited (see PIPE above)
- 462,500 Private Placement Units at IPO: None to be forfeited and cancelled
NOTABLE CONDITIONS TO CLOSING
- An aggregate of at least $143 million of cash available from the trust account and from equity financing sources
- Alta’s EBITDA is at least $72.5 million
NOTABLE CONDITIONS TO TERMINATION
- If the business combination has not been consummated by June 11, 2020
ADVISORS
- B. Riley FBR, Inc. is acting as the exclusive placement agent to BRPM
- Winston & Strawn LLP is acting as legal advisor to BRPM
- KPMG is acting as financial advisor to Alta
- Howard & Howard is acting as legal advisor to Alta
B. RILEY PRINCIPAL MERGER CORP. MANAGEMENT & BOARD
Executive Officers
Kenneth Young, 55
Chief Executive Officer & Director
Mr. Young has served as President of B. Riley Financial since July 2018. Mr. Young has served as Chief Executive Officer of B. Riley Principal Investments, a wholly-owned subsidiary of B. Riley Financial, which acquires, invests and operates companies across several verticals, including communications, media, construction and retail, with a focus on maximizing cash flows through operational expertise since October 2016. Mr. Young serves as the Chief Executive Officer of magicJackVocalTec and United Online, both wholly-owned subsidiaries of B. Riley Financial. Mr. Young, through a consulting agreement with B. Riley Financial, was appointed Chief Executive Officer of Babcock & Wilcox, a global leader in energy and environmental technologies and services for the power and industrial markets, in November 2018. B. Riley Financial has minority ownership in Babcock & Wilcox. Mr. Young has 30 years of operational, executive and board experience primarily within the communications and finance industry. Mr. Young served as President and Chief Executive Officer at Lightbridge Communications Corporation (“LCC”), a provider of technical services for wireless operators, from 2008 to September 2016. Prior to joining LCC, he spent over 16 years in senior executive positions with multiple corporations, including Southwestern Bell Corporation, AT&T and Cingular Wireless. Mr. Young has served as a member of the board of directors of Orion Energy Systems, Inc. (Nasdaq: OESX) since 2017, Sonim Technologies, bebe stores, inc. and Liberty Tax, Inc. since 2018. Mr. Young is a former member of the board of Globalstar, Inc. (NYSE: GSAT), Imagine Communications, B. Riley Financial (Nasdaq: RILY), Standard Diversified Opportunities, Inc. and Proxim Wireless Corp.
Daniel Shribman, 35
Chief Financial Officer & Director
Mr. Shribman has served as President of B. Riley Principal Investments, since September 2018, when such role was first created, and brings 11 years of experience in both public and private equity to the company. Prior to joining B. Riley Principal Investments, Mr. Shribman was a Portfolio Manager at Anchorage Capital Group, a special situation asset manager with over $15 billion in assets under management, from 2010 to 2018. During Mr. Shribman’s tenure at Anchorage, he led investments in dozens of public and private opportunities across the general industrials, transportation, automotive, aerospace, gaming, hospitality and real estate industries. These investments ranged from public equities and bonds to deeply distressed securities, par bank debt, minority owned private equity, and majority owned private equity. Mr. Shribman worked in close collaboration with management teams and boards to maximize shareholder value in the form of both operational turnarounds, capital markets financings and communication and capital deployment initiatives. Prior to Anchorage, Mr. Shribman worked at Tinicum Capital Partners, a private equity firm, and in the restructuring advisory group at Lazard Freres. Mr. Shribman holds an MA in Economics and History from Dartmouth.
Board of Directors
Patrick J. Bartels, Jr., 43
Director Nominee
Mr. Bartels serves as the Managing Member of Redan Advisors LLC (“Redan”). Prior to joining Redan, Mr. Bartels held the position of Managing Principal at Monarch Alternative Capital LP, a private investment firm that focuses primarily on distressed companies (“Monarch”) from 2002-2018. Prior to joining Monarch, Mr. Bartels was a high-yield investments analyst at Invesco Ltd. He began his career at PricewaterhouseCoopers LLP. Mr. Bartels contributes to the mix of experience and qualifications the board of directors seeks to maintain primarily through executive management oversight, finance and capital markets, human resources and compensation, and strategic planning experiences. Mr. Bartels’ other board experience includes Arch Coal Inc. (“Arch”), serving on its audit, nominating/governance and compensation committees. Mr. Bartels has 20 years of experience and holds the Chartered Financial Analyst designation.
James L. Kempner, 61
Director Nominee
Mr. Kempner is President of LSH Partners. Prior to joining LSH Partners, Mr. Kempner was President of Loeb Partners Corporation from 2014 to 2016. Mr. Kempner began his career at Lazard, in 1983 and was named a General Partner in 1993. Mr. Kempner was involved in banking and capital markets transactions and managed Lazard’s Corporate Finance department from 1995-1998 and founded Lazard’s Logistics and Transportation group in 2000. His most recent role was as Senior Advisor in Lazard’s general industrials banking group, with emphasis on companies in the Transportation and Logistics industries. Mr. Kempner also served on the Underwriting and Private Placement Committees of Lazard. Outside of the Logistics and Transportation Industry, Mr. Kempner has advised numerous other publicly-traded companies on their initial public offerings and other capital raises. Mr. Kempner is an Advisory Board Member and on the Finance Committee of Mount Sinai Health Systems, a Board Member of NuLabel Technologies, a Board Member of FallLine Group, and an Advisor to the Board of Synexis Biodefense Systems. Mr. Kempner is a Trustee of the James Loring Johnson 1944 Trust and a Trustee for an American artist and sculptor. Mr. Kempner received a B.A. from Yale University and an M.B.A. from Harvard Business School.
Timothy M. Presutti, 50
Director Nominee
Mr. Presutti is the managing partner and chief investment officer of Woody Creek Capital Partners, a private investment firm he founded in 2007, which specializes in private credit and special situation investing. In addition, Mr. Presutti has been a senior advisor to the Bosarge Family Office based in Houston, Texas since 2015. Mr. Presutti brings nearly 24 years of finance experience, spanning investing, portfolio management, trading and capital markets. He co-founded Broadbill Investment Partners in 2011, an investment management firm, where he oversaw all capital raising for two funds and a co-investment platform, was a member of its investment committee and has been its senior advisor since 2019. Mr. Presutti started his career at Bankers Trust, which was acquired by Deutsche Bank, where he served as managing director and head of high yield trading from 2005 to 2007 and as a managing director in high yield sales from 2000 to 2005. Mr. Presutti is an MBA candidate at The Ross School at the University of Michigan and holds a BS from Niagara University. He is active as a member of the investment committee of the Aspen Community Foundation as well as a member of YPO-WPO Aspen Chapter.
Bryant R. Riley, 52
Director Nominee
Mr. Riley is Chairman and Co-Chief Executive Officer of B. Riley Financial Inc. (NASDAQ: RILY), which we refer to elsewhere in this prospectus as B. Riley Financial, a publicly traded company which, through its subsidiaries, provides financial and business advisory services. In addition, Mr. Riley serves as CEO of B. Riley Capital Management, LLC, an SEC Registered Investment Advisor and a wholly-owned subsidiary of B. Riley Financial. Since July 2017, Mr. Riley has served as Co-Chief Executive Officer of B. Riley FBR, Inc. (formerly FBR Capital Markets & Co., LLC). Mr. Riley has served as a member of the board of directors of Liberty Tax, Inc. since September 2018. Previously, Mr. Riley held board positions at Alliance Semiconductor Corporation, Aldila Inc., Cadiz Inc., Carreker Corporation, DDI Corp., Integrated Silicon Solution, Inc., Celeritek, Inc., Kitty Hawk Inc., Mossimo Inc., National Holdings Corporation, SI Technologies, Inc., Silicon Storage Technologies, Strasbaugh, STR Holdings, Inc., Trans World Entertainment and Transmeta Corp. Prior to founding B. Riley & Co. in 1997, Mr. Riley held a variety of positions in the brokerage industry, primarily as an institutional salesman and trader. From October 1993 to January 1997 Mr. Riley was a co-head of Equity at Dabney-Resnick, Inc., a Los Angeles-based brokerage firm. From 1991 to 1993 he was a co-founder of Huberman-Riley, a Texas-based brokerage firm. Mr. Riley holds a Bachelor of Science in Finance from Lehigh University.
Robert Suss, 48
Director Nominee
Mr. Suss has been the joint chief executive officer of UK Agricultural Finance Ltd, a company that provides underwriting to local farming communities in the United Kingdom, since 2017. There, Mr. Suss assembled the board of directors and developed the strategic direction of the company in relation to hiring, policy formation and risk management. Mr. Suss is also the Chair of EG Capital Advisors’ Advisory Board, a position that he has held since 2017. Mr. Suss has been a member of the board of directors of TPG Pace Holdings Corp., a special purpose acquisition company, since 2017, where he is a member of its audit committee and nominating and corporate governance committee. Mr. Suss was previously a director and audit committee member of Pace Holdings Corp. from 2015 to 2016, a special purpose acquisition company. Mr. Suss was employed by Goldman Sachs International from 1997 to 2015. His latest position at Goldman Sachs was managing director and head of private wealth management. Mr. Suss is also a trustee to Lumos, J.K. Rowling’s charitable organization whose goal is to reduce the number of children being raised in institutions. Mr. Suss is also the trustee of The Royal Academy Development Trust, a charity formed to promote participation in the arts. Mr. Suss has a BA, with honors, in Economics and Management from the University of Leeds.