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DPCM Capital, Inc.

DPCM Capital, Inc.

Oct 16, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION:  D-Wave Quantum Inc.

ENTERPRISE VALUE: $1.347 billion
ANTICIPATED SYMBOL: QBTS

DPCM Capital, Inc. proposes to combine with D-Wave Quantum Inc.

D-Wave is in the development and delivery of quantum computing systems, software and services, and is the world’s first commercial supplier of quantum computers—and the only company developing both annealing quantum computers and gate-model quantum computers. They deliver customer value with practical quantum applications for problems as diverse as logistics, artificial intelligence, materials sciences, drug discovery, scheduling, cybersecurity, fault detection, and financial modeling.

D-Wave’s systems are being used by organizations including NEC Corporation, Volkswagen, DENSO, Lockheed Martin, Forschungszentrum Jülich, University of Southern California, and Los Alamos National Laboratory.

With headquarters and the Quantum Engineering Center of Excellence based near Vancouver, Canada, D-Wave’s U.S. operations are based in Palo Alto, Calif. D-Wave has a blue-chip investor base that includes PSP Investments, Goldman Sachs, BDC Capital, NEC Corp., Aegis Group Partners, and In-Q-Tel.

SUBSEQUENT EVENT – 6/23/22 – LINK

Purchase Agreement

  • Lincoln Park Capital Fund, LLC agreed to purchase up to $150,000,000 of NewCo common stock from time to time over a 36-month period following the Commencement Date.
  • After (i) the consummation of the Proposed Transaction and (ii) upon the satisfaction of certain other conditions set forth in the Purchase Agreement, NewCo shall have the right, but not the obligation, from time to time to direct Lincoln Park to purchase shares of NewCo common stock having a value of up to $250,000 on any business day, which may be increased to up to $1,000,000 depending on certain conditions as set forth in the Purchase Agreement.
    • The purchase price per share for a Regular Purchase will be the lower of:
      • (i) the lowest trading price for shares of NewCo common stock on the applicable Purchase Date and
      • (ii) the average of the three lowest closing sale prices for NewCo common stock during the ten consecutive business days ending on the business day immediately preceding such Purchase Date.
      • The purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, forward or reverse stock split, or other similar transaction as provided in the Purchase Agreement. 
  • From and after the Commencement Date, NewCo shall also have the right, but not the obligation, to direct Lincoln Park on each Purchase Date to make “accelerated purchases” on the following business day up to the lesser of:
    • (i) 300% of the number of shares purchased pursuant to a Regular Purchase or
    • (ii) 30% of the trading volume on such Accelerated Purchase Date at a purchase price equal to the lesser of 95% of
      • (x) the closing sale price of NewCo’s common stock on the Accelerated Purchase Date and
      • (y) of the volume-weighted average price of NewCo’s common stock on the Accelerated Purchase Date.
    • NewCo shall have the right in its sole discretion to set a minimum price threshold for each Accelerated Purchase in the notice provided with respect to such Accelerated Purchase, and NewCo may direct multiple Accelerated Purchases in a day provided that delivery of shares has been completed with respect to any prior Regular and Accelerated Purchases that Lincoln Park has purchased.
  • NewCo will issue to Lincoln Park $875,000 of shares of NewCo common stock as a commitment fee on the date of the closing of the Proposed Transaction.
    • NewCo is also obligated to issue up to an additional $1,750,000, payable in shares of NewCo common stock or cash at Newco’s discretion, as a commitment fee on or before the business day prior to the filing of the Lincoln Park Registration Statement.
  • The Purchase Agreement may be terminated by NewCo at any time after the Commencement Date, at its sole discretion, without any cost or penalty, by giving one business day notice to Lincoln Park.

Amended Transaction Agreement

  • The amount of “Permitted SPAC Expenses” was reduced to $7,000,000.

Waiver of Closing Condition

  • The Company waived the condition subject to the Aggregate Transaction Proceeds being equal to or exceeding $30,000,000.

TRANSACTION

  • The transaction values D-Wave at an equity value of approximately $1.2 billion USD.
  • The transaction also includes an innovative incentive structure, whereby a bonus pool of 5 million shares will be allocated pro rata to non-redeeming public stockholders of DPCM Capital, effectively reducing their cost basis.
  • A similar bonus pool of up to 1.8 million shares has been established for Private Investment in Public Equity (“PIPE”) investors to ensure the same effective cost basis for PIPE investors as for public stockholders of DPCM Capital.
  • The combined company will receive $300 million USD in gross proceeds from DPCM Capital’s trust account—assuming no redemptions by DPCM Capital’s public stockholders—as well as $40 million USD in gross proceeds from a group of strategic and institutional investors participating in the transaction via a committed PIPE.
    • The PIPE is led by new and existing investors including leading Canadian public-sector pension-plan manager PSP Investments, NEC Corporation, Goldman Sachs, Yorkville Advisors, and Aegis Group Partners.

dwave trans overview

PIPE

  • $40 million USD in gross proceeds from a group of strategic and institutional investors participating in the transaction via a committed PIPE. (PIPE Share price: $10.00)
    • The PIPE is led by new and existing investors including leading Canadian public-sector pension-plan manager PSP Investments, NEC Corporation, Goldman Sachs, Yorkville Advisors, and Aegis Group Partners.

EARNOUT

  • Sponsor
    • 1,813,125 NewCo Common Shares are subject to an earnout following the Closing, if, at any time during the period following the Closing and expiring on the fifth (5th) anniversary of the Closing Date, the last reported sales price of NewCo Common Shares equals or exceeds an amount equal to
      • (x)(1) $10.00 divided by (2) the Exchange Ratio multiplied by 
      • (y) 1.2 for any 20/30 trading day period.

LOCK-UP

  • Company
    • Six months following the Closing or trading for $12.00 for 20/30 trading days at least 90 days post Closing
  • Sponsor
    • One year following the Closing or trading for $12.00 for 20/30 trading days at least 150 days post Closing

BONUS STRUCTURE

dwave bonus structure

NOTABLE CONDITIONS TO CLOSING

  • Aggregate Transaction Proceeds shall be equal to or greater than $115,000,000

Waiver of Closing Condition – LINK

  • The Company waived the condition subject to the Aggregate Transaction Proceeds being equal to or exceeding $30,000,000.

NOTABLE CONDITIONS TO TERMINATION

  • August 7, 2022 (the “Termination Date”)
  • by SPAC, if the PCAOB Financials shall not have been delivered to SPAC on or before April 30, 2022

ADVISORS

  • Morgan Stanley & Co. LLC (“Morgan Stanley”) is serving as the exclusive financial advisor to D-Wave.
  • Paul, Weiss, Rifkind, Wharton & Garrison LLP and Blake, Cassels & Graydon LLP are serving as legal counsel to D-Wave.
  • Citigroup Global Markets Inc. (“Citigroup”) is serving as the lead capital markets advisor to DPCM Capital.
  • UBS Investment Bank is also serving as capital markets advisor to DPCM Capital. Greenberg Traurig LLP and Stikeman Elliott LLP are serving as legal counsel to DPCM Capital.
  • Morgan Stanley and Citigroup are also acting as placement agents for DPCM Capital with respect to a portion of the PIPE financing raised for certain Qualified Institutional Buyers and Institutional “Accredited Investors.”
  • Morgan Stanley and Citigroup did not act as placement agents or participate in any role with respect to, and will not earn any fees from, the portion of the PIPE financing which was conducted by D-Wave.
  • Longview Communications and Public Affairs is serving as D-Wave’s Canadian public affairs advisor.

PROPOSED BUSINESS COMBINATION: Jam City (Terminated on 7/23/21 – LINK)

ENTERPRISE VALUE: $1.2 billion
ANTICIPATED SYMBOL: JAM

SUBSEQUENT EVENT – 7/23/21

DPCM Capital, Inc.’s previously announced combination with Jam City, Inc. was mutually terminated on July 23, 2021, citing “market conditions”.  DPCM intends to continue to search for a new target acquisition.

DPCM Capital, Inc. proposes to combine with Jam City, Inc., a leading mobile entertainment company behind some of the world’s highest grossing and most enduring mobile games.

In conjunction with the closing of the business combination, Jam City will use the cash proceeds to acquire a leading Montreal-based mobile game publisher Ludia, Inc. (“Ludia”) from FremantleMedia Canada Inc. (“Fremantle”), bringing together two highly creative leaders in mobile gaming and further strengthening Jam City’s market position and global player network. The combined company’s well-balanced, diversified portfolio of critically acclaimed, top grossing games is expected to include Harry Potter: Hogwarts Mystery; Cookie Jam; Panda Pop; and Jurassic World Alive. It is also expected to benefit from a strong pipeline of tentpole owned and licensed game releases with leading brands such as DC, and some of Disney’s biggest brands, which are expected to accelerate organic growth for the next several years.

In addition to introducing new game franchises, Jam City has fueled growth through a successful and scalable M&A strategy that involves acquiring assets and studios that have created deep entertainment experiences and leveraging Jam City Live to improve game performance.

With the addition of Ludia, Jam City’s game portfolio will include seven forever franchises, which it considers its most enduring games with at least $100 million in lifetime bookings and receive ongoing Jam City support. Our forever franchises are anticipated to include Cookie Jam; Panda Pop; Genies & Gems; Harry Potter: Hogwarts Mystery; Bingo Pop; Disney Emoji Blitz1; and Jurassic World games (Jurassic World: The Game, Jurassic World Alive).2 These franchises are diversified across game genres and types of intellectual property, with no single game contributing more than 20% of Jam City’s and Ludia’s combined $570 million total bookings in 2020. By leveraging its strengths to improve performance across Ludia’s portfolio, Jam City expects to generate $868 million in bookings and $112 million in Adjusted EBITDA in 2022, representing 23% and 30% CAGRs, respectively, from 2019 to 2022E.

In 2020, Jam City was a top 10-featured game publisher in the U.S. across the App Store and Google Play. Together with Ludia, Jam City has built an engaged global player network of 31 million monthly active users and 1.3 billion cumulative game installs as of fourth quarter of 2020. Jam City and Ludia also generated a combined 3 billion total hours played and 9 billion advertising impressions last year.

TRANSACTION

  • A group of leading institutional investors, along with Netmarble, DPCM’s sponsor, and members of the combined company management teams have committed to a private investment of $100 million in Class A common stock of the combined company that will close concurrently with the business combination
  • Subject to any redemptions by DPCM Capital’s shareholders, there is approximately $300 million currently held in DPCM Capital’s trust account.
  • Proceeds from the transaction will be used to finance the $175 million acquisition of Ludia from Fremantle, provide liquidity to an early investor, and pay fees and expenses associated with the transaction.
  • It is expected that the combined company will have approximately $115 million of cash on its balance sheet, which is anticipated to be used to accelerate growth by introducing new games that appeal to broad global audiences, continuing to enhance its proprietary technology, and pursuing future M&A opportunities and other strategic initiatives.

dpcm trans overview

PIPE

  • 11,876,485 Subscription Shares at a price of $8.42 per share = $100 million
  • Investors include: Netmarble, DPCM’s sponsor, and members of the combined company management teams.
    • DPCM sponsor has committed to invest $3 million in the PIPE
    • Netmarble has committed to invest $36 million in the PIPE

SPONSOR SHARES 

  • DPCM sponsor has agreed to forfeit 1.875 million founder shares and subject 4.22 million founder shares to vesting at $12 and $15 per share (split evenly)
    • 2,110,000 Sponsor New Parent Escrow Shares will be released to Sponsor if the closing price of the Class A Common Stock of Parent equals or exceeds $12.00 per share for any 20 trading days within any consecutive 30 trading day period on or before the 5th anniversary of the Closing
    • 2,110,000 Sponsor New Parent Escrow Shares will be released to Sponsor if closing price of the Class A Common Stock equals or exceeds $15.00 per share for any 20 trading days within any consecutive 30 trading day period on or before the 5th anniversary of the Closing

NOTABLE CONDITIONS TO CLOSING

  • At least fifty six million dollars ($56,000,000) in Private Placements to investors other than affiliates of NM and Sponsor shall have been consummated
  • After giving effect to
    • (i) the payment of the Trust Redemption Amount and
    • (ii) sale and issuance by Parent of Parent Common Stock pursuant to the Private Placements, the amount of cash held by Parent in the aggregate, whether in or outside the Trust Account, including the aggregate gross proceeds of the Private Placements, shall be equal to or greater than three hundred million dollars ($300,000,000) before paying or accruing any Parent Transaction Expenses up to an amount equal to the Parent Transaction Expenses Cap;

NOTABLE CONDITIONS TO TERMINATION

  • By either Parent or the Company, if the Effective Time shall not have occurred prior to 11:59 p.m. Pacific Time on November 19, 2021 (the “Outside Date”)

ADVISORS

  • The Raine Group (“Raine”) is acting as lead financial advisor and Fenwick & West LLP is acting as legal advisor to Jam City
  • Paul Hastings LLP is acting as legal advisor to Netmarble.
  • UBS Securities LLC (“UBS”) is acting as lead financial and capital markets advisor to DPCM Capital.
  • Greenberg Traurig, LLP is acting as legal advisor to DPCM Capital.
  • UBS and Raine are acting as placement agents on the private placement.

MANAGEMENT & BOARD

Executive Officers

Emil Michael, 48
Chairman of the Board and Chief Executive Officer

He is one of Silicon Valley’s most highly regarded business executives having built three successful companies including Tellme Networks (sold to Microsoft in 2007), Klout (sold to Lithium Technologies in 2014) and Uber. Mr. Michael has extensive experience identifying high-growth, tech-enabled businesses with his investments spanning a broad range of companies including Bird, Codecademy, Docker, GoEuro, GoBrands, SpaceX, and Stripe. Mr. Michael has been the President of Technology and Management Consulting Services of M8 Enterprises LLC since January 2018. During his tenure as Chief Business Officer of Uber from July 2013 to June 2017, Mr. Michael led Uber’s efforts in China and Russia, which resulted in substantial market value creation. Mr. Michael played a pivotal role in raising nearly $15 billion dollars in capital from investors globally and led the merger of Uber’s China operations with key competitor in China, Didi Chiuxing. Additionally, he led the efforts to strike partnerships globally with companies such as American Express, AT&T, Daimler, Softbank, Tata Motors, and Toyota. Mr. Michael also led the Ottomotto acquisition that became the core of Uber’s Advanced Technology Group, responsible for autonomous vehicle development. He is also responsible for creating UberMilitary, a program at Uber for military veterans and their families. Prior to Uber, Mr. Michael served as Chief Operating Officer of Klout, where he played a pivotal role in growing the social media analytics company. Klout ultimately sold to Lithium Technologies for $200 million in 2014. Before joining Klout, Mr. Michael served as a White House Fellow working for the Secretary of Defense as a Special Assistant. During his tenure at the Pentagon, he ran projects in Afghanistan, Iraq and Pakistan as well as a department-wide budget cutting effort aimed at reducing overhead and bureaucracy. Mr. Michael was also part of the founding team of Tellme Networks, a pioneer in speech recognition technology and systems, that is highly regarded for weathering the technology bust of 2000 and for building a sustainable and profitable business. Mr. Michael helped Tellme Networks raise over $250 million in venture capital from investors such as Benchmark Capital and Kleiner Perkins. He also led Tellme Networks through its $800 million sale to Microsoft in 2007. Additionally, Mr. Michael has been a leadership coach and mentor to dozens of young CEOs over the years, giving him extensive exposure to early stage companies, technologies, and trends. He also serves as an advisor or investor in over 20 start-ups around the world, furthering his commitment to helping the next generation of entrepreneurs build and scale. He started his career at Goldman Sachs, where he was an Associate in the Investment Banking Division for a short period. Mr. Michael received his B.A. from Harvard University and his J.D. from Stanford Law School.

Ignacio Tzoumas, 46
Chief Financial Officer

Mr. Tzoumas has extensive financial management experience through over 20 years in the financial services industry. He has been the Chief Financial Officer of Bolt Mobility since November 2018, Pishevar Family Foundation since February 2019 and The Edison Companies since April 2019 and the Vice President of Finance of Stara since November 2018. During his tenure at Pishevar Family Foundation, he has advised and directed investments exceeding $200 million in value and in his tenure at Edison, he has led venture capital and private equity financing efforts for transportation and communications startups resulting in over $10 million in investment. He is an expert at lean financial management and has created a sustainable business model for continuous research, design, and innovation. Additionally, he is an active angel investor and mentors emerging talent in various financial roles. Earlier in his career, Mr. Tzoumas was a founding partner of the quantitative trading group at Triton Global, and a macro hedge fund, The Mercury Fund. Mr. Tzoumas received a B.S. from the University of Pennsylvania.

Kyle Wood, 44
Chief Legal Officer and Secretary

Mr. Wood currently serves as Chief Legal Officer for Sofreh Capital LP and Pishevar Family Office since January 2020. He has over 15 years of experience in technology transactions focusing primarily on public and private financings and M&A. He has also drafted and negotiated billions of dollars of acquisitions for Fortune 100 clients, advised on intellectual property licensing and development strategies, and counseled buyers and sellers on corporate transactions. From October 2016 to December 2019, Mr. Wood was a partner in Perkins Coie’s Technology Transactions and Privacy Law practice, as well as head of the firm’s Blockchain Operations Team, Hiring Partner in the Dallas Office, and member of the Associate Compensation Committee. His prior legal experience includes counsel at Hunton Andrews Kurth from April 2014 to October 2016, technology associate at Jones Day, and working in the in-house legal team at Sun Microsystems (acquired by Oracle) and Nominum, Inc. (acquired by Akamai Technologies). Mr. Wood received his B.A. from the University of Virginia and J.D. from Santa Clara University School of Law.

 

Board of Directors

Peter Diamandis, 59
Director

Dr. Diamandis has been the Chief Executive Officer of PHD Ventures, Inc. since October 1993 which is his personal holding company for his writing, speaking and consulting activities. He is the Founder and Executive Chairman of the XPRIZE Foundation, a non-profit foundation which, since 1996, has designed and operated large-scale incentive competitions for the benefit of humanity. He is also the Executive Founder of Singularity University, a graduate-level Silicon Valley institution founded in 2010 that counsels the world’s leaders on exponentially growing technologies. Dr. Diamandis was a Founder, Vice Chairman and is currently a shareholder of Human Longevity, Inc. an advanced health diagnostic company committed to delivering data driven health diagnostics, he resigned from the board of directors in December 2018. Dr. Diamandis is the Vice Chairman and co-Founder of Celularity Inc., founded in July 2017, a commercial-stage cell therapeutics company delivering allogenic cellular therapies engineered from the postpartum human placenta Dr. Diamandis is also a founder and board member of Fountain Therapeutic Services, Inc. which was formed in November 2018 to increase lifespan and optimize healthspan by harnessing regenerative medicine technologies and integrating extensive wellness solutions. In March 2020, Dr. Diamandis co-founded and is the Vice-Chairman of Covaxx, Inc. a pharmaceutical company that has developed a COVID-19 lgG antibody test and a vaccine that is currently in clinical trials. Dr. Diamandis is also currently serving as a director of two other special purpose acquisition companies, Software Acquisition Group Inc., which completed its initial public offering in November 2019, and Software Acquisition Group Inc. II, which completed its initial public offering in September 2020. As an entrepreneur, Dr. Diamandis has started over 20 companies in the areas of longevity, space, venture capital and education. Dr. Diamandis also co-founded BOLD Capital Partners, a venture fund investing in exponential technologies, in 2015, and is a New York Times Bestselling author. Dr. Diamandis earned degrees in Molecular Engineering and Aerospace Engineering from MIT and holds an M.D. from Harvard Medical School.

Denmark West, 50
Director

Mr. West is a founding partner of Connectivity Ventures Fund, an early stage and mission oriented fund focused on innovations that transform the way we live and work, where he currently serves as Chief Investment Officer. Prior to Connectivity, Mr. West was an executive at Viacom, serving at BET as President of Digital Media, and at Viacom Media Networks as both EVP of Strategy and Business Development and Chief of Operations (EVP) for the Global Digital Media Group. During his tenure at Viacom, he launched Viacom’s first vertical ad network, first episodic web series (Webby nominated), and first mobile TV companion app. He led strategy for social media and video games, drove over $1B in M&A transactions, ran post-merger integration initiatives, and oversaw the e-commerce P&L. He also oversaw new online audience records every year while at BET, and supported the first event on Twitter to capture all Top 10 Trending topics simultaneously. Prior to Viacom, Mr. West worked at Microsoft in the Corporate Development & Strategy Group and as the Chief of Staff of Windows Client Division ($12B in revenues at that time). There he helped to incubate new businesses, notably Xbox and Windows Media. He supported joint ventures with Qualcomm, Softbank and Ford. He led strategy initiatives for the Microsoft CEO and the board of directors, respectively, around streaming media, software as a service, and open source software. He also led Corporate Venture investments in internet infrastructure companies including Akamai and supported over $12B in strategic investments and M&A transactions. Mr. West also has passion around and speaks on technology trends and financial markets. He has appeared on The Today Show, CNBC, Al Jazeera and CCTV. He also has been referenced in business books like Stealing MySpace, the New York Times best seller The Facebook Effect, and Leapfrog: The New Revolution for Women Entrepreneurs. He started his career on Wall Street with Smith Barney and Goldman Sachs. Mr. West is a strategic advisor to the USO and the National Basketball Players Association, the union for NBA players. He is an operating advisor to K1 Investment Management, a private equity fund focused on enterprise software with over $1B AUM. He is also a member of the board of directors for SOCAP Global, Questbridge, Culture Shift Labs, IDEA Initiative and Mirror Digital. Mr. West received both his A.B. in Applied Mathematics and his M.B.A. from Harvard University.

Desiree Gruber, 53
Director

Peabody Award-winner Desiree Gruber has agreed to serve as one of our directors. She founded and has been the Chief Executive Officer since inception of Full Picture, a brand accelerator, content production, communications, and consulting services company now in its 21st year, with a passion to help her clients more effectively tell their stories and launch new ideas into the world. Ms. Gruber continues to evolve her mission of shaping zeitgeist-defining moments and reimagining how brands delight and engage global audiences in her work as an entrepreneur, business strategist, and venture capitalist. Through DGNL, Ms. Gruber has embraced a preeminent role in developing and supporting female founders and C-suite executives. With a goal of creating real opportunities for women to achieve measurable success, DGNL invests in and architects transformational deals across the consumer, technology, and media spectrum in order to establish a legacy of female empowerment. Among Ms. Gruber’s many accomplishments to date is co-founding the Project Runway television series. In addition to her Peabody Award, as executive producer of the groundbreaking show for 16 seasons she has received a GLAAD Media Award and earned 14 Emmy nominations. A lifelong advocate for a more equitable and inclusive world, she proudly serves on the boards of UNICEF USA, Tech:NYC, and God’s Love We Deliver, and was the recipient of UNICEF’s 2018 Spirit of Compassion Award. She is also an advisor to leading organizations such as Anthos Capital, Pharrell Williams’ Something in the Water and Chegg. Ms. Gruber lives with her husband, Kyle MacLachlan, and their son, and splits her time between NYC and LA.

ByRoman Developer