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Good Works Acquisition Corporation

Good Works Acquisition Corporation

Oct 16, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: Cipher Mining

ENTERPRISE VALUE: $2.0 billion
ANTICIPATED SYMBOL:  CIFR

Cipher Mining Technologies Inc., a newly formed U.S.-based Bitcoin mining operation, and Good Works Acquisition Corp. announced they have entered a definitive agreement for a business combination. Upon closing of the transaction, the combined company will be named Cipher Mining Inc. and is expected to be listed on the Nasdaq under the new ticker symbol “CIFR”.

Cipher Mining is a newly formed subsidiary of Bitfury. The Bitfury Group is a leading provider of Bitcoin mining hardware and other blockchain software and services. Since its inception in 2011, Bitfury Group has deployed more than 500+ MW of computing power and mined more than 600 thousand Bitcoin. Cipher is expected to be positioned as a U.S.-centric Bitcoin mining champion with potential to reach a cumulative deployed capacity of 745MW by the end of 2025. The Company’s U.S.-based data centers are planned to come on-line between Q4 2021 and Q2 2022 with a total of 445MW of power capacity and planned expansion of an additional 300MW deployed between 2023 and 2025.

TRANSACTION

The transaction values the combined company at an enterprise value of US $2.0 billion. Pursuant to the merger and following the share exchanges, the combined company is expected to receive approximately US $595 million in gross cash proceeds from a combination of cash from a US $425 million fully committed stock PIPE, including a $50 million investment in-kind from Bitfury, and approximately US $170 million in cash held in Good Works’ trust account from its initial public offering in October 2020, assuming no public shareholders exercise their redemption rights at closing requiring payment from Good Works’ trust account. Cash from the transaction, net of transaction fees, will be used to fund the planned build out of the mining facilities of the company.

Current Cipher Mining shareholders will become the majority owners of the combined company at closing with approximately 70% ownership in the pro forma company and all existing shareholders and investors will continue to hold their equity ownership subject to a two year lock-up period. The PIPE investors, including Bitfury, will own approximately 15%, Good Works, inclusive of its founder shares will own approximately 7.5%, and Cipher employees will own approximately 7% of the pro forma company at closing.

Both the board of directors and shareholders of Cipher Mining have unanimously approved the proposed transaction, which is expected to be completed in the second quarter of 2021.

PIPE

  • Fully committed $425 million PIPE investment at $10.00 per share, secured with anchor investors, including Fidelity Management & Research Company and Counterpoint Global (Morgan Stanley)
  • The PIPE investment includes $50 million investment-in-kind from Cipher Mining’s parent company, Bitfury, and is structured as a credit for future purchases of operating services and equipment for Cipher

SUPPORT AGREEMENTS

  • Good Works has entered into a Sponsor Support Agreement to vote their shares in favor of the business combination
  • Cipher Mining has entered into a Company Support Agreement to vote their shares in favor of the business combination

RESTRICTIVE COVENANT AGREEMENTS

  • Bitfury agreed not to hire or solicit Cipher Mining Inc.’s employees, not to compete with Cipher Mining Inc. and not to disparage Cipher Mining Inc. The agreement will terminate upon the earlier of seven years from the date of its execution or the termination of the Master Services and Supply Agreement between Bitfury Holding B.V. and Cipher

LOCK-UPS

The term of the Lock-Up shall be two years and the Lock-up will allow certain amounts of the shares to be publicly sold after 180 days

  • During the First Lock-Up Period, the Transfer Restriction shall expire with respect to ten million (10,000,000) Lock-Up Shares (the “First Tranche”), upon the earlier to occur of (i) the date on which the last reported sale price of the Acquiror Common Stock equals or exceeds $12.50 per share for any twenty (20) trading days within any thirty (30) trading day period that commences at least 90 days after the Closing Date or (ii) one year after the Closing Date
  • During the Second Lock-Up Period, the Transfer Restriction shall expire with respect to an additional twenty million (20,000,000) Lock-Up Shares (the “Second Tranche”), upon the earlier to occur of (i) the date on which the last reported sale price of the Acquiror Common Stock equals or exceeds $12.50 per share for any twenty (20) trading days within any thirty (30) trading day period that commences at least 330 days after the Closing Date or (ii) eighteen months after the Closing Date
  • eighteen (18) months after the Closing Date, the Transfer Restriction shall expire with respect to any Lock-Up Shares held by or subsequently acquired by the Stockholder that exceeds a total share ownership in post-merger Acquiror of 50.1% on a fully-diluted basis
  • If at any time the sale price of the Acquiror Common Stock equals or exceeds $20.00 per share for any twenty (20) trading days within any thirty (30) trading day period that commences at least 90 days after the Closing Date, then the date of commencement as well as the end date, where applicable, of each period set forth in shall be accelerated by three (3) months

NOTABLE CONDITIONS TO CLOSING

  • Aggregate cash proceeds in trust account must equal more than $400,000,000
  •  Good Works’s total outstanding Indebtedness shall be less than twenty-five million dollars ($25,000,000.00)

NOTABLE CONDITIONS TO TERMINATION

  • Either party may terminate if the Business Combination is not consummated within six months of signing of the Merger Agreement

BITFURY PRIVATE PLACEMENT

  • Bitfury agreed to participate in the PIPE with a $50 million investment-in-kind through equipment discounting
  • The first $200,000,000 of Service Fees payable by Cipher to BHBV under the MSSA shall be subject to a discount of 25%, to be applied at the point of invoicing and shown as a separate line item on each relevant invoice. For the avoidance of doubt, when the aggregate value of such discount reaches $50,000,000, such discount shall automatically cease to apply.

ADVISORS

  • J.P. Morgan Securities LLC is serving as exclusive advisor and lead placement agent to Good Works
  • Wells Fargo Securities, LLC is serving as lead financial advisor to Cipher Mining
  • Wells Fargo Securities, LLC is also serving as co-placement agent on the PIPE.
  • Schiff Hardin LLP is acting as legal counsel to Good Works
  • Latham & Watkins LLP is acting as legal counsel to Cipher Mining
  • Mayer Brown LLP is acting as legal counsel to the placement agents

MANAGEMENT & BOARD

Executive Officers

Fred Zeidman, 74
Co-Chairman, Chief Executive Officer

Mr. Zeidman has served as Chairman of Gordian Group LLC, a U.S. investment bank specializing in board level advice in complex financial matters since December 2014. Over the course of his distinguished 50-year career, Mr. Zeidman has been involved in numerous high-profile workouts, restructurings and reorganizations. He served as lead Director of Straight Path Communications, Inc., Director of REMA and Prosperity Bank in Houston and was formerly Restructuring Officer of TransMeridian Exploration Inc. and Chief Bankruptcy Trustee of AremisSoft Corp. He was also Chief Executive Officer, President and Chairman of Seitel, Inc., a Houston-based onshore seismic data provider where he was instrumental in the successful turnaround of the Company and also held the post of Chairman of the Board and Chief Executive Officer of Unibar Corporation, the largest domestic independent drilling fluids company, until its sale to Anchor Drilling Fluids in 1992. Mr. Zeidman was appointed Chairman of the US Holocaust Memorial Council by President George W. Bush in 2002, and served until 2010, and is Chairman Emeritus. He was Chairman of the University of Texas Health Science System Houston and is Chairman Emeritus. Mr. Zeidman was a Director of the Texas Heart Institute. He is on the board of the Development Corp of Israel (Israel Bonds) and served on the Board and Executive Committee of the National World War II Museum. Mr. Zeidman holds a Bachelor’s degree from Washington University in St. Louis and a Master’s in Business Administration from New York University.

Cary Grossman, 66
President and Director

Mr. Grossman is a veteran finance professional with a combination of executive management, investment banking and public accounting experience. His extensive experience includes interim management and restructuring of distressed businesses, public and private placements of debt and equity, mergers & acquisitions, initial public offerings, building and leading management teams, oversight of company financial functions, investor relations, and corporate governance. In 2010, Mr. Grossman co-founded Shoreline Capital Advisors, an investment banking firm focused on financial advisory services and middle market corporate finance transactions. Recent engagements have included: a term debt financing for one of the largest cannabis companies in the U.S., a leveraged recapitalization for a large managed care physician practice, serving as Chief Restructuring Officer for oilfield service company bankruptcies, and arranging $250 million of private debt and equity as well as advising on related acquisitions. Prior to Shoreline, from 1991 – 2002, Mr. Grossman co-founded and was CEO of another investment banking firm, McFarland, Grossman & Company. Earlier in his career, he practiced public accounting for 15 years. Mr. Grossman has also held a number of executive positions, including; President of XFit, Inc. from 2019 to 2020, Chief Financial Officer for Blaze Metals, LLC from 2007 to 2010; Executive Vice President, Chief Financial Officer and Chief Operating Officer of Gentium, S.P.A. from 2004 to 2006; Chief Executive Officer of ERP Environmental Services, Inc. and Chief Financial Officer of U.S. Liquids, Inc. from 2001 to 2003. He also co-founded Pentacon, Inc. (NYSE: JIT) and served as a board member and Executive Chairman from 1998 – 2002, and as a director of Metalico (NYSE: MEA) 2014 – 2015 and INX Inc (NASDAQ: INXI) 2004 – 2011. Mr. Grossman is a Certified Public Accountant and earned a Bachelor of Business Administration from the University of Texas.

 

Board of Directors

Douglas Wurth, 55
Co-Chairman, Director

Mr. Wurth led both the Wealth and Alternative Asset Division of the Asset Management businesses during his nearly 20 years at J.P Morgan from 1997 to 2016. He was Chief Executive Officer of Alternative Investments for J.P. Morgan Asset Management, where he managed businesses with over $120 billion in alternative assets. Prior to that role, Mr. Wurth was the Chief Executive Officer of J.P. Morgan’s International Private Bank, where he led the expansion of the franchise in Asia, Latin America and Europe while based in New York, Hong Kong, and London. Earlier, Mr. Wurth served as global head of J.P. Morgan Private Bank’s Alternative Investments Group in London and New York, which sourced, structured and monitored funds, separate accounts, and directs. Prior to joining J.P. Morgan, Mr. Wurth practiced law at the New York firm Skadden, Arps, Slate, Meagher & Flom from 1992 to 1995, and served as General Counsel to former U.S. Senator Robert Dole’s 1996 presidential campaign. Mr. Wurth earned a Bachelor of Arts degree from the University of Notre Dame and a J.D. from the University of Virginia School of Law.

David Pauker, 61
Independent Director

Mr. Pauker is an independent director and C-suite executive with more than 25 years of experience advising public and private companies and their investors as financial advisor and interim manager. Mr. Pauker was formerly the Executive Managing Director of Goldin Associates, a leading U.S. financial and restructuring advisory firm from 1990 to 2015. He headed the firm’s national practice and was senior advisor to companies and investors in financial services, energy and natural resources, consumer products, chemicals & industrial products, manufacturing, media & telecom, professional services, real estate, retail and other industries. He assisted clients to identify core competencies, develop strategic plans and negotiate and structure numerous financial and restructuring transactions. Mr. Pauker has served as an interim C-suite executive for numerous public and private companies including Young Broadcasting, Refco, Vlasic Foods/Swanson Frozen Foods, Grand Court Lifestyles, PSINet Consulting, ISM Advisors, Pharmacy Fund and Essar Steel Minnesota. Mr. Pauker has successfully negotiated the sale of many operating businesses and frequently improved financial performance through review of revenue drivers, COGS and SG&A and optimization of working capital. Mr. Pauker is currently non-executive Chairman of the Government Development Bank Debt Recovery Authority of Puerto Rico and a member of the board of Steinhoff International Holdings, NV. Mr. Pauker was appointed to the board of Lehman Brothers pursuant to its bankruptcy plan and served briefly as its Chairman from 2015 to 2016. He was formerly on the boards of Terraform Power and Interstate Bakeries. He is also a director of Social Accountability International. Mr. Pauker earned a J.D. from Columbia Law School and a B.S. from Cornell University (Industrial and Labor Relations). Mr. Pauker is a Fellow of the American College of Bankruptcy.

John J. Lendrum, III, 69
Independent Director

Since 2015, Mr. Lendrum has been the Non-Executive Chairman of Nuevo Midstream Dos, LLC which is actively pursuing midstream projects in the primary energy basins of the United States. From 2012 to 2014, he was the former President, CEO and member of the Board of Directors of Nuevo Midstream Company (“Nuevo”). Nuevo owned and operated gas gathering, processing and treating assets in the Delaware and Permian Basins of West Texas and New Mexico. This entity was sold to an affiliate of Anadarko Petroleum Company in 2014. Both Nuevo entities were formed and capitalized with EncapFlatrock Midstream partners. Mr. Lendrum serves on the Board of Blue Rock Energy Partners. In 2018, he participated along with several other family offices, in the acquisition of Blue Rock from the private equity unit of TudorPickeringHolt. Blue Rock and its predecessors have been involved in providing acquisition and development capital to the independent energy industry for over 25 years. He is the former Chairman of the Board, from 2013 to 2015, and President, from 2003 to 2013, of Torch Energy Advisors Incorporated (“Torch”), a Houston-based company which specialized in the exploitation and development of oil and gas properties, mid-stream oil and gas assets and clean energy renewable energy projects. Previously, from 1987 to 1993 Mr. Lendrum served as EVP and Chief Financial Officer of Torch and served in senior financial and business development roles with the Torch managed public companies of Nuevo Energy Company, Energy Assets International and Bellwether Exploration. Prior to joining the Torch companies in 1986, Mr. Lendrum served as EVP and Chief Financial Officer of a private oil and gas production company in Midland Texas. From 2006 to 2011, Mr. Lendrum was the Vice Chairman of the Board of Directors of Resaca Exploitation, Inc., which was listed on the Alternative Investment Market of the London Stock Exchange in 2008. He was also a Director of BPZ Energy, Inc. (“BPZ”) and Chairman of the Audit Committee. BPZ focused on the exploration and development of oil and gas and power generation projects in South America, with principal activities offshore Peru. BPZ was listed on the NYSE. Mr. Lendrum began his career with the international public accounting firm of KPMG Peat Marwick where he worked from 1975 to 1982. He earned a B.B.A. in Finance and completed his graduate studies in Accounting Theory at The University of Texas at Austin.

Paul Fratamico, 52
Independent Director

He has over 20 years of experience in financial markets and distressed investments and is currently a Managing Director at I-Bankers Securities, Inc. since 2015. Starting his Wall Street career in 1999 at JP Morgan, Mr. Fratamico was part of a Special Situations investment group that managed a long-short propriety trading fund on behalf of the bank. In 2006, Mr. Fratamico joined $15 billion multi-strategy hedge fund MD Sass where he played a leadership role and helped manage the fund’s special situations and distressed investment strategy, Resurgence Asset Management. While there, the Hedge Fund Research Institute ranked Resurgence Asset Management as the number one fund in the United States in its category. For the past several years, Mr. Fratamico has served as a trusted financial advisor on finance and investment transactions involving leading figures from the worlds of business, entertainment, and politics. In addition, Mr. Fratamico has served as a speaker and subject matter expert on corporate finance and financial restructuring topics. Mr. Fratamico has given professional seminars at leading Wall Street banks such as Citibank, Credit Suisse, JP Morgan, international banks including Bank of China, Société Général, and Rabobank, as well as leading universities such as the University of Chicago, Columbia University, and Johns Hopkins University. Earlier in his career from 1995 to 1997, Mr. Fratamico worked at the Inter-American Development Bank in Washington, DC, a multilateral development bank founded in 1959 to accelerate the economic and social development in Latin America and the Caribbean. Mr. Fratamico holds a Bachelor’s degree from Villanova University and a Master’s in Business Administration from the Booth School of Business at the University of Chicago.

Tahira Rehmatullah, 38
Independent Director

She has served as President of T3 Ventures Advisory since August 2016 and Partner at Highlands Venture Partners since June 2020. She is an investor, entrepreneur and advisor to numerous businesses and has expertise in brand development, investment strategy, and operational growth. An established thought leader, Ms. Rehmatullah is a frequent speaker at conferences and events around the world and has been featured in press outlets such as Forbes, Business Insider, Fortune, and Rolling Stone. Previously, Ms. Rehmatullah was Managing Director at Hypur Ventures, a venture capital fund, from June 2017 to August 2019, CFO of MTech Acquisition Corp., a SPAC, from January 2018 to June 2019, General Manager of Marley Natural, an iconic cannabis lifestyle brand, from November 2014 to May 2016, and an Investment Manager at Privateer Holdings, a private equity fund from July 2014 to May 2016. Prior to that, from September 2011 to June 2012, Ms. Rehmatullah was a Portfolio Manager at City First Enterprises managing CFE’s community development investment portfolio, and an associate at Perry Capital from March 2007 to July 2011 where she led research initiatives for the asset-backed securities team. Her career began in Ernst & Young’s Financial Services Advisory practice from October 2005 to March 2007. Ms. Rehmatullah earned her MBA from the Yale School of Management, where she was a Yale Entrepreneurial Institute Venture Creation Advisor. She holds a B.S. in Finance and Life Sciences from The Ohio State University where she graduated Magna Cum Laude and was a Presidential Scholar. She resides in New York City.

ByRoman Developer