B. Riley Principal Merger Corporation II
PROPOSED BUSINESS COMBINATION: Eos Energy Storage
ESTIMATED CURRENT FUNDS in TRUST: $176.8 million*
CURRENT PER SHARE REDEMPTION PRICE: $10.10*
ENTERPRISE VALUE: $550 million
*SPACInsider estimate a/o 10-17-20
B. Riley Principal Merger Corp. II proposes to combine with Eos Energy Storage, an established provider of long-duration energy storage focused on providing a domestic solution to a global need: low-cost, safe, and environmentally friendly energy storage.
Founded in 2008, Eos is focused on accelerating the growth of clean energy in the United States by deploying large scale stationary energy storage solutions that deliver reliable and cost-competitive power in a safe and environmentally sustainable way. Eos’s flagship product, the Eos Znyth® DC battery system, is designed to meet the requirements of the grid-scale energy storage market, is commercially available and scalable, and is manufactured in the United States. Znyth® technology requires just five core commodity materials that are derived from non-rare earth and non-conflict minerals, in addition to being fully recyclable. Eos’s battery is non-flammable and does not require any moving parts or pumps, which allows for simple upkeep and market-leading low-cost operations.
The transaction is expected to be completed in the fourth quarter of 2020.
TRANSACTION
The business combination values Eos at an implied $550 million pro forma enterprise value which represents ~2.0x 2022E revenue and ~0.5x 2024E revenue.
The net proceeds from this transaction will be used to fund the rapid growth of Eos’s corporate strategy, which includes the expansion of its manufacturing capacity to meet customer demand, investment in personnel to further drive research, development and commercialization, in addition to general corporate purposes.
Following completion of the transaction, Eos will retain its experienced management team. Joe Mastrangelo will continue to serve as Chief Executive Officer and Sagar Kurada will continue to serve as Chief Financial Officer. Daniel Shribman will join the Eos board of directors upon closing of the transaction.
EQUITY COMMITMENT (AND CANCELLATION OF FORWARD PURCHASE)
- The Equity Commitment Letter terminated the forward purchase agreement entered at the time of the IPO requiring Sponsor to purchase immediately prior to the Closing an aggregate of 2,500,000 units, each comprised of one share of Class A common stock and one-half of one warrant.
- The Company entered into an Equity Commitment Letter with B. Riley Financial, Inc. (“B. Riley Financial”) and B. Riley Principal Sponsor Co. II, LLC (“Sponsor”), pursuant to which B. Riley Financial committed to purchase up to:
- 4,000,000 shares of common stock, at a price per share of $10.00 per share, or
- Up to $40,000,000 in equity financing at Closing, less the number of shares of common stock already issued pursuant to subscription agreements entered into with investors prior to the Closing (the “Equity Commitment Letter”).
SPONSOR EARNOUT
- The Sponsor agrees to subject 1,718,000 of its shares in the Company (the “Sponsor Shares”), which formerly constituted shares of Class B common stock of the Company
- (a) 859,000 Sponsor Shares will be restricted from being transferred for five years following the Closing, unless and until either
- (i) the share price of the Company equals or exceeds $12.00 per share for any 20 trading days within any consecutive 30-trading day period or
- (ii) a change of control occurs for a share price of the Company equalling or exceeding $12.00 per share, and
- (b) 859,000 Sponsor Shares will be subject to similar restrictions except that the threshold is increased from $12.00 to $16.00.
- Any Sponsor Shares that have not previously been released will be automatically forfeited and cancelled for no consideration on the date that is five years after Closing.
- (a) 859,000 Sponsor Shares will be restricted from being transferred for five years following the Closing, unless and until either
EOS EARNOUT
- An additional 2,000,000 shares of the Company’s common stock to Eos’ securityholders pending the achievement of:
- The closing share price of Parent Shares on the principal securities exchange or securities market on which the Parent Shares are then traded equaling or exceeding $16.00 per share for any 20 trading days within any consecutive 30-trading day period during the Earn Out Period ( fifth anniversary of the Closing Date)
NOTABLE CONDITIONS TO CLOSING
- The Company has an aggregate of at least $110 million of cash (before taking into account certain transaction expenses, but after taking into account any redemptions by the Company’s public stockholders) available from the trust account.
NOTABLE CONDITIONS TO TERMINATION
- By either the Company or Eos if the business combination has not been consummated by January 15, 2021.
ADVISORS
- B. Riley FBR is acting as capital markets advisor to BMRG.
- White & Case LLP is acting as legal advisor to BMRG.
- Guggenheim Securities, LLC and Evercore are acting as financial advisors to Eos.
- Morrison Cohen LLP is acting as legal advisor to Eos.
- KPMG is acting as financial, accounting and tax advisor to Eos.
- Deloitte LLP is engaged as the independent auditor to Eos.
B. RILEY PRINCIPAL MERGER CORP. II MANAGEMENT & BOARD
Executive Officers
Daniel Shribman, 36
CEO, CFO & Director
Mr. Shribman helps oversee the asset base of B. Riley Financial alongside chief executive officer Bryant Riley. This asset base consists of several cash flow generating operating businesses in addition to cash and investments of roughly $750 million. The investment portfolio includes bilateral loans and small cap equity positions in both public and private markets. In virtually all investments, B. Riley Financial is involved at the board level and active in business and capital allocation decisions. Mr. Shribman has served as a member of the board of directors of Alta (NYSE: ALTG) since February 2020, when it completed its business combination with BRPM, where Mr. Shribman was chief financial officer. Mr. Shribman brings experience in both public and private equity to us. Prior to joining B. Riley, Mr. Shribman was a Portfolio Manager at Anchorage Capital Group, L.L.C., a special situation asset manager, from 2010 to 2018. During Mr. Shribman’s tenure at Anchorage Capital Group, L.L.C., he led investments in dozens of public and private opportunities across the general industrial, 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 market financing and capital deployment initiatives. Prior to Anchorage Capital Group, L.L.C., Mr. Shribman worked at Tinicum Capital Partners, a private equity firm, and in the restructuring advisory group at Lazard (NYSE: LAZ).
Board of Directors
Bryant Riley, 53
Chairman
Mr. Riley served as the chairman of B. Riley & Co., LLC since founding the stock brokerage firm in 1997 until its combination with FBR Capital Markets & Co., LLC in 2017; chief executive officer of B. Riley & Co., LLC from 1997 to 2006; and as chairman of BRPM from April 2019 until the completion of its business combination in February 2020. Mr. Riley has served as a member of the board of directors of Babcock & Wilcox Enterprises, Inc. (NYSE: BW) since April 2019 and Select Interior Concepts, Inc. (Nasdaq: SIC) since November 2019. Mr. Riley also previously served on the board of directors of Franchise Group, Inc. (Nasdaq: FRG) from September 2018 to March 2020 and Sonim Technologies, Inc. (Nasdaq: SONM) from October 2017 to March 2019. Mr. Riley received his B.S. in Finance from Lehigh University. Mr. Riley’s experience and expertise in the investment banking industry will provide our board of directors with valuable insight into the capital markets.
Kenneth Young, 56
Director
Mr. Young has served as chief executive officer of B. Riley Principal Investments, LLC, 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 served as the chief executive officer and as a director of BRPM from October 2018 until its initial business combination with Alta (NYSE: ALTG) in February 2020. Mr. Young currently serves as chief executive officer at Babcock & Wilcox (NYSE: BW) since November 2018. Mr. Young has served as a member of the board of directors of Orion Energy Systems, Inc. (Nasdaq: OESX) since 2017 and currently serves on the board of directors of Sonim Technologies (Nasdaq: SONM). He also served on the board of directors of Franchise Group, Inc. (Nasdaq: FRG) from August 2018 to March 2020 bebe stores, inc. from January 2018 to April 2019, Standard Diversified (NYSE: SDI) from 2015 to 2017, and Globalstar, Inc. (NYSE: GSAT) from November 2015 to December 2018. From August 2008 to March 2016, Mr. Young served as the president and chief executive officer of Lightbridge Communications Corporation. Mr. Young holds a Master’s in Business Administration from the University of Southern Illinois and a Bachelor of Science in Computer Sciences from Graceland University.
Patrick J. Bartels Jr., 44
Director
Mr. Bartels has been the managing member of Redan Advisors LLC, a firm that provides fiduciary services, including board of director representation and strategic planning advisory services, for domestic and international public and private business entities, since December 2018. Prior to founding Redan Advisors LLC, Mr. Bartels was a senior investment professional with 20 years of experience. From 2002 to December 2018, Mr. Bartels served as a Managing Principal at Monarch Alternative Capital LP, a private investment firm that focused primarily on event-driven credit opportunities. Prior to Monarch, he served as research analyst for high yield investments at Invesco Ltd. (NYSE: IVZ), where he analyzed primary and secondary debt offerings of companies in various industries. His professional experience includes investing in complex financial restructurings and process-intensive situations in North America, Asia and Europe in a broad spectrum of industries. Mr. Bartels has served as a director on numerous public and private boards of directors with an extensive track-record of driving value-added returns for all stakeholders through governance, incentive alignment, capital markets transactions, and mergers and acquisitions. Mr. Bartels formerly served on the board of directors for WCI Communities, Inc. from 2009 to 2017, Parker Drilling Company from March 2019 to February 2020 and BRPM from April 2019 to February 2020. During his time as a director for Parker Drilling Company and BRPM, Mr. Bartels served on the Audit Committee and Nominating and Corporate Governance Committee. Mr. Bartels currently serves on the board of directors of Arch Coal, Inc. (NYSE: ARCH), Hexion Inc., Brinks Home Security and Centric Brands Inc. (Nasdaq: CTRC); he serves on the Nominating and Corporate Governance Committee and the Audit Committee for Arch Coal, Inc. Mr. Bartels began his career at PricewaterhouseCoopers LLP, where he was a Certified Public Accountant. Mr. Bartels holds the Chartered Financial Analyst designation, and received a Bachelor of Science in Accounting with a concentration in Finance from Bucknell University.
Jamie Kempner, 62
Director
Mr. Kempner has been president of LSH Partners since December 2016. Prior to this position, Mr. Kempner was president of Loeb Partners Corporation from 2014 to 2016. Mr. Kempner began his career at Lazard (NYSE: LAZ), 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. Mr. Kempner has extensive experience advising on a number of corporate transactions and initial public offerings. Mr. Kempner has been a member of the board of directors of Private Wealth Partners since September 2018, and served on the board of directors of BRPM from 2018 until the completion of its business combination in February 2020. Mr. Kempner received a B.A. from Yale University and an M.B.A. from Harvard Business School.
Timothy Presutti, 51
Director
Mr. Presutti currently serves as managing partner and chief investment officer of Woody Creek Capital Partners LLC, a private investment firm he founded in 2007 that specializes in private credit and special situation investing. Mr. Presutti has been the sole owner and managing director of Woody Creek Capital Partners LLC since 2006, Woody Creek Capital Management LLC since 2018 and Wocap II GP, LLC since 2017. Mr. Presutti additionally serves as senior advisor to the Bosarge Family Office based in Houston, TX. Mr. Presutti has nearly twenty-four years of finance experience, spanning investing, portfolio management, trading and capital markets. As co-founder of Broadbill Investment Partners, an investment management firm, Mr. Presutti oversaw all capital raising for two funds and a co-investment platform. He was a member of the Investment Committee and is now a senior advisor, minority owner and managing director to Broadbill Investment Partners since 2011. Mr. Presutti started his career at Bankers Trust, which was acquired by Deutsche Bank Securities Inc. in 1999; his last position there was managing director and head of High Yield trading from 2005 to 2007. Mr. Presutti served on the board of directors of BRPM from 2018 until the completion of its business combination in February 2020.
Robert Suss, 51
Director
Mr. Suss has been co-chief executive officer of UK Agricultural Finance, a company that provides underwriting to local farming communities in the United Kingdom, since 2016, and non-executive chairman of EG Capital Advisors, a London-based investment firm, since 2017. Mr. Suss has served on the board of directors of Kingswood Group PLC since 2019. Until 2015, Mr. Suss was a managing director at Goldman Sachs & Co. LLC where he worked for 18 years in the Investment Management Division. Mr. Suss served on the audit committees of the board of directors of Pace Holdings Corp. from 2015 until the completion of its business combination in March 2017 and TPG Pace Holdings Corp. from 2016 until the completion of its business combination in November 2019. Mr. Suss also served on the board of directors of BRPM from 2018 until the completion of its business combination in February 2020.