B. Riley Principal 150 Merger Corp.
PROPOSED BUSINESS COMBINATION: FaZe Holdings Inc.
ENTERPRISE VALUE: $713 million
ANTICIPATED SYMBOL: FAZE
B. Riley Principal 150 Merger Corp. proposes to combine with FaZe Holdings Inc.
FaZe Clan is at the forefront of the global creator economy — an industry centered around innovative digital content development fueled by social media influencers, creators and businesses who monetize their content online. With a leading digital content platform created for and by Gen Z and millennials, FaZe Clan has established a highly engaged, loyal global fan base of over 350 million across its combined social platforms that rivals established major sports leagues and generates more social media interactions than the next top eight esports organizations combined.
FaZe Clan reimagines traditional entertainment for the next generation, leading youth culture with transformative content, tier-one brand partnerships, a collective of notable talent, and fashion and consumer products. The Company boasts a diverse and robust talent network and has ten competitive esports teams that have won 30 championships worldwide.
The Company produces premium content, merchandise, and consumer products and creates advertising and sponsorship programs for leading national brands. With approximately 80% of its audience between the ages of 13-34, FaZe Clan has unlocked key relationships with a coveted demographic that has long proven difficult to reach for traditional media companies and advertisers.
FaZe Clan’s roster of more than 85 influential personalities consists of engaging content creators, esports professionals, world-class gamers and a mix of talent who go beyond the world of gaming, including NFL star Kyler “FaZe K1” Murray, Lebron “FaZe Bronny” James Jr., Lil Yachty aka “FaZe Boat” and Offset aka “FaZe Offset.”
SUBSEQUENT EVENT – 8-K 3/10/22
- On March 10, 2022, B. Riley entered into an amendment to the Merger Agreement (“Amendment No. 2”) with Merger Sub and FaZe.
- Amended language regarding the “FaZe Options”
- The previous minimum cash requirement of $218 million has been waived
- In connection with entering into the Term Loan, on March 10, 2022, FaZe waived the Minimum Acquiror Closing Cash Amount.
- An affiliate of B. Riley entered into an Bridge Loan Agreement with FaZe for $10 million (the “Initial Term Loan”)
- The initial Term Loan is evidenced by a promissory note (the “Term Promissory Note”) and accrues interest at a rate of 7% per year, compounded quarterly.
- Upon receipt of a borrowing notice from FaZe, to issue to FaZe in a second advance a term loan in the principal amount of $10 million (the “Final Term Loan”)
TRANSACTION
- With funding from the proposed Business Combination, FaZe Clan plans to further diversify its revenue streams with user monetization, expansion of its global footprint, and investment in new growth opportunities across the creator economy and emerging technologies in addition to a robust acquisition strategy that will only strengthen the Company’s flywheel.
- The proposed Business Combination has been approved by the boards of directors of both FaZe Clan and BRPM and is expected to close in the first quarter of 2022, subject to regulatory and stockholder approvals.
PIPE
- $118 million from committed PIPE investments at $10.00 per share
- An affiliate of the Sponsor has subscribed to purchase 2,000,000 shares of Class A common stock at $10.00 per share in the PIPE Investment, for an aggregate purchase price of $20,000,000.
EARNOUT
- Excludes 2.2mm BRPM shares subject to earn-out, vesting ratably at $12.00, $14.00, and $16.00.
- Excludes seller earn-out of up to 6% of combined company shares, vesting ratably at $12.00, $14.00, and $16.00.
- Both earn-outs subject to five-year period post-closing. Excludes the dilutive impact of 5.75mm public warrants and 0.17mm private placement warrants with an $11.50 exercise price.
- BRPM Sponsor includes 520k private placement units.
LOCK-UP
- “Lock-up Period” means the period beginning on the closing date of the FaZe Transaction and ending on the earlier of
- (A) with respect to 20% of the Lock-up Shares held by each Lock-up Holder, in the event that the VWAP per share of Corporation Common Stock at any point during the trading hours of a Trading Day is equal to or greater than $20.00 for any 20 Trading Days within any period of 30 consecutive Trading Days beginning 90 days following the closing date of the FaZe Transaction, the date when the foregoing is first satisfied
- (B) the date that is 180 days after the closing date of the FaZe Transaction
- (C) the date on which the Corporation completes a Corporation Sale; for the avoidance of doubt, the Lock-up Period for any Lock-up Shares for which the Lock-up Period has not ended on the date that is 180 days after the closing date of the FaZe Transaction shall end on such 180th day after the closing date of the FaZe Transaction
- Sponsor Shares
- (i) with respect to 862,500 Sponsor Shares only, in the event that the VWAP per share of Acquiror Common Stock at any point during the trading hours of a Trading Day is equal to or greater than $20.00 for any 20 Trading Days within any period of 30 consecutive Trading Days beginning 90 days following the Closing Date, the date when the foregoing is first satisfied
- (ii) the date that is one year after the Closing Date
- (iii) in the event that the VWAP per share of Acquiror Common Stock at any point during the trading hours of a Trading Day is equal to or greater than $15.00 for any 20 Trading Days within any period of 30 consecutive Trading Days beginning 150 days after Closing, the date that is six months after the Closing Date
- (iv) the date on which Acquiror completes an Acquiror Sale (such period, the “Lock-Up Period”), Sponsor shall not, directly or indirectly, Transfer, or enter into any Contract or option with respect to the Transfer of, any of the Sponsor Shares except for Permitted Transfers; provided, that any such Permitted Transfer shall be permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, reasonably satisfactory in form and substance to the Company and Acquiror, to assume all of the obligations of Sponsor under, and be bound by all of the terms of, this Sponsor Support Agreement
SUPPORT AGREEMENT
- Invest at least $20,000,000 in the PIPE Investment as well as to backstop the PIPE Investment, if the amount in cash actually received by B. Riley from the PIPE Investment at Closing is less than $100,000,000, by committing to purchase that portion of the PIPE Investment not purchased by third party investors to cause the PIPE Investment actually received by B. Riley at the Closing to equal $100,000,000
- Waive the anti-dilution and conversion price adjustments set forth in B. Riley’s amended and restated certificate of incorporation with respect to the Class B common stock held by the Sponsor (“Founder Shares”)
- Subject 50% of the Founder Shares to forfeiture following Closing if certain price-based vesting conditions are not met during the five years following Closing
- Subject the Founder Shares to certain transfer restrictions
- To vote all voting equity securities owned by it in favor of the Merger Agreement, Business Combination, and each other proposal presented by B. Riley in the proxy statement/prospectus that is part of the Registration Statement.
NOTABLE CONDITIONS TO CLOSING
- B. Riley having a minimum of $218,000,000 in cash available to it at Closing after payment of the transaction expenses
- The previous minimum cash requirement of $218 million has been waived – LINK
NOTABLE CONDITIONS TO TERMINATION
- By B. Riley or Faze, if the Closing has not occurred on or before 5:00 p.m., Eastern time, on July 25, 2022
ADVISORS
- B. Riley Securities, Inc. is acting as capital markets advisor to BRPM and as sole placement agent on the PIPE.
- Citi is acting as lead financial advisor to FaZe Clan.
- M. Klein and Company and Evolution Media Capital are also serving as financial advisors to FaZe Clan.
- White & Case is acting as legal advisor to BRPM.
- Skadden, Arps, State, Meagher & Flom LLP is acting as legal advisor to FaZe Clan.
- McDermott Will & Emery acted as legal advisor to the PIPE placement agent.
MANAGEMENT & BOARD
Executive Officers
Daniel Shribman, 36
Chief Executive Officer, Chief Financial Officer and 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 over $1 billion as of September 30, 2020. 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 Equipment Group Inc. (Alta) (NYSE: ALTG) since February 2020, when it completed its business combination with B. Riley Principal Merger Corp. (BRPM), where Mr. Shribman was chief financial officer. Mr. Shribman has also served as a member of the board of directors of Eos Energy Enterprises, Inc. (“Eos Energy”) (Nasdaq: EOSE) since November 2020, when it completed its business combination with B. Riley Principal Merger Corp. II (“BRPM II”), where Mr. Shribman was chief executive officer. Mr. Shribman brings experience in both public and private equity. 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). In April 2019, Mr. Shribman led the initial public offering of BRPM, a blank check company with a business purpose substantially similar to ours, which was also sponsored by an affiliate of B. Riley Financial. BRPM sold 14,375,000 units at a price of $10.00 per unit in its initial public offering, with each unit comprised of one share of Class A common stock and one-half of one warrant to purchase one share of Class A common stock, generating gross proceeds of $143,750,000. On December 12, 2019, BRPM announced its entry into a definitive agreement relating to its initial business combination with Alta, a leading provider of premium industrial and construction equipment and related services. The transaction was valued at approximately $540 million and closed on February 14, 2020. Further, in May 2020, Mr. Shribman led the initial public offering of BRPM II, another blank check company with a business purpose substantially similar to ours, which was also sponsored by an affiliate of B. Riley Financial. BRPM II sold 17,500,000 units at a price of $10.00 per unit in its initial public offering, with each unit comprised of one share of Class A common stock and one-half of one warrant to purchase one share of Class A common stock, generating gross proceeds of $175,000,000. On September 8, 2020, BRPM II announced its entry into a definitive agreement relating to its initial business combination with Eos Energy, a leading manufacturer of safe, reliable, low-cost zinc battery storage systems. The transaction was valued at approximately $500 million and closed on November 16, 2020.
Board of Directors
Bryant Riley, 53
Chairman
Mr. Riley previously served as B. Riley’s Chief Executive Officer from June 2014 to July 2018. In addition, 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; as Chairman of B. Riley Principal Merger Corp. from April 2019 to February 2020, at which time it had completed its business combination with Alta Equipment Group, Inc. (NYSE: ALTG) and as Chairman of B. Riley Principal Merger Corp. II from May 2020 to November 2020, at which time it had completed its business combination with Eos Energy (NASDAQ: EOSE). Mr. Riley has served as director of Select Interior Concepts, Inc. (NASDAQ: SIC) since November 2019. He also previously served on the board of Babcock & Wilcox Enterprises, Inc. (NYSE: BW) from April 2019 to September 2020, Sonim Technologies, Inc. (NASDAQ: SONM) from October 2017 to March 2019 and Franchise Group, Inc. (NASDAQ: FRG) (fka Liberty Tax, Inc.) from September 2018 through March 2020. Mr. Riley received his B.S. in Finance from Lehigh University. Mr. Riley’s experience and expertise in the investment banking industry provides the Board with valuable insight into the capital markets. Mr. Riley’s extensive experience serving on other public company boards is an important resource for the Board.
Nicholas Hammerschlag, 34
Director
Mr. Hammerschlag is currently a Senior Advisor to Guild Education as well as an active investor in and advisor to early and expansion-stage education, financial technology, and business service companies. He currently serves as a director of a number of venture-backed companies such as Staircase, Inc. since January 2020, Pathstream, Inc. since February 2018, and Yellowbrick, Inc. and Entangled Ventures LLC since February 2017. Previously, Mr. Hammerschlag was the President and co-founder of Entangled Group from 2015 to 2020, an education-focused venture studio and consultancy, part of which was sold to Guild Education in 2020. Entangled raised over $60 million in financing across its holding and portfolio companies. Mr. Hammerschlag has extensive experience in capital raising and mergers and acquisitions. Mr. Hammerschlag was previously on the investment teams at General Atlantic from 2013 to 2015 and OpenView Venture Partners from 2010 to 2013, where he focused on investments in the internet, technology, and education sectors. Notably, Mr. Hammerschlag led OpenView’s investment in Instructure (NYSE: INST) and served on its board as an observer. He graduated from Columbia University with a degree in history.
Samuel McBride, 34
Director
Mr. McBride is an investor, advisor and board member for high growth food and beverage companies and served as the former Chief Operating Officer and Chief Sales Officer of RXBAR from 2017 to 2019. At RXBAR, Mr. McBride drove net sales growth from $2 million in 2014 to $220 million in 2018 leveraging e-commerce as well as traditional retail distribution helping fuel its acquisition for $600 million by Kellogg in 2017. Mr. McBride started in finance at Wellspring Partners in 2008, focusing on healthcare mergers and acquisitions. In 2010, he moved to LiveWatch Home Security, helping build one of the fastest-growing and most disruptive companies in the direct-to-consumer home security space before its acquisition by Ascent Capital for $67 million in 2015. Prior to RXBAR, Mr. McBride oversaw sales and marketing for nine operating companies with a combined $180 million in annual revenue at the Rabine Group from 2013 to 2014. Mr. McBride has been the Chief Executive Officer and Principal at McBride Capital LLC since 2017, investing in early to mid-stage food and beverage companies and has been a member of the Board of Directors at Kettle & Fire, Inc. since 2018, MUSH since 2019 and Four Sigmatic and Minor Figures since 2020.
Ross Levinsohn, 57
Director
Ross Levinsohn has long been at the center of transformation and innovation in the media and technology spaces. Mr. Levinsohn is current Chief Executive Officer of theMaven, Inc., a technology company powering more than 250 premium media brands since August 2020. From October 2019 until September 2020, he was the Chief Executive Officer of Sports Illustrated Media. Best known for his roles at Yahoo and Fox, Mr. Levinsohn has served as Chief Executive Officer of a number of high profile brands — driving change, culture and results. Prior to joining Maven, from August 2017 until January 2019, Mr. Levinsohn served in two capacities for Tribune Publishing – first as Chief Executive Officer of the Los Angeles Times, and after the paper was sold, as Chief Executive Officer of Tribune Interactive, a publisher of more than 100 titles including the Chicago Tribune and New York Daily News. At Yahoo, from August 2017 until January 2019, Mr. Levinsohn served as interim Chief Executive Officer, overseeing all aspects of the internet pioneer with more than $5 billion of revenue and a $20 billion market cap. Prior to being named to that post, he was head of Global Media, and executive vice president of the Americas region. In this role, Mr. Levinsohn was responsible for more than $3 billion in revenue, and operations across sales, marketing, strategy, business development, media and content. Mr. Levinsohn held a variety of roles at News Corporation from 2000 to 2006, including as President of News Corporation’s Fox Interactive Media, where he oversaw the day-to-day operations, strategy, business development and acquisitions that helped transformed the media titan into a leader in digital media. During his six years, he helped grow their digital business to the most engaged set of web properties in the United States. Among his other roles, Mr. Levinsohn has served as Chief Executive Officer of Guggenheim Digital Media, managing The Hollywood Reporter, Billboard Magazine, and Ad Week; a managing director of media and technology venture fund Fuse Capital; and an executive at HBO. He began his digital career at CBS Sportsline. He also served as a senior advisor at Boston Consulting Group. Mr. Levinsohn holds a B.A. in Communications from The American University, where he served as a member of its Board of Trustees.
Timothy Presutti, — [Appointed 2/18/22]
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. Mr. Presutti served on the board of directors of BRPM II from May 2020 until the completion of its business combination in November 2020.