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TLG Acquisition One Corp. *

TLG Acquisition One Corp. *

Jan 12, 2021 by Kristi Marvin

PROPOSED BUSINESS COMBINATION: Electriq Power

ENTERPRISE VALUE: $645 million
ANTICIPATED SYMBOL: ELIQ

TLG Acquisition One Corp. proposes to combine with Electriq Power (Electriq), a provider of intelligent energy storage and management for homes and small businesses.

Electriq, founded in 2014 in Silicon Valley, provides intelligent energy storage and management solutions for residential and small business use. In combination with rooftop solar, Electriq’s solutions provide always-available, low-cost clean energy, even during intermittent outages and inclement weather.

The solutions are delivered via an innovative go-to-market model that makes solar plus storage easily accessible to all socio-economic groups, including low- and middle- income communities across the U.S. In addition to engagements with communities, from Santa Barbara and Parlier in California to Washington, D.C., and Puerto Rico, Electriq also has a broad range of industry partnerships, including a multi-billion-dollar global manufacturer, high-growth providers of turnkey microgrids, and residential solar companies.

SUBSEQUENT EVENT – 7/24/23 – LINK

  • Non-Redemption Agreement:
    • The SPAC entered into a non-redemption agreement with Meteora Capital, LLC in exchange for them agreeing not to redeem an aggregate of 100,000 shares
  • Forward Purchase Agreement:
    • The SPAC and Electriq Power, Inc. entered into a Forward Purchase Agreement with Meteora Special Opportunity Fund I, LP, Meteora Capital Partners, LP, and Meteora Select Trading Opportunities Master, LP (collectively referred to as “Seller” or “Meteora”) for an OTC Equity Prepaid Forward Transaction.
    • The Seller intends, but is not obligated, to purchase up to a number of shares of TLG Common Stock in the aggregate amount equal to up to 9.9% of the total shares of TLG Common Stock outstanding following the closing of the Business Combination.
    • The Number of Shares subject to the Forward Purchase Agreement is subject to reduction following a termination of the Forward Purchase Agreement with respect to such shares as described under “Optional Early Termination” in the Forward Purchase Agreement.
    • The Forward Purchase Agreement provides that $3,000,000 (the “Prepayment Shortfall”) will be paid by Seller to Counterparty not later than one local business day following the Closing.
    • The reset price shall initially be the Initial Price and subject to a $6.67 floor (the “Reset Price Floor”).
    • The Reset Price shall be adjusted on the first scheduled trading day of every other week (each a “Reset Date”) commencing with the first week following the thirtieth day after the closing of the Business Combination to be the greatest of (a) the then-current Reset Price, (b) $6.67 and (c) the VWAP Price of the Shares of the prior two weeks; provided that the Reset Price may not be greater than the Initial Price and may be further reduced pursuant to a Dilutive Offering Reset or in the event the Seller, in its sole discretion, elects to extend the Valuation Date beyond six months following the closing of the Business Combination, which would eliminate the Reset Price Floor.
    • The “Maturity Consideration” means an amount equal to the product of (1) (a) the Number of Shares less (b) the number of Terminated Shares, multiplied by (2) $0.75 in the event of cash or, in the event of Shares, $1.00; and $2.00, solely in the event of a Registration Failure.

SUBSEQUENT EVENT – 3/23/23 – LINK

  • The outside date was extended to July 31, 2023.

SUBSEQUENT EVENT – 3/23/23 – LINK

  • First Amendment to Amended and Restated Securities Purchase Agreement
    • Pursuant to the Securities Purchase Agreement, the parties agreed to eliminate funding under the Permanent Financing as a closing condition to Mr. Lawrie’s funding of the remaining $3.5 million under the Lawrie Notes.
  • First Amendment to Lock-Up Agreement
    • Pursuant to the Lock-up Agreements, the parties agreed to amend the definition of “Restricted Securities” such that a fraction of the Closing Merger Consideration (equal to approximately 5%) received by each Electriq Holder will not be subject to the Lock-up.

SUBSEQUENT EVENT – 12/23/22 – LINK

  • On December 23, 2022, each of the parties to the Merger Agreement entered into a First Amendment to Merger Agreement, pursuant to which the parties agreed to, among other things, the following:
    • eliminate the Minimum Cash Closing Condition; and
    • replace TLG’s agreement to use its reasonable best efforts to enter into subscription agreements, non-redemption agreements, backstop agreements, or similar financing agreements with one or more persons which shall raise or backstop an amount of at least $120.0 million with an agreement by TLG to use its reasonable best efforts to enter into Financing Agreements to provide at least the level of cash required to provide adequate operating liquidity for New Electriq through December 31, 2023.
  • Further, Electriq and Mr. Lawrie entered into an amended and restated securities purchase agreement, pursuant to which the parties agreed that, among other things, Mr. Lawrie would fund the initial $5.0 million under the A&R Securities Purchase Agreement.
  • Subsequent funding under the A&R Securities Purchase Agreement is subject to certain conditions, including the documentation of, and funding under, a $21.5 million asset-backed revolving credit facility with one or more banks, commercial finance lenders or other institutions regularly engaged in the business of lending money.

EXTENSION – 12/21/22 – LINK

  • The stockholders approved the proposal to amend the Company’s Amended and Restated Certificate of Incorporation, giving the Company the right to extend the Business Combination Period on a monthly basis up to six times from February 1, 2023, to August 1, 2023.
  • In connection with the stockholders’ vote at the Special Meeting, the holders of 32,051,595 shares of Class A common stock properly exercised their right to redeem such shares for a pro-rata portion of the funds held in the Trust Account.
  • TLG Acquisition Founder LLC, the Company’s sponsor, agreed to forfeit for no consideration 5,000,000 shares of Class F common stock in connection with the Extension, which shares of Class F common stock will be canceled.
  • Following the Redemptions and the Forfeiture, the Company will have 7,948,405 shares of Class A common stock outstanding and 5,000,000 shares of Class F common stock outstanding.

TRANSACTION

  • Pro forma pre-money equity value of $495 million
  • Expected to provide Electriq with up to $125 million of capital to fund its growth through a combination of debt and equity.
  • Electriq is in advanced discussions for up to $60 million of capital that includes an asset-backed revolving credit facility from a leading institutional investor, a personal convertible debt commitment of up to $8.5 million from TLGA CEO Mike Lawrie and other convertible debt to be raised before transaction close.
  • Electriq intends to close and partially fund the revolving credit facility and the convertible debt from Mr. Lawrie before year end 2022.
  • A meaningful number of shares will be placed into escrow to provide incentives for equity financing commitments.
  • TLGA may also enter into a forward purchase agreement prior to transaction close to backstop redemptions for up to $100 million.

Updated investor presentation

PIPE

  • TLG has agreed to use its reasonable best efforts to enter into subscription agreements, non-redemption agreements, backstop agreements or similar financing agreements (the “Financing Agreements”) with one or more persons which shall raise or backstop an amount at least $120.0 million after deducting the amount of the Electriq Revolver and the amount committed under the Lawrie Note.
  • In connection with the Financings, 7,000,000 shares of Parent Class A Common Stock (the “Incentive Shares”) will be placed in escrow at Closing,
    • consisting of 5,000,000 newly issued shares of Parent Class A Common Stock (the “New Incentive Shares”) and
    • the 2,000,000 Merger Consideration Incentive Shares.
    • The New Incentive Shares will be paid out as incentives in the Financings first, followed by the Merger Consideration Incentive Shares.
    • At the termination of the escrow, any New Incentive Shares not paid out in the Financing will be transferred 50% to the Sponsor and 50% to the Electriq equityholders, and any Merger Consideration Incentive Shares not paid out in the Financing will be returned to the Electriq equityholders.

LOCK-UP

Company

  • May not be transferred until the earlier to occur of
    • (i) six months following Closing and
    • (ii) the date after the Closing on which New Electriq completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of New Electriq stockholders having the right to exchange their equity holdings in New Electriq for cash, securities or other property (the “Lock-up”).
    • If, after the Closing,
      • (i) the volume weighted average price per share of Parent Class A Common Stock equals or exceeds $12.50 per share for any 20 trading days within any 30-day trading period, 10% of the Restricted Securities of each Electriq Holder is released from the Lock-up and
      • (ii) the volume weighted average price per share of Parent Class A Common Stock equals or exceeds $15.00 per share for any 20 trading days within any 30-day trading period, an additional 10% of the Restricted Securities of each Electriq Holder will be released from the Lock-up.

Sponsor

Sponsor has agreed that it will forfeit for no consideration 5,000,000 SPAC Founder Shares. The Sponsor also agreed to:

  • (i)With respect to 500,000 SPAC Founder Shares, the Sponsor will not transfer such shares until the earliest to occur of
    • (x) the fifth anniversary of the Closing,
    • (y) such time as the closing volume weighted average price of a share of the Parent Class A Common Stock equals or exceeds $12.50 for any 20 trading days within any 30-day trading period and
    • (z) the date after the Closing on which New Electriq completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of New Electriq stockholders having the right to exchange their Parent Class A Common Stock for cash, securities or other property;
  • (ii) with respect to an additional 500,000 SPAC Founder Shares, the Sponsor will not transfer such shares until the earliest to occur of
    • (x) the fifth anniversary of the Closing,
    • (y) such time as the closing volume weighted average price of a share of the Parent Class A Common Stock equals or exceeds $15.00 for any 20 trading days within any 30-day trading period or
    • (z) the date after the Closing on which New Electriq completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of New Electriq stockholders having the right to exchange their Parent Class A Common Stock for cash, securities or other property; and
  • (iii) with respect to all of the SPAC Founder Shares (including those covered in (i) and (ii)), the Sponsor and the other holders will not transfer such shares until the earliest to occur of
    • (x) the six-month anniversary of the Closing or
    • (y) the date after the Closing on which New Electriq completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of New Electriq stockholders having the right to exchange their Parent Class A Common Stock for cash, securities or other property; provided that
      • (i) 10% of such SPAC Founder Shares will be released at such time as the closing volume weighted average price of a share of the Parent Class A Common Stock equals or exceeds $12.50 for any 20 trading days within any 30-day trading period and
      • (ii) an additional 10% of such SPAC Founder Shares will be released at such time as the closing volume weighted average price of a share of the Parent Class A Common Stock equals or exceeds $15.00 for any 20 trading days within any 30-day trading period.

ELECTRIQ DEBT FINANCINGS

  • On September 21, 2022, Electriq signed a term sheet for a $21.5 million asset-backed revolving credit agreement with a private lender (“Electriq Revolver”).
    • Electriq is negotiating definitive documentation of such agreement. While it is expected the definitive documentation to be executed before December 31, 2022, there can be no assurance that Electriq and the private lender will enter into such credit agreement.
  • On November 13, 2022, Electriq entered into a securities purchase agreement with John Michael Lawrie pursuant to which Mr. Lawrie agreed to purchase secured convertible promissory notes from Electriq (the “Lawrie Note”) in an amount of up to $8.5 million.
    • Funding under the securities purchase agreement is subject to certain conditions, including
      • (i) the documentation of the Electriq Revolver,
      • (ii) the conversion of $5.0 million of Electriq stockholder debt into convertible debt being reasonably satisfactory to Mr. Lawrie and
      • (iii) funding under the Electriq Revolver.
    • The Lawrie Note will bear interest at a simple rate of 14% per annum, payable quarterly in cash. The Lawrie Note is payable in full 24 months following the issuance of the Lawrie Note.
    • The Lawrie Note will be senior to all current and future indebtedness of Electriq, except that it will be subordinated to the Electriq Revolver. If it is not converted in connection with the Business Combination, the Lawrie Note will be assumed by New Electriq in the Merger.
    • Mr. Lawrie will have the right but not the obligation to convert the outstanding principal and unpaid accrued interest into equity of Electriq or its successor in the event of
      • (i) a future issuance of equity securities for the purpose of raising capital of at least $20,000,000,
      • (ii) an acquisition of Electriq or its successor, whether by asset purchase, merger or share purchase
      • (iii) certain capital markets transactions, including an initial public offering, direct listing, or SPAC-related transaction (a “Capital Markets Transaction”); or
      • (iv) upon maturity, if the Lawrie Note remains outstanding.
    • Other than at maturity, the conversion price is 95% of the relevant consideration per share.
      • With respect to conversion at maturity, the price per share is to be obtained by dividing $275,000,000 by the number of outstanding shares of common stock of Electriq.
    • Mr. Lawrie will be entitled to demand prepayment in cash in connection with any Capital Markets Transaction. If Mr. Lawrie does not convert in connection with an Acquisition Transaction, Electriq is required to pay Mr. Lawrie two times the outstanding principal amount in cash. The Lawrie Note will have events of default that are customary for similar instruments.

NOTABLE CONDITIONS TO CLOSING

  • Subsequent Event – On December 23, 2022, each of the parties to the Merger Agreement entered into a First Amendment to Merger Agreement, pursuant to which the parties agreed to, among other things, the following:
    • eliminate the Minimum Cash Closing Condition
  • Minimum available funds equal to or in excess of $125.0 million (after taking into account any transaction expenses, redemptions, taxes due and payable prior to Closing, and funds received in the Financings and the amount of the Electriq Revolver and the amount committed under the Lawrie Note).

NOTABLE CONDITIONS TO TERMINATION

  • If the Business Combination has not been consummated on or prior to February 1, 2023 (subject to extensions until as late as June 1, 2023).
    • The outside date was extended to July 31, 2023. – LINK

ADVISORS

  • Truist Securities, Inc. is acting as financial advisor to TLG Acquisition One Corp and as structuring agent for the transaction.
  • The Duff & Phelps Opinions practice of Kroll, LLC rendered a fairness opinion to TLGA.
  • Gibson, Dunn & Crutcher LLP is acting as legal counsel to TLGA.
  • Ellenoff Grossman & Schole LLP is acting as legal counsel to Electriq.

MANAGEMENT & BOARD

Executive Officers

John Michael Lawrie, 67
Chief Executive Officer, President, Chairman

In 2005,  Mr. Lawrie founded The Lawrie Group, a private company providing consulting services on value creation and enterprise transformation, and related investment management services, and currently serves as the chief executive officer.  Mr. Lawrie previously served as chairman, president, and chief executive officer of DXC Technology, a leading, independent end-to-end IT services company serving more than 6,000 global enterprise clients in more than 70 countries, from April 2017 to his retirement in March 2019.  Prior to his employment at DXC, Mr. Lawrie served as president and chief executive officer of Computer Sciences Corporation from May 2012 to March 2017 and was appointed chairman in December 2015.  Mr. Lawrie is a trustee of Drexel University, Philadelphia. Mr. Lawrie holds a B.A. in history from Ohio University and an MBA from Drexel University. Mr. Lawrie also received an honorary doctorate from the Shiv Nadar University in India.

David Johnson, 67
Chief Financial Officer and Director nominee

Mr. Johnson previously served first as senior managing director responsible for technology investments of Blackstone Group, one of the world’s leading investment firms, from 2013 to 2017, then as a senior advisor, from 2017 to 2020. Before joining Blackstone, Mr. Johnson served as senior vice president of Strategy at Dell Corporation and held various corporate and development and finance roles, including vice president of Corporate Development, at IBM.  Currently, Mr. Johnson sits on the board of various companies including Cloudreach, Intsights Cyber Intelligence and Mphasis Limited.  Mr. Johnson earned his B.A. in English and his M.B.A. in Finance from Boston College.

Jonathan Morris, 44
Chief Development Officer

Mr. Morris has served in the capacity of CFO splitting his time between Twelve Seas Investment Company II, FreeCast, Inc. and Hush Aerospace since May 2020.   Prior to that, Mr. Morris served in the capacity of CFO at Imageware Systems, Inc. in 2020.  In addition, from 2016 to 2019 Mr. Morris led principal investments and structuring as President and Sr. Managing Direct at a large family office. From 2012 to 2016,  Mr. Morris served as a Director at The Blackstone Group, Inc. and on the board of SunGard AS from 2014 to 2016. From 2005 to 2012 he was in the Technology, Media, and Telecommunication Investment Banking Group of Credit Suisse. Mr. Morris began his career in 1997 within the private equity division of Lombard, Odier et Cie, private bank in Switzerland and subsequently went to work as an associate at GAIN Capital, a currency hedge fund from 1999 to 2003. Mr. Morris earned his B.S. in Economics and Finance from the University of Virginia and his M.B.A. from Georgetown University.

Board of Directors

A. George Kadifa, 61
Director Nominee

Mr. Kadifa currently serves as managing director of Sumeru, a position he has held since June 2015, where he focuses on the firm’s software investments and is a member of its Investment Committee  Prior to co-founding Sumeru, Mr. Kadifa served as executive vice president at HP from June 12 to March 2015, where he was responsible for leading growth initiatives with key stakeholders. Before joining HP, Mr. Kadifa served as operating partner at Silver Lake, a global technology investment firm. Currently, Mr. Kadifa sits on the Board of Ceros, Inc. and SocialChorus, Inc.  Mr. Kadifa earned his B.S. in Electrical Engineering from American University in Beirut, his M.S. in Electrical Engineering at the California Institute of Technology, and his M.B.A  from the University of Chicago.

Kristin Muhlner, 49
Director Nominee

Ms. Muhlner currently serves on the board of directors for CSI, a position she has held since June 2017, and as Chief Executive Officer of Affect Therapeutics, a position she has held since September 2020.  In addition, Ms. Muhlner served as Executive Chairman of the board of directors of Skyword, Inc., a position she held from June 2019 to January 2021. Previously, from April 2017 to January 2019, Ms. Muhlner served as President and Chief Operating Officer for Framebridge, Inc.    Before joining Framebridge, Ms. Muhlner served as Executive Vice President of Global Revenue for Sprinklr from June 2015 to October 2016. Ms. Muhlner earned her B.A. in Economics from Rhodes College.

Hilliard C. Terry III, 51
Director Nominee

From January 2012 to October 2018, he served as Executive Vice President and Chief Financial Officer of Textainer Group Holdings Limited, an intermodal marine container management and leasing company. Before joining Textainer, Mr. Terry was Vice President and Treasurer of Agilent Technologies, Inc., which he joined in 1999, prior to the company’s initial public offering and spinoff from Hewlett-Packard Company.  He is currently a director of Umpqua Holdings Corporation, a position he has held since 2011, where he chairs the Audit and Compliance Committee and serves on the Finance and Capital, Nominating & Governance and Strategy Committees. Mr. Terry is also a director of Upstart Holdings, Inc., a position he has held since February 2019, where he chairs the Audit Committee.  Mr. Terry holds a B.A. in Economics from the University of California, Berkeley and an M.B.A. from Golden Gate University.

Edward Ho, 58
Director Nominee

Mr. Ho served as Executive Vice President and General Manager for DXC Technology Company (NYSE: DXC) from January 2018 until October 2020.  Previously, Mr. Ho served on the board of directors of Fenergo, a privately-held Fintech company that is a leading provider in compliance and data management solutions, from July 2019 to November 2020.  In addition, Mr. Ho previously served as the President of Global Payment Solutions of D+H Corporation, a publicly traded, leading, global financial technology company, from April 2015 to November 2017, where he was responsible for leadership of its digital, global transaction banking business. From January 2013 to April 2015, Mr. Ho served as the President and Chief Operating Officer of Fundtech Corporation, a private equity owned, leading provider of digital payments banking software and services, where he was responsible of sales, marketing, product management, development, professional services, customer support and certain general and administrative functions. Mr. Ho earned his B.A. from Columbia College and his M.B.A. from The Wharton School of the University of Pennsylvania.

ByKristi Marvin