Churchill Capital Corporation III
PROPOSED BUSINESS COMBINATION: Multiplan, Inc.
ESTIMATED CURRENT FUNDS in TRUST: $1.1 billion*
CURRENT PER SHARE REDEMPTION PRICE: $10.03*
ENTERPRISE VALUE: $11.0 billion
*SPACInsider estimate a/o 10-4-20
Churchill Capital Corp. III proposes to merger with Multiplan, Inc., a technology-enabled provider of end-to-end healthcare cost management solutions. The combined company will operate as MultiPlan and will be listed on the NYSE. The transaction implies an initial enterprise value for MultiPlan of approximately $11 billion or approximately 12.9x estimated 2021 Adjusted EBITDA. The transaction will bring to MultiPlan up to $3.7 billion of new equity or equity linked capital to substantially reduce its debt and fund new value-added services.
The capital from this transaction will enable MultiPlan to continue to enhance its core offerings to payers through a significant increase in its data analytics platform, extend into new payer customer segments and expand its platform, increasing the value MultiPlan provides to more than 700 payers, their 60 million consumers and MultiPlan’s 1.2 million providers that serve them. Further, the transaction will better position MultiPlan to capitalize on the entire $50 plus billion total addressable market, rather than its current subset of $8 billion, organically and through M&A.
Summary of Transaction
Churchill will contribute up to $1.1 billion of cash from their trust account with an additional $2.6 billion in additional PIPE commitments – a record size for SPACs. The new $2.6 billion new private capital raise consists of a $1.3 billion common stock at $10 per share and $1.3 billion of 6 percent interest convertible debt, with a conversion price of $13 per share. The convertible debt provides flexible capital, including a non-cash pay option.
The total investment of up to $3.7 billion raised in this transaction will be used to pay down existing debt, purchase a portion of the equity owned by existing MultiPlan shareholders and capitalize the MultiPlan balance sheet. As a result of this transaction, MultiPlan’s leverage will be reduced and its existing Net Debt to Adjusted EBITDA ratio will be reduced from 6.8x to approximately 5.8x with its Net Debt to Adjusted EBITDA at the operating company level decreasing to 4.1x (assuming no redemptions). The additional capital and public stock currency will allow the Company to advance its strategy of investing in organic and acquisition growth, and to increase its investment in data, machine learning and artificial intelligence technologies.
CONSIDERATION
The aggregate consideration to be paid to Holdings will be equal to $5,678,000,000 (the “Closing Merger Consideration”) and will be paid in a combination of stock and cash consideration.
The cash consideration will be an amount equal to :
- (x) all amounts in Churchill’s trust account (after reduction for the aggregate amount of payments required to be made in connection with any valid stockholder redemptions), plus
- (y) the aggregate amount of cash that has been funded to and remains with Churchill pursuant to the Subscription Agreements (as defined below) as of immediately prior to the closing (such amounts in clauses (x) and (y), the “Available Closing Acquiror Cash”),
- minus the aggregate principal amount of the Company’s outstanding 8.500% / 9.250% Senior PIK Toggle Notes due 2022 (excluding any accrued and unpaid interest or applicable premium thereunder) (such amount, the “Closing Cash Consideration);
- provided, that in no event will the Closing Cash Consideration be greater than $1,521,000,000.
- If the closing occurs when less than all of the Convertible PIPE Investment (as defined below) has been funded to Churchill and the Closing Cash Consideration as otherwise determined in accordance with the definition thereof would be less than $1,521,000,000, then (other than in specified circumstances), the Closing Cash Consideration will be increased, notwithstanding such calculation to $1,521,000,000.
- The remainder of the Closing Merger Consideration will be paid in shares of Class A common stock, par value $0.0001 per share, of Churchill (the “Class A Common Stock”) in an amount equal to $10.00 per share (the “Closing Share Consideration”).
COMMON PIPE
Churchill has agreed to issue and sell to the Common PIPE Investors$1,300,000,000 of Class A Common Stock (the “Common PIPE Shares”) at a purchase price of $10.00 per share and 1/20th of a warrant (the “Common PIPE Warrants”) to purchase one share of Class A Common Stock, with each whole warrant having a strike price of $12.50 per share and a 5-year maturity from the closing of the Transactions (the “Common PIPE Investment”).
- There is an original issue discount (“OID”) of 1% for subscriptions of equal to or less than $250,000,000
- And an OID of 2.5% for subscriptions of more than $250,000,000
CONVERTIBLE PIPE
Churchill entered into certain convertible note subscription agreements (the “Convertible Subscription Agreements”) with certain investment funds affiliated with Franklin Advisers, Inc., Magnetar Capital LLC, Oak Hill Advisors LP, and Pacific Investment Management Company LLC (the “Convertible Investors”) pursuant to which the Convertible Investors will provide convertible debt financing in the form of Convertible Senior PIK Toggle Notes (the “Convertible Notes”) to Churchill in the aggregate principal amount of $1,300,000,000
- The Convertible Notes will mature in seven years.
- The coupon rate of the Convertible Notes is, at Churchill’s option, 6% per annum payable semi-annually in arrears in cash or 7% per annum payable semi-annually in arrears in-kind.
- Holders may convert the Convertible Notes into shares of Class A Common Stock based on a $13.00 conversion price, subject to customary anti-dilution adjustments.
- Churchill may redeem the Convertible Notes after the third anniversary of the issuance of the Convertible Notes, subject to a holder’s prior right to convert, if:
- the trading price of the Class A Common Stock exceeds 130% of the conversion price 20 out of the preceding 30 trading days.
- There will be customary registration rights with respect to the Class A Common Stock issuable upon conversion of the Convertible Notes.
- Subject to the condition that the Convertible PIPE Investment is funded in full on the Closing Date, the Convertible Notes will be guaranteed by a subsidiary of the Company.
- The Convertible Notes are being issued with an OID (original issue discount) of 2.5%.
VOTING AND REDEMPTION AGREEMENTS
Certain of the Voting Agreements and Non-Redemption Agreements permit the stockholders party thereto to transfer the shares of Class A Common Stock held by such stockholder at any time following the date that the closing price of the shares of Class A Common Stock equals or exceeds $15.00 per share, as adjusted for certain events, for any 15 trading days within any consecutive 20-trading day period commencing on the date the preliminary Proxy Statement with the respect to the Transactions is filed.
Voting Agreements
- The Company and Holdings entered into voting and support agreements (the “Voting Agreements”) with certain Churchill stockholders pursuant to which such stockholders have agreed to vote in favor of the Transactions and the other Acquiror Stockholder Matters.
- Under the Voting Agreements, when taken together with the Churchill Sponsor’s agreement to vote in favor of the Transactions and the other Acquiror Stockholder Matters, approximately 41% of the outstanding common stock of Churchill has agreed to vote in favor of the Transactions and the other Acquiror Stockholder Matters. The Voting Agreements terminate upon termination of the Merger Agreement.
Redemption Agreements
- Certain stockholders of Churchill entered into non-redemption agreements (the “Non-Redemption Agreements”) with Churchill, Holdings and the Company, pursuant to which, among other things, such stockholders owning in the aggregate 28,979,500 shares of Class A Common Stock agreed not to elect to redeem or tender or submit for redemption any shares of Class A Common Stock held by such stockholder (a “Redemption Election”),
- If such stockholders fail to comply and a Redemption Election is made with respect to any of such stockholder’s shares of Class A Common Stock (the “Redeemed Shares”), such stockholder unconditionally and irrevocably agrees to subscribe for and purchase, from Holdings (or from its assignee(s) or designee(s), including, if applicable, its equityholders), the same number of such Redeemed Shares, for a per share purchase price equal to the amount to be received for each Redeemed Share in connection with such Redemption Election.
NOTABLE CONDITIONS TO CLOSING
- The amount of Available Closing Acquiror Cash being least $2,700,000,000 as of the closing of the Transactions
NOTABLE CONDITIONS TO TERMINATION
- By either Churchill or the Company if the transactions are not consummated on or before January 28, 2021 (the “Termination Date”)
ADVISORS
- Citigroup is serving as the private placement agent and capital markets advisor to Churchill.
- Citigroup and Goldman Sachs served as financial advisors
- Weil, Gotshal & Manges LLP served as legal counsel to Churchill.
- Credit Suisse served as a capital markets advisor to Churchill.
- Citigroup and Goldman Sachs were joint book running managers for Churchill Capital Corp III.
- Centerview Partners, Barclays, BofA Securities and UBS Investment Bank served as financial advisors to MultiPlan.
- Kirkland & Ellis and Simpson Thacher & Bartlett served as legal counsel to MultiPlan and H&F.
CHURCHILL CAPITAL CORP. III MANAGEMENT & BOARD
Executive Officers
Michael Klein, 56
Chief Executive Officer, President & Chairman
Mr. Klein is also the Chief Executive Officer and Chairman of the Board of Directors of Churchill Capital Corp II, a blank check company whose sponsor is an affiliate of M. Klein and Company, LLC. Mr. Klein is currently a Director of Credit Suisse Group AG and Credit Suisse AG. Mr. Klein was the co-founder and Chairman of Churchill Capital Corp, a blank check company formed in 2018. Churchill Capital Corp merged with Clarivate Analytics in May 2019, and Mr. Klein currently serves on the board of directors of Clarivate Analytics. Mr. Klein is the founder and managing partner of M. Klein and Company, which he founded in 2012. M. Klein and Company is a global strategic advisory firm that provides its clients a variety of advice tailored to their objectives. Mr. Klein is a strategic advisor to global companies, boards of directors, senior executives, governments and institutional investors. Mr. Klein’s background in strategic advisory work was built during his 30-year career, including more than two decades at Citi and its predecessors, during which he initiated and executed strategic advisory transactions. He began his career as an investment banker in the M&A Advisory Group at Salomon Smith Barney and subsequently became Chairman and Co-Chief Executive Officer of Citi Markets and Banking, with responsibilities for global corporate and investment banking and Global Transaction Services across Citi. Mr. Klein is a graduate of The Wharton School of the University of Pennsylvania, where he earned his Bachelors of Science in Economics with concentrations in finance and accounting.
Jay Taragin, 53
Chief Financial Officer
Mr. Taragin is also the Chief Financial Officer of M. Klein and Company which he joined in May 2019. Prior to joining M. Klein and Company, Mr. Taragin served as the US Scotiabank Chief Financial Officer from 2013 to 2017. Prior to Scotiabank, Mr. Taragin held a Chief Operating and Financial Officer role from 2009 to 2012 at Fundcore Finance Group LLC and held a variety of senior finance and audit roles at Merrill Lynch & Company from 1993 to 2009. In addition, Mr. Taragin worked at Credit Suisse and PricewaterhouseCoopers as a senior auditor and accountant. Mr. Taragin is a CPA and holds a master’s degree in business administration from New York University Stern School of Business and a bachelor’s degree from Yeshiva University.
Board of Directors
Jeremy Paul Abson, 52
Director Nominee
Mr. Abson is also a Director of Churchill Capital Corp II. He is currently the President and CFO of TBG AG, an investment company located in Zurich, Switzerland. Mr. Abson has more than 20 years’ experience in financial and general management. Prior to joining TGB AG, Mr. Abson was the Chief Operating Officer of Usaha Tegas Sdn Bhd (“UTSB”), a multi-billion investment company which had significant interests in the telecommunications, media, power, energy, marine logistics and real estate sectors. Prior to working at UTSB, Mr. Abson was a Partner at PricewaterhouseCoopers. Mr. Abson holds a Bachelor of Science degree from Manchester University, UK, and is a member of the Institute of Chartered Accountants in England and Wales. He also completed the Advanced Management Program at the Harvard Business School in October 2011.
Glenn R. August, 58
Director Nominee
Mr. August is also a Director of Churchill Capital Corp II. Mr. August is the Founder, Senior Partner and Chief Executive Officer of Oak Hill Advisors. In addition, he serves as global head of the firm’s distressed investment business. Mr. August has played leadership roles in numerous restructurings and served on numerous public and private company boards since 1987. Since 1996, he co-founded each of Oak Hill Advisors’ funds, where he serves as Managing Partner. He co-founded the predecessor firm to Oak Hill Advisors in 1987 and took over responsibility for its credit and distressed investment activities in 1990. Mr. August earned a Bachelor of Science degree from Cornell University and an M.B.A. from Harvard Business School, where he was a Baker Scholar.
Mark Klein, 57
Director Nominee
Mr. Klein is also a Director of Churchill Capital Corp II. He is the President and Chief Executive Officer of GSV Capital, and has been a director of GSV Capital since 2011. Since 2010, Mr. Klein has served as a Managing Member and Majority Partner of M. Klein and Company, LLC. Mr. Klein also serves on the Board of Directors for Atlantic Alliance Partnership Corp. and has served as an investment adviser at B. Riley Wealth Management since April 2012. Mr. Klein was a Director of National Holding Corporations from 2011 to 2014, where he also served as Chief Executive Officer and Co-Chairman from March 2013 to December 2014. He served as a director of New University Holdings Corp., from its inception in 2010 through August 2011, when New University Holdings Corp. merged with ePals, Inc. In addition, from April 2010 until May 2011, Mr. Klein served as the Chief Executive Officer and President and a Director of 57th Street General Acquisition Corp. until it completed a merger with Crumbs Bake Shop. Subsequently, Mr. Klein served as a member of the Board of Directors of Crumbs from May 2011 to March 2014. Mr. Klein has a Bachelor’s degree, with high distinction, in Business Administration from Emory University and an MBA from the J. L. Kellogg School of Management, Northwestern University.
Malcolm S. McDermid, 41
Director Nominee
Mr. McDermid is a Director of Churchill Capital Corp II and previously was a Director of Churchill Capital Corp. Mr. McDermid is also a Managing Director with Emerson Collective where he has led Emerson Collective’s venture capital investing efforts since August 2017. He was previously a Partner with Andreessen Horowitz, a venture capital firm based in Menlo Park, California from March 2013 to July 2017. Prior to Andreessen Horowitz, Mr. McDermid was a Director with Stifel Nicolaus, formerly Thomas Weisel Partners, a technology focused investment bank in San Francisco. He began his career at Citigroup as a financial analyst. Mr. McDermid received a Bachelor of Arts degree in Computer Science and Quantitative Economics from Tufts University and a Master of Arts in Law and Diplomacy from the Fletcher School at Tufts University.
Karen G. Mills, 66
Director Nominee
Ms. Mills is a Director of Churchill Capital Corp II and previously was a Director of Churchill Capital Corp. Ms. Mills is a Director of Clarivate Analytics. Ms. Mills is also a Senior Fellow at the Harvard Business School and the Harvard Kennedy School since January 2014, focusing on economic policy, U.S. competitiveness, entrepreneurship and innovation. Ms. Mills was a member of President Barack Obama’s Cabinet, serving as the Administrator of the U.S. Small Business Administration from April 2009 to August 2013. Ms. Mills is the President of MMP Group since October 1993, which invests in financial services, consumer products and technology-enabled solutions businesses. Ms. Mills is Vice Chair of the immigration services company Envoy Global since September 2014. She also serves as Chair of the Advisory Committee for the Private Capital Research Institute since March 2017. Ms. Mills holds an Bachelor of Arts degree in Economics from Radcliffe College, Magna Cum Laude, and earned an M.B.A. from Harvard Business School, where she was a Baker Scholar.
Michael Eck [Added 4/21/20]
Class II Director
Mr. Eck is a Managing Director at M. Klein and Company, a global strategic advisory firm. He joined the firm as a Senior Advisor in January 2016, and from December 1, 2017 to December 31, 2018, served as the Interim Chief Executive Officer of The Johnson Controls Hall of Fame Village on behalf of M. Klein and Company. Mr. Eck is currently an independent director and Chairman of Audit Committee of J. Jill, Inc. and was the Global Head of the Consumer and Retail Investment Banking Group at Morgan Stanley from 2008 until his retirement in 2014. Prior to that, Mr. Eck worked at Citigroup from 1993 to 2008, where he was the Global Head of the Consumer and Retail Banking Group, and at Credit Suisse First Boston from 1987 to 1993. From 2015 to April 2018 he served as an independent Board member and Chairman of the Audit Committee of Blue Buffalo Pet Products, Inc., a publicly-held leading natural pet food company, until Blue Buffalo Pet Products, Inc. was acquired by General Mills Inc. in April 2018. Mr. Eck is also the co-founder and co-chairman of the board of Steer for Student Athletes. In addition, he previously served as a Board member of USA Ultimate and as a member of the Senior Advisory Board of Shopkick. Mr. Eck received his Masters in Management from Northwestern University and his B.S. in Business from the McIntire School of Commerce at the University of Virginia.
Bonnie Jonas [Added 4/21/20]
Class III Director
Ms. Jonas is a co-founder of Pallas Global Group, LLC (“Pallas Global”), a company that provides independent monitoring and consulting services to corporations and organizations. Prior to co-founding Pallas Global, Ms. Jonas served for 18 years as an Assistant United States Attorney in the U.S. Attorney’s Office for the Southern District of New York (the “SDNY”). Ms. Jonas’s most recent position with the SDNY was as Deputy Chief of the Criminal Division, from 2013 to 2016. She also served as the SDNY’s Financial Fraud Coordinator for President Obama’s Financial Fraud Enforcement Task Force and as Co-Chief of the General Crimes Unit. Ms. Jonas was an attorney with the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP and a law clerk for the Honorable Reena Raggi of the U.S. District Court in the Eastern District of New York. Earlier in her career, Ms. Jonas worked as a consultant at Peterson Consulting, where she evaluated settlement amounts in connection with pending asbestos litigation. Ms. Jonas is a graduate of the Wharton School at the University of Pennsylvania and Columbia University School of Law.