Mountain Crest Acquisition Corporation
PROPOSED BUSINESS COMBINATION: Playboy Enterprises, Inc.
ENTERPRISE VALUE: $413.3 million
ANTICIPATED SYMBOL: PLBY
Mountain Crest Acquisition Corp. proposes to combine with Playboy Enterprises, Inc., one of the largest and most recognizable lifestyle brands in the world, with more than $3B in global consumer spend against the brand across 180 countries. Building upon almost seven decades of groundbreaking media, entertainment, hospitality and social advocacy, Playboy today reaches millions of consumers around the world with products and services across four major categories:
- Sexual Wellness, including intimacy products and lingerie;
- Style & Apparel, including a variety of apparel and accessories products for men and women globally;
- Gaming & Lifestyle, such as digital gaming, hospitality and spirits;
- Beauty & Grooming, including fragrance, skincare, grooming and cosmetics for men and women.
Playboy’s return to the public markets presents a transformed, streamlined and high-growth business. The Company has over $400 million in cash flows contracted through 2029, sexual wellness products available for sale online and in over 10,000 major retail stores in the US, and a growing variety of clothing and branded lifestyle and digital gaming products.
Upon closing of the transaction, Mountain Crest will be renamed and is expected to remain listed on the Nasdaq Stock Market under ticker PLBY, and will be led by Ben Kohn, Playboy’s Chief Executive Officer.
TRANSACTION
Playboy shareholders will be entitled to receive approximately 23.9 million shares valued at $10.00 per share in Mountain Crest, subject to closing adjustments, and Mountain Crest will assume net debt outstanding of approximately $142 million, for a total purchase price of approximately $381 million.
In addition, in order to limit dilution, Playboy has agreed to purchase 700,000 Mountain Crest founder shares at $6.35 per share, which will further adjust the shares issuable to Playboy shareholders. Existing Playboy shareholders have agreed to a one year lock up subject to a partial release if after six months the stock trades at $14.00 for 20 out of 30 consecutive trading days.
As part of the transaction, Mountain Crest has signed definitive purchase agreements for the sale of $50 million of its common stock to institutional and accredited investors. This along with funds held in Mountain Crest’s trust account at closing, currently $58.5 million, will be used to fund Playboy’s growth plans.
The transaction is expected to close early in the first quarter of 2021.
PIPE
- An aggregate of 5,000,000 shares of MCAC common stock for $10.00 per share
- Under certain circumstances, additional payments by MCAC may be assessed with respect to the PIPE Shares in the event that
- (i) the PIPE Resale Registration Statement has not been filed with the SEC by the closing date;
- (ii) the PIPE Resale Registration Statement has not been declared effective by the SEC by the Effectiveness Date;
- (iii) the PIPE Resale Registration Statement is declared effective by the SEC but thereafter ceases to be effective or is suspended for more than fifteen (15) consecutive calendar days or more than an aggregate of twenty (20) calendar days (which need not be consecutive calendar days) during any 12-month period; or
- (iv) MCAC fails for any reason to satisfy the current public information requirement under Rule 144(c) under the Securities Act of 1933, as amended (the “Securities Act”) and the PIPE Shares are not then registered for resale under the Securities Act during the period commencing from the twelve (12) month anniversary of the closing and ending at such time that all of the PIPE Shares may be sold without the requirement for MCAC to be in compliance with Rule 144(c)(1) under the Securities Act and otherwise without restriction or limitation pursuant to Rule 144 under the Securities Act.
- The additional payments by MCAC will accrue on the applicable PIPE Shares at a rate of 1.0% of the aggregate purchase price paid for such shares per month, subject to certain terms and limitations (including a cap of 6.0% of the aggregate purchase price paid for such shares pursuant to the Subscription Agreement).
NOTABLE CONDITIONS TO CLOSING
- MCAC shall have received at least $50 million of cash at the closing of the Business Combination pursuant to the Subscription Agreements
- MCAC shall have at least $15 million of cash held in its trust account after giving effect to redemptions of public shares, if any, but before giving effect to the consummation of the closing of the Business Combination and the payment of MCAC’s and PEI’s outstanding transaction expenses as contemplated by the Merger Agreement, including payment of deferred underwriting fees owed by MCAC
NOTABLE CONDITIONS TO TERMINATION
- By either MCAC or PEI if the closing of the Business Combination has not occurred on or before March 31, 2021
ADVISORS
- Roth Capital Partners and Craig-Hallum Capital Group LLC are acting as joint placement agents, and M&A advisors to Playboy and Mountain Crest.
- Jones Day is serving as legal counsel for Playboy.
- Loeb & Loeb LLP is serving as legal advisor to Mountain Crest Acquisition Corp.
MOUNTAIN CREST MANAGEMENT & BOARD
Executive Officers
Suying Liu, 32
Chairman & Chief Executive Officer
Dr. Liu has been the Head of Corporate Strategy of Hudson Capital Inc. (Nasdaq: HUSN) since May 2020, where he leads the company’s strategic development for both general operations and specific growth areas. Dr. Liu integrates corporate finance opportunities with business fundamentals of Hudson Capital, leveraging his as well as the company’s broad network of relationships across a variety of industries such as financial services, general industrial and real estate. Between November 2018 and April 2020, Dr. Liu served as the Chief Strategist of Mansion Capital LLC, a privately-held real estate investment firm with brokerage and property management operations serving clients from both North America and Asia for their investments in the U.S. real estate market. With extensive property transaction experience, Dr. Liu has a breadth of connections to operating businesses that incorporate tactical real estate considerations into their business development strategies. Prior to joining Mansion Capital, Dr. Liu was an investment strategist at J.P. Morgan Chase & Co. from July 2015 to October 2018. With a primary focus in commercial mortgages, Dr. Liu assessed the operational strength and financial health of a multitude of commercial real estate operators such as Starwood, Simon and Westfield, providing investment strategies to major Wall Street institutions spanning private equity, hedge funds and insurance companies. Dr. Liu began his career in academia, teaching a variety of degree programs from bachelor’s to executive education at Washington University Olin Business School between January 2013 and May 2015 while completing his doctoral studies, for which he received a PhD in finance in May 2015. Dr. Liu obtained a master’s in finance in December 2012 and his BA in economics and mathematics summa cum laude in May 2010 from Washington University in St. Louis.
Dong Liu, 34
Chief Financial Officer
Mr. Liu has been the Chief Financial Officer of Dongguan Zhishang Photoelectric Technology Co., Ltd., a regional designer, manufacturer and distributor of LED lights serving commercial customers throughout Southern China since November 2016, at which time he led a syndicate of investments into the firm. Mr. Liu has since overseen the financials of Dongguan Zhishang as well as provided strategic guidance to its board of directors, advising on operational efficiency and cash flow performance. From March 2010 to October 2016, Mr. Liu was the Head of Finance at Feidiao Electrical Group Co., Ltd., a leading Chinese manufacturer of electrical outlets headquartered in Shanghai and with businesses in the greater China region as well as Europe.
Board of Directors
Nelson Haight, 55
Director
A veteran in the oil & gas industry with over 30 years of professional experience, Mr. Haight currently serves as the Chief Financial Officer for Element Markets, LLC, an environmental commodities firm, which he joined in September 2019. From November 2018 to June 2019, Mr. Haight was the Chief Financial Officer for Epic Companies, LLC, a family office backed oilfield service company. Between July 2017 and September 2018, Mr. Haight was the Chief Financial Officer of Castleton Resources, LLC, a privately held exploration and production company. From December 2011 to July 2017, Mr. Haight served in various capacities from Vice President to Chief Financial Officer at Midstates Petroleum Company, Inc., an exploration and production company founded in 1993 and focused on the application of modern drilling and completion techniques to oil/liquids-prone resources in previously discovered yet underdeveloped hydrocarbon trends. In 2015, Mr. Haight led the team that raised $625 million in new capital for Midstates Petroleum. Mr. Haight received an MPA and BBA from the University of Texas at Austin in May 1988 and is a Certified Public Accountant and member of the American Institute of Certified Public Accountants.
Todd Milbourn, 55
Director
Dr. Milbourn is the Vice Dean and Hubert C. and Dorothy R. Moog Professor of Finance at Washington University Olin Business School, where he has researched and built academic programs in the areas of corporate finance, executive compensation and credit ratings since June 2000. With expertise on valuation, corporate finance, corporate governance, executive compensation and corporate risk-taking, Dr. Milbourn has been retained as an expert by private firms as well as the U.S. Department of Justice in cases related to fair rates of return, breach of contract damages and executive compensation programs, among others. Dr. Milbourn is also the Director and Chair of the Audit Committee of the Xanthus Fund at Oppenheimer, an asset management company with over 1,000 financial advisors and more than $90 billion assets under administration. Dr. Milbourn obtained his PhD in finance from Indiana University Kelly School of Business in December 1995 and BA in economics and mathematics from Augustana College in May 1991.
Wenhua Zhang, 50
Director
Mr. Zhang has been a Partner at Azia Capital Fund LP, a private investment firm, since October 2014. Mr. Zhang began his career in the financial industry as the Vice President of Equity Research in the technology, media and telecom sector with T. Rowe Price from August 2001 to May 2008, and later joined Bain Capital as Director of the Brookside Fund, a long short equity investments fund, between July 2008 and December 2010. From February 2011 to August 2012, Mr. Zhang was Senior Vice President and Portfolio Manager at Harvard Management Company, a wholly owned subsidiary of Harvard University charged with managing the university’s endowment assets, and then as Partner and Portfolio Manager at Newport Asia LLC between October 2012 and October 2014, investing in Asia’s high-growth companies on behalf of clients from institutions, endowments, and family offices. Mr. Zhang received an MBA with dual majors in finance and technology innovation from the Wharton School at the University of Pennsylvania in May 2001.