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Oaktree Acquisition Corporation II

Oaktree Acquisition Corporation II

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: Alvotech Holdings S.A.

ENTERPRISE VALUE: $2.25 billion
ANTICIPATED SYMBOL: ALVO

Oaktree Acquisition Corp. II proposes to combine with Alvotech Holdings S.A., a global biopharmaceutical company focused solely on the development and manufacture of biosimilar medicines for patients worldwide.

  • Alvotech seeks to be a global leader in the biosimilar space by delivering high quality, cost-effective products and services, enabled by a fully integrated approach and broad in-house capabilities.
  • Alvotech’s current pipeline contains seven biosimilar candidates aimed at treating autoimmune disorders, eye disorders, osteoporosis, and cancer.

SUBSEQUENT EVENT – 4/20/22 – LINK

  • On April 19, 2022, the Company secured a Standby Equity Purchase Agreement (“SEPA”) facility from YA II PN, Ltd (“Yorkville”) and signed a binding term sheet for a debt facility from Sculptor Capital Management (“Sculptor”).
  • The two facilities are intended to provide access of up to $250 million and are expected to be used to replace potential redemptions by OACB shareholders.
  • The Yorkville SEPA facility provides for up to $150 million of equity financing at the Company’s option
    • The shares will be purchased for 98% of the market value during a pricing period elected by the company
  • Additionally, the binding term sheet with Sculptor provides for $75 million – $125 million in debt, with the exact amount to be finalized based on the level of net proceeds generated as a result of the closure of the Business Combination.
    • Alvotech Holdings will pay a 2% underwriting fee to Sculptor and the interest rate is to be determined on the date of the signing of the facility agreement but will be no less than 10% and no more than 12.5%, and the maturity date of the facility is September 23, 2025.
  • Subsequent Event – On April 20, 2022, Alvotech and OACB agreed to reduce the minimum cash condition such that the minimum cash condition would be satisfied through the existing PIPE commitments of approximately $175 million and the new loan facility from Sculptor.
    • (i) to lower the Minimum Cash Condition from $300,000,000 to $250,000,000
    • (ii) to increase the principal amount of indebtedness Alvotech Holdings can incur in any debt financing transactions prior to the closing of the Business Combination without the prior written consent of OACB from $50,000,000 to $90,000,000
    • (iii) that the aggregate proceeds in excess of $90,000,000 of any debt financing funded or available to be funded to Alvotech Holdings prior to the closing of the Business Combination, at or following the closing of the Business Combination are to be credited towards the Minimum Cash Condition.

SUBSEQUENT EVENT – 1/18/22 – LINK

Upsizes Oversubscribed PIPE

  • The upsized PIPE, totaling approximately $175 million and entirely raised as common stock at $10.00 per share, is driven by increased interest from premier Icelandic investors, including Arctica Finance, Arion Bank, and Landsbankinn.
    • This $21 million is in addition to other top-tier investors including Suvretta Capital, Athos (the Strüngmann Family Office), CVC Capital Partners, Temasek Holdings, Farallon Capital Management, and Sculptor Capital Management, among others.

TRANSACTION

  • The business combination is expected to deliver gross proceeds to Alvotech in excess of $450 million (assuming no redemptions).
  • This includes cash proceeds of approximately $250 million from Oaktree Acquisition Corp. II’s trust account (assuming no redemptions); in excess of $150 million from private placement (PIPE) investors (the “PIPE Transaction”), including among others, funds managed by Suvretta Capital, Athos (the Strüngmann Family Office), CVC Capital Partners, Temasek, Farallon Capital Management, Sculptor Capital Management and premier Icelandic investors including Arctica Finance, Arion Bank, and Landsbankinn; and a $50 million equity commitment from existing shareholders to be funded prior to the end of 2021.
  • The combined company will have an implied initial enterprise value of approximately $2.25 billion and will be well-positioned to continue investing in the growth of its biosimilar pipeline.
  • As part of the transaction, Alvotech’s existing equity holders have committed to roll 100% of their equity into the combined company.
  • Leading existing institutional backers of Alvotech, including among others, Aztiq Pharma Partners, led by founder and Chairman Mr. Robert Wessman, Alvogen with CVC Capital Partners and Temasek as lead investors, Fuji Pharma from Japan, YAS Holdings from Abu Dhabi, Shinhan from Korea, Baxter Healthcare SA from the US, and Athos (the Strüngmann Family Office) from Germany intend to roll 100% of their shares into the combined company.
  • Assuming no public shareholders of Oaktree Acquisition Corp. II exercise their redemption rights, current Alvotech equity holders will own approximately 80%, Oaktree Acquisition Corp. II shareholders will own approximately 11%, and PIPE investors will own approximately 7% of the issued and outstanding ordinary shares, respectively, of the combined company at closing.
  • The transaction also includes earn-out provisions tied to the trading price of the combined company’s shares, reflecting an alignment of interest with shareholders.
  • Oaktree Acquisition Corp. II’s sponsor is deferring 1.25 million founder shares into an earn-out at share price hurdles of $12.50 and $15.00.
  • The transaction also includes an earn-out to existing shareholders of Alvotech, consisting of 38.3 million shares, which will vest evenly at share price hurdles of $15.00 and $20.00.

Oaktree II Transaction Overview

PIPE

  • Fully committed PIPE of 15,330,000 TopCo Ordinary Shares at a purchase price of $10.00 per share, for aggregate gross proceeds of $153,300,000 from top-tier investors, including Suvretta Capital, Athos (the Strüngmann Family Office), CVC Capital Partners, Temasek, Farallon Capital Management, Sculptor Capital Management, and premier Icelandic investors including Arctica Finance, Arion Bank, and Landsbankinn.
  • Upsizes Oversubscribed PIPE
    • The upsized PIPE, totaling approximately $175 million and entirely raised as common stock at $10.00 per share, is driven by increased interest from premier Icelandic investors, including Arctica Finance, Arion Bank, and Landsbankinn.
      • This $21 million is in addition to other top-tier investors including Suvretta Capital, Athos (the Strüngmann Family Office), CVC Capital Partners, Temasek Holdings, Farallon Capital Management, and Sculptor Capital Management, among others.

LOCK-UP

  • In connection with the consummation of the Business Combination, TopCo will enter into an investor rights and lock-up agreement (the “IRA”) with the OACB Sponsor and certain Alvotech shareholders.
  • Pursuant to the IRA, TopCo Ordinary Shares may not be transferred (subject to certain exceptions) until:
    • (i) with respect to the TopCo Ordinary Shares held by the OACB Sponsor after the closing of the Business Combination, 365 days after the closing of the Business Combination, subject to earlier release if the TopCo Ordinary Shares trade at or above a volume weighted average price of $12.00 for ten (10) trading days during any twenty (20) trading day period commencing at least 180 days following the closing of the Business Combination;
    • (ii) with respect to the TopCo Ordinary Shares held by TopCo’s chairman of the board of directors (the “Chairman Shares”),
      • (x) 180 days following the closing of the Business Combination, with respect to one-third of the Chairman Shares,
      • (y) 365 days following the closing of the Business Combination, with respect to one-third of the Chairman Shares (with earlier release if the TopCo Ordinary Shares trade at or above a volume-weighted average price of $12.00 for ten (10) trading days during any twenty (20) trading day period commencing at least 180 days following the closing of the Business Combination), and
      • (z) 545 days following the closing of the Business Combination, with respect to the remaining one-third of the Chairman Shares; and
    • (iii) with respect to the TopCo Ordinary Shares held by the other investors party to the IRA, 180 days after the closing of the Business Combination. Additionally, pursuant to the IRA, the OACB Warrants held by the OACB Sponsor may not be transferred for a period of 30 days following the closing of the Business Combination.

EARNOUT

  • The transaction also includes earn-out provisions tied to the trading price of the combined company’s shares, reflecting an alignment of interest with shareholders.
  • Oaktree Acquisition Corp. II’s sponsor is deferring 1.25 million founder shares into an earn-out at share price hurdles of $12.50 and $15.00.
  • The transaction also includes an earn-out to existing shareholders of Alvotech, consisting of 38.3 million shares, which will vest evenly at share price hurdles of $15.00 and $20.00.

NOTABLE CONDITIONS TO CLOSING

  • Subsequent Event – On April 20, 2022, Alvotech and OACB agreed to reduce the minimum cash condition such that the minimum cash condition would be satisfied through the existing PIPE commitments of approximately $175 million and the new loan facility from Sculptor.
    • (i) to lower the Minimum Cash Condition from $300,000,000 to $250,000,000
    • (ii) to increase the principal amount of indebtedness Alvotech Holdings can incur in any debt financing transactions prior to the closing of the Business Combination without the prior written consent of OACB from $50,000,000 to $90,000,000
    • (iii) that the aggregate proceeds in excess of $90,000,000 of any debt financing funded or available to be funded to Alvotech Holdings prior to the closing of the Business Combination, at or following the closing of the Business Combination are to be credited towards the Minimum Cash Condition.
  • The obligation of OACB and Alvotech to consummate the Business Combination is subject to the aggregate cash proceeds from OACB’s trust account, together with the proceeds from the PIPE Financing, being no less than $300,000,000 (after deducting any amounts paid to OACB shareholders that exercise their redemption rights in connection with the Business Combination) (the “Minimum Cash Condition”).

NOTABLE CONDITIONS TO TERMINATION

  • The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior to the closing of the Business Combination by either party, if the closing of the Business Combination has not occurred by June 7, 2022.

ADVISORS

  • Morgan Stanley & Co. LLC and Credit Suisse served as financial advisors to Alvotech.
  • Deutsche Bank Securities served as financial advisor and capital markets advisor to Oaktree Acquisition Corp. II.
  • Deutsche Bank Securities and Morgan Stanley & Co. LLC served as lead private placement agents, and Citigroup Global Markets Inc. and Credit Suisse also served as private placement agents, for Oaktree Acquisition Corp. II in connection with the PIPE Transaction.
  • Cooley (UK) LLP served as lead legal counsel to Alvotech.
  • Kirkland and Ellis LLP and King & Spalding served as legal counsel to Oaktree Acquisition Corp. II.
  • Shearman & Sterling LLP served as legal counsel to the placement agents.

MANAGEMENT & BOARD

Executive Officers

Patrick McCaney, 39 [Resigned 4/18/22]
Chief Executive Officer & Director

Patrick McCaney serves as Chief Executive Officer and a director on the board of directors of Oaktree Acquisition Corp. II and OAC and has served as portfolio manager for Oaktree’s Value Equities strategy since its inception. Mr. McCaney oversees the analysis, portfolio construction and management of the Value Equities strategy. Since joining Oaktree, he has led more than 40 public and private investments across a variety of sectors. Prior to joining Oaktree, Mr. McCaney spent more than seven years as an investment professional for the Special Situations Group of Goldman, Sachs & Co., where he originated, executed and managed investments of Goldman’s proprietary capital. Mr. McCaney earned a master’s degree in electrical engineering as well as B.S. degrees in electrical engineering and management science from the Massachusetts Institute of Technology. .

Alexander Taubman, 33
President

Alexander Taubman is President of Oaktree Acquisition Corp. II and OAC and a managing director within Oaktree’s Value Equities strategy, which he helped launch. Mr. Taubman contributes to the analysis, portfolio construction and management of the Value Equities strategy. He has led public and private investments in consumer, industrial, media, financials and various other sectors. Prior to joining Oaktree in 2014, Mr. Taubman was an investment professional in the Special Situations Group at Goldman, Sachs & Co., where he originated, executed, and managed investments of Goldman’s balance sheet capital. Mr. Taubman serves as a Trustee of Heckscher Foundation for Children, as well as the Museum of Contemporary Art Detroit. He earned a A.B. degree in economics from Harvard College, as well as an M.B.A. from Harvard Business School.

Zaid Pardesi, 37
Chief Financial Officer and Head of M&A

Zaid Pardesi is Chief Financial Officer and Head of M&A of Oaktree Acquisition Corp. II and OAC and he is a senior vice president within Oaktree’s Value Equities strategy. He has spent his career originating, acquiring and managing middle-market companies in the industrial, consumer, and healthcare sectors, often operating platforms as CFO. Mr. Pardesi joined Oaktree in 2019 from The Cranemere Group, a global holding company, where he was a senior investment professional acquiring middle-market businesses. Prior thereto, Mr. Pardesi was an investor at H.I.G. Capital and at AEA Investors in New York and London. He began his career at Bain & Company. Mr. Pardesi received an M.B.A. from The Wharton School at the University of Pennsylvania, and a B.S. from Northwestern University, where he was a computer engineering and economics double major.

Mathew Pendo, 57
Chief Operating Officer

Mathew Pendo is Chief Operating Officer of Oaktree Acquisition Corp. II and OAC and the Head of Corporate Development and Capital Markets for Oaktree, the President and Chief Operating Officer of the three Oaktree managed BDC’s: Oaktree Specialty Lending Corporation, Oaktree Strategic Income Corporation and Oaktree Strategic Income II. Mr. Pendo joined Oaktree in 2015. His prior experience includes serving as the chief investment officer of the Troubled Asset Relief Program (TARP) of the U.S. Department of the Treasury, where he was honored with the Distinguished Service Award in 2013. Mr. Pendo began his career at Merrill Lynch, where he spent 18 years, starting in their investment banking division before becoming managing director of the technology industry group. Subsequently, Mr. Pendo was a managing director at Barclays Capital, first serving as co-head of U.S. Investment Banking and then co-head of Global Industrials group. He received a bachelor’s degree in economics from Princeton University, cum laude and is a former board member of Ally Financial and SuperValu Inc.

 

Board of Directors

John Frank, 63
Chairman & Director

John Frank serves as the Chairman and a director on the board of directors of Oaktree Acquisition Corp. II and OAC and is Oaktree’s Vice Chairman, working closely with Howard Marks, Bruce Karsh and Jay Wintrob (Oaktree’s Chief Executive Officer) in managing the firm. Since October 2017, Mr. Frank has also served as the Chairman of the boards of directors of Oaktree Strategic Income Corp. and Oaktree Specialty Lending Corporation. Mr. Frank joined Oaktree in 2001 as General Counsel and was named Oaktree’s Managing Principal in early 2006, a position which he held for about nine years. As Managing Principal, Mr. Frank was the firm’s principal executive officer and responsible for all aspects of the firm’s management. Prior to joining Oaktree, Mr. Frank was a partner of the Los Angeles law firm of Munger, Tolles & Olson LLP where he managed a number of notable merger and acquisition transactions. Prior to joining Munger Tolles in 1984, Mr. Frank served as a law clerk to the Honorable Frank M. Coffin of the United States Court of Appeals for the First Circuit. Prior to attending law school, Mr. Frank served as a Legislative Assistant to the Honorable Robert F. Drinan, Member of Congress. Mr. Frank holds a B.A. degree with honors in history from Wesleyan University and a J.D. magna cum laude from the University of Michigan Law School where he was Managing Editor of the Michigan Law Review and a member of the Order of the Coif. He is a member of the State Bar of California and, while in private practice, was listed in Woodward & White’s Best Lawyers in America. Mr. Frank is a member of the Board of Directors of Chevron Corporation and a Trustee of Wesleyan University, The James Irvine Foundation, Good Samaritan Hospital of Los Angeles, and the XPRIZE Foundation.

Paul Meister, 67
Director

Paul Meister has agreed to serve on the board of directors of Oaktree Acquisition Corp II. Mr. Meister is co-founder, and since 2008, Chief Executive Officer of Liberty Lane Partners, LLC, a private investment company with diverse investments in healthcare, technology and distribution-related industries, and is Vice Chairman and Co-Founder of Perspecta Trust, a New Hampshire based trust company. Mr. Meister also served as President of MacAndrews & Forbes Incorporated from 2014 to 2018. Previously, Mr. Meister was appointed Executive Vice Chairman of Revlon, Inc. to serve as the principal executive officer on an interim basis when the Chief Executive Officer of Revlon, Inc. resigned in January 2018. Mr. Meister previously served as Chairman and Chief Executive Officer of inVentiv Health, Inc. (now Syneos Health Inc.) (NASDAQ:SYNH), a provider of commercial, consulting and clinical research services to the pharmaceutical and biotech industries, from 2010 until 2014. Mr. Meister was Chairman of Thermo Fisher Scientific Inc. (NYSE:TMO), a scientific instruments equipment and supplies company, from November 2006 until April 2007. He was previously Vice Chairman of Fisher Scientific International, Inc., a predecessor to Thermo Fisher, from 2001 to 2006, and Chief Financial Officer of Fisher Scientific from 1991 to 2001. Prior to Fisher Scientific, Mr. Meister held executive positions with the Henley GrouAmAAp, Wheelabrator Technologies and Abex, Inc. Mr. Meister has served as a director of Quanterix Corporation (NASDAQ:QTRX) since 2013, Aptiv PLC (NYSE: APTIV) since July 2019, and Amneal Pharmaceuticals, Inc. (NYSE: AMRX) since August 2019. He also previously served as director of Scientific Games Corporation (NASDAQ: SGMS), which provides customized, end-to-end solutions to the gaming industry from 2012 to 2020: LKQ Corporation (NASDAQ:LKQ), a distributor of vehicle products, from 1999 until 2018; vTv Therapeutics Inc. (NASDAQ:VTVT), a clinical-stage bio pharmaceutical company, from 2015 until 2018; and Revlon (NYSE:REV) from 2015 to 2018. Mr. Meister has served as a director of OAC from 2019 to present. Mr. Meister is Co-Chair of the University of Michigan’s Life Sciences Institute External Advisory Board and Chair of the Provost’s Advisory Committee. Mr. Meister has an M.B.A. from Northwestern University and a B.A. from the University of Michigan.

Andrea Wong, 54
Director

Andrea Wong has agreed to serve on the board of directors of Oaktree Acquisition Corp. II. Ms. Wong serves on the boards of Oaktree Acquisition Corp. (NYSE: OAC), Liberty Media Corporation (NASDAQ:LSXMK), Qurate Retail Group (NASDAQ:QRTEA) and Hudson Pacific Properties (NYSE:HPP). She is also a Governor of the British Film Institute and a Trustee of the Royal Academy of Arts. Ms. Wong was most recently President, International Production for Sony Pictures Television and President, International for Sony Pictures Entertainment based in London. She oversaw Sony Pictures Television’s 18 overseas production companies, creating nearly 1,300 hours of entertainment around the world each year. Previously, Ms. Wong served as President and CEO of Lifetime Networks where she oversaw the operations of Lifetime Television, Lifetime Movie Network, Lifetime Real Women, and Lifetime Digital, including programming, marketing, advertising sales, affiliate sales, public affairs, business and legal affairs, strategic planning, operations and research. Prior to that, Ms. Wong was Executive Vice President, Alternative Programming, Specials and Late Night at ABC. Ms. Wong graduated from MIT with a degree in electrical engineering and received an M.B.A. from Stanford University. She is a Henry Crown Fellow at the Aspen Institute, serves on the Stanford Graduate School of Business Advisory Council and is a member of the Committee of 100.

Anthony Grillo, 65
Director

Anthony Grillo has agreed to serve on the board of directors of Oaktree Acquisition Corp. II. Mr. Grillo has served as a director of Littelfuse, Inc. (NASDAQ:LFUS) since 1991 and OAC since 2019. Mr. Grillo has also served and is currently serving on the boards of directors of NarrativeWave, Inc. since 2017 and WeR.AI, Inc. since February 2018. Mr. Grillo is one of the founders of American Securities Advisors, LLC and affiliates (now known as Ascribe Opportunities Management, LLC), an advisory and private equity investment firm established in 2005. Mr. Grillo served as Managing Director of Ascribe until his retirement in December 2018. From 2001 through 2004, Mr. Grillo served as Senior Managing Director of Evercore Partners, Inc. (NYSE:EVR), an investment banking boutique providing advisory services to multinational corporations on significant mergers, acquisitions, divestitures, restructurings and other strategic corporate transactions, where he founded the restructuring practice for the firm. From 1999 through 2001, Mr. Grillo served as Senior Managing Director of Joseph Littlejohn & Levy, Inc., a private equity firm. From 1991 through 1999, Mr. Grillo was a Senior Managing Director of the Blackstone Group L.P. (NYSE:BX), a private equity firm. Mr. Grillo previously served as a director of GeoKinetics, from 2013 through 2015, and Lumeta Corporation, from 2016 through June 2018. Mr. Grillo holds a B.A. in economics from Rutgers University and an M.B.A. from The Wharton School of the University of Pennsylvania.

ByRoman Developer