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Novus Capital Corporation

Novus Capital Corporation

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: AppHarvest

ENTERPRISE VALUE: $549.7 million
ANTICIPATED SYMBOL: APPH

Novus Capital Corp. proposes to combine with AppHarvest, an applied technology company building some of the world’s largest indoor farms in Appalachia. The Company combines conventional agricultural techniques with cutting-edge technology and is addressing key issues including improving access for all to nutritious food, farming more sustainably, building a home-grown food supply, and increasing investment in Appalachia. The Company’s 60-acre Morehead, KY facility is among the largest indoor farms in the U.S.

AppHarvest Investment Highlights

  • Operates a 60-acre controlled environment agriculture facility in Morehead, KY — one of the largest high-tech greenhouses in the world — and has an active and robust development pipeline for future large-scale controlled environment indoor farm projects
  • First produce scheduled to be harvested, in early 2021, will be tomatoes, a crop that has seen imports rise to 60% of all fresh tomatoes available in U.S. stores
  • Designed to reduce water usage by 90% compared to traditional open-field agriculture and eliminate agricultural runoff
  • Aims to improve access to fresh non-GMO fruits and vegetables, as approximately 70% of the U.S. population is within a one-day drive of the Morehead, KY facility, which AppHarvest estimates will lower transportation costs compared to existing growers by up to 80%
  • Positioned to capitalize on the secular shift to plant-based foods, creating increased demand for locally grown, high-quality produce
  • Experienced leadership team and board of directors with experience in sustainable investing
  • Promoting sustainable change in agriculture as a Public Benefit Corporation, registered with Delaware, and a B Corporation, independently certified by the non-profit B Lab
  • Long-term distribution agreement in place to reach top grocers in the United States

TRANSACTION

  • The business combination values AppHarvest at a $827.0 million pro forma equity value, at the $10.00 per share PIPE price and assuming minimal redemptions by Novus Capital shareholders.
  • The transaction will provide $475 million of gross proceeds to the company, including $375 million fully committed common stock PIPE at $10.00 per share anchored by existing and new investors
    • including Fidelity Management & Research Company, LLC, Inclusive Capital and Novus Capital Corporation.
  • Assuming minimal redemptions, it is anticipated that this transaction provides AppHarvest over $435 million of unrestricted cash at close, which will primarily be used to fund operations, including building additional high-tech controlled environment indoor farms, support growth and for other general corporate purposes.
  • AppHarvest issued a $30 million convertible note to Inclusive Capital which funded on September 28, 2020. The proceeds of the convertible note will primarily be used to fund operations, including development of new high-tech controlled environment indoor farms, during the period prior to the close of this transaction. This note will convert to shares of AppHarvest’s common stock in connection with the close of this transaction.

The transaction is expected to close late in the fourth quarter of 2020 or early in the first quarter of 2021.

novus trans overview

PIPE

  • 37,500,000 shares of Novus Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $375,000,000

SPONSOR RESTRICTED STOCK AGREEMENT

2,500,000 shares of Novus Common Stock held by the Initial Holders will be released from escrow, provided that a certain number of such shares of Novus Common Stock will be subject to restrictions in accordance with the formula set forth below

  • Restrictions will apply to a number of shares of Novus Common Stock equal to 1,250,000 shares of the Novus Common Stock held by the Initial Holders, multiplied by (x) a number, not less than 0, equal to (i) the number of shares of Novus Common Stock validly redeemed by holders thereof pursuant to redemption rights provided in the Novus certificate of incorporation minus (ii) 1,025,000, divided by (y) the number of shares of Novus Common Stock outstanding immediately prior to the Effective Time.
  • The Restricted Shares will be released from restrictions on:
    • (A) with respect to 50% of the Restricted Shares, the date on which
      • (x) the closing price of Novus Common Stock equals or exceeds $12.50 per share for any 20 trading days within a 30-trading day period commencing after the Closing or
      • (y) Novus consummates a sale, merger, liquidation, exchange offer, transaction after the Merger (a “Subsequent Transaction”) which results in the stockholders of Novus having the right to exchange their shares of Novus Common Stock for cash, securities or other property having a value of at least $12.50 per share;
    • (B) with respect to the other 50% of the Restricted Shares, the date on which
      • (x) the closing price of the Novus Common Stock equals or exceeds $15.00 per share for any 20 trading days within a 30-trading day period commencing after the Closing or
      • (y) Novus consummates a Subsequent Transaction which results in the stockholders of Novus having the right to exchange their shares of Novus Common Stock for cash, securities or other property having a value of at least $15.00 per share.
    • If none of the events set forth in this paragraph occur prior to the fifth (5th) anniversary of the Closing, the Restricted Shares will be forfeited.

NOTABLE CONDITIONS TO CLOSING

  • The sale and issuance by Novus of Novus Common Stock in an aggregate amount at least equal to the Minimum PIPE Commitments and not in excess of the Maximum PIPE Allocation shall have been consummated in accordance with the terms of the Subscription Agreements

NOTABLE CONDITIONS TO TERMINATION

  • If the Effective Time will not have occurred prior to the date that is 180 days after the date of the Business Combination Agreement (the “Outside Date”)
    • Effect of Termination: all expenses incurred in connection with the Business Combination Agreement and the Proposed Transactions shall be paid by the party incurring such expenses, whether or not the Proposed Transactions are consummated.

ADVISORS

  • Cowen is serving as sole placement agent and capital markets advisor to Novus Capital.
  • Blank Rome LLP is serving as legal advisor to Novus Capital.
  • Cowen is serving as financial advisor to AppHarvest.
  • Cooley LLP is serving as legal advisor to AppHarvest.

NOVUS CAPITAL CORP. MANAGEMENT & BOARD

Executive Officers

Larry M. Paulson, 66
Chief Executive Officer & Director

Mr. Paulson has served as principal and founder of Rancho Santa Fe Solutions , a wireless industry consulting company he founded in February 2010. From 2013 to January 2020, Mr. Paulson was with Qualcomm (Nasdaq:QCOM) where he served as Vice President of Product Management (2013-16), Vice President and President India and SAARC (2016-2018) and Vice President Sales NA and Australia (2018-Jan 2020). Prior to Qualcomm, he served as Executive Vice President and Chief Marketing officer of Brightpoint, Inc., a provider of worldwide distribution and integrated logistics services to the wireless communications industry, from 2010 to 2013. Prior to that he served with Nokia (NYSE:NOK) from 1987 to 2010 where he had numerous roles including global Senior Vice President and General Manager CDMA Product line. Mr. Paulson holds a BA in Communications from Point Park University.

Vincent Donargo, 59
Chief Financial Officer

Since December 2019, Mr. Donargo has been providing financial advisory and consulting services to private clients. From May 2019 to December 2019, Mr. Donargo served as Executive Vice President and Chief Financial Officer of the Celadon Group Inc. (OTC:CGIPQ). From November 2017 to April 2019, he was Vice President and Chief Accounting Officer of the Celadon Group Inc., where he was brought in to assist with Celadon Group’s financial restructuring. Celadon Group filed a voluntary petition for bankruptcy on December 8, 2019. From August 2016 to November 2017, Mr. Donargo was Executive Vice President and Chief Financial Officer of Beaulieu Group LLC, a North American carpet and flooring manufacturing company, where he assisted the company with its financial restructuring process. Beaulieu Group LLC filed a voluntary petition for bankruptcy on July 16, 2017. Prior to joining Beaulieu Group, Mr. Donargo held senior finance positions at several publicly-traded companies, including Executive Vice President and Chief Financial Officer of Brightstar Corporation from April, 2014 to August 2016 and Executive Vice President, Chief Financial Officer and Treasurer of Brightpoint, Inc. from September 2005 until it was acquired by Ingram Macro Inc. in November 2012. From 1998 to 2005, Mr. Donargo was the strategic business unit controller, director of finance and corporate controller of Aearo Company, a safety products manufacturing company. Prior to that, from 1990 to 1998, Mr. Donargo was employed in various financial positions with National Starch and Chemical Company, a specialty chemical manufacturing company. Mr. Donargo holds a BA in Accounting from Rutgers University.

 

Board of Directors

Robert J. Laikin, 56
Chairman

Mr. Laikin currently serves as the non-executive Chairman of the Board of Washington Prime Group Inc. (NYSE:WPG), where he has held a director role since May 2014. Mr. Laikin held the Lead Independent Director role at Washington Prime Group Inc. until the position was eliminated by the Board in 2016 and he at that time became Chairman of the Board. Mr. Laikin has also been the managing member of L7 Investments LLC, a closely held company that invests primarily in multi-family apartments as well as single-purpose buildings, hotels, divestitures and single-family homes, since January 2016. Mr. Laikin served as Executive Advisor to the CEO and Government Relations Executive of Ingram Micro Inc. (NYSE:IM), a wholesale technology distributor and supply-chain management and mobile device lifecycle services company, from November 2012 to December 2019. Previously Mr. Laikin served as the founder, Chief Executive Officer and member of the board of directors of Brightpoint, Inc. (Nasdaq:CELL) from August 1989 until it was acquired by Ingram Macro Inc. in November 2012. Mr. Laikin holds a Bachelor of Science from Indiana University. We believe Mr. Laikin is well-qualified to serve as our Chairman because of his significant experience in the areas of executive leadership, corporate management, retail, real estate, business strategy and corporate finance, banking, financing, accounting, corporate management, general business and global business operations, accounting, corporate governance, public company compliance, political/governmental matters, audit/compliance, entrepreneurism, real estate development, sales, charitable/philanthropic matters, marketing, risk management/insurance, legal, investor, media and public relations, negotiation and deal structure.

Heather Goodman, 47
Director 

Since March 2007, Ms. Goodman has served as the Chief Operating Officer and President of True Capital Management, a boutique multi-family office specializing in business management and investment advisory services for athletes, entertainers and high net worth individuals. Previously Ms. Goodman acted as Financial Advisor at Morgan Stanley Smith Barney from February 2002 to February 2007. Ms. Goodman holds a BS in Business Administration with an emphasis in Accounting from California Polytechnic State University, San Luis Obispo. She is a Certified Public Accountant and maintains Series 63, 65 and life insurance licenses.

Brad Bostic, 45
Director

Mr. Bostic has served as the Chairman and Chief Executive Officer of hc1, a bioinformatics company with more than 1,000 health systems and diagnostic laboratory sites utilizing its machine-learning powered software, since founding hc1 in 2011. Mr. Bostic has also served as the Managing Director of Health Cloud Capital since June 2017, where he leads the deployment of Health Cloud Capital Fund I, a special purpose vehicle targeting SaaS bioinformatics businesses that can be consolidated with hc1. Mr. Bostic has been responsible for forging strategic partnerships for hcl with global healthcare technology leaders including Quest Diagnostics, Appriss Health, CliniSys, and Amazon Web Services and leading healthcare organizations including Cleveland Clinic, University of Washington Health System, Sonora Quest Labs, and Sonic Healthcare. Mr. Bostic has served on the board of directors of TechPoint Indiana, an advisory body advising technology companies headquartered in Indiana, since January 2015 and Eskenazi Health Foundation, a non-profit organization aiming to promote a vital, healthy Indianapolis community, since December 2017. Mr. Bostic holds a BS in Business at Indiana University with a concentration in Informatics.

ByRoman Developer