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AEA-Bridges Impact Corporation

AEA-Bridges Impact Corporation

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: LiveWire

ENTERPRISE VALUE: $1.765 billion
ANTICIPATED SYMBOL: LVW

AEA-Bridges Impact Corp. and Harley-Davidson, Inc., announced that they have entered into a definitive business combination agreement under which ABIC will combine with LiveWire, Harley-Davidson’s electric motorcycle division, to create a new publicly-traded company.

  • Building on a 10-year journey within Harley-Davidson and established as a separate division in 2019, LiveWire is an industry-leading, all-electric motorcycle brand with a focus on the urban market, and a mission to pioneer the electric motorcycle space and beyond.
  • LiveWire will develop the technology of the future and will invest in the capabilities needed to lead the transformation of motorcycling.
  • As a pure-play EV brand with first-mover advantage, LiveWire has brand presence in North America and Europe, with planned expansion into additional markets including Asia.
  • LiveWire has a deep track record of R&D investments and a clearly defined strategy to capture increasing market share and consumer adoption in the growing two-wheel EV transition, following significant investment to date.
  • LiveWire has a compelling financial profile with a robust new product pipeline with breakthrough technology and features, and a clear path to attractive long-term profitability.
  • LiveWire will also include STACYC, the all-electric balance bikes for kids.

TRANSACTION

  • The transaction will be financed by ABIC’s $400 million cash held in trust*, a $100 million investment from Harley-Davidson, and a $100 million investment from KYMCO, through a PIPE (private investment in public equity).
  • The combined company is expected to have an enterprise value of approximately $1.77 billion and post-money equity value of approximately $2.31 billion at closing.
  • Jochen Zeitz, Chairman, President and CEO of Harley-Davidson, will be Chairman and serve as Acting CEO of LiveWire for up to two years following completion of the transaction. Ryan Morrissey will serve as President of LiveWire
  • LiveWire’s Board of Directors will include independent directors in addition to representation from Harley-Davidson and ABIC.
  • The net cash proceeds will be used to fund LiveWire’s strategic plan to accelerate its go-to-market strategy, invest in new product development, and enhance its global manufacturing and distribution capabilities.
  • Upon closing of the transaction, Harley-Davidson will retain an equity interest in the Company of approximately 74%, ABIC’s shareholders will own approximately 17%, and ABIC’s founders and KYMCO will own approximately 4% each*.
  • As the majority shareholder in LiveWire following the transaction, Harley-Davidson will continue to consolidate LiveWire’s results of operations for GAAP financial reporting purposes. LiveWire will be reported as a separate segment within Harley-Davidson’s financials with GAAP disclosures recognizing amounts attributable to the noncontrolling interests.

AEA Transaction Overview

PIPE

  • An aggregate of 10,000,000 shares of Holdco Common Stock for a purchase price of $10.00 per share, for aggregate gross proceeds of $100,000,000 (the “PIPE Financing”).

BACKSTOP

  • H-D has committed to a backstop facility, whereby H-D has agreed to subscribe for shares of HoldCo Common Stock to fund redemptions by shareholders of ABIC in connection with the Business Combination in an aggregate amount of up to $100,000,000 for a purchase price of $10.00 per HD Backstop Share.

LOCK-UP

  • With respect to the Target Holder (Company), the period beginning on the Closing Date and ending on the earliest of:
    • (i) the date that is seven years after the Closing Date
    • (ii) when the volume-weighted average price of HoldCo Shares is greater than or equal to $18.00 for any 20 trading days within a 30-trading day period commencing at least 18 months after the Closing Date and
    • (iii) when written notice of termination is given by LiveWire (or its permitted assigns or successor) by and between HD and Target
  • With respect to the Sponsor, Mr. Replogle and Mr. Serafeim (IMPX Directors) in respect of Lock-up Shares, the period beginning on the Closing Date and ending on the earliest of:
    • (i) 365 days after the Closing Date
    • (ii) if the volume weighted average price of a HoldCo Share equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period
  • With respect to Mr. Garcia (IMPX Director) in respect of Lock-up Shares, the period beginning on the Closing Date and ending on the earliest of:
    • (i) eighteen months after the Closing Date
    • (ii) if the volume weighted average price of a HoldCo Share equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period

EARNOUT

  • Company: Following the Closing, and as additional consideration in respect of the transfer of the Company Equity to HoldCo, within ten (10) Business Days after the occurrence of an applicable Triggering Event:
    • 6,250,000 Earn-Out Shares for which the HoldCo Common Share Price is equal to or greater than $14.00 during the Earn-Out Period.
    • 6,250,000 Earn-Out Shares for which the HoldCo Common Share Price is equal to or greater than $18.00 during the Earn-Out Period.
      • “Earn-Out Period” means the period beginning eighteen (18) months from the Closing Date and ending on the fifth (5th) anniversary date of the beginning of the Earn-Out Period.
  • Sponsor shall forfeit and/or transfer up to an aggregate of 2,000,000 shares Class B ordinary share, par value $0.0001 of ABIC.

NOTABLE CONDITIONS TO CLOSING

  • The amount of Available Cash shall be no less than $270,000,000.
    • The amount of cash available to be released from the Trust Account as of immediately prior to the Closing (net of the SPAC Share Redemption Amount), plus
    • the net amount of proceeds actually received or confirmed to be received by HoldCo pursuant to the PIPE Investments as of immediately prior to or concurrently with the Closing, plus
    • the amount of proceeds required to be funded to HoldCo, plus
    • the portion of the HD Backstop Amount actually required to be funded to HoldCo, in each case, by the Company Equityholder, minus
    • the aggregate amount of all Transaction Expenses and SPAC Transaction Expenses.

NOTABLE CONDITIONS TO TERMINATION

  • In the event the Closing has not occurred on or before September 30, 2022, provided that such right to terminate is not available to any party if such exercising party is in material breach of its representations, warranties, covenants or agreements under the Business Combination Agreement

ADVISORS

  • J.P. Morgan Securities LLC is serving as financial advisor to Harley-Davidson, and Latham & Watkins LLP is serving as legal counsel.
  • Credit Suisse Securities (USA) LLC is serving as financial advisor and capital markets advisor to ABIC.
  • Citigroup Global Markets Inc. is serving as capital markets advisor to ABIC.
  • Kirkland & Ellis LLP is acting as legal counsel to ABIC.

MANAGEMENT & BOARD

Executive Officers

John Garcia, 64
Chair, Co-Chief Executive Officer and Director

Dr. Garcia is the Executive Chairman of AEA. He joined AEA in 1999 as a Partner and Head of AEA’s then newly-formed European operations based in London. In 2002, he became President of AEA while continuing to head European operations and lead AEA’s global Value-Added Industrial Products and Specialty Chemicals teams. In 2006, Dr. Garcia also became CEO of AEA, during which time he was responsible for all operational aspects of AEA including fundraising, investment review process, growth and strategy and operations. Dr. Garcia was also named Chairman of AEA in 2012 and in 2019, in connection with relinquishing the title of CEO, he became the Executive Chairman. As Executive Chairman, he remains responsible for AEA’s investment review process. Since 1999, under his leadership, AEA has made 75 private equity investments totaling over $9 billion of invested capital. He was also instrumental in the creation of the AEA Private Debt Funds in 2005 and the AEA Small Business Funds in 2004. Dr. Garcia has served on the board of numerous AEA portfolio companies in addition to various other companies. Dr. Garcia serves as the chairman or member of the investment committee for all the various AEA private equity and private debt funds. He has a long history of working together with family-owned and entrepreneur-led businesses and investors to help them maximize their potential and meet their long-term needs. Prior to joining AEA, Dr. Garcia held various positions at Credit Suisse First Boston including global head of the chemicals group and head of the European acquisitions, leveraged finance and financial sponsors group, and head of the European natural resources group. Earlier in his career, Dr. Garcia was a managing director at Schroder Wertheim in New York and held a number of industrial positions at Atlantic Richfield in Philadelphia, Pennsylvania. Dr. Garcia earned a B.Sc. from the University of Kent, an M.A. and Ph.D. in Organic Chemistry from Princeton University, and an M.B.A. from Wharton School of the University of Pennsylvania.

Michele Giddens, 54
Co-Chief Executive Officer and Director

Ms. Giddens has almost 30 years of experience in international development and social finance. Ms. Giddens is a Co-CEO of Bridges Fund Management, which she founded alongside Philip Newborough and Sir Ronald Cohen in 2002. She has played a key role in the growth of the impact investing movement in the U.K. Ms. Giddens currently sits as a Non-Executive Director on the board of CDC, the UK Government’s Development Finance Institution. Ms. Giddens’s prior experience includes chairing the UK National Advisory Board on Impact Investing, part of the Global Social Impact Investment Steering Group, from 2016 to 2018, and sitting on the Council of the BVCA. She was previously an adviser to the U.K. Treasury’s Social Investment Task Force and chaired the Community Development Finance Association from 2003 to 2005. Ms. Giddens began her career with the International Finance Corporation, the private sector financing arm of the World Bank Group, where she ran small business lending programs in Russia, Central and Eastern Europe, and advised on microfinance in Bangladesh, the Middle East and Mongolia. She subsequently spent eight years with Shorebank Corporation, one of the leading community development banks in the United States. Ms. Giddens has a B.A. (with Honors) in Politics, Philosophy & Economics from Oxford University and an M.B.A. from Georgetown University, Washington, D.C., and was awarded an OBE for her services to international development and social finance in the 2018 Queen’s Birthday Honors list.

Ramzi Gedeon, 47
Chief Financial Officer, Secretary and Director

Mr. Gedeon is a Partner of AEA and has over 20 years of private equity investment experience. Mr. Gedeon focuses on AEA’s investments in Europe. Prior to joining AEA in 2018, Mr. Gedeon was a Partner at TPG Capital in London, where he completed investments in various sectors including retail and consumer, industrials, building materials and technology and telecom. He has served on numerous boards and has closed transactions in several markets including the United Kingdom, Germany, France, Turkey, the Middle East and Australia. Mr. Gedeon began his career in investment banking at Merrill Lynch in New York, where he advised private equity firms on all aspects of their investment activities. Mr. Gedeon earned a B.A. (with Honors) in Economics from Cambridge University, and an M.A. in International and Development Economics from Yale University.

 

Board of Directors

Brian Trelstad, 51
Director

Mr. Trelstad has nearly 20 years of impact investing experience, and is currently a Partner at Bridges in the U.S. Sustainable Growth Fund, and a director of the Bridges Impact Foundation in the United States. His prior experience includes serving as the Chief Investment Officer of Acumen Fund, where he oversaw $55.0 million of investments into companies that were delivering health, water, energy and agriculture services in South Asia and Sub-Saharan Africa. Mr. Trelstad also served as a co-founding board member of the Aspen Network of Development Entrepreneurs and was one of the principal architects of the impact management software tool, Pulse, and the Impact Reporting and Investment Standards. Prior to Acumen Fund, Mr. Trelstad was a healthcare consultant at McKinsey & Company, was a lead environmental staff person at the Corporation for National Service, and has been involved in starting and advising a range of non-profit and for-profit start-ups. Brian has an undergraduate degree from Harvard University, an M.B.A. from Stanford’s Graduate School of Business, and an M.A. in City & Regional Planning from the University of California at Berkeley. He also teaches social entrepreneurship at Harvard Business School. Brian was the first impact investor to go through the Kauffman Fellows Program of the Center for Venture Education, and is a Henry Crown Fellow of the Aspen Institute.

John Replogle, 54
Independent Director

John Replogle is a leader in the conscious consumer and mission-driven brand movement, with extensive experience leading fast growth, high performing businesses including Seventh Generation and Burt’s Bees. Seventh Generation helped to launch the B Corp movement and has been awarded the “Best for the World” distinction from B Labs. Mr. Replogle believes that business is one of the most powerful forces on earth and such power must be harnessed for the greater good. He also served as President of Unilever’s Skin Care business and President of the Guinness Bass Import Company. Mr. Replogle started his career at the Boston Consulting Group and holds degrees from Harvard Business School and Dartmouth College. Recently, Mr. Replogle is a Founding Partner of One Better Ventures, a Real Leader 100 social impact firm that advises and invests in mission driven consumer goods companies. He serves on the Boards of Seventh Generation, Dartmouth, Leesa Sleep, Cree, Melissa & Doug, Beautycounter and BEST NC. He is an active environmentalist and champion of social entrepreneurs.

George Serafim, 38
Independent Director

George Serafeim is the Charles M. Williams Professor of Business Administration and the Chair of the Impact-Weighted Accounts Project at Harvard Business School. He has presented his research in over 60 countries around the world and ranks among the top 10 most popular authors out of over 12,000 business scholars on the Social Science Research Network. Professor Serafeim’s research focuses on measuring, driving and communicating corporate performance and social impact. His work is widely cited and has been published in the most prestigious academic and practitioner journals. He has been recognized by Barron’s as “one of the most influential people in ESG investing.” Professor Serafeim has held several positions of leadership. He is the co-founder of the consulting firm KKS Advisors and the technology firm Richmond Global Sciences. He serves on the steering committee of the Athens Stock Exchange and as the Chairman of Greece’s Corporate Governance Council. He has served on several not-for-profit organizations including the board of directors of the High Meadows Institute and the Standards Council of the Sustainability Accounting Standards Board.

ByRoman Developer