Andretti Acquisition Corp. *

Andretti Acquisition Corp. *

Mar 23, 2021 by Nat Judge

PROPOSED BUSINESS COMBINATION: Zapata Computing, Inc. 

ENTERPRISE VALUE: $283 million
ANTICIPATED SYMBOL: ZPTA

Andretti Acquisition Corp. entered into a definitive business combination agreement with Zapata Computing, Inc.

  • Zapata AI is the Industrial Generative AI company, revolutionizing how enterprises solve their hardest problems with its powerful suite of Generative AI software.
  • By combining numerical and text-based solutions, Zapata AI empowers enterprises to leverage large language models and numerical generative models better, faster, and more efficiently—delivering solutions to drive growth, savings and unprecedented insight.
  • The Company was founded in 2017 and is headquartered in Boston, Massachusetts.

SUBSEQUENT EVENT – 3/26/24 – LINK

Forward Purchase Agreement

  • The SPAC entered into an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Agreement”) with Sandia Investment Management LP.
    • Sandia will purchase up to an aggregate of 1,500,000 shares.
    • After the Business Combination closes, the initial reset price for shares will be $10.00, adjusted monthly starting 180 days later, to be the greater of $4.50 or the 30-day average share price preceding each adjustment date.
      • The reset price may decrease with any lower-priced dilutive offering, excluding specific exceptions like equity plan grants, senior note conversions, and shares issued for business combination costs, or in certain transactions agreed upon prior or shortly after the combination.
    • The valuation date will be set at the earliest of three events:
      • (a) two years after the Business Combination closes,
      • (b) a date chosen by Sandia following specific trigger events such as changes in the stock’s average price, delisting, registration issues, or other significant terminations, and
      • (c) 90 days after the Counterparty issues a notice if the stock’s average price falls below the reset price for 20 out of 30 days, six months post-combination, given that all registration requirements are met during this time.
    • On the Cash Settlement Payment Date, ten business days after the Valuation Period ends, Sandia will receive a cash payment from the Counterparty.
      • This payment equals the total shares at the Valuation Date, minus unregistered shares, multiplied by the average share price during the Valuation Period.
      • If the Counterparty owes less than this amount, the difference will be deducted and the remainder paid in cash.
      • The Counterparty will pay Sandia an adjustment amount based on the share count at the Valuation Date, at $2.00 per share in cash or, if higher, in shares at $2.25 each.
        • However, if certain conditions like a delisting occur, this adjustment must be paid in cash.

FPA Funding Amount PIPE Subscription Agreement

  • Andretti and Sandia have signed an agreement where Sandia will buy 1,500,000 shares of Zapata Common Stock from Andretti when their Business Combination closes, minus any shares previously recycled.

SUBSEQUENT EVENT – 3/25/24 – LINK

  • On March 25, 2024, the Company signed a Non-Redemption Agreement with Sandia Investment Management LP, representing certain investors, to cancel up to 300,000 redemption requests of the Company’s ordinary shares.
    • Following the Business Combination, the Company will compensate these investors from its IPO trust account, paying the difference between the Redemption Price and $9.00 per Investor Share.

TRANSACTION

  • The transaction values Zapata at an implied pre-money equity value of $200 million, with existing Zapata shareholders set to roll over 100% of their equity into the combined entity, or 20.0 million shares at a price of $10.00.
  • Andretti Acquisition Corp.’s sponsors and certain investors that own or have the right to receive founder shares will own a combined 5.8 million shares, or an implied value of approximately $58 million.
  • Andretti Acquisition Corp.’s public shareholders currently hold approximately 7.9 million shares, all of which are subject to redemption.
  • The pro forma equity value of the combined company (inclusive of the remaining cash in trust at Andretti Acquisition Corp. after redemptions) is expected to be between $281 million and $365 million, depending on the level of redemptions.
  • Business combination expected to provide up to approximately $84 million to the pro forma company’s balance sheet, depending on the level of redemptions.
  • The Boards of Directors of each of Zapata and Andretti Acquisition Corp. have approved the transaction.
  • Zapata AI’s visionary CEO and leadership team to lead the combined company
  • The combined company is expected to be listed on the New York Stock Exchange under the new ticker symbol “ZPTA”.
  • The transaction is expected to close in the first quarter of 2024.


SPAC FUNDING

  • Prior to the Closing Date, Zapata may negotiate and enter into a committed equity facility or subscriptions to shares of Zapata capital stock for cash, or issue additional senior promissory notes (the “Senior Notes”), subject to:
    • (i) the aggregate principal amount of all Senior Notes outstanding not exceeding $20,000,000 and
    • (ii) the aggregate amount of equity financing of Zapata raised, committed or issued prior to the closing not exceeding $25,000,000 (inclusive of principal amount and interest).

LOCK-UP

  • Company and Sponsor:
    • The Company and Sponsor have agreed to lock-up their shares until the date that is the earlier of:
      • (i) one year after the Closing Date, or
      • (ii) the date on which the closing price of the shares equals or exceeds $12.00 per share for any 20 trading days within any 30 trading day period commencing at least 150 days after the Closing Date.

SPONSOR FORFEITURE

  • The Sponsor and Sol Verano Blocker 1 LLC (the “Sponsor Co-Investor”) have agreed that up to 30% of the founder shares held by Sponsor and Sponsor Co-Investor will be subject to certain vesting and forfeiture conditions based on the available cash to Parent at Closing as follows:
    • (i) If the Closing Available Cash is an amount equal to $25 million or more, then all Sponsor Founder Shares will be fully vested
    • (ii) If the Closing Available Cash is $10 million or less, then 30% of the Sponsor Founder Shares shall be unvested and subject to forfeiture
    • (iii) If the Closing Available Cash is more than $10 million but less than $25 million, then the number of Sponsor Founder Shares that will be unvested and subject to forfeiture will be determined by straight line interpolation between zero and 30% of the number of Sponsor Founder Shares
  • Any Sponsor Founder Shares subject to vesting will become vested if, within three years of the Closing, the closing price of the shares equals or exceeds $12.00 per share for any 20 trading days within any 30 trading day period, or if there is a change of control of Parent.
  • If neither of these events occur within three years of the Closing, then the unvested Sponsor Founder Shares will be forfeited.

NOTABLE CONDITIONS TO CLOSING

  • Andretti shareholder approval

NOTABLE CONDITIONS TO TERMINATION

  • The Business Combination Agreement may be terminated by either AAC or Zapata if the Closing has not occurred on or before April 18, 2024 (the “Outside Date”), subject to extension until the September 6, 2024 if:
    • (a) all conditions to Closing other than the conditions with respect to antitrust approvals and waiting periods, the effectiveness of the Registration Statement and the approval of the New Parent Common Stock to be issued in connection with the Business Combination to be approved for listing on the NYSE, and
    • (b) AAC’s shareholders have approved at a general meeting an amended to the amended and restated memorandum and articles of association of AAC extending the date on which AAC must complete a business combination to a date that is on or after such extended Outside Date.

MISCELLANEOUS

  • Prior to the Closing, AAC will adopt an equity incentive award plan and an employee stock purchase plan.

ADVISORS

  • Zapata Advisors:
    • The Benchmark Company, LLC (“Benchmark”) served as financial advisor.
    • Foley Hoag LLP is serving as legal counsel
  • Andretti Advisors:
    • Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC (“CCM”), is serving as exclusive financial advisor and lead capital markets advisor
    • Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel

EXTENSION – 7/17/23 – LINK

  • The SPAC approved the extension from July 18, 2023 to April 18, 2024.
    • An unknown amount of shares were redeemed at the meeting for $10.62 per share.
    • No contribution will be made into the trust account.

SUBSEQUENT EVENT – 7/6/23 – LINK

  • The SPAC entered into a non-redemption agreement with an unaffiliated third party in exchange for them agreeing not to redeem an aggregate of 350,000 shares
    • The Sponsor will transfer 87,500 Class B shares to the non-redeeming shareholders

SUBSEQUENT EVENT – 7/6/23 – LINK

  • The SPAC announced that it has signed a non-binding letter of intent for a proposed business combination with a generative AI software company.

MANAGEMENT & BOARD


Executive Officers

William J. Sandbrook, 63
Co-Chief Executive Officer and Chairman

Bill has extensive corporate management experience, most recently serving as the President, Chief Executive Officer and chairman of the board of directors of U.S. Concrete. Bill joined U.S. Concrete in 2011 as the President and Chief Executive Officer and spearheaded turnaround efforts, selling off low-margin units and refocusing U.S. Concrete on its core competencies. Under his leadership, U.S. Concrete became a top producer in North America and made more than 35 acquisitions, and sales grew by nearly 3.5x. U.S. Concrete currently holds leading market positions in New York, Philadelphia, San Francisco, Dallas-Fort Worth and Washington, D.C. During his time heading U.S. Concrete, Bill worked with Matt Brown, who was the Senior Vice President and Chief Financial Officer from 2012 to 2015. Additionally, in 2019, Bill was elected chairman of the National Ready-Mixed Concrete Association and in 2018, he joined the board of directors of Comfort Systems USA, Inc. (NYSE: FIX), where he is a member of both the Audit Committee and the Compensation Committee. He has also been recognized for his efforts at Ground Zero after the September 11th bombing of the World Trade Center. Bill was named the Rockland County, NY 2002 Business Leader of the Year, the Dominican College 2002 Man of the Year and the American Red Cross 2003 Man of the Year for Southern New York. Earlier in his career, Bill worked at Tilcon New York in 1992 and became President and Chief Executive Officer three years later. In 1996, Tilcon was acquired by Oldcastle Materials. Bill graduated from the U.S. Military Academy at West Point. After receiving his bachelor of science in management, he spent 13 years in the U.S. Army, where his service included a four-year tour in Germany in cavalry and engineering units, three years as an associate professor in the Department of Mathematics at the Military Academy and two years as the Army Program representative to Raytheon. Bill also served as a social aid to President Ronald Reagan while teaching at West Point. In addition to his qualification as an Army Ranger, Bill earned four Master’s degrees while in the service. He has received an MBA from The Wharton School at the University of Pennsylvania, a Master of Science in Systems Engineering from the University of Pennsylvania, a Master in Public Policy from the Naval War College and a Master of Arts in International Relations from Salve Regina University.


Michael M. Andretti, 58
Co-Chief Executive Officer and Director

Michael is a world-renowned racecar driver and has won more Champ Car World Series races than any other driver in its history. He was crowned champion in 1991 and is now a successful IndyCar team owner. Andretti has 42 race victories, the most in the CART era and fourth-most of all time. After retiring from active racing, Andretti has owned Andretti Autosport, a team that has won four IndyCar Series championships and five Indianapolis 500 races. wo years after his father, legendary racecar driver Mario Andretti, clinched the 1978 World Championship, Michael began his own racing career. He initially competed in Formula Ford and claimed victory in the 1982 SCCA Super Vee Championship with a Ralt RT5. Afterward, he raced in Formula Atlantic in 1983 and had his debut at Le Mans in the same year, finishing third in that race. Michael was named Co-Rookie of the Year in the 1984 Indianapolis 500 and finished as championship runner-up in 1986. In 1991, he had a banner year, finishing second in the Indianapolis 500 before winning the Champ Car World Series. Michael has also raced as part of McLaren’s Formula One team. After racing in the 2003 Indianapolis 500, he retired from full-time IndyCar racing and bought into “Team Green” which was run by Kim and Barry Green in CART. It became Andretti Green Racing and, for 2003, the team moved to the Indy Racing League IndyCar Series. The team has won the IndyCar title on multiple occasions with Tony Kanaan in 2004, Dan Wheldon in 2005, Dario Franchitti in 2007 and Ryan Hunter-Reay in 2012. In 2009, Andretti Green Racing restructured and emerged as Andretti Autosport, with Michael as sole owner. Today, the Andretti Autosport team fields multiple entries in the NTT INDYCAR SERIES, Indy Lights Presented by Cooper Tires Championship and Pirelli GT4 Americas. Additionally, Andretti Autosport and BMW i Motorsport formed a pioneering partnership in the ABB FIA Formula E Championship, where the BMW i Andretti Motorsport Team competes in the world’s first race series for fully-electric Formula cars. Overall, the Andretti Autosport team boasts a highly impressive track record of over 200 total race wins, four IndyCar Series championships, three Indy Lights titles, one Indy Pro 2000 and one USF2000 championship, alongside five Indy 500 victories. In 2018, Michael began a collaboration with Ryan Walkinshaw’s Walkinshaw Racing and Zak Brown’s United Autosports to create Walkinshaw Andretti United, where Walkinshaw and Andretti now hold equal ownership with United Autosports as minority partner. Michael Andretti has extensive business experience through his time running Andretti Autosport, as well as through personal business ventures. Andretti Autosport has successfully gained support from a vast portfolio of world class brands that serve as sponsors, which currently include Honda, DHL, Gainbridge, NAPA Auto Parts, Genesys and BMW. In 2018, U.S. Concrete, an American concrete, heavy construction aggregates and related-solutions company, announced a partnership to become the primary sponsor for the car of Michael Andretti’s son, Marco. The company leveraged a long-term relationship with then-Chief Executive Officer Bill Sandbrook to team up for Marco’s IndyCar races. Additionally, in 2020, Andretti Autosport announced an equity stake in EVO, a platform that gives fans the ability to invest in individual professional athletes. Michael has partnered with EVO to identify the best up and coming racecar drivers to bring under the EVO umbrella and help revolutionize sports development for individual athletes. Outside of racing, Michael joined DÜZY, a video technology platform with livestream monetization, as an investor and advisor.


William M. Brown, 56
Chief Financial Officer

Matt has deep experience leading public and private companies, working across capital markets, executing mergers and acquisitions and transforming businesses to create shareholder value. Prior to joining our company in 2021, Matt formerly served as the Chief Financial Officer of Rocky Mountain Industrials, Inc., an early-stage aggregates and distribution logistics company focused on the Rocky Mountain region, from 2020 to 2021. Previously, he was the Executive Vice President and Chief Financial Officer of Forterra, a billion-dollar manufacturer of drainage and water pipe. From 2012 through 2015, Matt served as the Senior Vice President and Chief Financial Officer of U.S. Concrete, where he worked together with Bill Sandbrook. From 2007 through 2012, he served as the Treasurer and Executive Assistant to the Chief Executive Officer, and from 2005 through 2007, as the Treasurer of Drummond Company, Inc., a multibillion-dollar international coal producer. From 1999 through 2005, Matt served in the investment banking department of Citigroup Global Markets Inc., including as a Vice President in the basic industries coverage group. There he led both buy-side and sell-side M&A transactions as well as capital markets offerings of a variety of debt and equity securities. From 1988 through 1997, Matt served in the United States Navy as a SEAL Officer. He holds a Master of Business Administration degree from The Wharton School of the University of Pennsylvania and a Bachelor of Science degree in Mechanical Engineering from the United States Naval Academy.


Board of Directors

Zakary C. Brown, 49
Director

Zak is the Chief Executive Officer of McLaren Racing. At McLaren, he has overall responsibility for the business, including strategic direction, operational performance, marketing and commercial development. He is also the co-founder and Chief Executive of United Autosports, an auto sport company based in the United Kingdom that competes in different sports prototype categories across the world, including Virgin Australia Supercars where they are partnered with Andretti through their team Walkinshaw Andretti United. Born and raised in California, Zak raced professionally around the world for 10 years before developing his skills in motorsport’s business and commercial worlds. In 1995, he founded JMI, which grew to become the largest and most successful motorsport marketing agency in the world. When JMI was acquired by CSM Sport & Entertainment, a division of Chime Communications, in 2013, Zak became the Chief Executive Officer. He then relinquished the position of the Chief Executive Officer to embark on his journey at McLaren in the winter of 2016. A passionate racer, collector and enthusiast, Zak is also a former member of the board of directors of Cosworth Engineering and a former chairman of the board of directors of Motorsport Network.


James W. Keyes, 65
Director

Jim  has over 30 years of experience in retail, consumer products and aerospace. Jim has been the chairman of the board of directors of Wild Oats Marketplace, a producer of natural and organic food, since 2012. During his time at Wild Oats Marketplace, it acquired 180 Fresh & Easy stores from Tesco and developed a strategic partnership with Walmart. Previously, he served in roles of the chairman of the board of directors and Chief Executive Officer at Blockbuster, where he helped the company to survive the financial market collapse in 2008 through successful restructuring and sale to Dish Networks. Prior to that, Jim spent over 20 years in executive roles at 7-Eleven, including as Global President and Chief Executive Officer from 2000 to 2005. He also served in various roles at CITGO Petroleum and Gulf Oil Corporation. Jim received an MBA from Columbia Business School and a bachelor’s degree from College of the Holy Cross. He has been awarded with the Horatio Alger Award in 2005 and the Ellis Island Medal of Honor in 2008. James currently serves on the board of directors for Murphy USA (NYSE: MUSA) and has served on a number of philanthropic boards, including the American Red Cross and the Education is Freedom foundation.


Cassandra S. Lee, 52
Director

Cassie experienced financial leader with extensive experience in the technology industry. She currently serves as the Chief Financial Officer of AT&T Network Operations and Technology Services. In this position, she is responsible for all financial operations of network construction, engineering and operations, technology development, security operations and global supply chain. In this role, she oversees nearly $50 billion in annual spending, including managing the company’s capital program. Over the past five years from 2015 to 2019, AT&T has invested more in the United States than any other public company. Prior to her current role, Cassie served as Chief Financial Officer for AT&T’s Digital, Retail & Care division, which is responsible for all customer touchpoints across the company’s wireless, video and broadband businesses. She has spent nearly three decades at AT&T, gaining deep experience in all areas of the business. She currently serves on the board of directors of Wireless Maritime Services, LLC, a world leader in maritime communications providing cellular and Wi-Fi services to the cruising and shipping industries. She is also the First Vice Chair of the board of directors for the Girl Scouts of Northeast Texas, where she leads the Finance Committee. Cassie earned a Bachelor of Professional Accountancy degree from Mississippi State University and was a member of the Mississippi Society of Certified Public Accountants. She served in the Mississippi Army National Guard and is a U.S. Army Veteran.


Gerald D. Putnam, 62
Director

Jerry  has decades of experience in the financial services industry, both in management roles and on corporate boards of directors. He has served as the chairman of the board of directors and Chief Executive Officer of TruMarx Data Partners Inc. from 2011 to 2012. Prior to that, he was the Senior Advisor of Corporate Strategy, Technology Integration and Derivative Products of NYSE Euronext Inc. from 2007 until 2008 and the President and Co-Chief Operating Officer of NYSE Euronext Inc. from 2006 to 2007. Prior to the merger of NYSE Group, Inc. and Euronext, Jerry was the President and Co-Chief Operating Officer of NYSE Group, Inc. from 2006 to 2007. A highly successful entrepreneur, he founded Archipelago Holdings, an electronic communications network, in 1997. He served as the Chief Executive Officer and the chairman of the board of directors of Archipelago Holdings, leading a $150 million initial public offering in 2004, and then the company’s sale to NYSE in 2006 for nearly $3 billion. Before founding Archipelago Holdings, Jerry had founded Terra Nova Financial, LLC and served as the President from 1994 until 1999. Jerry has served on multiple boards of directors, including SIAC, OptionsHouse LLC, Greenplum, Inc., FX Alliance, LLC, TruMarx Data Partners, Inc. and MediaCrossing. In recognition of his many accomplishments, Jerry was selected as one of Time Magazine’s innovators of the 21st century and was a recipient of the Chicago Innovation Visionary Award. He received his undergraduate degree from The Wharton School of the University of Pennsylvania.


John J. Romanelli, 63
Director

John is an experienced corporate finance executive with transactional and client coverage experience, and has advised boards of directors, chief executive officers and chief financial officers on a wide variety of strategic and financial matters. John is skilled with initial public offerings, acquisition financing, messaging and investor relations and strategic transactions. Additionally, he possesses a keen understanding of participants in the special purpose acquisition companies market and public company governance and responsibilities. Since 2007, John has served as the Founder and Managing Partner at Seahawk Advisory Corp., an advisory boutique. He has advised private and public companies on a variety of strategic and financial transactions, including restructuring, M&A, investor relations strategies, growth capital and strategies, capital structure and strategic alternatives. Seahawk Advisory Corp. worked on a wide range of issues and transactions with Bill Sandbrook prior to our company, including numerous acquisitions. Prior to Seahawk Advisory Corp., John was a Senior Managing Director in the Strategic Finance group at Bear Stearns & Co., and spent over 20 years in investment banking at Bear Stearns & Co., The First Boston Corporation / Credit Suisse First Boston and Prudential-Bache Securities. John holds an MBA in Finance from The Wharton School at the University of Pennsylvania and a BBA in Finance from the University of Notre Dame. He is also a Co-Founder of the Connacht Whiskey Company, based in Ireland.