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Duddell Street Acquisition Corporation

Duddell Street Acquisition Corporation

Oct 16, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: FiscalNote

ENTERPRISE VALUE: $1.188 billion
ANTICIPATED SYMBOL: NOTE

Duddell Street Acquisition Corporation proposes to combine FiscalNote, an AI-driven enterprise SaaS company that delivers legal and regulatory data and insights.

FiscalNote is a global technology provider of legal and policy data and insights. By combining AI capabilities, expert analysis, and legislative, regulatory, and geopolitical data, FiscalNote is reinventing the way that organizations minimize risk and capitalize on opportunity.

FiscalNote has more than 3,000 subscription customers across a diverse range of blue-chip global enterprises, small and medium-sized businesses (SMBs), non-profits, and the public sector, including 3M, AstraZeneca, Blackstone, FedEx, Lyft, Microsoft, National Association of Realtors, Nestlé, Netflix,  Northrop Grumman, Peloton, Tesla, Uber, Zillow, the White House, the United States Congress, the United States Supreme Court, and major US federal agencies such as the Department of Defense, CDC, NIH, and the Federal Reserve.

FiscalNote’s user-friendly cloud based software and information feeds—which leverage patented artificial intelligence capabilities to collect and analyze vast amounts of legislative and regulatory data from international, federal, state, and municipal governments—power a clear value proposition for government agencies seeking information to help with initiatives such as securing budgets and supporting diplomacy, enterprises seeking to navigate increasingly complex regulatory issues such as ESG and data privacy, and non-profits and K Street seeking to advocate on behalf of their interests to elected officials. FiscalNote’s automated technology enables its data and information to be sold on a subscription basis to multiple customers, supporting high profit margins over time.

The total addressable market of legal and regulatory information solutions globally was approximately $37 billion in 2020, according to Outsell, a leading research and advisory firm. The market is driven by strong structural tailwinds, including the proliferation of regulatory complexity, demand for workflow efficiency and automation, need for aggregation and standardization, and the democratization of analytical capabilities in law.

SUBSEQUENT EVENT – 5/9/22 – LINK

  • Duddell Street Acquisition Corp. announced FiscalNote’s signing of a commitment letter for an upsized credit facility, with Runway Growth Capital, ORIX Growth Capital, and Atalaya Capital Management, providing for up to $250 million in senior debt funding, as well as enhancements to the Business Combination Agreement such as the establishment of a bonus pool for non-redeeming DSAC shareholders.
  • The expanded credit facility will provide a 5-year senior secured term loan of up to $250 million, including an aggregate principal amount of $150 million financing committed at closing with an additional accordion facility for $100 million. 
  • The new credit facility replaces the previously announced PIPE.
  • In addition, FiscalNote and DSAC are allocating, on a pro-rata basis, the 10 million shares previously reserved for the PIPE into a bonus pool available exclusively to non-redeeming DSAC public shareholders and backstop providers, with existing FiscalNote equity holders retaining approximately 75% pro forma equity ownership in the post-business combination company.
  • The parties also have expanded the scope of the existing earnout structure, providing existing FiscalNote equity holders the opportunity to receive additional shares of common stock of the combined company if certain stock price growth targets are achieved. 
  • In connection with the execution of the Amendment, DSAC and the Backstop Purchasers entered into an Amendment to the Backstop Agreement.
    • DSAC has agreed to a bonus issuance to each Backstop Purchaser of 0.57 shares of Newco Class A Common Stock for each Backstop Purchase Share immediately prior to the effective time of the Merger.

TRANSACTION

  • The transaction implies a pro forma market capitalization of approximately $1.3 billion for the combined company, representing a multiple of approximately 6.9x enterprise value to 2022E pro forma revenue.
  • Current FiscalNote equity holders will roll 100% of their equity interests into the combined company and will retain approximately 76% ownership.
  • Concurrently with the consummation of the proposed business combination, investors, anchored by Maso Capital, have committed to purchase $100 million of common stock of the combined company in a fully committed private placement at $10.00 per share.
  • Upon closing, the transaction will provide approximately $275 million of gross proceeds to the combined company, comprised of approximately $175 million of cash held in the trust account of Duddell Street, with redemptions of the trust account backstopped by Maso Capital, and $100 million in the fully committed PIPE, with participation from leading global institutional investors.
  • Gross proceeds are expected to far exceed the minimum cash condition of $190 million as set forth in the definitive business combination agreement.

NOTE trans overivew

PIPE

  • Subsequent Event – On May 9th, 2022, Duddell Street Acquisition Corp. announced FiscalNote’s signing of a commitment letter for an upsized credit facility, with Runway Growth Capital, ORIX Growth Capital, and Atalaya Capital Management, providing for up to $250 million in senior debt funding, as well as enhancements to the Business Combination Agreement such as the establishment of a bonus pool for non-redeeming DSAC shareholders.
  • The expanded credit facility will provide a 5-year senior secured term loan of up to $250 million, including an aggregate principal amount of $150 million financing committed at closing with an additional accordion facility for $100 million. 
  • In connection with the execution of the Amendment and the Debt Commitment Letter, the parties to the Subscription Agreements agreed to terminate the PIPE Agreements
  • The transaction includes an aggregate of 10,000,000 shares of Newco Class A Common Stock for a purchase price of $10.00 per share, for aggregate gross proceeds of $100,000,000, anchored by Maso Capital, an affiliate of the Sponsor, as well as participation from leading global institutional investors (unnamed).

BACKSTOP AGREEMENT

  • Subsequent Event – On May 9, 2022, DSAC agreed to a bonus issuance to each Backstop Purchaser of 0.57 shares of Newco Class A Common Stock for each Backstop Purchase Share immediately prior to the effective time of the Merger.
  • DSAC and certain affiliates of the Sponsor (the “Backstop Purchasers”) entered into a backstop agreement (the “Backstop Agreement”) whereby the Backstop Purchasers have agreed, subject to the other terms and conditions included therein, at the BPS Closing, to subscribe for Newco Class A Common Stock in order to fund any redemptions by shareholders of DSAC in connection with the Business Combination, in an amount of up to $175,000,000 (the “Sponsor Backstop”).
    • Each Purchaser hereby agrees and covenants that, such Purchaser will not
      • (i) during the period from the Closing Date and ending on the date that is 180 days following after the Closing Date (the “Initial Lock-Up Period”), Transfer any of the Backstop Purchase Shares (collectively, the “Restricted Securities”)
      • (ii) during the period from the date that is 180 days following after the Closing Date and ending on the first anniversary of the Closing Date (the “Subsequent Lock-Up Period” and together with the Initial Lock-Up Period, the “Lock-Up Period”), Transfer more than 50% of each type of the Restricted Securities (any Transfer prohibited under clause (i) or (ii) above, a “Prohibited Transfer”).
    • If any Prohibited Transfer is made or attempted contrary to the provisions of this Agreement, such purported Prohibited Transfer shall be null and void ab initio, and DSAC shall refuse to recognize any such purported transferee of such Restricted Securities as one of its equity holders for any purpose.
    • In order to enforce this Section 3, DSAC may impose stop-transfer instructions with respect to the Restricted Securities of Sponsor until the end of the Lock-Up Period, as well as include customary legends on any certificates for any of the Restricted Securities reflecting the restrictions.

EARNOUT

The Company:

  • Subsequent Event – On May 9, 2022, DSAC, FiscalNote and Merger Sub entered into a First Amendment to the Business Combination Agreement (the “Amendment”).  
  • Pursuant to the Amendment, the parties thereto agreed to an additional triggering event:
    • The date on which the VWAP is greater than or equal to $10.50 for any ten (10) Trading Days within any twenty (20) consecutive Trading Day period within the Earnout Period.
  • The date on which the VWAP is greater than or equal to $12.50 for any ten (10) Trading Days within any twenty (20) consecutive Trading Day period within the Earnout Period.
  • The date on which the VWAP is greater than or equal to $15.00 for any ten (10) Trading Days within any twenty (20) consecutive Trading Day period within the Earnout Period.
  • The date on which the VWAP is greater than or equal to $20.00 for any ten (10) Trading Days within any twenty (20) consecutive Trading Day period within the Earnout Period.
  • The date on which the VWAP is greater than or equal to $25.00 for any ten (10) Trading Days within any twenty (20) consecutive Trading Day period within the Earnout Period.

LOCK-UP

  • The Company:
    • 180 days following the Closing Date (the “Lock-Up Period”).
  • In addition, the Sponsor has agreed that:
    • (i) all equity interests of Newco held by the Sponsor immediately after the Effective Time (the “Restricted Securities”) will be subject to a lockup of 180 days from the Effective Time
    • (ii) 50% of each type of the Restricted Securities held by the Sponsor will be subject to a lockup during the period from the date that is 180 days following after the Effective Time and ending on the first anniversary of the Effective Time, in each case, except to the Permitted Transferees as defined in the Sponsor Agreement.

SUPPORT AGREEMENT

  • Concurrently with the execution of the Business Combination Agreement, certain stockholders of FiscalNote (collectively, the “Voting Stockholders”) entered into a voting and support agreement (collectively, the “Support Agreements”) with DSAC and FiscalNote, pursuant to which each Voting Stockholder has agreed to, among other things
    • (i) vote in favor of the Business Combination Agreement and the transactions contemplated thereby
    • (ii) a lockup of all equity interests of Newco held by such Voting Stockholder immediately after the Effective Time for a period of 180 days from the Effective Time (or 12 months, in the case of the Company’s co-founders)
    • (iii) be bound by certain other covenants and agreements related to the Business Combination. The Voting Stockholders hold sufficient shares of FiscalNote to cause the approval of the Business Combination on behalf of FiscalNote.

NOTABLE CONDITIONS TO CLOSING

  • The aggregate cash proceeds from DSAC’s trust account(after deducting any amounts paid to DSAC shareholders that exercise their redemption rights in connection with the Business Combination), together with the proceeds from the PIPE Financing and the net amount of proceeds actually received by DSAC pursuant to the Backstop Agreement, if any, minus the lesser of the transaction expenses incurred by FiscalNote and $5,000,000, minus the lesser of the transaction expenses incurred by DSAC and $30,000,000 equaling no less than $190,000,000.

NOTABLE CONDITIONS TO TERMINATION

  • By either the Company or DSAC if the Closing shall not have occurred on or before the eight-month anniversary of the date hereof (the “Termination Date”)

ADVISORS

  • J.P. Morgan acted as financial advisor to FiscalNote.
  • Citi and BTIG, LLC acted as capital markets advisors to Duddell Street.
  • Citi and J.P. Morgan served as joint placement agents for the PIPE financing.
  • Davis Polk & Wardwell LLP is serving as legal advisor to Duddell Street
  • Paul Hastings LLP is serving as legal advisor to FiscalNote.
  • Shearman & Sterling LLP is serving as legal advisor to Citi and J.P. Morgan.

MANAGEMENT & BOARD

Executive Officers

Manoj Jain, 41
Chief Executive Officer, Co-Chief Investment Officer and Chairman of the Board of Directors

Mr. Jain is the co-chief investment officer and co-founder of Maso Capital. Prior to founding Maso Capital, Mr. Jain spent nine years at Och-Ziff Capital Management Limited, a leading multi-strategy investment firm, where he was a Managing Director in the Hong Kong office. At Och-Ziff, Mr. Jain was focused on Asia merger arbitrage, event driven and capital markets. Prior to moving to Hong Kong, Mr. Jain was a generalist analyst focused on event driven and arbitrage at Och-Ziff in New York. Prior to Och-Ziff, Mr. Jain was an analyst in Mergers & Acquisitions at Credit Suisse First Boston in New York. Mr. Jain holds a M.A. in Management Studies from Cambridge University, U.K.

Sohit Khurana, 47
President, Chief Risk Officer and Director

Mr. Khurana is the co-chief investment officer and co-founder of Maso Capital. Prior to founding Maso Capital, Mr. Khurana spent five years at Och-Ziff Capital Management Limited, a leading multi-strategy investment firm, where he was a Managing Director in the Hong Kong office. At Och-Ziff, Mr. Khurana was co-portfolio manager of the Asian convertible bond portfolio. He managed the Asia flow credit business and was responsible for macro hedging in Asia. Prior to Och-Ziff, Mr. Khurana spent five years trading European Asset and Mortgage Backed Securities on both the sell side (Deutsche Bank) and buy side (Cambridge Place Investment Management). Prior experience includes derivative structuring at Merrill Lynch and Deutsche Bank. Mr. Khurana holds a B.Sc.(Econ.) in Economics from London School of Economics and an M.B.A. from Duke University.

Allan Finnerty, 48
Chief Financial Officer

Mr. Finnerty is the chief operating officer and co-founder of Maso Capital. Prior to founding Maso Capital, Mr. Finnerty was Chief Financial Officer (Asia) of Mount Kellett Capital Management responsible for all financial and operational functions in Asia. Prior to Mount Kellett Capital Management, Mr. Finnerty spent a total of 11 years at Morgan Stanley and Goldman Sachs in finance and operational roles in Europe and Asia. Mr. Finnerty holds a BComm from the National University of Ireland and is a Fellow of the Institute of Chartered Accountants in Ireland.

 

Board of Directors

Marc Holtzman, 60
Director

Mr. Holtzman currently serves as the Chairman of Bank of Kigali, Rwanda’s largest financial institution, and the Chairman of CBZ holdings, Zimbabwe’s largest financial institution. Additionally, he currently serves as a member of the Board of Directors of TTEC, a leading provider of analytics-driven technology-enabled services, and the Kazakhstan Direct Investment Fund. Mr. Holtzman previously served as the Chief Executive Officer of KazKommertsBank, Vice Chairman of Barclays Capital and Vice Chairman of ABN Amro Bank, the co-founder and President of MeesPierson EurAmerica, Senior Adviser to Salomon Brothers, the President of the University of Denver, the Secretary of Technology of the State of Colorado and Chairman of Colorado’s Information Management Commission and Co-Chairman of the Governor’s Commission on Science and Technology. Additionally, from 2012 through 2015, Mr. Holtzman served on the Board of Directors of FTI Consulting, Inc., a global financial and strategic consulting firm, and Sistema, Russia’s largest listed private company. Mr. Holtzman holds a bachelor’s degree in Economics from Lehigh University.

Peter Lee Coker Jr., 51 [Resigned 5-24-21]
Director

Mr. Coker has over 30 years of experience in the finance and investment industries, currently serving as the Chairman of Hometown International Incorporated and as the Managing Partner of Pacific Advisers. Additionally, Mr. Coker has served as the Chairman of Southshore Holdings Limited since 2013 and as Chairman of the Executive Committee since 2018. Mr. Coker previously served as a partner of TDR Capital Investment Ltd., in various capacities at the Bridge Companies and as the Chairman of IRESS Market Technology, Wellington Securities (New Zealand) and Global Trading Offshore Pte (Singapore). Mr. Coker is a graduate of Lehigh University.

Mark Derrick Collier, TBD [5-24-21]
Director

Mr. Collier currently serves on the Board of Directors of Assupol Group Holdings Ltd, Assupol Life Ltd, Sigma Pensions Ltd, Sigma Investment Management Ltd, Actis Golf B.V. and Mark Collier Ltd. Mr. Collier previously served on the Board of Directors of Alexander Forbes Group Holdings Ltd, Alexander Forbes Emerging Markets (Pty) Ltd, Alexander Forbes Insurance Company, Alexander Forbes Financial Services Holdings (Pty) Ltd, Alexander Forbes Life Ltd, Alexander Forbes Investments Ltd., Bajaj Capital Ltd, XP Investimentos Inc, Fidelity Investment Services Ltd and Fidelity Portfolio Services Ltd. Mr. Collier founded Investia Ltd and FundsHub Ltd and served as the Chairman and Chief Executive Officer of these companies from 1999 to 2006. Prior to that, Mr. Collier was President of Charles Schwab Europe Ltd, Chief Executive Officer of Schwab International, and Senior Vice President of Charles Schwab & Co Inc. Prior to joining Schwab, Mr. Collier held senior roles at various companies, including serving as President of Fidelity Investments Advisor Group Inc. and as Chief Executive of Fidelity Brokerage Services Ltd.

Bradford Allen, 63
Director

Mr. Allen is a seasoned entrepreneur, financier, and business executive with 35 years of experience in senior roles in the private banking, investment banking and venture capital industries. Mr. Allen currently serves as the Chairman of Vaunt, a sports and entertainment IP development company. Prior to joining Vaunt, he successfully founded, funded and exited three start-up companies, including most recently, NextVR, which was acquired by Apple. Mr. Allen holds a bachelor’s degree in Business Administration from Villanova University.

ByRoman Developer