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FirstMark Horizon Acquisition Corporation

FirstMark Horizon Acquisition Corporation

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: Starry Inc.

ENTERPRISE VALUE: $1.656 billion
ANTICIPATED SYMBOL: STRY

FirstMark Horizon Acquisition Corp. proposes to combine with Starry Inc., a next generation licensed fixed wireless technology developer and internet service provider.

Founded in 2014, Starry believes broadband is essential and is committed to delivering on its mission – offering customers a superior internet service that is fast, reliable, uncapped and competitively-priced, while also working to improve digital access and equity.

Starry’s wireless network is designed exclusively to serve the needs of fixed broadband users, including residential and small- and medium-sized businesses, with broadband that meets the growing bandwidth needs of today’s consumer. Starry is a research and development company at its core, having invested nearly $200 million to develop and commercialize proprietary technology that enables it to wirelessly beam gigabit-speed internet from towers and rooftops to people’s homes at a fraction of the cost of traditional fiber. The company has a full intellectual property stack and developed each piece of its network hardware, from the base stations to the home receiver on customer premises, all the way down to the Wi-Fi router that serves the customer’s home. The company has also built its own software billing, customer care, and network management systems to provide complete visibility and flexibility in serving the customer.

The company has transformed the economics of broadband, pioneering the use of licensed high frequency spectrum at a low cost to deliver high-capacity, low-latency, symmetrical connectivity over distances up to one mile. To date, Starry has successfully deployed its gigabit network in six U.S. cities including BostonNew YorkLos AngelesWashington D.C.Denver, and Columbus – covering more than 4.7 million households. With its licensed spectrum rights, Starry intends to further develop its offerings and expand its network to cover more than 25 million households by 2026, with a projected 1.4 million subscribers and $1.1 billion in revenue. The company saw 187% year over year revenue growth from 2019 to 2020 and expects revenues of $22 million in 2021. The company expects a revenue CAGR of 124% for the period between 2020 and 2023.


BANKRUPTCY – 2/21/23 – LINK

  • Starry announced that they have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware and have entered into a Restructuring Support Agreement with lenders holding the Company’s debt.

SUBSEQUENT EVENT – 3/28/22 – (8-K LINK)

  • In connection with the consummation of the Business Combination, the parties to the Merger Agreement have entered into a Merger Agreement Waiver (the “Merger Agreement Waiver”) have entered into a Waiver and Amendment No. 1 to Subscription Agreement (the “PIPE Subscription Amendment”) and Waiver and Amendment No. 1 to the Series Z Subscription Agreements (the “Series Z Subscription Amendment”) pursuant to which they have agreed to waive the Minimum Cash Condition of the Merger Agreement and conditions to closing of the Business Combination.
  • The parties to the PIPE Subscription Agreements have also agreed to reduce the purchase price per share of each PIPE Subscribed Share from $10.00 per share to $7.50 per share.
  • Further, the parties have agreed to increase the aggregate number of shares of PIPE Subscribed Shares issuable from 10,900,000 to 14,533,334.
  • Similarly, the parties to the Series Z Subscription Agreements have also agreed to reduce the purchase price per share of each Series Z Subscribed Share from $10.00 per share to $7.50 per share and to increase the aggregate number of Series Z Subscribed Shares issuable pursuant to the Series Z Subscription Agreements from 2,100,000 to 2,800,000.
  • In addition, on March 25, 2022, Starry and Tiger Global Private Investment Partners IX, LP entered into an additional Series Z Subscription Agreement (the “Tiger Series Z Subscription Agreement”) pursuant to which Tiger agreed to subscribe for 1,333,333 shares of Starry Series Z Preferred Stock at a purchase price per share of $7.50 for a purchase price equal to approximately $10.0 million.

SUBSEQUENT EVENT – 3/14/22 – (8-K LINK)

  • On March 11, 2022, FirstMark Horizon Acquisition Corp. and Credit Suisse Securities entered into an amendment letter whereby the Company and Credit Suisse agreed to amend certain terms of the underwriting agreement between the Company and Credit Suisse
    • The Company and Credit Suisse agreed that:
      • (i) Credit Suisse will reduce the Deferred Discount payable to it by the Company from $14,490,000 to $9,990,000 under the same terms of the Underwriting Agreement, and such payment will satisfy in full the Company’s obligation to pay the Deferred Discount under the Underwriting Agreement, and
      • (ii) in the Company’s sole and exclusive discretion, up to $4,500,000 of the previously allocated Deferred Discount may be allocated by the Company to one or more FINRA members, including certain of the underwriters and/or their affiliates, that assist the Company in connection with its initial business combination or following the consummation thereof.

SUBSEQUENT EVENT – 3/9/22 – (8-K LINK)

  • On March 9, 2022, FirstMark, Starry Group Holdings and certain accredited investors entered into a Non-Redemption Agreement pursuant to which:
    • Each Investor agreed for the benefit of FirstMark to not redeem a certain number of shares of Class A common stock of FirstMark, representing 2,398,613 shares of FirstMark Class A Common Stock, in the aggregate.
    • Starry Group Holdings has agreed to issue to each Investor a number of shares of Starry Group Holdings Class A common stock, equal to:
      • (i) the number of Investor Shares multiplied by (ii) (a) 1.33 less (b) the Class A Exchange Ratio in each case, at or promptly following the consummation of the Acquisition Merger (such shares of Starry Group Holdings Class A Common Stock, the “New Investor Shares”), provided that, none of the New Investor Shares shall be less than 422,108, in the aggregate (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events).
    • The Class A Exchange Ratio refers to the lower of:
      • (A) 1.2415; and (B) (1) (x) the FirstMark Outstanding Shares, plus (y) 1,000,000 divided by (2) the FirstMark Outstanding Shares.

TRANSACTION

  • The transaction is expected to be funded through a combination of FirstMark’s $414 million of cash in trust supported by a $130 million fully committed PIPE and contemporaneous equity investment at $10.00 per share.
  • The transaction implies a pro forma Starry enterprise value of $1.66 billion, or approximately 7x 2025 estimated adjusted EBITDA. It is estimated that post-transaction, Starry will have approximately $452 million on its balance sheet to fund growth initiatives.
  • Starry will use a portion of cash raised in the PIPE, as well as a $150 million issuance of new convertible debt, to retire Starry’s existing debt.
  • The new convertible debt is led by AS Birch Grove, an existing lender to Starry, and certain funds managed by Highbridge Capital Management, LLC.
  • Uniquely, the holders of FirstMark Class A common stock that do not elect to redeem their shares in connection with the transaction will share in a pool of one million additional shares based on an exchange ratio between 1.0242 and 1.2415, to be determined based on the number of unredeemed shares.
    • Assuming a price of $10.00 per share of FirstMark Class A common stock at the closing of the transaction, each share of FirstMark Class A common stock would receive shares of the post-combination company with a value ranging between $10.24 (assuming no redemptions by FirstMark’s stockholders) and $12.42 (assuming redemptions resulting in the maximum exchange ratio).

fmark trans overview


PIPE

  • Subsequent Event (3/28/22) – In connection with the consummation of the Business Combination, the parties to the Merger Agreement have entered into a Merger Agreement Waiver (the “Merger Agreement Waiver”) have entered into a Waiver and Amendment No. 1 to Subscription Agreement (the “PIPE Subscription Amendment”) and Waiver and Amendment No. 1 to the Series Z Subscription Agreements (the “Series Z Subscription Amendment”) pursuant to which they have agreed to waive the Minimum Cash Condition of the Merger Agreement and conditions to closing of the Business Combination.
    The parties to the PIPE Subscription Agreements have also agreed to reduce the purchase price per share of each PIPE Subscribed Share from $10.00 per share to $7.50 per share.
    Further, the parties have agreed to increase the aggregate number of shares of PIPE Subscribed Shares issuable from 10,900,000 to 14,533,334.
  • $109 million fully committed PIPE and contemporaneous equity investment at $10.00 per share.
    •  The PIPE is anchored by leading institutional investors, strategic investors, and existing Starry investors including ArrowMark Partners, Atreides Management, Fidelity Management & Research Company LLC, and Tiger Global Management
  • The PIPE Subscription Agreements will terminate, and be of no further force and effect, upon the earliest to occur of
    • (i) such date and time as the Merger Agreement is terminated in accordance with its terms without being consummated
    • (ii) upon the mutual written agreement of FirstMark and the applicable PIPE Investor
    • (iii) if the conditions set forth therein are not satisfied or are not capable of being satisfied on or prior to the PIPE Investment Closing and, as a result thereof, the transactions contemplated therein will not be or are not consummated at the PIPE Investment Closing
    • (iv) July 6, 2022, if the PIPE Investment Closing has not occurred by such date and the terminating party’s breach was not the primary reason such closing failed to occur by such date.

SERIES Z SUSCRIPTION AGREEMENT

  • Subsequent Event (3/28/22) – The parties to the Series Z Subscription Agreements have also agreed to reduce the purchase price per share of each Series Z Subscribed Share from $10.00 per share to $7.50 per share and to increase the aggregate number of Series Z Subscribed Shares issuable pursuant to the Series Z Subscription Agreements from 2,100,000 to 2,800,000.
    In addition, on March 25, 2022, Starry and Tiger Global Private Investment Partners IX, LP entered into an additional Series Z Subscription Agreement (the “Tiger Series Z Subscription Agreement”) pursuant to which Tiger agreed to subscribe for 1,333,333 shares of Starry Series Z Preferred Stock at a purchase price per share of $7.50 for a purchase price equal to approximately $10.0 million.
  • “Class A Exchange Ratio” refers to the lower of:
    • (A) 1.2415; and
    • (B) (1) (x) the FirstMark Outstanding Shares, plus (y) 1,000,000 divided by (2) the FirstMark Outstanding Shares
  • On October 6, 2021, concurrently with the execution of the Merger Agreement, Starry entered into the Series Z Subscription Agreement with certain investors affiliated with FirstMark’s sponsor, FirstMark Horizon Sponsor LLC, pursuant to, and on the terms and subject to the conditions of, which the Series Z Investors have collectively subscribed for 2,100,000 shares of the Starry Series Z Preferred Stock at a price of $10.00 per share for an aggregate purchase price equal to $21,000,000 million.

EARNOUT

  • The Sponsors have also agreed that, during the period commencing on the date of the Acquisition Merger Closing and ending on the date that is five (5) years from such date (the “Earn-out Period”), they will subject 6,672,500 shares of New Starry Class A Common Stock held by the Sponsors (the “Earn-out Shares”) to potential forfeiture to New Starry for no consideration until the occurrence of certain triggering conditions as further described below.
    • (a) one tranche of shares equal to one third of the Earn-out Shares that will vest if at any time during the Earn-out Period, the Closing Price is equal to or exceeds $12.50 per share for 20 out of any 30 consecutive trading days
    • (b) one tranche of shares equal to one third of the Earn-out Shares that will vest if at any time during the Earn-out Period, the Closing Price is equal to or exceeds $15.00 per share for 20 out of any 30 consecutive trading days
    • (c) one tranche of shares equal to one third of the Earn-out Shares that will vest if at any time during the Earn-out Period, the Closing Price is equal to or exceeds $17.50 per share for 20 out of any 30 consecutive trading days.
  • If one or more of the vesting conditions as described in clauses (a) – (c) above has not occurred by the end of the Earn-out Period, the applicable tranche of Earn-out Shares will be forfeited to New Starry for no consideration.

LOCK-UP

  • Subject to and conditioned upon the occurrence of the Acquisition Merger Effective Time, each Sponsor has agreed that such Sponsor shall not transfer any shares of New Starry Common Stock held by such Sponsor during the period commencing immediately after the Acquisition Merger Effective Time and ending upon the earlier to occur of (x) 8:00 a.m. Eastern Time on the date that is twelve (12) months after (and excluding) the date of the Acquisition Merger Closing.

SUPPORT AGREEMENT

  • Each Sponsor has further agreed that, immediately prior to the SPAC Merger Effective Time, each Sponsor shall contribute, transfer, assign, convey and deliver to FirstMark all of each Sponsor’s right, title and interest in, to and under such Sponsor’s shares of FirstMark Class B common stock, par value $0.0001 per share in exchange for shares of FirstMark Class A Common Stock (the “Class B Exchange”).
    • (a) 10,230,000 outstanding shares of FirstMark Class B Common Stock held by the Sponsor shall be exchanged and converted into shares of FirstMark Class A Common Stock equal to (i) 9,230,000 divided by (ii) the Class A Exchange Ratio
    • (b) 30,000 outstanding shares of FirstMark Class B Common Stock held by each independent director of FirstMark shall be exchanged and converted into the number of shares of FirstMark Class A Common Stock equal to (i) 30,000 divided by (ii) the Class A Exchange Ratio.

NOTABLE CONDITIONS TO CLOSING

  • Net cash proceeds actually received by Starry in consideration for the issuance of Additional Funding Shares prior to the Acquisition Merger Closing shall be at least $300,000,000

NOTABLE CONDITIONS TO TERMINATION

  • If the Acquisition Merger Closing has not occurred on or before nine (9) months after the date of the Merger Agreement (subject to automatic extension to twelve (12) months in certain situations).

ADVISORS

  • Goldman Sachs & Co. LLC served as financial advisor to Starry and placement agent to FirstMark Horizon Acquisition Corp.
  • Credit Suisse served as financial advisor and capital markets advisor to FirstMark.
  • Latham & Watkins LLP acted as legal advisor to Starry.
  • Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to FirstMark.

MANAGEMENT & BOARD


Executive Officers

Richard Heitzmann, 48
Chief Executive Officer and director

Since 2008, Mr. Heitzmann has served as a Founder and Partner of FirstMark, a venture capital firm focused on consumer and enterprise investments in media, advertising technology, gaming, mobile and data service. Prior to this, Mr. Heitzmann served as a Partner at Pequot Ventures from 1999 to 2008. From 2003 to 2004, Mr. Heitzmann was Senior Vice President of Corporate Development at First Advantage Corp (Nasdaq: FADV) and from 2001 to 2003, Mr. Heitzmann served at US Search.Com Inc. as Senior Vice President of Corporate Development and a member of its board of directors. Currently, Mr. Heitzmann sits on the board of directors of many private companies including Dashlane, Inc., Omaze, Inc., NoHo Solutions, Inc. (d/b/a Orchard) and Roman Health Ventures, Inc. Mr. Heitzmann graduated from Georgetown University with a B.S. in Business Administration and earned his M.B.A. from The Harvard Business School.


Eric D. Cheung, 36
Secretary and director

Mr. Cheung has served as the General Counsel at FirstMark since 2019. Prior to this, Mr. Cheung served at Naspers Ventures as General Counsel from 2016 to 2019. From 2012 to 2016, Mr. Cheung was a corporate, M&A and securities law attorney at Gunderson Dettmer and from 2006 to 2012, served as a corporate attorney for Dewey & LeBoeuf LLP. Mr. Cheung is a member of the board of directors of OpenGamma, Inc., a financial technology company focused on derivatives analytics. Mr. Cheung received his B.A. in Politics, Philosophy and Economics and Comparative Literature from the University of Pennsylvania and earned his J.D. and LL.M in Taxation from Georgetown University Law Center.


Daniel Gaisin, 40
Chief Financial Officer

Mr. Gaisin has served at FirstMark since 2008, first as Controller and currently as Vice President of Finance. Prior to this, Mr. Gaisin was Controller at Pequot Ventures for several months in 2008. From 2007 to 2008, Mr. Gaisin was a Manager of Accounting at Riverstone Holdings, LLC and from 2004 to 2007, served at The Carlyle Group as a Senior Accountant. Mr. Gaisin received his B.S. in Accounting from Yeshiva University.


 

Board of Directors

Amish Jani, 42
President and Chairman of the board of directors

Since 2008, Mr. Jani has served as a Founder and Partner of FirstMark. Prior to this, Mr. Jani served as a Partner at Pequot Ventures from 2000 to 2008. Currently, Mr. Jani serves on the board of directors of many private companies including Brooklinen, Inc., InVisionApp, Inc., Starry and Tracelink. Mr. Jani earned his B.S. in Economics and his M.B.A. from The Wharton School at the University of Pennsylvania.


Luis Ubiñas, 57
Director

Mr. Ubiñas most recently served as President of the Ford Foundation from 2008 to 2013. Prior to this, he was a Senior Partner and Director at McKinsey & Company from 1989 to 2008. Mr. Ubiñas is currently a member of the board of directors of Electronic Arts Inc. (Nasdaq: EA), Boston Private Financial Holdings, Inc. (Nasdaq: BPFH) and Tanger Factory Outlet Centers Inc. (NYSE: SKT) as well as a member of the board of trustees at Mercer (NYSE: MMC). Additionally, Mr. Ubiñas serves as a board member of Aura Financial. Mr. Ubiñas received his A.B. and his M.B.A. from Harvard University.


Frederick Ball, 58
Director

Mr. Ball served as Chief Financial Officer at Marketo Inc. (“Marketo”), a leading provider of a cloud-based marketing platform, from 2011 to 2016, first as its Senior Vice President and Chief Financial Officer and later as its Executive Vice President and Chief Administrative Officer. Prior to joining Marketo, Mr. Ball was Chief Financial Officer for a number of private and public technology companies including Webroot Software from 2008 to 2011, BigBand Networks, Inc. from 2004 to 2007, and Borland Software Corporation from 1999 to 2003. Prior to this, Mr. Ball served as Vice President, Mergers and Acquisitions for KLA-Tencor Corporation, a manufacturer of semiconductor equipment, from 1997 to 1999 and as Vice President, Controller for Tencor Instruments from 1995 to 1997. Mr. Ball served at PricewaterhouseCoopers LLC from 1984 to 1995, ending his tenure as Audit Senior Manager. Mr. Ball currently serves as a director of Welunity and also as a director of Advanced Energy Industries (Nasdaq: AEIS) and is the currently the chair of its compensation committee and served as its audit committee chair from 2009 to 2020. Previously, from 2003 to 2019, Mr. Ball served as a director and as chair of various committees of Electro Scientific Industries, Inc. (Nasdaq: ESIO), and from 2017 to 2019, as a director and chair of various committees of Sendgrid, Inc.(NYSE: SEND). Mr. Ball obtained his B.S. in Accounting from Virginia Tech.


Germán Curá, 56
Director 

Mr. Curá is a member of the Board of Directors of Tenaris (NYSE:TS), a global manufacturer of steel pipes, mainly to the energy industry and also holds the position of Vice Chairman of the Board of Tenaris, since 2018. He served as president of Tenaris’ operations in North America from 2006 to 2018. He was first employed by Siderca, an Argentine subsidiary of Tenaris, in 1988. Previously, he served as Siderca’s exports director, Tenaris’ Mexican subsidiary Tamsa’s exports director and commercial director , sales and marketing manager of Tenaris’s Middle East subsidiary, president of Algoma Tubes, president and Chief Executive Officer of Maverick Tubulars and president and Chief Executive Officer of Hydril, director of the Oilfield Services global business unit and Tenaris commercial director. He was also a member of the board of directors of American Petroleum Institute (API) from 2008 to 2009 and currently serves as a member of the board of directors of the American Iron and Steel Institute (AISI) since 2018 and of Deep Ocean AS, a Norway based subsea construction company since 2018. He holds a degree in Marine Engineering from the Instituto Tecnológico de Buenos Aires and an M.B.A. from the Massachusetts Institute of Technology.


Allison Goldberg, 44
Director

Since 2020, Ms. Goldberg has served as a Partner at Saints Capital Media Ventures, a technology and digital media fund. Prior to this, Ms. Goldberg served as a Partner at Advancit Capital, a venture capital fund focusing on early stage investments in consumer and media technology companies, from 2019 to 2020. Prior to this, Ms. Goldberg served as Group Managing Director & Senior Vice President of Time Warner Investments from 2001 to 2018. Prior to joining Time Warner, Ms. Goldberg was an Associate at Groupe Arnault from 2000 to 2001. She started her career in the Global Media Group, Investment Banking at Morgan Stanley from 1998 to 2000. Currently, Ms. Goldberg sits on the board of directors for YieldMo, a digital advertising and attention analytics company. Ms. Goldberg received her B.S. in Economics from The Wharton School at the University of Pennsylvania.


Jason Robins, 34
Director

Currently, Mr. Robins is the Chairman, Co-Founder and Chief Executive Officer of DraftKings, Inc. (Nasdaq: DKNG), where he has served since 2012. Prior to this, Mr. Robins held positions in marketing and analytics at Vistaprint from 2008 to 2012 and at Capital One from 2003 to 2008. Mr. Robins received his B.S. in Economics and Computer Science from Duke University.