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LIV Capital Acquisition Corp. II *

LIV Capital Acquisition Corp. II *

Dec 30, 2021 by Anthony Sozzi

LIQUIDATION – 11/20/23 – LINK

  • The Company anticipates that the last day of trading in the Class A ordinary shares will be December 7, 2023.
    • The per-share redemption price will be approximately $10.98

The below-announced combination was terminated on 11/20/23.  It will remain on the page for reference purposes only. Once a new combination is announced it will be added to the top of the page.

PROPOSED BUSINESS COMBINATION: Covalto [Terminated]

ENTERPRISE VALUE: $547 million
ANTICIPATED SYMBOL: CVTO

LIV Capital Acquisition Corp. II proposes to combine with Covalto.

Founded in 2015, Covalto is a digital banking and services platform for SMEs in Mexico. The company provides a product ecosystem of lending, banking, and business analytics solutions to support SMEs throughout their lifecycle via products that are superior in price, speed of delivery, and quality of customer experience. The company uses a combination of cutting-edge software design, innovative applications of data science, and advanced internal processes for decision-making and product structuring.

EXTENSION – 5/3/23 – LINK

  • The SPAC approved the extension from May 10, 2023 to February 10, 2024.
    • 5,855,018 shares were redeemed for $10.49 per share.
    • $135K per month will be deposited into the trust account.

SUBSEQUENT EVENT – 4/10/23 – LINK

  • Require Covalto, after the approval of the Extension by the LIVB shareholders, to deposit funds into the trust account for the extension to February 10, 2024 and reimburse LIVB for all out-of-pocket expenses
  • Revise the definition of the Termination Fee to provide LIVB the option, in the event that Covalto chooses to pay the Termination Fee in the form of the Fee Shares, to elect to receive, as the Termination Fee, the option of
    • (i) the Fee Shares or
    • (ii) both
      • (a) 820,000 Covalto shares and
      • (b) reimbursement for up to fifty percent (50%) of the reasonable and documented LIVB Expenses actually paid by or on behalf of LIVB as of the termination date, subject to a cap of $1,500,000 in the aggregate and other restrictions on the timing of such reimbursement
  • Extend the Termination Date from May 10, 2023 to February 10, 2024, and eliminate the right of LIVB and Covalto to extend the Termination Date by mutual written consent for an additional 3-month period.

TRANSACTION

  • The deal values Covalto at an implied $547 million pro-forma enterprise value.
  • The transaction is expected to further strengthen Covalto’s balance sheet, generating up to $177 million of capital before expenses, assuming no redemptions from LIVB shareholders.
  • Existing Covalto shareholders will roll 100% of their equity in the transaction and are expected to own over 72% upon closing of the deal (assuming no redemptions)
  • Covalto shareholders have the potential to receive an earnout of additional 2.5 million shares of common stock of the combined company if certain stock price targets are met as set forth in the definitive business combination agreement.
  • The transaction has been unanimously approved by the boards of directors of Covalto and LIVB, and is expected to close in the first quarter of 2023

covalto

CONVERTIBLE NOTE

  • Covalto has obtained commitments from an anchor investor (the “Anchor Investor”) pursuant to a mandatorily convertible note of the same series  for an amount in United States dollars that is equivalent to 600,000,000 Mexican pesos
    • The Mandatorily Convertible Notes accrue interest at a rate equal to seven percent (7.0%) per annum, compounding annually
    • The Mandatorily Convertible Notes shall be payable in cash or, at Covalto’s option, in kind by way of addition to the outstanding principal, semi-annually
  • Each of the Mandatorily Convertible Notes, including the Anchor Investment and the prior outstanding notes, is subject to conversion at the Closing of the proposed business combination into ordinary shares of Covalto, at a conversion price equal to eighty percent (80%) of the lowest price per share paid by investors in the proposed business combination or, if earlier:
    • (i) upon another Qualified Financing
    • (ii) upon a Liquidity Event
    • (iii) on July 7, 2023, in each case subject to the conversion pricing and other terms set forth therein.

EARNOUT

  • The company shareholders are entitled to receive 2.5 million shares over a 5 year period
    • 50% of the shares will be released if the share price is equal to or greater than $13.50 for any 20/30 trading days
    • 50% of the shares will be released if the share price is equal to or greater than $17.50 for any 20/30 trading days

LOCK-UP

Sponsor

  • One year after the closing date or the date that is 180 days after Closing and the share price equals or exceeds $12.50 for any 20/30 trading days

Company

  • 180 days after Closing

NOTABLE CONDITIONS TO CLOSING

  • The Mexican Anti-Trust Federal Agency (Comisión Federal de Competencia Económica) and approval from the Mexican Securities and Banking Commission (“CNBV”) with respect to ultimate beneficial owners and the new indirect shareholders with an ownership interest greater than 5% after Closing and notice to CNBV with respect to new indirect shareholders with an ownership interest greater than 2%

NOTABLE CONDITIONS TO TERMINATION

  • By Covalto, if the Anchor Investment (as defined below) has not been duly funded to Covalto, in an amount no less than the Anchor Investment Amount, no later than thirty (30) days following the Signing Date.
  • By LIVB or Covalto, if the Effective Times have not occurred by 11:59 p.m., Eastern Time, on May 10, 2023 (the “Termination Date”)
    • Extend the Termination Date from May 10, 2023 to February 10, 2024, and eliminate the right of LIVB and Covalto to extend the Termination Date by mutual written consent for an additional 3-month period. – LINK

Termination Fee

  • If the deal ends up terminating, at Covalto’s option, they will pay either (1) $5,500,000 by wire transfer (in accordance with wire instructions specified by LIVB to Covalto) in immediately available funds or (2) 1,125,251 Covalto shares, of the most senior class of preference shares of Covalto then outstanding, or if no preference shares are then outstanding, ordinary shares of Covalto (the “Termination Fee”).
    • The receipt of the Termination Fee, if and when payable, shall be the sole and exclusive remedy of, and no specific performance or equitable remedies shall be available to, LIVB, the Sponsor or any of their respective affiliates and representatives under the Business Combination Agreement and each other transaction document (other than the confidentiality agreement).
  • Revise the definition of the Termination Fee to provide LIVB the option, in the event that Covalto chooses to pay the Termination Fee in the form of the Fee Shares, to elect to receive, as the Termination Fee, the option of
    • (i) the Fee Shares or
    • (ii) both
      • (a) 820,000 Covalto shares and
      • (b) reimbursement for up to fifty percent (50%) of the reasonable and documented LIVB Expenses actually paid by or on behalf of LIVB as of the termination date, subject to a cap of $1,500,000 in the aggregate and other restrictions on the timing of such reimbursement

ADVISORS

  • Simpson Thacher & Bartlett LLP is acting as legal advisors to Covalto
  • Davis Polk & Wardwell LLP is acting as legal advisors to LIVB
  • EarlyBirdCapital, Inc. is acting as the capital market advisor to LIVB
  • EarlyBirdCapital, Inc. is acting as the financial advisor to LIVB

MANAGEMENT & BOARD

Executive Officers

Alexander R. Rossi, 53
Chairman & Chief Executive Officer

Mr. Rossi previously served as the Chief Executive Officer and Chairman of the Board of Directors of LIV Capital Acquisition Corp. I from October 2019 to August 2021, and continues to serve as a member of AgileThought’s Board of Directors. Since 2006, Mr. Rossi has served as Managing Partner of LIV Capital Group, a leading private investment firm in Mexico. From 1996 to 2006, Mr. Rossi served as Managing Director of Communications Equity Associates, LLC (“CEA”), a merchant and investment bank specializing in the media, communications and technology sectors. Prior to joining CEA, Mr. Rossi held position at Bancomer Securities International, a Mexican Investment Bank, Smith Barney International and PaineWebber Incorporated. Mr. Rossi currently serves on the board of several Mexican companies. Mr. Rossi has an MBA from New York University’s Stern School of Business (1995) and a BA in Economics and Art History from Williams College (1990).

Luis Rodrigo Clemente Gamero, 51
Chief Financial Officer

Mr. Gamero previously served as the Chief Financial Officer of LIV Capital Acquisition Corp. I from October 2019 to August 2021. Since 2016, Mr. Gamero has served as Chief Financial Officer of LIV Capital Group. From 2014 to 2016, Mr. Gamero served as Chief Financial Officer of Grupo Diagnostico Proa, a leading medical diagnosis and clinical analysis laboratories company in Mexico. Mr. Gamero has been working in finance for 26 years and has acted as Chief Financial Officer in several industries, such as entertainment, retail, gaming, medical diagnosis and clinical analysis laboratories and private equity firms. He has also served on the board of directors and executive committees of several companies including Administradora Mexicana de Hipódromo, S. A de C. V., Impulsora de Centros de Entretenimiento las Américas, S.A.P.I. de C.V., Promociones Recreativas Mexicanas, S.A. de C.V., Calle de Entretenimiento de las Américas, S. A. de C. V., Entretenimiento Recreativo, S. A. de C. V., Entretenimiento Virtual, S. A. de C. V., Hotel de Entretenimiento de las Américas, S. A. de C. V., Centro de Convenciones las Américas, S. A. de C. V., Impulsora Recreativa de Entretenimiento AMH, S. A. de C. V., Juegamax de las Américas, S. A. de C. V., Servicios Administrativos del Hipódromo S. A. de C. V., Servicios Compartidos en Factor Humano Hipódromo S. A. de C. V., Comercializadora de Sortijuegos, S. A. de C. V. Mr. Gamero holds a CPA from Universidad de Guadalajara in Jalisco Mexico (1993) and an MBA from ITAM (2001) in Mexico City.

 

Board of Directors

Humberto Zesati, 53
Director

Mr. Zesati previously served as a member of the Board of Directors of LIV Capital Acquisition Corp. I from October 2019 to August 2021. Since 2006, Mr. Zesati has served as Managing Partner of LIV Capital Group. From 1999 to 2006, Mr. Zesati served as Managing Director of Latin Idea.com, LLC, the predecessor of LIV Capital. Prior to founding Latin Idea.com, LLC, Mr. Zesati was Managing Director of Grupo Infinitti, S.A. de C.V., a Mexican real estate company focused on tourism. Mr. Zesati currently serves on the board of several Mexican companies. Mr. Zesati has an MBA from New York University’s Stern School of Business (1996) and a BA in Economics from Universidad Iberoamericana (1992).

Miguel Ángel Dávila, 56
Director

Since 2009, Mr. Dávila has served as Managing Partner of LIV Capital Group. Mr. Dávila founded Cinemex, the largest capitalized venture start-up in Mexican history and a leading Mexican chain of cinemas, in 1993 and served as its Chief Executive Officer until 2008. Prior to founding Cinemex, Mr. Dávila was a Business Analyst of McKinsey & Company, an American worldwide management consulting firm. Mr. Dávila currently serves on the board of several Mexican companies and Endeavor México, a not-for-profit organization leading the high-impact entrepreneurship movement around Mexico and the world. Mr. Dávila has an MBA from Harvard Business School (1993) and a CPA from Instituto Tecnológico Autónomo de México (1989).

Carlos Alberto Rohm, 49
Director Nominee

Mr. Rohm previously served as a member of the Board of Directors of LIV Capital Acquisition Corp. I from March 2020 to August 2021. Since 2007, Mr. Rohm has been a Partner of LCA Capital, a leading family office with ties to Mexico. From 2004 to 2007, Mr. Rohm served as Chief Executive Officer of HSM Americas, which provides business management services. Prior to joining HSM Americas, from 1994 to 2003, Mr. Rohm worked at JP Morgan Chase in several roles including, as a member of the Latin American private equity fund (JPMorgan Partners) and as an investment banking analyst in New York. Mr. Rohm served on the board of directors of several Mexican companies, including Grupo Aeroportuario del Pacifico (GAP), an airport operator in Mexico, and FIBRA Storage, a real estate developer that develops and manages self-storage facilities and mini warehouses. Mr. Rohm has a bachelor’s in business administration from Universidad de San Andres, Argentina (1994).

Jose Antonio Solano Arroyo, 65
Director Nominee

Mr. Solano previously served as a member of the Board of Directors and chaired the audit committee of LIV Capital Acquisition Corp. I from December 2019 to August 2021. Since January 2002, Mr. Solano has been general director and shareholder of Diseño y Gestión Empresarial S.C., a company that provides consulting services in Mexico. From January 2002 to April 2016, Mr. Solano served as director and shareholder of Recuperación Crediticia de Mexico S.C., a collection agency. From June 2000 to November 2001, Mr. Solano was the Chief Executive Officer of retail operations at Citibank, Grupo Financiero. From 1992 to May 2000, Mr. Solano acted as Chief Executive Officer of retail operations at Grupo Financiero Serfin, which provides commercial banking services and other financial services to individuals and businesses, and which was later merged into Grupo Financiero Santander Mexicano. From 1990 to 1992, Mr. Solano acted as executive director of private banking investments at Operadora de Bolsa S.A. de C.V., a securities brokerage company. Mr. Solano currently serves on the board of directors and executive committees of several other companies including Central de Corretajes S.A.P.I. de C.V., Industrial and Commercial Bank of China (ICBC) and Concrédito (Fin U?til, S.A. de C.V. SOFOM ENR). During his career, Mr. Solano has also served on the board of directors and executive committees of several other companies including BEPENSA S.A. de C.V., Fondo Nacional de Infraestructura, Grupo Financiero Intercam S.A., Grupo Financiero Interacciones S.A., Buró de Crédito de México SA de C.V., Total System Services de México, S.A. de C.V., Visa International México, S.A. de C.V. and Impulsora del Fondo Mexico, S.C. Mr. Solano received an MA in economics from the University of Boston in 1980, an MA in economic policy from the University of Boston in 1981, and a PhD in Economics from the University of Boston in 1982.

ByAnthony Sozzi