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Monterey Capital Acquisition Corporation

Monterey Capital Acquisition Corporation

Apr 22, 2022 by Anthony Sozzi

PROPOSED BUSINESS COMBINATION: ConnectM Technology Solutions, Inc.

ENTERPRISE VALUE: $tbd million
ANTICIPATED SYMBOL: CNTM

Monterey Capital Acquisition Corporation proposes to combine with ConnectM Technology Solutions, Inc.

ConnectM is a vertically integrated clean energy technology and solutions provider for buildings (residential and light commercial) and All-Electric OEMs with a proprietary platform to accelerate the transition to solar and all-electric heating, cooling and transportation.

SUBSEQUENT EVENT – 7/11/24 – LINK 

  • The SPAC amended its $3,680,000 deferred underwriting fee owed to EF Hutton to a payment of $500,000 in cash at close and a one-year $3,680,000 note that may be paid in shares once it matures.

EXTENSION – 5/7/24 – LINK

  • The SPAC approved the extension from May 13, 2024 to November 13, 2024.
    • 228,678 shares were redeemed
    • $0.045/share per month will be deposited into the trust account.

EXTENSION – 11/8/23 – LINK

  • The SPAC approved the extension from November 13, 2023 to May 13, 2024.
    • 1,961,875 shares were redeemed for $10.67 per share.
    • $0.045/share per month will be deposited into the trust account.

TRANSACTION

  • Under the terms of the transaction, MCAC has agreed to acquire ConnectM at an implied pre-money equity valuation of $145 million, subject to an upward adjustment depending on the extent to which MCAC’s transaction expenses exceed $8.0 million.
  • MCAC holds approximately $93.0 million of cash in its trust, subject to potential redemptions by MCAC’s existing stockholders.
  • The Merger has been approved unanimously by the boards of directions of both MCAC and ConnectM and is expected to close in the second quarter of 2023

SPAC FUNDING

  • OTC Equity Prepaid Forward Transaction
    • Up to a maximum of 6,600,000 Shares at a price equal to the estimated redemption price of approximately $10.21 per Share to be paid to investors who elect to redeem their shares at MCAC’s redemption deadline (the “Initial Price”); provided that Seller may not beneficially own greater than 9.9% of the issued and outstanding Shares on a post-merger pro forma basis.
    • Seller has agreed to waive any redemption rights with respect to any Shares in connection with the merger. Such waiver may reduce the number of Shares redeemed in connection with the merger, which reduction could alter the perception of the potential strength of the merger.
    • The Forward Purchase Agreement provides that not later than one local business day following the Closing of the merger, MCAC will pay to Seller, out of funds held in MCAC’s trust account, a cash amount equal to
      • (x) the product of the number of Recycled Shares and the Initial Price less
      • (y) an amount equal to 1% of the product of the number of Recycled Shares and the Initial Price.
    • At the written request of Seller, the Prepayment Amount must be deposited into an escrow account simultaneously with the Closing.
    • In addition to the Prepayment Amount, MCAC shall pay directly from the Trust Account on the Prepayment Date, an amount equal to the product of 40,000 and the Initial Price, for the purpose of repayment of Seller having actually purchased additional Shares from third parties prior to the Closing.
    • The Additional Consideration shall be free and clear of all obligations of Seller in connection with signing a definitive agreement for the Forward Purchase Transaction.
    • From time to time following the Closing and prior to the earliest to occur of
      • (a) the third anniversary of the Closing and
      • (b) the date specified by Seller in a written notice to be delivered to MCAC at Seller’s discretion after the occurrence of any of a
        • (x) Trigger Event or
        • (y) Delisting Event (in each case, the “Maturity Date”), Seller may, in its sole discretion, sell some or all of the Shares.
    • On the Maturity Date, the escrow agent shall transfer to the Seller an amount in cash equal to the product of
      • (x)(i) the number of Shares as set forth in the initial Pricing Date Notice (as defined in the Forward Purchase Agreement) less (b) the number of Terminated Shares (the “Matured Shares”) multiplied by
      • (y) the Initial Price and the Seller shall transfer to the escrow agent for the benefit of MCAC the Matured Shares less the Maturity Shares and the Penalty Shares.
    • On the last trading day of each week following the merger, Seller will pay to the combined company the product of the number of Shares sold multiplied by the Reset Price.
      • The “Reset Price” shall initially be the Initial Price and shall be adjusted on the first scheduled trading day of each week commencing with the first week following the thirtieth day after the Closing to be the lowest of
        • (a) the then-current Reset Price
        • (b) the Initial Price and
        • (c) the VWAP Price of the Shares of the prior week, but not lower than $7.50; provided that to the extent that MCAC or the combined company offers and sells any Shares or securities convertible into Shares at a price lower than the Initial Price, the Reset Price, shall be modified to equal such reduced price at which such securities may be issued.
      • Seller will retain any sale proceeds in excess of the product of the number of Shares sold by Seller and the Reset Price.
    • In the event that the VWAP Price of the Class A Common Stock falls below $5.00 per share for any 20 trading days during a 30 trading day period beginning 30 days following the closing of the Merger (a “Trigger Event”), then Seller may elect to accelerate the Maturity Date to the date of such Trigger Event.
      • At the Maturity Date, the combined company is required to purchase from Seller, subject to Seller’s consent, all of the unsold Shares for consideration equal to an amount, in cash or Shares at the sole discretion of combined company (the “Maturity Consideration”), equal to
        • (a) in the case of cash, the product of the unsold Shares and $2.00, or $2.50, solely in the event of a Registration Failure, and
        • (b) in the case of Shares, such number of Shares (the “Maturity Shares”) with a value equal to the product of the unsold Shares and $2.00, or $2.50, solely in the event of a Registration Failure, divided by the VWAP Price of the Shares for the 10 trading days prior to the Maturity Date; provided that the Maturity Shares used to pay the Maturity Consideration are freely tradable.
      • If the Maturity Shares are not freely tradable, Seller shall instead receive such number of Shares equal to the product of (i) three (3) and (ii) 6,600,000 minus the Terminated Shares (as defined in the Forward Purchase Agreement) (the “Penalty Shares”); provided, however, that if the Penalty Shares are freely tradable within 45 days after the Maturity Date, Seller shall return to Appreciate such number of Penalty Shares that are valued in excess of Maturity Consideration based on the 10-day VWAP ending on the date that such Shares satisfied the Share Conditions.
    • Pursuant to the terms and conditions of the Forward Purchase Agreement, ConnectM and the combined company agree, from and after December 31, 2022, not to incur in excess of $25.0 million of indebtedness through and including the 90th day following the Prepayment Date without the prior written consent of the Seller.
    • A break-up fee equal to (i) all of Seller’s reasonable and documented fees and expenses relating to the Forward Purchase Agreement capped at $75,000 plus (ii) $500,000, shall be payable by the combined company to Seller in the event the Forward Purchase Agreement is terminated by MCAC.

LOCK-UP

  • Company and Sponsor
    • 180 days after the Closing and when the share price equals or exceeds $16.50 for any 20/30 trading days at least 150 days after closing

NOTABLE CONDITIONS TO CLOSING

  • Closing of the Transaction does not have a minimum cash condition

NOTABLE CONDITIONS TO TERMINATION

  • By either MCAC or ConnectM if the Merger is not consummated on or before November 13, 2023 (the “Outside Date”).
  • On 10/16/23, the Outside Date was extended to May 13, 2o24. 

ADVISORS

  • EF Hutton, division of Benchmark Investments, LLC, is serving as capital markets advisor.
  • Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. is acting as legal counsel for MCAC
  • Polsinelli P.C. is acting as legal counsel for ConnectM.

MANAGEMENT & BOARD

Executive Officers

Bala Padmakumar, 61
Chief Executive Officer and Chairman

Since August 2020, Mr. Padmakumar has been a partner at Advantary LLC, where he specializes in business development and advises on strategic matters. Since January 2021, he has been actively partnering with the Asia practice of FocalPoint Partners LLC, a boutique investment bank on deal flow diligence in the clean transition space in Asia. Since June 2021, he has been an advisor to the Chief Executive Officer of NTherma Corporation on strategic relationships and capital raising activities. From July 2016 to December 2021, Mr. Padmakumar has also advised on deal flow and provided operational support to portfolio companies for a fund set up to support SK Telecom Co., Ltd.’s strategic interests. From 2007 through 2010, Mr. Padmakumar was a Venture Partner at X/Seed Capital Management, LLC, where he focused on transactions in the cleantech and materials sectors. Additionally, from 2011 to October 2020, Mr. Padmakumar was the Chief Executive Officer at Amperics, Inc., a developer and vendor of high energy density ultracap hybrid storage systems. Mr. Padmakumar also has extensive experience in the clean energy sectors, having been an advisor to Lionrock Batteries Ltd., which creates flexible batteries and high performance separator technology since 2019, an advisor to the board and CEO of Hyperscale Data Center Company, a company focused on energy usage efficiency in hyperscale data centers from 2018 to 2020, and an advisor to the chairman of Advanced Systems Automation Limited in Singapore, where he advised on issues surrounding urban transportation, High Energy Density Li Ion battery (NMC technology) and 3D printing technology from 2017 to 2019. Mr. Padmakumar also has broad experience advising on capital raising and corporate strategy, serving as a mentor to OneValley Inc., a global entrepreneurship platform for individuals, startups, and corporations seeking innovation and accelerated growth, and as an advisor to several early stage companies from audio technologies to SaaS products. Mr. Padmakumar has a Bachelor’s Degree in Technology from the University of Madras in Chemical Engineering and a Master of Science Degree in Chemical Engineering from Stanford University.

Vivek Soni, 63
Executive Vice President and Director

Dr. Soni has been a member of Prithvi Ventures LLC since January 2021, a fund for investments in innovative cleantech companies, and has been a member of S CAP ClimateTech Opportunity Fund, LP, since July 2021, which is a late stage Climatech fund. With these funds, he has played a vital role in investing $22 million in 2021 in the clean transition sector that includes investments in energy storage, electrical vehicle (EV) technology, renewable energy, and novel materials companies. Since September 2017, Dr. Soni has been on the Advisory Board of Reading Municipal Light Department, the largest municipal electric utility in Massachusetts and currently is the Vice Chair. Since 2016, he has also been a Managing Director for TiE Boston Angels, where he created a robust process for syndication and due diligence, and also grew investments threefold over five years. From 2007 to 2011, he was a Venture Advisor to Nomura International plc’s New and Clean Energy Technology Ventures fund, a late stage Cleantech VC fund. Since 2006, Dr. Soni has also been the Managing Partner of Boston Cleantech, a company that enables investors and entrepreneurs to grow businesses in cleantech, energy, chemicals, materials and manufacturing. His responsibilities include promoting early-stage companies and impact investing in cleantech, carbon capture and sequestration, and solar energy. Dr. Soni is also a member of the boards of directors of A.T.E Private Limited, A.T.E. Enterprises Private Limited and A.T.E. Huber Envirotech Private Limited, where he provides expertise on governance, technology, innovation, cleantech, fundraising, acquisitions and global expansion. Dr. Soni holds a Bachelor’s Degree in Technology from the Indian Institute of Technology, New Delhi, India, a Master of Science Degree in Polymer Science & Engineering from the University of Massachusetts, Amherst, a Ph.D. in Polymer Science & Engineering from the University of Massachusetts, Amherst, and an Executive Development Program certificate from the Kellogg School of Management at Northwestern University.

Daniel Davis, 56
Chief Financial Officer

Mr. Davis has served as the Chief Administrative Officer of SeQure Dx, Inc., a company focused on providing off-target diagnostics in gene editing since April 2021. Prior to that, from 2007 through April 2020, Mr. Davis was a Director in the Life Sciences and Technology Practice at Accounting Management Solutions (“AMS”), and subsequently, following its acquisition, at CliftonLarsonAllen LLP, an accountancy firm. At AMS, Mr. Davis founded and managed the life sciences practice and provided strategic consulting on complex engagements surrounding fundraising and mergers and acquisitions strategies. Mr. Davis is also co-founder, acting Chief Financial Officer and Director of AngioWave Imaging, LLC, where he led an over-subscribed seed round, and was a key contributor to the strategic plan and drove the forecasting for the five-year plan. Mr. Davis received his B.A. in Political Science from Brown University and his M.B.A from the University of Pennsylvania, Wharton School of Business.

Board of Directors

Leela Gray, 55
Chairman

Between November 2018 and May 2019, Ms. Gray served as Strategic Advisor to United States Army Cyber Command, playing a key role in innovating and modernizing cyber policy shaped by her market and stakeholder insights, including her tenure at the Department of State, where she created interagency and international partner initiatives in Cyber/Information Warfare. Prior to that, from August 2016 to July 2018, Ms. Gray served as a Deputy Commanding General at the U.S. Army Central Command guiding strategies to transform operations and logistics. As a National Security senior executive with Top Secret clearance, Ms. Gray represented the United States internationally, shaped policy, and advised logistics and governance, building on a global perspective that also included two combat operations and one peacekeeping mission. Since June 2020, Ms. Gray has been a mentor at Tampa Bay WAVE’s Tech Accelerator programs. From July 2019 to June 2021, Ms. Gray served on the Executive Board of Alpha Omicron Pi Fraternity, a $100 million international nonprofit with over 100,000 members. Ms. Gray currently serves on the Advisory Board of Empower Rideshare, SaaS ridesharing company alternative to Uber and Lyft and holds the National Association of Corporate Directors (NACD) Directorship Certification™. Ms. Gray earned a Master of Strategic Studies from the United States Army War College, an M.A. in Journalism from Ball State University, and a B.A. in Communications from Elon University.

Kathy Cuocolo, 70
Director Nominee

Ms. Cuocolo is currently a director and Audit Chair of Greenbacker Renewable Energy Company LLC and a director at Syntax ETF Trust. Her prior directorships include President and Director of The China Fund, Inc., which invests primarily in private placements in mainland China, Chairperson of Select Sector ETF Trust, and director of Guardian Life family of funds. From 2014 through March 2020, Ms. Cuocolo was the president of Syntax Advisors, LLC where she was responsible for all aspects of business operations and the development of its financial management products. Prior to that, from 2008 until 2013, Ms. Cuocolo was a Managing Director and Division Head for the Mutual Fund and global ETF Services for The Bank of New York Mellon Corporation, where she was responsible for the operations and strategic planning for these business lines. Prior to that, from 1982 until 2003, Ms. Cuocolo served in various roles at State Street Corporation, including as an Executive Vice President, Division Head of Investor Products and Services, where she was responsible for operations and strategic planning. Ms. Cuocolo was a member of the corporations’ Executive Operating Committee responsible for all aspects of business strategy. During her 22 years at State Street, Ms. Cuocolo led the firm to become the largest fund administrator in the U.S., with over $1.2 trillion in assets. Prior to State Street, Ms. Cuocolo was an auditor at PriceWaterhouseCoopers LLP. Ms. Cuocolo received her B.A. in Accounting, summa cum laude, from Boston College, and holds a Masters Professional Director Certificate from the American College of Corporate Governance. Ms. Cuocolo received her CPA license in the Commonwealth of Massachusetts in 1981.

Stephen Markscheid, 68
Director Nominee

He is currently the Chairman of Still Waters Green Technology Limited, a UK based renewable energy developer since December 2019 and currently serves as a director of Fanhua, Inc. (Nasdaq: FANH), JinkoSolar Holding Co., Ltd. (NYSE: JKS), Zhongjin Technology Services Group Company Limited (HKEX: Stock Code 08295), Xiaobai Maimai Inc. (Nasdaq: HX), UGE International Ltd. (TSXV: UGE.V), and the Global Corporate Social Responsibility Foundation. In addition, Mr. Markscheid is currently the Chief Financial Officer of ChildWise International Corporation and serves as a Board Advisor to several companies, including NanoGraf Corporation, Intelligent Generation LLC, SeedVantage LLC, Clean Energy Trust, and Kearsarge Energy L.P. Mr. Markscheid also serves as a trustee emeritus of Princeton-in-Asia. From 1998 until 2006, Mr. Markscheid served as a Director of Business Development and Senior Vice President and led GE Capital’s business development activities in China and the Asia Pacific region, primarily focusing on acquisitions and direct investments. Prior to GE, Mr. Markscheid worked with the Boston Consulting Group throughout Asia. Mr. Markscheid was a banker for ten years in London, Chicago, New York, Hong Kong and Beijing with Chase Manhattan Bank and First National Bank of Chicago. Mr. Markscheid began his career with the US-China Business Council, in Washington D.C. and Beijing. Mr. Markscheid earned a B.A. in East Asian Studies from Princeton University in 1976, an M.A. in international affairs from Johns Hopkins University in 1980, and an MBA from Columbia University in 1991, where he was class valedictorian.

 

ByAnthony Sozzi