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Mudrick Capital Acquisition Corporation II

Mudrick Capital Acquisition Corporation II

Oct 16, 2020 by Roman Developer

The below-announced combination was terminated on 8/9/22.  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: Blue Nile [Terminated]

ENTERPRISE VALUE: $683 million
ANTICIPATED SYMBOL: TBD

Mudrick Capital Acquisition Corporation II proposes to combine with Blue Nile.

Blue Nile, Inc. is an online retailer of high-quality, conflict-free, GIA-graded diamonds and fine jewelry. The company offers a superior experience for purchasing engagement rings, wedding rings, and fine jewelry by providing expert guidance, in-depth educational materials, and unique online tools that place consumers in control of the jewelry shopping process. Blue Nile has some of the highest quality standards in the industry and offers thousands of independently graded diamonds and fine jewelry at prices significantly below traditional retail.

TRANSACTION

  • The transaction is anticipated to generate approximately $450 million of capital before expenses, assuming no redemptions by the public stockholders of Mudrick Capital Acquisition Corporation II.
  • $50 million of new preferred equity provided by Mudrick Capital.
  • $80 million of committed PIPE capital (~$50M of which has been pre-funded) from existing sponsors Bain Capital Private Equity, Bow Street, and Adama Partners, and from Mudrick Capital.
  • Existing Blue Nile shareholders will roll over their existing equity, retaining 39% of the combined company’s pro forma equity.
  • The pro forma implied equity value of the combined company is $873 million at the $10.15 per share PIPE price, assuming no redemptions by the public stockholders of Mudrick Capital Acquisition Corporation II.
  • The transaction implies a pro forma enterprise value for Blue Nile of approximately $683 million.

muds

PIPE

  • $80 million of committed capital
    • Sponsor PIPE
      • $40 million of MUDS common stock for a purchase price of $10.15/Share
    • Bain & Bow Street PIPE
      • $40 million of MUDS common stock for a purchase price of $10.15/Share

BACKSTOP

  • The Sponsor agreed to purchase up to an aggregate of $68 million of MUDS common stock at a purchase price of $10.15 per share in connection with the consummation of the Business Combination, to the extent necessary to fund any shortfall in the Available Closing Buyer Cash, without taking into consideration any amount funded from the backstop. In the event the Company terminates the Merger Agreement in order to enter into a definitive agreement in respect of a change of control transaction with the Specified Third Party, the Subscription and Backstop Agreement provides for a “Subscriber Termination Adjustment” in the amount of $13,575,000, payable to the Subscriber, at the Company’s option, in cash or shares of the Company’s convertible preferred stock, upon the earlier of
    • (i) the consummation of the closing of the transactions contemplated by the applicable definitive agreement with the Specified Third Party or
    • (ii) the termination of the applicable definitive transaction agreement with the Specified Third Party

PREFERRED EQUITY

  • $50 million of new preferred equity was provided by Mudrick Capital.
    • 50,000 shares of convertible preferred stock of the Company with an initial liquidation preference of $1,000/Share

LOCK-UP

  • Company and Sponsor
    • 6 months from the Closing Date

NOTABLE CONDITIONS TO CLOSING

  • The amount of Available Closing Buyer Cash being no less than $195,500,000, and the proceeds of the initial PIPE financing amount having been delivered in full as of the closing.

NOTABLE CONDITIONS TO TERMINATION

  • By either MUDS or the Company if the transactions are not consummated on or before September 10, 2022 (the “Termination Date”)
    • Termination Date shall be automatically extended for three (3) months in the event that MUDS stockholders approve an extension of the period for MUDS to consummate a business combination
  • If the company terminates, it must pays MUDS a termination fee in cash in an amount equal to MUDS’s expenses (up to $10 million)
  • By either MUDS or the Company if a governmental entity shall have issued an order, decree or ruling or taken any other action, in any case having the effect of permanently enjoining or prohibiting the merger, which order, decree, judgment, ruling or other action is final and non-appealable.

ADVISORS

  • Jefferies LLC is acting as exclusive financial
  • Jefferies LLC is acting as capital markets advisor and placement agent
  • Weil, Gotshal & Manges LLP is acting as legal advisor to Mudrick Capital Acquisition Corporation II.
  • Kirkland & Ellis LLP is acting as legal advisor to Blue Nile.

The below-announced combination was terminated on 8/20/21.  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: The Topps Company [TERMINATED on 8/20/21 – LINK]

ENTERPRISE VALUE: $1.307 billion
ANTICIPATED SYMBOL: TOPP

Mudrick Capital Acquisition Corporation II proposes to combine with The Topps Company, Inc. (“Topps” or “the Company”), a global leader in sports and entertainment collectibles and confections.

Building on its 80-year heritage, Topps has transformed its core Sports & Entertainment and Confections businesses through innovation and diversification into a portfolio of complementary product offerings including expanded e-commerce, mobile digital applications and digital e-gifting solutions. The Company had record sales of $567 million in 2020, representing a year-over-year increase of 23%. Topps engages and emotionally connects with millions of consumers driving revenue through its powerful and widely recognized brands across the globe via the following product offerings:

  • Physical Sports & Entertainment, built upon strategic licensing partnerships including Major League Baseball, Major League Baseball Players Association, UEFA, Bundesliga, Major League Soccer, Major League Soccer Players Association, National Hockey League, National Hockey League Players Association, Formula 1, Disney, Star Wars and World Wrestling Entertainment and comprising a broad portfolio of trading cards, stickers and albums and trading card games sold in stores around the world as well as through its fast growing e-commerce platform, topps.com;
  • Digital Sports & Entertainment, including interactive mobile apps Topps® BUNT®, TOPPS® KICK®, Topps® NHL SKATE™, Disney Collect! by Topps®, Marvel Collect! by Topps®, Star Wars™: Card Trader by Topps® and Topps® WWE SLAM™ creates communities of users who collect, trade and play online, and has recently commenced expansion into Blockchain/NFTs;
  • Gift Cards, under the Topps Digital Services tradename, provides global gifting/payment solutions for leading digital companies including Airbnb, Deliveroo, DoorDash, Hulu, Instacart, Netflix, Nike, Twitch and Uber;
  • Confections, under the Bazooka Candy Brands tradename, spans a branded portfolio of novelty confections delivering engaging Edible Entertainment
    ® with celebrated product lines under the Bazooka, Ring Pop, Juicy Drop, Push Pop and Baby Bottle Pop brands.

Topps is capitalizing on the accelerated interest in its multi-channel Sports & Entertainment business from growing enthusiasm around its innovative sports and entertainment collectibles, as well as growth from investments in its e-commerce platform, topps.com. The Company has put a premium on growth through innovation with existing and new licenses, international expansion, curated experiential events, and innovative artist-inspired collectibles. Topps has further reimagined the collectibles universe through its transition to the digital marketplace, addressing the contemporary, more tech-savvy consumer demands for convenience, immediacy, value, social engagement, and interactive experiences within the changing retail landscape by leveraging its innovation and community. Topps is also capitalizing on its growing technological capabilities to advance its Gift Cards offering with a focus on further penetrating the fast-growing digital gift card channel. In Confections, the Company is fueling excitement and demand for its well-known novelty branded products through Innovative new product launches and brand extensions, significantly increased e-commerce activity, and international expansion.

TRANSACTION

  • The transaction is anticipated to generate gross proceeds of up to approximately $571 million of cash, assuming no redemptions by the public stockholders of MUDS.
    • This additional capital will be used to purchase shares from existing Topps shareholder Madison Dearborn Partners, which intends to sell the majority of its ownership position, and to fund transaction related fees and expenses.
    • This includes a private placement of $250 million of common stock in MUDS, including participation from funds and accounts managed by GAMCO Investors and Wells Capital Management and including up to $100 million from Mudrick Capital.
    • The pro forma implied equity value of the combined company is $1.163 billion at the $10.15 per share PIPE price, assuming no redemptions by the public stockholders of MUDS.
    • The transaction implies a pro forma enterprise value for The Topps Company of approximately $1.3 billion, or 12.5x 2021 projected adjusted EBITDA with estimated net debt of less than $150 million.

Muds trans overview 4-6-21

PIPE

  • PIPE of $250 million at $10.15 per share led by Mudrick Capital
    • Includes participation from funds and accounts managed by GAMCO Investors and Wells Capital Management and including up to $100 million from Mudrick Capital.

BACKSTOP

  • MUDS entered into a subscription agreement with funds and accounts managed by Mudrick Capital Management, L.P. (the “Mudrick Backstop Parties” and, such subscription agreement, the “Backstop Agreement”), pursuant to which the Mudrick Backstop Parties have agreed to purchase an aggregate of up to 9,852,216 shares of MUDS’ Class A common stock, for a purchase price of $10.15 per share and for an aggregate commitment of up to approximately $100 million (the “Backstop Amount”); provided, that the Mudrick Backstop Parties may elect in connection with the Closing to reduce the Backstop Amount by the excess above $350 million (if any) of the amount of the Available Buyer Closing Cash (including the maximum Backstop Amount).

SPONSOR SUPPORT AGREEMENT

  • If more than 20% of MUDS’ Class A common stock is redeemed by MUDS’ stockholders in connection with the Transactions, the sponsor will surrender for cancellation up to 2,635,416 shares of MUDS’ Class B common stock in proportion to the incremental percentage of shares redeemed above such 20% threshold.

EARNOUT

  • 7,684,730 shares of Class B common stock of the combined company (the “Earnout Shares”), subject to forfeiture if certain share price targets
  • MUDS’ Class B common stock will be issued in two equal series consisting of 3,842,365 shares of Series B-1 common stock and 3,842,365 shares of Series B-2 common stock.
    • The Series B-1 common stock have a “triggering event” if the volume-weighted average share price of MUDS’ Class A common stock is $14.00 or above for 20 trading days within a 30 consecutive trading day period within 18 months after the Closing.
    • If such triggering event (or another triggering event) has not previously occurred, both the Series B-1 common stock and Series B-2 common stock will have a triggering event if the volume-weighted average share price of MUDS’ Class A common stock is $16.00 or above for 20 trading days within a 30 consecutive trading day period within 3 years after the Closing.
    • A triggering event also occurs if there is a merger, consolidation, tender offer, exchange offer, business combination or sale at or above the relevant share price.
    • MUDS’ Class B common stock will convert automatically into shares of MUDS’ Class E common stock (in the case of Tornante Topps LLC) and shares of MUDS’ Class A common stock (in all other cases) upon a triggering event.
    • Any shares of MUDS’ Class B common stock that have not vested by the third anniversary of the Closing shall be cancelled.

NOTABLE CONDITIONS TO CLOSING

  • the obligations of the Company to consummate the Transactions are conditioned upon the amount of Available Closing Buyer Cash being no less than $350 million as of the closing of the Transactions
  • The obligations of MUDS to consummate the Transactions are conditioned upon, among others, the amount of Available Closing Buyer Cash being no less than $350 million minus the Backstop Amount

NOTABLE CONDITIONS TO TERMINATION

  • By either MUDS or the Company if the transactions are not consummated on or before January 6, 2022 (the “Termination Date”)

ADVISORS

  • Jefferies LLC (“Jefferies”) served as financial and capital markets advisor to MUDS.
  • Weil, Gotshal & Manges LLP served as legal counsel to MUDS.
  • Deutsche Bank Securities Inc. served as financial advisor to The Topps Company.
  • Kirkland & Ellis LLP served as legal counsel to The Topps Company.
  • Jefferies is acting as lead placement agent and Deutsche Bank Securities Inc., Roth Capital Partners, LLC, and
    Craig-Hallum Capital Group, LLC are acting as placement agents on the PIPE.

MANAGEMENT & BOARD

Executive Officers

Jason Mudrick, 45
Chief Executive Officer and Chairman of the Board of Directors

Mr. Mudrick is the founder and Chief Investment Officer of Mudrick Capital Management, L.P. (“Mudrick Capital”), an investment firm that specializes in long and short investments in distressed credit. Mudrick Capital was founded in 2009 with $5 million under management. As of August 2020, the firm had grown to approximately $2.5 billion under management, primarily for institutional clients. Mr. Mudrick began his Wall Street career in 2000 advising on mergers and acquisition transactions as an Associate in Merrill Lynch’s Mergers & Acquisitions Investment Banking Group. In 2001, he joined Contrarian Capital Management, where he began his focus on distressed investing. Beginning in October 2002, Mr. Mudrick served as Managing Director and Portfolio Manager of the Contrarian Equity Fund, a fund specializing in post-restructured equities, which he managed until his departure at the end of 2008. As Managing Director and Portfolio Manager of the Contrarian Equity Fund, Mr. Mudrick specialized in investing in post-restructured equities, among other things. In 2009, Mr. Mudrick founded Mudrick Capital to continue his specialty of investing in distressed debt and post-restructured equities. Mr. Mudrick has served on numerous ad hoc creditors’ committees and eleven post-restructured companies’ boards of directors, including Safety-Kleen Holdings, Integrated Alarm Services Group, Salton, Rotech Healthcare, NJOY Holdings, Corporate Risk Holdings, Fieldwood Energy, Proenza Schouler, cxLoyalty and Thryv Holdings, Inc., where he is currently the Chairman of the Board. Mr. Mudrick was also Chief Executive Officer and director of Mudrick Capital Acquisition Corporation, our predecessor special purpose acquisition company. Mr. Mudrick also spent two years in graduate school teaching economics classes to Harvard University undergraduates. Mr. Mudrick has a B.A. in Political Science from the College of the University of Chicago and a J.D. from Harvard Law School. Mr. Mudrick was previously admitted to the New York State Bar.

Victor Danh, 42
Vice President

Mr. Danh is a Managing Director and Senior Analyst at Mudrick Capital, where he is responsible for analyzing distressed credit and equity opportunities across a diverse range of industries and overseeing and coordinating the research team. Prior to joining Mudrick Capital, Mr. Danh was a Vice President and Assistant Portfolio Manager at Contrarian Capital Management, LLC from 2003 to 2009 where he focused on deep value and distressed investments in a wide range of industries across the entire capital structure. Previously, Mr. Danh worked at Merrill Lynch in the Mergers and Acquisitions Group and at UBS in the Technology Investment Banking Group. Mr. Danh previously served on the Board of Directors of Seventy Seven Energy and is currently serving on the Board of Directors of Expanse Energy Solutions, Inc. Mr. Danh was also Vice President of Hycroft Mining Holding Corp. (fka Mudrick Capital Acquisition Corporation). Mr. Danh received a B.A. in Economics from Harvard College.

David Kirsch, 40
Vice President and Director Nominee

Mr. Kirsch is a Managing Director and Senior Analyst at Mudrick Capital, where he is responsible for analyzing distressed credit and equity opportunities across a diverse range of industries. Prior to joining Mudrick Capital, from 2008 to 2010 Mr. Kirsch was a Senior Analyst and Managing Director at Miura Global Management, a large global long-short equity hedge fund, where he was responsible for coverage of the financial and consumer industries across the Americas, Europe and Asia. Mr. Kirsch gained extensive restructuring experience as a Director at Alvarez & Marsal from 2003?–?2008. At Alvarez & Marsal, he held primary or lead management roles on an interim basis for distressed companies and advised creditors on balance sheet solutions to maximize the value of their investments. Mr. Kirsch began his Wall Street career as an Analyst in the Healthcare Industry Group in the Investment Banking Division of Banc of America Securities. He is currently serving on the Board of Directors of NJOY Holdings, Proenza Schouler and Targus Holdings and previously served on the Board of Directors of NYDJ. Mr. Kirsch currently serves as Chairman of the Board for Hycroft Mining Holding Corporation and Nelson Education. Mr. Kirsch was also Vice President and director of Hycroft Mining Holding Corp. (fka Mudrick Capital Acquisition Corporation). Mr. Kirsch received his B.S. Magna Cum Laude in Economics from the Wharton School at the University of Pennsylvania.

Glenn Springer, 47
Chief Financial Officer

Mr. Springer is the Chief Financial Officer of Mudrick Capital, where he oversees the finance, accounting and operations functions. Prior to joining Mudrick Capital, Mr. Springer was Chief Financial Officer and Chief Operating Officer at Turtle Creek Investment Advisors, LLC from 2007 to 2008 where he developed from inception, its operational and financial infrastructure. Prior to joining Turtle Creek, Mr. Springer served as Chief Financial Officer & Chief Compliance Officer of SBZ Select Investments, LLC from 2005 to 2007 where he was responsible for the finance, accounting and compliance functions, including the registration of two investment advisors with the SEC. Previously, Mr. Springer served as Controller (A.A.I.UK), Director of Fund Accounting and a Risk Management Affiliated Fund Analyst at Asset Alliance Corporation from 2000 to 2004. Prior to Asset Alliance, Mr. Springer was a Senior Accountant in PricewaterhouseCoopers, LLP’s Financial Services and Business Advisory Services Group from 1998 to 2000 where his focus was on audits of a variety of investment companies including hedge funds and private equity funds. Mr. Springer began his career at Richard A. Eisner & Co. LLP from 1996 to 1998 where he was a Senior Accountant in the Audit Department. Mr. Springer was also Chief Financial Officer of Hycroft Mining Holding Corp. (fka Mudrick Capital Acquisition Corporation). Mr. Springer received a B.A. from the State University of Albany and an M.B.A. from Baruch College, CUNY. Mr. Springer is a Certified Public Accountant in the State of New York.

 

Board of Directors

Dennis Stogsdill, 49
Director 

Mr. Stogsdill has in excess of 25 years of experience in management consulting, advising troubled companies, lenders and equity sponsors in distressed and non-distressed situations. Mr. Stogsdill began his career in 1994 working as a management consultant at GB Consulting and later in 1996 joined the global restructuring group of Arthur Andersen. In 2001 he helped form the restructuring group of the investment bank Berenson Minella. In 2002, he joined Alvarez & Marsal LLC, a global consulting firm specializing in corporate turnarounds and financial restructurings. Mr. Stogsdill is currently Managing Director at Alvarez & Marsal LLC and has been involved in all aspects of the reorganization process, including acting in executive-level roles such as Chief Restructuring Officer. Mr. Stogsdill periodically served as the interim Chief Executive Officer or Chief Restructuring Officer (or in an analogous position) of companies which elected to utilize bankruptcy proceedings as a part of their financial restructuring process and, as such, he served as an executive officer of various companies which filed bankruptcy petitions under federal law, including, without limitation, Fairway Group Holdings in 2015, Revel Casino in 2013, Fresh & Easy Markets in 2013 and M&G Chemicals SA in 2017. Mr. Stogsdill has a B.S. from Rutgers University.

Scott Kasen, 55
Director 

Mr. Kasen has been a private investor since 2010. Mr. Kasen is currently a Member of SK Restaurant Holdings LLC and from February 2016 to November 2018. From August 2016 through August 2020 Mr Kasen served as a director of Thryv Holdings, Inc. and from February 2016 to November 2018 was a member of the board of directors for Targus Cayman Holdco Limited. Previously, Mr. Kasen has held several senior leadership positions within Contrarian Capital Management, LLC, including co-portfolio manager of European Fund, LP and Contrarian Capital Senior Secured, LP. Mr. Kasen has previously held leadership roles as Vice President with The Trump Organization and has served as a partner with A.B. Edelman Management Company and Velocity Crossover Investors. Mr. Kasen also previously served on the board of directors for Special Metals, Inc. and Cascade Timberlands, LLC. Mr. Kasen received his Bachelor of Science degree from Rutgers University and his Master of Business Administration degree from The Columbia Business School.

Dr. Brian Kushner, 61
Director 

Dr. Kushner has, since 2009, served as a Senior Managing Director at FTI Consulting, Inc. (NYSE: FCN), a global business advisory firm, where he serves as the leader of the Private Capital Advisory Services practice and as the co-leader of the Technology practice, the Aerospace, Defense and Government Contracting practice and the Activism and M&A Solutions practice. Prior to joining FTI, Dr. Kushner was the co-founder of CXO, L.L.C., a boutique interim and turnaround management consulting firm that was acquired by FTI at the end of 2008. Over the past two decades, he has served as Chief Executive Officer, the Chief Restructuring Officer or a Director of more than two dozen public and private technology, manufacturing, telecom and defense companies, and has led, or participated in the sale or acquisition of over 25 companies. Dr. Kushner periodically served as the interim CEO or Chief Restructuring Officer (or in an analogous position) of companies which elected to utilize bankruptcy proceedings as a part of their financial restructuring process and, as such, he served as an executive officer of various companies which filed bankruptcy petitions under federal law, including, without limitation, Relativity Media LLC in 2015. Dr. Kushner began his career in 1982 at BDM International, a defense firm, and remained with them following their acquisition by Ford Motor Company, and stayed on to become Chief Scientist and General Manager as part of the management team that completed a leveraged buyout of BDM in 1990 with the Carlyle Group. Dr. Kushner serves as an independent director and Chair of the Audit Committee of Cumulus Media, Inc. (NASDAQ: CMLS), a leader in the radio broadcasting industry, since 2018; an independent director and member of the Audit, the Finance, the Technology and the Strategy and Operations Committees of Resideo Technologies, Inc. (NYSE:REZI), a leader in smart home products and systems, since 2019; and an independent director and Chair of the Audit Committee of Gibson Brands, Inc., a manufacturer of guitars and other musical instruments, since 2018. Dr. Kushner is also a member of the Advisory Council of the College of Natural Sciences at the University of Texas at Austin and is an Emeritus member of the Engineering College Council at Cornell University in Ithaca, New York. Previously, from 2016 – 2020, he served as an independent director and Chair of the Audit Committee of Thryv, Inc. (fka Dex Media Holdings Inc.), a digital and print marketing company; an independent director of DevelopOnBox Holding, LLC d/b/a Zodiac Systems, a video software engineering services firm, where he served on the Audit and Governance Committees, from 2016 – until the sale of the company to Orion Innovation in 2020; from 2016 – 2018, he served as a non-executive independent director, Chair of the Remuneration Committee and a member of the Audit Committee of the Luxfer Group, PLC (NYSE: LXFR), a specialty materials manufacturing company; from 2015 to 2016 he served as an independent director and Chair of the Audit Committee of Everyware Global, Inc, the manufacturing company that is the parent of the Oneida and Anchor Hocking brands (since renamed the Oneida Group); from 2013 to 2015 the Lead Independent Director of Damovo, LLC, the ultrahigh reliability and data systems integration company; from 2010 to 2013 as Chair of Caribbean Asset Holdings, the voice, video and telephony company serving many Caribbean islands; from 2009 to 2013 as managing member and director of DLN Holdings, LLC, a mid-tier defense contractor; from 2007 to 2012 as director and acting Chair of Sage Telecom, Inc., a competitive local exchange carrier and a Silver Point Capital portfolio company; from 2006 to 2009 a director of Pacific Crossing Limited, a telecom carrier; and from 2003 to 2008 an independent director of Headway Resources, a staffing company. Dr. Kushner was also a director of Hycroft Mining Holding Corp. (fka Mudrick Capital Acquisition Corporation). Dr. Kushner has a Ph.D. in Applied and Engineering Physics with a minor in Electrical Engineering from Cornell University, as well as an M.S. and B.S. in Applied and Engineering Physics from Cornell.



ByRoman Developer