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Perception Capital Corp. II *

Perception Capital Corp. II *

Apr 7, 2021 by Nat Judge

PROPOSED BUSINESS COMBINATION: Spectaire Holdings Inc.

ENTERPRISE VALUE: $203 million
ANTICIPATED SYMBOL: tbd

Perception Capital Corp. II proposes to combine with Spectaire Holdings Inc.

Spectaire Inc. manufactures, distributes and installs a patented portable mass spectrometry system that pioneers emissions reduction of logistics assets through direct observational measurement.

SUBSEQUENT EVENT – 10/19/23 – LINK

  • On October 16, 2023, PCCT and Polar Multi-Strategy Master Fund entered into an agreement for an OTC Equity Prepaid Forward Transaction.
  • Pursuant to the terms of the Polar Forward Purchase Agreement, Polar purchased 206,000 class A ordinary shares of PCCT from holders (other than PCCT or its affiliates) who elected to redeem such shares in connection with the Business Combination.
  • Purchases by Polar were made through brokers in the open market after the redemption deadline in connection with the Business Combination at a price no higher than the redemption price to be paid by PCCT in connection with the Business Combination.

SUBSEQUENT EVENT – 10/12/23 – LINK

  • On October 11, 2023, the Company agreed with Dr. Jörg Mosolf to a private placement subscription agreement.
    • The agreement involves Dr. Mosolf subscribing for newly-issued shares of common stock of Spectaire Holdings Inc., totaling $3.5 million.
      • The initial purchase of 50,000 shares, costing $10.00 per share, will happen concurrently with the Closing for $500,000.
      • Within two years after the Closing, Dr. Mosolf will buy additional shares for $10.00 per share, totaling $3 million.
      • The purchase of the shares is subject to the Closing and other standard conditions for this type of transaction.

SUBSEQUENT EVENT – 10/10/23 – LINK

Subscription Agreement

  • On October 4, 2023, Perception Capital Corp. II (PCCT) made an agreement with Polar Multi-Strategy Master Fund (Polar) to provide money for PCCT’s expenses until they finalize a business deal.
    • Polar agreed to give PCCT $650,000, which will be paid back when PCCT completes the business deal.
    • In return for the money, PCCT will give Polar 0.9 shares of the Surviving Entity’s common stock for every dollar of the money provided.
    • The money doesn’t earn interest and can be repaid either in common stock or cash, based on Polar’s choice.
    • PCCT will also sign an agreement with Polar to register the common stock shares given to Polar.
    • In case of certain defaults, PCCT will give Polar additional shares of common stock for every dollar of the money provided, subject to certain conditions.

Sponsor Letter Agreement

  • PCCT’s sponsor, Perception Capital Partners II LLC, gave PCCT a letter agreement to support its fundraising.
    • The agreement states that the sponsor will cancel 585,000 Class B ordinary shares of PCCT when the closing happens.
    • Additionally, after the closing, they will cancel an equal number of Common Stock shares as the Default Shares issued to Polar based on the Subscription Agreement.

EXTENSION – 4/27/23 – LINK

  • The SPAC approved the extension from May 1, 2023 to November 1, 2023.
    • 376,977 shares were redeemed for $10.70 per share.
    • $0.04/share per month will be deposited into the trust account.

SUBSEQUENT EVENT – 3/28/23 – LINK

  • The SPAC reduced the deferred underwriting discount from $8,050,000 to $5,635,000.
  • They have also added a $25M minimum cash closing condition

EXTENSION – 10/28/22 – LINK

  • The shareholders approved, by special resolution, the proposal to amend the company’s amended and restated memorandum and articles of association to extend the date by which the company must:
    • (1) consummate a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization, or similar business combination,
    • (2) cease its operations except for the purpose of winding up if it fails to complete such initial business combination, and
    • (3) redeem all of the Class A ordinary shares included as part of the units sold in its initial public offering from November 1, 2022, to May 1, 2023.
  • In connection with the charter extension, a total of 159 shareholders have elected to redeem an aggregate of 20,542,108 Class A ordinary shares, representing approximately 89.3% of the issued and outstanding Class A ordinary shares.
  • As a result, $210,161,773.71 will be paid out of the company’s trust account in connection with the redemptions, representing a redemption price per Class A ordinary share of approximately $10.23.

TRANSACTION

  • The proposed Transaction values Spectaire at a pro forma enterprise value of approximately $203M.
  • The proposed Transaction has no minimum cash condition and a pre-arranged forward purchase agreement with Meteora Capital, LLC for the full amount of its cash in trust.
  • The parties expect the proposed Transaction to close in the second quarter of 2023.

pcct

SPAC FUNDING

  • Perception Capital entered into a forward purchase agreement with Meteora Capital, LLC for the full amount of cash in the trust.
    • Seller intends but is not obligated to purchase up to a maximum of 2,457,892 PCCT Class A Ordinary Shares from holders (other than PCCT or its affiliates) who have elected to redeem such shares in connection with the Business Combination.
    • Purchases by Seller will be made through brokers in the open market after the redemption deadline in connection with the Business Combination at a price no higher than the redemption price to be paid by PCCT in connection with the Business Combination
    • The Forward Purchase Agreement provides that not later than one local business day following the Closing, PCCT will pay into an escrow account, out of funds held in the Trust Account, a cash amount equal to the product of the number of Recycled Shares and the Initial Price, less an amount equal to 1% of the product of the number of Recycled Shares and the Initial Price.
    • PCCT shall pay directly from the Trust Account on the Prepayment Date, an amount equal to the product of 150,000 PCCT Class A Ordinary Shares and the Initial Price.
    • From time to time following the Closing and prior to the earliest to occur of
      • (a) the first anniversary of the Closing (or, upon the mutual written agreement of PCCT and Seller, 18 months following the Closing) and
      • (b) the date specified by Seller in a written notice to be delivered to PCCT at Seller’s discretion after the occurrence of a Seller Price Trigger Event or a Delisting Event (each as defined in the Forward Purchase Agreement) (in each case, the “Maturity Date”), Seller may, in its sole discretion, sell some or all of the Recycled Shares.
    • On the last trading day of each calendar month following the Business Combination, in the event that Seller has sold any Recycled Shares (other than sales to recover the Shortfall Amount), an amount will be paid to PCCT from the escrow account equal to the product of the number of Recycled Shares sold multiplied by the Reset Price and to the Seller from the escrow account equal to the excess of the Initial Price over the Reset Price for each sold Recycled Share.
      • The “Reset Price” shall be set on the first scheduled trading day of each month, commencing with the first calendar month following the Closing, to be the lowest of the (b) Initial Price and (c) volume weighted average price of the PCCT Common Stock during the last 10 trading days during the prior calendar month, but not lower than $7.50; provided that to the extent that PCCT offers and sells any PCCT Common Stock or securities convertible into PCCT Common Stock at a price lower than the existing Reset Price, the Reset Price shall be modified to equal such reduced price.
    • At the Maturity Date, an amount equal to the Initial Price for each Recycled Share that is still held by the Seller shall be transferred to the Seller from the escrow account, and the Seller shall transfer the Matured Shares to PCCT.
    • Additionally, at the Maturity Date, PCCT shall pay to the Seller an amount equal to $1.25 (or $1.75, if the Maturity Date has been extended by the mutual written agreement of PCCT and Seller) for each Matured Share, which may be paid in cash or in shares of PCCT Common Stock at the 10-day volume weighted average price of the PCCT Common Stock.
    • A break-up fee equal to (i) up to $50,000 of Seller’s reasonable and documented fees and expenses relating to the Forward Purchase Agreement plus (ii) $500,000 (the “Break-up Fee”), shall be payable by PCCT and Spectaire to Seller in the event that, prior to the Maturity Date
  • On October 11, 2023, the Company agreed with Dr. Jörg Mosolf to a private placement subscription agreement.
    • The agreement involves Dr. Mosolf subscribing for newly-issued shares of common stock of Spectaire Holdings Inc., totaling $3.5 million.
      • The initial purchase of 50,000 shares, costing $10.00 per share, will happen concurrently with the Closing for $500,000.
      • Within two years after the Closing, Dr. Mosolf will buy additional shares for $10.00 per share, totaling $3 million.
      • The purchase of the shares is subject to the Closing and other standard conditions for this type of transaction.

EARNOUT

  • Company
    • The company can earn up to an additional 7,500,000 shares if they meet certain price thresholds within 5 years of the Closing Date
      • 2,500,000 shares will be released at $15.00, $20.00, and $25.00

LOCK-UP

  • Sponsor
    • 1 year following the Closing Date or if the share price equals or exceeds $12.00 for any 20/30 trading days at least 150 days after Closing
  • Company
    • 180 days following the Closing Date

NOTABLE CONDITIONS TO CLOSING

  • The transaction has no minimum cash condition and prior to signing the business combination agreement
  • They have also added a $25M minimum cash closing condition – LINK

NOTABLE CONDITIONS TO TERMINATION

  • If any of the closing conditions have not been satisfied or waived by May 1, 2023 (or by the Business Combination Deadline if the Extension Proposals are approved)

ADVISORS

  • Latham & Watkins LLP is serving as legal counsel to Spectaire.
  • Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to Perception.

MANAGEMENT & BOARD

Executive Officers

Rick Gaenzle, 56
Chief Executive Officer and Director Nominee

Mr. Gaenzle has over 30 years of private equity investment and corporate finance experience; he is a co-founder and currently serves as a Managing Director of Gilbert Global Equity Capital, L.L.C., the principal investment advisor to Gilbert Global Equity Partners, L.P. and related entities, a $1.2 billion leveraged buyout and private equity fund. Mr. Gaenzle has spent the last twenty-eight years at Gilbert Global and its predecessor entity, completing over 110 direct equity investments, co-investments and add-on acquisitions for portfolio companies. Previously, Mr. Gaenzle was a Principal of Soros Capital L.P., the principal venture capital and leveraged equity entity of the Quantum Group of Funds and a principal advisor to Quantum Industrial Holdings Ltd. Prior to joining Soros Capital, Mr. Gaenzle held various positions at PaineWebber Inc. Mr. Gaenzle currently serves as a Senior Advisor to Impact Delta, an impact-investing and impact-measurement advisory firm; an Operating Partner of NPG; a board member and Chairman of the Audit Committee for SOAC; and Chairman of Lake Street Homes, a single-family rental investment vehicle. He has also previously served on the boards of CPM Holdings, Inc.; True Temper Corp; Vice Chairman of Optical Capital Group, Inc.; Birch Telecommunications, Inc.; E-via S.p.A.; Tinka-ServiCos de Consultoria, S.A.; and the LaserSharp Corporation. Mr. Gaenzle holds a B.A. from Hartwick College and an M.B.A. from Fordham University.

James Sheridan, 53
Co-President

Mr. Sheridan has experience as both an operating executive (Chief Procurement Officer) and as a leader of the Purchasing Practice at McKinsey & Co. Mr. Sheridan also has over 25 years of corporate and private equity leadership experience delivering bottom line impact and organizational capability improvement. Mr. Sheridan has served on the board of directors of Innoviz (Nasdaq: INVZ) since April 2021. Prior to joining Perception in 2020, Mr. Sheridan served as an Operating Partner for Sustainable Opportunities Acquisition Corp. (NYSE:SOAC), the first ESG focused SPAC, led by Scott Honour (Chairman). Before joining SOAC, he served as a Senior Vice President of Purchasing and Logistics at Forterra Building Products from 2017-2019. Prior to Forterra, Mr. Sheridan spent 12 years (2005-2017) at McKinsey & Co. as a Senior Expert in Purchasing & Supply Chain. During his tenure at McKinsey & Co., he led operational transformations across industries from petrochemicals and metals to aerospace. From 2003 through 2005, Mr. Sheridan was Champion Enterprises’ Chief Procurement Officer. Mr. Sheridan started his professional career at Ford Motor Company in Corporate Purchasing where he spent over 8 years in a number of positions including serving as the Strategy Manager for Manufacturing Procurement Operations (Powertrain and Raw Materials). Mr. Sheridan earned a B.A. from the College of the Holy Cross and M.B.A from Carnegie Mellon.

Patrick Williams, 50
Co-President

Mr. Williams has over 20 years of experience in operations and development, leading major transformation efforts at private and public companies. Prior to joining Perception in 2020, Mr. Williams served as an Operating Partner for Sustainable Opportunities Acquisition Corp. (NYSE:SOAC), the first ESG focused SPAC, led by Scott Honour (Chairman). Before joining SOAC, Mr. Williams served as Vice President of Transformation and Supply Chain at GenOn since 2018. Previously, he had served as Vice President of Performance Improvement at Forterra. From 2008 to 2016, Mr. Williams held executive roles with Energy Future Holdings in Operational Excellence, Development and Finance. From 2005 to 2008, Mr. Williams served HomeTeam Pest Defense as their Vice President & GM for the Southwest Region. Mr. Williams spent 5 years (1999-2005) at McKinsey & Co. after serving as a Captain in the U.S. Army. Mr. Williams earned a B.S. in Electrical Engineering from West Point and an M.B.A from Harvard Business School.

Corey Campbell, 39
Chief Financial Officer

Mr. Campbell currently serves as the Chief Financial Officer of NPG. Prior to joining NPG, Mr. Campbell held a number of positions within the finance and accounting organizations at Valspar Corporation where he worked for seven years. At Valspar, he held a range of positions, including managing an International Controllership group that spanned four regions and 27 countries. Prior to Valspar, Mr. Campbell was a Senior Audit Associate at Lurie, LLP. Mr. Campbell earned a B.B.A. in finance and business economics from the Mendoza School of Business at the University of Notre Dame.

Board of Directors

Scott Honour, 54
Chairman of the Board of Directors

Mr. Honour has over 30 years of private equity investment experience and has been involved in over 100 transactions totaling over $20 billion in transaction value. Mr. Honour is Managing Partner of NPG, a private equity firm, which he co-founded in 2012. He also serves as Chairman of Sustainable Opportunities Acquisition Corp. (“SOAC”), the first ESG focused SPAC, and of EVO. Prior to that, Mr. Honour was at The Gores Group, a Los Angeles based private equity firm, for 10 years, serving as Senior Managing Director and one of the firm’s top executives. During his time at The Gores Group, the firm raised four funds, totaling $4 billion in aggregate, and made over 35 investments. Mr. Honour also served on the investment committee for The Gores Group. Prior to joining The Gores Group, Mr. Honour was a Managing Director at UBS Investment Bank from 2000 to 2002 and was an investment banker at Donaldson, Lufkin & Jenrette from 1991 to 2000. Mr. Honour began his career at Trammell Crow Company in 1988. Mr. Honour has served on the board of directors of numerous public and private companies including Anthem Sports & Entertainment Inc., 1st Choice Delivery, United Language Group, Renters Warehouse, Real Dolmen (REM:BB) and Westwood One, Inc. (formerly Nasdaq: WWON), and is a co-founder of Titan CNG LLC and YapStone Inc. Mr. Honour earned a B.S. and B.A., cum laude, in Business Administration and Economics from Pepperdine University and an M.B.A. in Finance and Marketing from the Wharton School of the University of Pennsylvania.

Marcy Haymaker, 32
Director Nominee

Ms. Haymaker is a Partner at NPG, which she was involved in the formation of in 2012. She also served as Principal for Sustainable Opportunities Acquisition Corp. (NYSE:SOAC), the first ESG focused SPAC, led by Scott Honour (Chairman). Prior to joining the NPG, Ms. Haymaker was an Associate at The Gores Group, an operations-focused private equity firm with over $4 billion in assets under management at the time. Ms. Haymaker began her career as an Analyst at US Bancorp, headquartered in Minneapolis. Ms. Haymaker serves on the boards of Renters Warehouse, 1st Choice Delivery and Lake Street Labs. Ms. Haymaker earned a B.S. in Finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Thomas J. Abood, 57
Director Nominee

Since September 2019, Mr. Abood has been CEO and a director of EVO, a national trucking firm serving the USPS and other freight customers. Currently, he sits on the board of directors of Nelson Worldwide Holdings, a national architecture, engineering and interior design firm and SBH Funds, a mutual fund complex sponsored by Segall Bryant and Hamill. From 1994 to 2014, Mr. Abood was an owner and Executive Vice President, General Counsel and Secretary of Dougherty Financial Group LLC. From 1988 to 1994, Mr. Abood was an associate with the law firm of Skadden Arps. Mr. Abood is Chair of the Archdiocesan Finance Council and Corporate Board of the Archdiocese of St. Paul and Minneapolis, past Chair of the board of directors and executive committee member of Citation Jet Pilots, Inc. owner pilot association, past Chair of the Board and director of MacPhail Center for Music, past Chair of the Board and governor of the University of St. Thomas School of Law, past Chair of the Board and director of the Minnesota Children’s Museum and past President and Governor, The Minikahda Club. Mr. Abood received his JD from Georgetown University Law Center, cum laude and his BBA from the University of Notre Dame, magna cum laude.

Omer Keilaf, 42
Director Nominee

Mr. Keilaf is the Chief Executive Officer and Co-Founder of Innoviz Technologies. Prior to founding Innoviz, Mr. Keilaf was a System and Product Team Manager at Consumer Physics where he worked for three years. Prior to Consumer Physics, Mr. Keilaf was an R&D Manager at STMicroelectronics where his responsibilities included chip architecture, SW architecture and development, board design and systems integration among other responsibilities. Mr. Keilaf also has industry experience at Anobit Tech and ADS. Mr. Keilaf served for seven years in Unit 81, the elite technology unit of the Israeli Defense Forces whose veterans were key in founding Innoviz Technologies. Mr. Keilaf’s association with Unit 81 will bring exceptional value to Perception Capital Corp. II due to his deep industry knowledge and relationships at the forefront of innovation in industrial technology. Mr. Keilaf has also been a lecturer at Tel Aviv University. Mr. Keilaf earned a B.S. in Electrical and Electronics Engineering, an M.S. in Electrical and Electronics Engineering from and an M.B.A., all from Tel Aviv University.

R. Rudolph Reinfrank, 65
Director Nominee

Mr. Reinfrank is the Managing General Partner of Riverford Partners, LLC, a strategic advisory and investment firm which acts as an investor, board member and strategic advisor to growth companies and companies in transition. Prior to founding Riverford, Mr. Reinfrank was a co-founder and a Managing General Partner of Clarity Partners L.P., an $800 million private equity firm focused on media and communications, and a co-founder of Clarity China, L.P., a $220 million private equity partnership with investments in Greater China. Prior to joining Clarity, he was a co-founder and a Managing General Partner of Rader Reinfrank & Co., a private equity fund. His prior experience includes roles as an executive, investor, and advisor across a wide range of industries for the Roy E. Disney and Marvin Davis families. Mr. Reinfrank is a member of the board of directors of Apollo Investment Corporation, a registered investment company and publicly-traded financial services company (Nasdaq: AINV). Mr. Reinfrank is also a Senior Advisor to BC Partners, a private equity and credit firm which targets investments in market leading businesses with defensive growth characteristics. BC Partners has completed 101 investments in companies with a total enterprise value of €124 billion. Mr. Reinfrank is also a Senior Advisor to Grafine Partners, an asset management firm. Until November 2018, Mr. Reinfrank was a member of the board of directors of Kayne Anderson Acquisition Corp., (Nasdaq: KAAC), chairman of its audit committee, and a member of its compensation committee. Mr. Reinfrank earned a B.A. from Stanford University and an M.B.A from the UCLA Graduate School of Management.

ByNat Judge