STOP THE WAR! Let’s support Ukraine Together

Qell Acquisition Corporation

Qell Acquisition Corporation

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: Lilium GmbH

ENTERPRISE VALUE: $2.374 billion
ANTICIPATED SYMBOL: LILM

Qell Acquisition Corporation proposes to combine with Lilium GmbH (“Lilium”), a manufacturer in regional electric air mobility, developing its electric vertical take-off and landing jet.

Lilium’s vision is to create a sustainable and accessible mode of high-speed, regional transportation. Using the 7-Seater Lilium Jet, an electric vertical take-off and landing jet, offering leading capacity, low noise and high performance, Lilium is building a transport network and service for people and goods. Working in partnership with world-leading aerospace, technology and infrastructure partners, commercial operations are planned to launch in 2024. Lilium’s 600+-strong team includes over 400 aerospace engineers and a leadership responsible for delivering some of the most successful aircraft in aviation history. Founded in 2015, Lilium’s headquarters and manufacturing facilities are in Munich, Germany, with teams based across Europe and the U.S.

Lilium can revolutionize regional travel, saving people hours not minutes. Using its 7-Seater Lilium Jet, revealed today, Lilium’s regional shuttle service will enable sustainable, high-speed transportation. The 7-Seater Lilium Jet has market-leading capacity and is the first of Lilium’s serial aircraft. It is capable of quiet vertical take-off, allowing Lilium access to more landing sites and the opportunity to build higher network density, avoiding the need for expensive ground infrastructure. The 7-Seater Lilium Jet and regional shuttle service business model are projected to deliver the best unit economics, with passenger and enterprise opportunities.

The Lilium 7-Seater Jet has a projected cruise speed of 175 mph at 10,000 feet and a range of 155+ miles, including reserves.

Lilium applied for concurrent type certification for a high-capacity aircraft with EASA and the FAA in 2018. Development of the 7-Seater Lilium Jet began in stealth mode following this milestone. In 2020 the 7-Seater Lilium Jet received CRI-A01 certification basis from EASA.

Lilium has successfully developed, tested and refined the underlying technology for electric vertical take-off and landing jets – Lilium’s proprietary Ducted Electric Vectored Thrust (“DEVT”) technology, along with key control systems, aircraft and battery architecture. DEVT technology enables Lilium to scale to higher-capacity aircraft and keep noise emissions and ground footprint low.

The proceeds from the transaction are intended to fund the launch of commercial operations, planned for 2024. This includes the finalization of serial production facilities in Germany, launch of serial production aircraft and completion of type certification.


TRANSACTION

  • The transaction values the combined company at an implied $3.3 billion pro forma equity value at the $10.00 per share PIPE price.
  • The combined company is expected to receive approximately $830 million of gross proceeds from a fully committed common stock PIPE offering of $450 million, along with approximately $380 million cash held in trust, assuming minimal redemptions of Qell’s existing public stockholders.
  • The PIPE includes participation from leading strategic and long-term financial investors including Baillie Gifford, funds and accounts managed by BlackRock, Tencent, Ferrovial, LGT and its direct impact investing arm Lightrock, Palantir, Atomico, FII Institute and private funds affiliated with PIMCO.
  • Net cash from the transaction will be used to fund the commercial launch of Lilium’s 7-Seater Jet.
  • Lilium’s existing shareholders will roll 100% of their shares into the combined company.
  • In addition, upon completion of the transaction, Daniel Wiegand will hold 3:1 super voting shares.

Qell trans overview


PIPE

  • Common stock PIPE offering of $450 million at $10.00 per share
    • The PIPE includes participation from leading strategic and long-term financial investors including Baillie Gifford, funds and accounts managed by BlackRock, Tencent, Ferrovial, LGT and its direct impact investing arm Lightrock, Palantir, Atomico, FII Institute and private funds affiliated with PIMCO.

SPONSOR LETTER AGREEMENT

  • Forfeit 1,828,945 of the Holdco Ordinary Shares acquired by the Qell Sponsor in connection with the Merger
  • Subject 3,063,422 of the Holdco Ordinary Shares acquired by the Qell Sponsor in connection with the Merger (in addition to any New Shares issued with respect to such Holdco Ordinary Shares) to certain time and performance vesting provisions.

EARNOUT

  • 40% of sponsor shares (3,063,422) subject to earnout based on the achievement of certain operational milestones and otherwise which will become fully vested by end of the Q3 2025
    • (a) thirty seven and a half percent (37.5%) of the Sponsor Earnout Shares will be Released upon the earlier of
      • (i) the first successful airborne flight of the Group’s seven (7)-seater aircraft (whether manned or unmanned), or
      • (ii) March 31, 2024;
    • (b) thirty seven and a half percent (37.5%) of the Sponsor Earnout Shares will be Released upon the earlier of
      • (i) in respect of any aircraft developed by the Group, the receipt of “Type Certification” as required (in accordance with applicable law) by the applicable Governmental Entities of either the European Union Aviation Safety Agency or Federal Aviation Administration (including, for the avoidance of doubt, but not limited to, Type Certification based on the European Union Aviation Safety Agency’s “SC VTOL” technical specifications), or
      • (ii) June 30, 2025; and
    • (c) twenty five percent (25%) of the Sponsor Earnout Shares will be Released upon the earlier of
      • (i) following the achievement of “Type Certification” of a Group Company aircraft in accordance with Section 3.5(b)(i), the Group Company incurring its first U.S. dollar ($) (or foreign equivalent) of positive revenue as recorded on its books and records in the ordinary course related, connected and/or otherwise attributable to a “Type Certified” Group Company aircraft (as determined by a majority of Holdco’s independent directors, acting reasonably),
      • or (ii) September 30, 2025.

LOCKUP

  • With respect to the Target Holders, the period beginning on the Final Closing Date and ending on the date that is 180 days after the Final Closing Date
  • with respect to the Sponsor, the period beginning on the Final Closing Date and ending on the earlier of
    • (i) 360 days after the Final Closing Date and (ii) (x) if the closing price of an Ordinary Share equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Final Closing Date, or
    • (y) the date on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all the Company’s stockholders having the right to exchange their Ordinary Shares for cash, securities or other property.

NOTABLE CONDITIONS TO CLOSING

  • the Aggregate Holdco Transaction Proceeds (as defined in the Business Combination Agreement) shall be equal to or greater than $450,000,000

NOTABLE CONDITIONS TO TERMINATION

  • If the closing of the Business Combination has not occurred on or before the later of:
    • (A) the date that is 6 calendar months after the date of the Business Combination Agreement, and
    • (B) the date that is 6 calendar months following:
      • (x) notification from the German BMWi that a certificate of non-objection is required in respect of the Business Combination, or
      • (y) the parties to the Business Combination Agreement coming to the mutual decision to seek a certificate of non-objection from the German BMWi

ADVISORS

  • JP Morgan Securities LLC and Barclays Capital Inc. are acting as financial and capital markets advisors to Qell.
  • Citi is acting as exclusive financial advisor to Lilium.
  • JP Morgan Securities LLC, Barclays Capital Inc. and Citigroup Global Markets Inc. acted as lead placement agents for the PIPE transaction.
  • Orrick Herrington & Sutcliffe LLP and Ropes & Gray LLP are serving as legal advisors to Lilium.
  • Goodwin Procter LLP is serving as legal advisor to Qell.
  • JPMorgan Securities LLC and Barclays Capital Inc. acted as the joint book-running managers of Qell’s IPO.

MANAGEMENT & BOARD


Executive Officers

Barry Engle, 56
Chief Executive Officer and Director

Mr. Engle has experience in operational, financial and managerial roles within the international automotive sector, as well as growth-oriented companies across various industries. He has spent the past five years serving in senior executive roles at General Motors Company (“GM”). From April 2019 through August 2020, Mr. Engle served as President of GM North America, which is GM’s largest segment with $100+ billion in 2019 revenue. Under his leadership, GM frequently beat Wall Street research analysts’ consensus operating income expectations, including during the unprecedented COVID-19 pandemic. During his tenure, GM also achieved significant retail market share gains in the important full-size pickup segment. In addition to his responsibilities for GM North America, Mr. Engle was Global Head of Chevrolet and served on the board of GM’s China joint venture. Before this, Mr. Engle served as the President of GM International, where he significantly restructured its Asian operations, including driving a rapid turnaround in its Korean business by working with unions, the government and suppliers. Mr. Engle joined GM in September 2015 as President of GM South America, leading the business unit through the region’s economic recession and achieving market leadership in Brazil, the region’s largest market, for 50+ consecutive months while reorganizing the business to improve its profitability. Prior to joining GM, Mr. Engle spent time leading high growth, private equity and venture capital-backed companies, serving as Chief Executive Officer of Agility Fuel Systems and of European electric vehicle manufacturer Think EV. Before joining Think EV, Mr. Engle spent two years as President and CEO of New Holland Agricultural Equipment in Turin, Italy. Mr. Engle also spent a number of years with Ford Motor Company where he served as President & CEO of Ford Canada, President of Ford Brazil, and led U.S. Marketing for the Ford brand. During his early career with Ford, Mr. Engle also spent time living and working in Mexico and Japan, where he was responsible for Mazda’s global brand strategy. Finally, Mr. Engle has previously led an entrepreneurial endeavor of his own. During the period 1997-2000, he sourced and executed an acquisition, purchasing and operating a retail automotive dealership in the Salt Lake City metro area, Barry Engle Chrysler-Plymouth-Jeep. Mr. Engle holds a BA in Economics, with a minor in Spanish, from Brigham Young University as well as an MBA from The Wharton School at the University of Pennsylvania. Mr. Engle has also served on the National Advisory Council for the Marriott School of Business at Brigham Young University since 2006.


Sam Gabbita, 46
Chief Financial Officer and Director nominee

Mr. Gabbita has held a variety of positions across financial and managerial functions within the financial services industry. From January 2020 through September 2020, Mr. Gabbita has led OGCI Climate Investments’ (“CI”) San Francisco office. CI is a $1 billion dollar fund that invests in solutions to decarbonize pollutant sectors like oil and gas, industry and commercial transportation. From March 2018 to December 2019, he served as Chairman of Agility Fuel Solutions. Prior to that, from September 2006 to December 2016, Mr. Gabbita served as Managing Director at Element Partners, a sustainability-focused private investment firm that managed $850 million of capital and over 25 portfolio companies. At Element, he made venture and growth investments in sustainable technology companies in the clean transportation arena, including Agility Fuel Solutions where he and Mr. Engle worked together on various strategic and value enhancing initiatives. In addition, he has served on boards of several high growth companies including Qnergy, Kairos Aerospace, Soleras Advanced Coatings and others. Mr. Gabbita spent the early part of his career working at various financial services firms: at Lazard Freres as an associate focusing on financial restructuring; at Nautic Partners, a private equity firm, as an associate focusing on growth, buyout and venture investments; and at Salomon Brothers, as a financial analyst covering firms in the industrial sector. Mr. Gabbita graduated Magna Cum Laude with a BA in Economics from the University of California at Los Angeles, and earned an MBA from The Wharton School at the University of Pennsylvania.


 

Board of Directors

Kathleen Ligocki, 63
Director

Kathleen Ligocki, who has agreed to serve as a director following the completion of this offering, is a serial CEO having led four innovative early to growth stage venture capital backed companies (Agility Fuel Solutions, Harvest Power, Next Autoworks, GS Motors) and one Fortune 1000 public company (Tower Automotive). Ms. Ligocki also served as an Operating Partner at Kleiner Perkins Caufield & Byers, one of Silicon Valley’s top venture capital providers, working with the firm’s sustainable industrial technology ventures on strategic challenges, scaling operations and commercialization. She brings 40 years of experience including Ford, United Technologies and GM where she led operations in the Americas, Europe, Africa, Middle East, Russia, India and China. Ms. Ligocki currently serves as an Independent Director on three public boards (Lear Corporation, PPG, and Carpenter Technology) one private board (Farmers Business Network) and the Indiana University Foundation. Ms. Ligocki earned a BA with highest distinction from Indiana University Kokomo and holds an MBA from The Wharton School at the University of Pennsylvania where she was a GM Fellow. She has also been awarded honorary doctorate degrees from Indiana University Kokomo and Central Michigan University.


Joseph Walker, 65
Director 

Joseph Walker, who has agreed to serve as a director following the completion of this offering, was an investment banker and a Vice Chairman and Managing Director with JP Morgan Chase & Co. (“JP Morgan”) before his retirement in June 2018, and provides expertise in operations management, corporate finance, capital budgeting, transaction execution and restructuring. He currently serves on the board of Immplecate, Inc., a privately-owned early stage medical research company, and has prior experience serving on the boards of Hertz and Liquid Environmental Solutions. In addition to these corporate boards, Mr. Walker currently serves on the Advisory Board of Columbia University Medical Center and of Applied Innovation at the University of California Irvine. Before re-joining JP Morgan as a Vice Chairman in 2012, Mr. Walker co-founded KW Advisors, a strategic advisory partnership which advised a variety of major and start-up corporations, including Dana Holdings on a major restructuring, after spending 5 years as a senior adviser to General Motors. While there, he counseled GM on a variety of corporate finance, capital budgeting, M&A and restructuring issues. From 1998 to 2000, Walker served as the global head of Technology, Media and Telecommunications Investment Banking at JP Morgan. Mr. Walker also co-led JP Morgan’s mergers and acquisitions group after helping the firm build their global M&A practice. Additionally, Mr. Walker was a member of the firm’s Investment Banking Management Committee as well as the firm’s Global Strategic Advisory Council. Mr. Walker spent the early part of his time at JP Morgan working in various capacities, including assignments in South Korea and Japan. Mr. Walker earned both a BA in Political Science and an MBA in Finance and Public Administration from Columbia University in New York.


Steve Adams, 60
Director 

Steve Adams, who has agreed to serve as a director following the completion of this offering, is the Chief Operating Officer at North American Holding Company (“NAHC”), a privately held investment company and family office based in Brentwood, TN. NAHC makes early stage and venture investments, and manages a family office and charitable foundation. In addition, Mr. Adams has been a Director of Agility Fuel Systems since 2010, serving on its Audit and Compensation Committees. Before serving as a director, Mr. Adams served as Chairman and President of FAB holdings, an Agility Fuel Solutions predecessor company, from 2005 to 2010 and from 2000 to 2005, respectively. Before his roles at Agility, Mr. Adams held strategic and financial roles in the healthcare industry after beginning his career with Deloitte in 1982. Mr. Adams is a graduate of Drake University, and a member of the American Institute of Certified Public Accountants.


Ryan Popple, 42
Director 

Ryan Popple, who has agreed to serve as a director following the completion of this offering, has served, since April 2016, as a partner at the venture capital firm R7 Partners and a director at Proterra, a leader in the design and manufacture of zero-emission electric vehicles, since May 2014. Mr. Popple has served on the board of the Silicon Valley Leadership Group since April 2016 and is currently a member of the executive board. Before his current roles, Mr. Popple served as CEO of Proterra for over five years beginning in October 2014, leading the company through technology development, exponential revenue growth and the establishment of its Tier-1 EV component business unit. Before that, he was a partner at the venture capital firm Kleiner Perkins Caufield & Byers, from April 2010 to October 2014. Mr. Popple was also an early employee at Tesla Motors where he served as a senior director of finance and was focused on strategic financial planning and corporate and business development. Mr. Popple served as an officer in the U.S. Army and has a Bachelors degree in Business Administration from the College of William & Mary and earned his MBA from Harvard University.


David Cozzens, 58
Director 

David Cozzens, who has agreed to serve as a director following the completion of this offering, has served on the boards of revVana since January 2019 and Kareo since July 2018, each of which are venture and growth-stage technology companies seeking to revolutionize established markets. He was also an advisor and served on the board of Digital Map Products from January 2019 until its acquisition by Lightbox in June 2019. Prior to his current roles and from May 2007 to August 2016, Mr. Cozzens served as the CEO of Telogis, a global enterprise Software-as-a-Service company. Under his leadership, Telogis grew from a start-up to become one of the largest players in the connected vehicle/smart mobility market leading to its acquisition by Verizon Communications. Before joining Telogis, Mr. Cozzens served as Vice President of Operations for Novell Americas. Prior to this role, Mr. Cozzens held a number of senior executive positions at Novell including area vice president and general manager for the Midwest and Federal businesses as well as vice president of North America Consulting. Before joining Novell, Mr. Cozzens was the Vice President of Consulting at Cambridge Technology Partners before its acquisition by Novell. Mr. Cozzens earned a B.S. in Mechanical Engineering from the University of Tennessee and a dual MBA degree in International Business from the Wirtschaftsuniversität Wien (Vienna University of Economics and Business)/University of South Carolina.