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Replay Acquisition Corporation

Replay Acquisition Corporation

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: Finance of America Equity Capital

ENTERPRISE VALUE: $1.662 billion
ANTICIPATED SYMBOL: FOA

Replay Acquisition Corp. proposes to combine with Finance of America Equity Capital LLC, an end-to-end lending and services platform.

Finance of America connects borrowers with investors. The Company operates in four large and growing markets including Mortgage, Reverse Mortgage, Commercial Real Estate, and Fixed Income Investing, with each supported by powerful structural tailwinds such as low interest rates, underserved markets, fragmented competition, constructive demographic trends, and favorable supply and demand imbalances, which lower volatility and create stable, growing earnings.

Finance of America’s multiproduct line-up is broadly distributed through retail locations, loan officers, and a third-party origination network and powered by a differentiated end-to-end digital platform, providing jobs to over 5,000 employees globally. Beyond product offerings, the Company offers ancillary services to its partners and to enhance the customer experience, resulting in incremental fee income. Furthermore, the Company’s capital markets and portfolio management capabilities inform product innovation, optimize execution, and allow for selective retention of assets while delivering superior risk-adjusted returns to investors.

SUBSEQUENT EVENTS – 3/18/21

It is a condition to the Sellers’ obligation to consummate the Business Combination that cash held by Replay as of immediately prior to the closing of the Business Combination (after taking into account any redemptions and the PIPE investments to be made at closing but before the payment of fees and expenses) be equal or greater to $400,000,000. In connection with the Business Combination, the Sellers intend to waive the closing condition relating to the minimum cash required to be held by Replay in the event such condition is not otherwise satisfied. 

TRANSACTION

The transaction implies an equity valuation at closing for the combined company of $1.9 billion.

Institutional investors have committed to invest $250 million in the form of a PIPE at a price of $10.00 per share of the combined company’s Class A common stock immediately prior to the closing of the transaction.

Estimated cash proceeds will consist of the PIPE in addition to Replay Acquisition’s $288 million of cash in trust, subject to redemptions.

It is anticipated that the combined company will begin with a minimum of $250 million of cash and cash equivalents.

Pro forma for the transaction, assuming no redemptions by Replay Acquisition’s public shareholders, Management, entities managed by Finance of America’s founder and funds managed by Blackstone Tactical Opportunities will own approximately 70% of the combined company. Over half of the sponsor’s founder shares of Replay Acquisition will be deferred and subject to share price hurdles.

The transaction is expected to close in the first half of 2021.

foa trans overview

PIPE

  • $250.0 million of PIPE Shares at $10.00 per share, including $10.0 million of PIPE Shares to be purchased by an affiliate of the Sponsor.

WARRANT OFFER

At the sole election of FoA, during the period prior to the Closing, Replay shall commence a tender offer (the “Warrant Offer”) for the outstanding warrants issued as part of the units sold in Replay’s initial public offering (the “Public Warrants”), with the price per Public Warrant, the aggregate amount of warrants subject to the Warrant Offer, and the other terms and conditions of the Warrant Offer to be determined by FoA in its sole discretion.

In the event FoA elects to have Replay commence the Warrant Offer, Replay will use its reasonable best efforts to launch the Warrant Offer as soon as practicable, and the Warrant Offer will be consummated concurrently with the Closing, with any payment for the Public Warrants in connection with the Warrant Offer to be made from the cash of the combined companies after the release of funds from Replay’s trust account established in connection with its initial public offering (the “Trust Account”).

SPONSOR AGREEMENT

Replay Sponsor, LLC (the “Sponsor”) and Replay’s directors and officers entered into an amendment and restatement of the existing Sponsor Agreement with New Pubco, Replay and FoA, pursuant to which, among other things:

  • (i) immediately prior to the Domestication, all of the private placement warrants owned by the Sponsor will be exchanged for Ordinary Shares (the “Warrant Exchange”) and
  • (ii) excluding the Founder Shares held by Daniel Marx, Mariano Bosch or Russell Colaco (unless transferred to any other Sponsor Person or permitted transferee thereof), 40% of the Founder Shares held by the Sponsor will be vested and wholly owned by the Sponsor as of the Closing and
    • 60% of the Founder Shares held by the Sponsor will be subject to vesting and forfeiture in accordance with the following terms and conditions:
      • Upon the First Earnout Achievement Date (should it occur), 35% of the unvested Founder Shares beneficially owned by each Sponsor Person (or affiliate thereof) as of immediately prior to the Closing will vest; and
      • Upon the Second Earnout Achievement Date (should it occur), 25% of the unvested Founder Shares beneficially owned by each Sponsor Person (or affiliate thereof) as of immediately prior to the Closing will vest.

EARNOUT

Following the Closing, New Pubco and FoA collectively will issue up to an aggregate of 18,000,000 Earnout Securities to the Blocker Shareholders (in the case of issuances by New Pubco) and to Blocker GP and the Sellers (in the case of issuances by FoA) as follows:

  • 9,000,000 Earnout Securities, in the aggregate, in the event that the average trading price of the Class A Common Stock is $12.50 or greater for any 20 trading days within a period of 30 consecutive trading days prior to the sixth anniversary of the Closing (the date when the foregoing is first satisfied, the “First Earnout Achievement Date”); and
  • 9,000,000 Earnout Securities, in the aggregate, in the event that the average trading price of the Class A Common Stock is $15.00 or greater for any 20 trading days within a period of 30 consecutive trading days prior to the sixth anniversary of the Closing (the date when the foregoing is first satisfied, the “Second Earnout Achievement Date”).
  • Such Earnout Securities will also become issuable under certain circumstances if an agreement with respect to a sale of New Pubco (a “New Pubco Sale”) is entered into prior to the sixth anniversary of the Closing.
  • “Earnout Securities” means
    • (i) in the case of an issuance by New Pubco to the Blocker Shareholders, shares of Class A Common Stock and
    • (ii) in the case of an issuance by FoA to Blocker GP and the Sellers, FoA Units.

LOCK-UPS

Sponsors: The Sponsor Agreement also provides for:

  • (i) a one-year post-Closing lock-up period applicable to the transfer of a Sponsor Person’s New Pubco securities, other than any securities of Replay issued in Replay’s initial public offering or purchased on the open market, pursuant to the PIPE or acquired through the Warrant Exchange (collectively, the “Excluded Securities”) and
  • (ii) a 180-day post-Closing lock-up period applicable to the transfer of a Sponsor Person’s Excluded Shares, other than any Excluded Shares purchased in connection with the PIPE or on the open market after the date of the Sponsor Agreement.

Selling Company

Pursuant to the Stockholders Agreement:

  • For a period of 180 days following the Closing, each Principal Stockholder will not, and will cause any other holder of record of any of such Principal Stockholder’s New Pubco securities, not to, transfer any of such Principal Stockholder’s New Pubco securities, other than any such securities purchased in the PIPE or on the open market.

NOTABLE CONDITIONS TO CLOSING

  • The Pre-Closing Purchaser Cash being equal to or greater than $400,000,000 (excluding payment of any deferred underwriting fees and certain permitted transaction expenses of each of FoA and Replay)

NOTABLE CONDITIONS TO TERMINATION

  • By either AMCI or Advent if any of the conditions to Closing have not been satisfied or waived by October 20, 2020 (the “Outside Date”), provided that the Outside Date will be automatically extended to February 22, 2021 if AMCI obtains the Required Extension

ADVISORS

  • Simpson Thacher & Bartlett LLP is acting as legal advisor to Finance of America.
  • Credit Suisse Securities (USA) LLC is acting as capital markets advisor to Replay Acquisition.
  • Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC served as lead placement agents and Credit Suisse Securities (USA) LLC served as placement agent for the PIPE.
  • Greenberg Traurig, LLP is acting as legal advisor to Replay Acquisition.

REPLAY ACQUISITION CORP. MANAGEMENT & BOARD

Executive Officers

Edmond Safra, 42
Founder & Co-Chief Executive Officer

Mr. Safra founded and has served since 2007 as the President of EMS Capital LP, a New York-based investment manager with over $2.1 billion in assets under management as of December 31, 2018. Mr. Safra has also served since 1999 as Vice President and director of M. Safra & Co., Inc., a multi-asset class investment management company that serves as the family office of the late Moise Y. Safra. He has extensive experience investing across various strategies, asset classes, sectors and geographies. He has been an active investor in the public and private markets in Brazil for the past two decades and in Argentina for the past six years, most recently including private real estate development projects in Buenos Aires. Mr. Safra graduated from Harvard University with an A.B. in History in 1998.

Gregorio Werthein, 35
Founder & Co-Chief Executive Officer

Mr. Werthein has served since 2012 as an Executive Managing Director of Werthein Group, which was founded approximately 90 years ago and is one of the most prominent private holding companies in Argentina. Mr. Gregorio Werthein has worked at Werthein Group for the past seven years. He currently serves as the chair of the M&A and investment committee. Mr. Gregorio Werthein is a board member of GNNW S.A., Experta ART and Cachay S.A. Mr. Gregorio Werthein also serves as a board member and executive committee member of TGS. Mr. Gregorio Werthein received an undergraduate degree in Economics from the University of Buenos Aires in 2008, an MBA from Columbia Business School in 2011 and participated in the Program for Leadership Development at Harvard Business School in 2017.

Gerardo Werthein, 60
Founder & Advisory Board Member

Mr. Werthein has been a principal and shareholder of Werthein Group since 1990. Over the last three decades, Mr. Gerardo Werthein has played an instrumental role in Werthein Group, executing more than fifty M&A and corporate finance transactions in Argentina. Mr. Gerardo Werthein has held a variety of leadership positions, including Vice Chairman of the board of directors of Telecom Argentina from 2003 to 2017, where he negotiated and completed a $3.3 billion debt refinancing, one of the largest private debt restructurings in Argentina’s history. Mr. Gerardo Werthein also acted as the CEO of Holding Caja de Ahorro y Seguro from 1994 to 2009. Over his tenure as CEO, the company increased its participation in the market to become the largest insurance group in Argentina. Mr. Gerardo Werthein received a Doctor of Veterinary Medicine degree from the University of Buenos Aires in 1980.

Brendan Driscoll, 44
Chief Financial Officer

Mr. Driscoll has served since September 2017 as Chief Financial Officer of EMS Capital LP. From November 2012 to September 2017, Mr. Driscoll was at Wingspan Investment Management, a global long/short asset management firm, serving as the firm’s Chief Operating Officer and Chief Financial Officer. Immediately prior to joining Wingspan, Mr. Driscoll was the Chief Financial Officer of Normandy Hill Capital, a global distressed-debt and event-driven asset manager, and The Airlie Group, a credit-focused asset manager. Before Airlie, Mr. Driscoll spent several years as an Audit Manager at Goldstein Golub Kessler, LLP. Mr. Driscoll is a Certified Public Accountant in New York. He received a Bachelor of Business Administration in Accounting from Dowling College in 1998.

 

Board of Directors

Leonardo Madcur, 48
Director

Mr. Madcur has served since 2012 as the Director of Corporate Development at Werthein Group. Mr. Madcur has over two decades of experience in Argentina’s private and public sectors. He has helped execute over $2.0 billion of M&A and corporate finance transactions and co-led Argentina’s $100 billion sovereign debt restructuring in 2005. Mr. Madcur also serves on the board of directors of Madalena Energy Inc. Previously, Mr. Madcur held senior leadership roles at Uno Medios/Grupo America, Integra Investment and Corporacion America. Mr. Madcur has also held senior roles in the public sector, serving as the Secretary of Technical Coordination in Argentina’s Ministry of Economy, the Regulator of Competition and Consumers and a Former Member of the Board of the Central Bank of Argentina. Mr. Madcur received an undergraduate degree in Law from Belgrano University in 1992 and an MBA from IAE—Austral University in 1997.

Ezra Cohen, 31
Director

Mr. Cohen joined EMS Capital LP in June 2017 as an Investment Analyst. Previously, Mr. Cohen was an Associate from July 2013 to May 2015 and an Analyst from March 2010 to June 2013 in the investment banking division at Credit Suisse, where he was primarily responsible for providing a complete range of M&A, financial advisory, and capital raising services to companies throughout Latin America. Mr. Cohen received a Bachelor of Science in Economics, magna cum laude, from the Wharton School at the University of Pennsylvania in 2009 and an MBA from Harvard Business School in 2017.

Daniel Marx, 65
Independent Director

Mr. Marx has served since June 2009 as the Executive Director of Quantum Finanzas, a financial boutique based in Buenos Aires which has a strategic international alliance with Evercore Partners. Prior to joining Quantum Finanzas, Mr. Marx served as Manager in charge of the Corporate Department in Banco Río de la Plata, Director of the Central Bank of Argentina, Managing Director of Darby Overseas Investments, a private equity fund with interests in Latin America, Executive Director of Merchant Bankers Asociados and was responsible for the restructuring of Arbol Solo/Inversiones Unidas Group. Mr. Marx was Secretary of Finance of the Argentine Ministry of Economy from 2000 to 2001 and Chief Debt Negotiator from 1988 to 1993, in charge of the design and execution of sovereign debt restructuring, financing program and relationship with international financial institutions and private banks. He also organized the initial public offering of several major Argentine firms. Mr. Marx has served on the board of directors of Corporación América Airports S.A. since February 2019, Quantum Asset Management since May 2018, Central Urbana S.A. since April 2018 and Quantum Finanzas since June 2009. He has also served on the advisory board of AES Argentina. Previously, he served on the board of directors of Banorte (Mexico) and Interbank (Peru). Mr. Marx received an undergraduate degree in Economics from the University of Buenos Aires in 1974.

Mariano Bosch, 48
Independent Director

Mr. Bosch co-founded and has served since 2002 as Chief Executive Officer of Adecoagro (NYSE: AGRO), a leading agricultural company based in South America, with presence in Argentina, Brazil and Uruguay. From 1995 to 2002, Mr. Bosch served as the founder and Chief Executive Officer of BLS Agribusiness, an agricultural consulting, technical management and administration company. Mr. Bosch currently serves on the board of directors of Adecoagro and also serves on the advisory board of Teays River Investments LLC, a farmland investment management firm in North America. Mr. Bosch has over 20 years of experience in agribusiness development and agricultural production. He actively participates in organizations focused on promoting the use of best practices in the agribusiness sector, such as the Argentine Association of Regional Consortiums for Agricultural Experimentation (AACREA) and the Conservational Production Foundation (Producir Conservando), among others. Mr. Bosch is also involved in organizations focused on business leadership like YPO and IDEA. In 2018, he was awarded by Konex in the category “Agribusiness Entrepreneurs”. Mr. Bosch received an undergraduate degree in Agricultural Engineering from the University of Buenos Aires in 1993.

Russell Colaco, 46
Independent Director

Mr. Colaco has served since September 2017 as the Managing Partner of Aleutian Advisors, a consulting firm. From June 2016 to July 2017, Mr. Colaco served as the Chief Financial Officer of JBS Foods International, a global food company, and from November 2015 to May 2016, he served as the Head of Corporate Development. From May 2006 to September 2015, Mr. Colaco was a Managing Director in the investment banking division at Morgan Stanley. In that position, he advised leading global consumer and retail companies on strategic and corporate finance matters. Mr. Colaco received a Bachelor of Business Administration from Wilfrid Laurier University in 1995 and an MBA from the University of Chicago Booth School of Business in 2004.

ByRoman Developer