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Roman DBDR Tech Acquisition Corporation

Roman DBDR Tech Acquisition Corporation

Oct 16, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: CompoSecure

ENTERPRISE VALUE: $1.2 billion
ANTICIPATED SYMBOL: CMPO

Roman DBDR Tech Acquisition Corporation proposes to combine with CompoSecure, a  provider of premium financial payment cards and emergent provider of cryptocurrency storage and security solutions.

CompoSecure is a pioneer and category leader in premium payment cards and an emergent provider of cryptocurrency and digital asset storage and security solutions. Using proprietary manufacturing methods that meet high standards of quality and security, and leading-edge engineering capabilities and technologies, CompoSecure provides some of the world’s largest banks and financial institutions, such as J.P. Morgan Chase and American Express, with innovative products that elevate their customers’ experience. CompoSecure’s innovative cryptocurrency cold-storage and security solution, ArculusTM, leverages the Company’s 20-plus years of payment card technology and security expertise to advance cryptocurrency and other digital asset adoption. ArculusTM enables users to store and manage their digital assets using a highly secure payment card form factor and intuitive mobile wallet, incorporating a unique three-factor authentication system.

CompoSecure Investment Highlights

  • Established high-growth FinTech business addressing large market opportunities across payment cards, cryptocurrency and digital assets.
  • Trusted, highly embedded relationships with blue chip clients, including leading financial institutions (such as J.P. Morgan Chase and American Express), as well as FinTechs (such as N26 and Crypto.com), with a group revenue-weighted average client tenure of 12 years.
  • Products and technology solutions platform uniquely positioned to capitalize on fragmented cryptocurrency and broader digital asset markets.
  • Compelling financial profile with high growth, attractive margins and high cash flow generation – generated $261 million of Net Revenue and $116 million of Adjusted EBITDA in 2020 (44% Adjusted EBITDA Margin).
  • Proven and experienced management team, who will continue leading the combined company.

TRANSACTION

  • CompoSecure and Roman DBDR will merge with a pro forma combined enterprise value of approximately $1.2 billion.
  • The cash components of the transaction consideration to CompoSecure’s equity holders will be funded by Roman DBDR’s cash in trust of approximately $236 million (assuming no redemptions) as well as a $175 million private placement financing of 7.00% exchangeable unsecured notes and common equity from institutional investors, led by funds and accounts managed by BlackRock and Highbridge Capital Management, which will close concurrently with the merger.
    • The $130 million of exchangeable unsecured notes have a five year maturity and have a conversion price of $11.50, representing a 15% premium to the purchase price of the common shares.
  • The balance of the consideration to CompoSecure’s equity holders will consist of equity in the pro forma Company.
  • CompoSecure’s current equity holders will own approximately 60% of the pro forma company immediately after closing, assuming no redemptions.

dbdr trans overview


PIPE

  • $175 million private placement financing of 7.00% exchangeable unsecured notes and common equity from institutional investors, led by funds and accounts managed by BlackRock and Highbridge Capital Management, which will close concurrently with the merger.
    • The $130 million of exchangeable unsecured notes have a five year maturity and have a conversion price of $11.50, representing a 15% premium to the purchase price of the common shares.
    • 4,500,000 shares of Class A Common Stock for a purchase price of $10.00 per share, or an aggregate purchase price of $45 million.

EARNOUT

  • CompoSecure equity holders will have the right to receive an aggregate of up to 7.5 million additional (i) shares of Class A Common Stock or (ii) CompoSecure Units (and a corresponding number of shares of Class B Common Stock)
    • 3,750,000 shares – “Phase 1 Share Price Target” – VWAP of Class A Parent Common Stock on the Stock Exchange or the principal securities exchange or securities market on which the Class A Parent Common Stock is then traded equals or exceeds $15.00 per share
    • 3,750 000 shares – “Phase 2 Share Price Target” – VWAP of Class A Parent Common Stock on the Stock Exchange or the principal securities exchange or securities market on which the Class A Parent Common Stock is then traded equals or exceeds $20.00 per share

EXPENSE CAP AND WAIVER AGREEMENT

The Company and Roman DBDR Tech Sponsor LLC, a Delaware limited liability company (the “Sponsor”), entered into an expense cap and waiver agreement (the “Expense Cap and Waiver Agreement”).

  • Under the terms of the Expense Cap and Waiver Agreement, Sponsor agreed that to the extent the Company’s transaction expenses exceed $35 million, then Sponsor shall, at Closing, either
    • (i) pay any such amount in excess of $35 million to the Company in cash, or
    • (ii) irrevocably forfeit and surrender to the Company such number of shares of Class B Common Stock held by the Sponsor that would, in the aggregate, have a value equal to such amount in excess of $35 million.
  • In addition, the Sponsor agreed to waive any adjustment to the initial conversion ratio of the Company’s current Class B Common Stock in the Company’s certificate of incorporation resulting from the Merger.

NOTABLE CONDITIONS TO CLOSING

  • The Remaining Trust Cash plus the amount of the PIPE Investments, minus $50 million of transaction expenses shall not be less than $210 million
  • The net indebtedness of CompoSecure (generally, indebtedness minus cash) will be no greater than $250 million
  • The amount of cash on hand at CompoSecure shall not be less than $5 million;

NOTABLE CONDITIONS TO TERMINATION

  • By either the Company or CompoSecure if the Closing has not occurred on or before December 31, 2021, which date may be extended to no later than January 31, 2022 if the expiration or termination of the applicable waiting period under the HSR Act remains pending,

ADVISORS

  • Financial Technology Partners and FTP Securities (“FT Partners”) served as strategic and financial advisor to CompoSecure.
  • J.P. Morgan Securities LLC and The Klein Group, LLC are acting as financial advisors to Roman DBDR.
  • Goodwin Procter LLP is acting as legal counsel to Roman DBDR.
  • Morgan, Lewis & Bockius LLP is acting as legal counsel to CompoSecure.
  • ICR LLC is acting as investor relations advisor.
  • J.P. Morgan Securities LLC, Barclays and B. Riley Securities served as placement agents with respect to the private placement.
  • B. Riley Securities is acting as capital markets advisor to Roman DBDR.
  • Simpson Thacher served as counsel to the placement agents.

MANAGEMENT & BOARD


Executive Officers

Dr. Donald G. Basile, 54
Chairman and Co-Chief Executive Officer

Dr. Basile has also served as an executive officer and director at Monsoon Blockchain Corporation since November 2019 and as a director of GIBF, GP Inc. since September 2018. Dr. Basile previously served as a director of Violin Memory, Inc. from April 2009 to January 2014 and as its Chief Executive Officer from April 2009 to December 2013. He also served as Chief Executive Officer of FusionIO from January 2008 to March 2009 and as its Chairman from July 2006 to March 2009. Dr. Basile previously worked at AT&T Bell Labs, IBM, United Health Group and Lenfest Group (acquired by Comcast) and served as Managing Director of Raza Foundries and Vice President of Raza Microelectonics (RMI). Dr. Basile received a Ph.D. degree in Electrical Engineering with a focus on distributed computing from Stanford University, a MS in Electrical Engineering focused on advanced computer architecture from Stanford University and a BS in Electrical Engineering with a minor in economics from Rensselaer Polytechnic Institute.


Dixon Doll, Jr., 52
Co-Chief Executive Officer

Mr. Doll is currently also the Chief Executive Officer and Chairman of DBM Cloud Systems, Inc. since January 2016 and the Managing Director of Longstreet Ventures, Inc. since January 2003. From July 2009 to January 2014, Mr. Doll served as the Chief Operating Officer and as a director of Violin Memory, Inc. He has also previously worked as the Senior Vice President of Sales and Corporate Development at FusionIO from February 2008 to February 2009, as the Vice President of Corporate Development of NEON from May 1998 to July 2001 and as Vice President of Corporate Development of Recourse Technologies from July 2001 to August 2002. In addition, he was a Business Development Manager at Oracle Alliances Division from September 1994 to May 1998. Mr. Doll has previously served as a consultant to Oak Investment Partners, GTGR, Carlyle Group and DCM. He also is a partner at Birchwood Partners, an angel fund that helps early stage companies launch. Mr. Doll is the son of Dixon Doll, one of our director nominees. Mr. Doll holds a bachelors of arts from Georgetown University and has been a member of the board of advisors to the dean of the College of Liberal Arts since 2012. He holds an MBA from The University of Michigan.


John C. Small, 52
Chief Financial Officer

Mr. Small also serves as the Chief Operating Officer and Chief Financial Officer of Quanterra Capital Management LP since May 2019. He served as the Chief Operating Officer of Mode Media from April 2016 to September 2016, and the Chief Financial Officer of Viggle, Inc. (Nasdaq: VGGL) from September 2012 to October 2015. He served as Senior Vice President of Finance for Tsunami XR from October 2016 to May 2019. Mr. Small joined GLG Partners in 2000 as a Senior Asset Manager responsible for Telecom, Media, Technology and Renewable Energy investments for the GLG North American Opportunity Fund and served as the President of the GLG North America office from April 2000 to August 2011. He worked as a Telecom and Media analyst at Ulysses Management from January 1997 to March 2000 and as a Telecom analyst at Odyssey Partners from March 1996 to January 1997. He also worked as an equity research analyst at Dillon Read (from January 1992 to September 1993) and Morgan Stanley (from October 1993 to February 1996). Mr. Small has previously served as a director of Loyalty Alliance, Inc., PayEase Ltd., INFINIA Corporation, ViSole Energy, Inc., New Millennium Solar Equipment Co, ShortList Media Ltd, DraftDay Inc., and Spinvox Ltd. Mr. Small received a BA in Economics concentrating in International Relations from Cornell University.


 

Board of Directors

Dixon Doll, 77
Senior Director

Mr. Doll currently serves on the Advisory Board for the Stanford Institute for Economic Policy Research Institute (SIEPR). Previously, Mr. Doll served as the Chairman of Network Equipment Technologies (NWK) and as a director of DIRECTV (DTV). Mr. Doll was elected to the Board of the National Venture Capital Association in 2005 and served on the Executive Committee and as Chairman from 2008 to 2009. Mr. Doll led DCM Ventures’ investments in About.com (acquired by The New York Times Co.), @Motion (acquired by Openwave), Clearwire (Nasdaq: CLWR), Coradiant (acquired by BMC), Force10 Networks (acquired by Dell), Foundry Networks (Nasdaq: FDRY), Internap (Nasdaq: INAP), Ipivot (acquired by Intel), and Neutral Tandem (Nasdaq: TNDM). He previously served on the board of directors of Direct TV. He is a Board Member of Papal Foundation Rome and the University of San Francisco. He received his B.S. degree (cum laude) from Kansas State University and M.S. and Ph.D. degrees in Electrical Engineering from the University of Michigan, where he was a National Science Foundation scholar. Mr. Doll is the father of Dixon Doll, Jr., our Co-Chief Executive Officer.


Alan Clingman, 60
Director

Since January 2008, Mr. Clingman has served as the founder and Chief Executive Officer of Yellow River Asset Management. He has also served as the co-founder of LRG Energy since February 2018. Mr. Clingman started his first business, Coal & Carbon Industries, in 1981 and purchased AIOC, a small commodities trading company in New York, in 1988. He also served as the CEO and Chairman of Marquis Jet from March 2001 to April 2003 and founded Cortiva Education from November 2003 to January 2007, which was acquired by Steiner Leisure (NASDAQ: STNR).


Paul Misir, 47
Director

Since May 2013, Mr. Misir has served as the founder and Managing Partner of Notos LLC, where he consults boards of late stage private and public telecom, data, and technology companies on corporate strategy and the development of capital markets offerings. From July 2001 to December 2011, Mr. Misir served as the Founder and Managing Partner of Morning Street Capital and its related funds (including as Founder and CEO of its predecessor merchant bank and market research advisor, Columbia Strategy LLC). Mr. Misir holds an M.B.A. from Columbia University and a B.A. from the University of Chicago.


Arun Abraham, 38
Director

Mr. Abraham is an executive director at M. Klein and Company, a global strategic advisory firm, where he advises technology, FinTech, media, sports and other companies and select financial sponsors, sovereign wealth funds and other large private investors. Since joining M. Klein and Company in July 2017, Mr. Abraham has also helped execute various special purpose acquisition company (SPAC) processes and transactions for both SPACs sponsored by M. Klein and for third-party advisory clients. Previously, Mr. Abraham was an investment banker at Lazard Frères & Co. from August 2016 to June 2017 and at Evercore Partners from May 2013 to August 2016, where he advised technology, media, FinTech, healthcare and other leading global companies and investors. From 2007 to 2011, he served as an attorney at Cadwalader, Wickersham & Taft and is a member of the New York State Bar. Mr. Abraham holds an MBA from the University of Chicago Booth School of Business, a J.D. from USC Law School and a B.A. from Yale University.


James L. Nelson, 71 [Appointed 12-07-20]
Director

Mr. Nelson, 71, has served as the Chief Executive Officer of Global Net Lease, Inc., a publicly traded real estate investment trust, since July 2017 and has been a director of the company since March 2017. He has also served as a director and member of the audit committee of Caesars Entertainment Corporation, a casino-entertainment company, since March 2019. In addition, Mr. Nelson has served as a director of Herbalife Nutrition Ltd. since 2014 and was elected lead director in July 2019. Mr. Nelson was previously a director and member of the audit committee of Icahn Enterprises GP from June 2001 to March 2019.