Roth CH Acquisition II Co.
PROPOSED BUSINESS COMBINATION: Reservoir Holdings, Inc. (“Reservoir”)
ENTERPRISE VALUE: $788.5 Million
ANTICIPATED SYMBOL: RSVR
Reservoir Holdings, Inc., a leading independent music company, and Roth CH Acquisition Co. II (NASDAQ: ROCC) (“Roth CH II” or “ROCC”), announced the signing of a definitive agreement for a business combination that will result in Reservoir becoming a public company.
Founded in 2007, Reservoir is an award-winning independent music company. The Company’s music publishing business represented Reservoir’s primary focus from its inception until its large-scale step toward building its recorded music business in 2019 with the acquisition of Chrysalis Records. With a catalog of hit songs and a roster populated by leading talent, the Company is well positioned to benefit from the tremendous growth in streaming and new digital platforms for music and more broadly, audio consumption.
The Company’s music publishing catalog is complemented by its frontline creative business, a collection of songwriters and artists retained and fronted by Reservoir. Notable roster signings include Ben Harper, Migos’ Offset and Takeoff, 2 Chainz, Danja, James Fauntleroy, and Ali Tamposi. Reservoir has invested and deployed over $100 million in its frontline creative signings.
The Company’s recorded music business consists of more than 26,000 sound recordings. Like its music publishing catalog, Reservoir’s recorded music catalog is diverse across genre, geography, and time period. Reservoir’s management business consists of over 60 clients who have received global recognition, and critical and commercial acclaim.
The combined company will continue to be led by Golnar Khosrowshahi, Founder & CEO, and an executive leadership team including Rell Lafargue, President & COO, and Jim Heindlmeyer, CFO.
Highlights:
- Large market opportunity with strong secular industry tailwinds driven by the global adoption of paid streaming music subscription services and growth in areas like in-home fitness
- Diverse catalogs of music compositions and sound recordings, de-risked by long-term royalty copyright ownership
- Business model strengthened by value enhancement initiatives that have enabled the Company to grow organically at more than double the rate of the industry
- An active songwriter roster nurtured by the frontline creative team has achieved regular top ten market share within the contemporary music marketplace
- Proven M&A platform and large pipeline of catalog acquisition opportunities in an industry ripe for consolidation
- Highly attractive economic model with predictable, significant free cash flow generation
TRANSACTION
- The transaction will be funded by a combination of Roth CH II’s cash held in its trust account (after any redemptions by its public stockholders in connection with the closing), a full equity roll-over from existing Reservoir ownership, and proceeds from a private placement of $150 million of common stock at $10.00 per share led by Caledonia and other institutional investors
- The transaction implies a pro forma enterprise valuation for the combined company of approximately $788 million at closing.
- The pro forma implied equity value of the combined company is $740 million at $10.00 per share, assuming no redemptions by the public stockholders of ROCC.
- Following the transaction and after payment of transaction expenses, Reservoir is expected to receive approximately $246 million of cash – inclusive of the $150 million PIPE and assuming no redemptions from the approximately $115 million of cash held in Roth CH II’s trust account.
PIPE
- Fully committed PIPE of $150 million at $10.00 per share from institutional investors, including Caledonia
DEBT REFINANCING
- Reservoir Media Management Inc. (“RMM”), a wholly-owned subsidiary of Reservoir, entered into a Debt Commitment Letter (the “Debt Commitment Letter”), dated as of April 14, 2021, with Truist Bank and Truist Securities, Inc. (the “Lead Arranger” and, together with Truist Bank, “Truist”).
- Truist has committed to arrange and underwrite the refinancing of RMM’s existing senior secured revolving credit facility in an aggregate amount of up to $248,750,000 (the “Debt Refinancing”).
- The Debt Refinancing will be used, among other things,
- (i) to refinance RMM’s existing senior secured revolving credit facility,
- (ii) to pay fees, commissions and expenses in connection with the foregoing and
- (iii) for other general corporate purposes.
- The availability of the Debt Refinancing is subject to limited conditions precedent, customary for financings of transactions comparable to the Merger.
- The Debt Commitment Letter terminates automatically on October 14, 2021.
LOCK-UP
- Each Lockup Party has agreed that it will not, directly or indirectly, sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of
- (i) fifty percent (50%) of the Covered Shares owned by such Lockup Party during the period beginning on the Effective Time and ending on the date that is the earlier of (1) 180 days after the date of the Closing and (2) the date on which the closing price of the shares of ROCC Common Stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30 trading day period commencing after the Closing and
- (ii) the remaining 50% of the Covered Shares owned by such Lockup Party during the period beginning on the Effective Time and ending on the date that is 180 days after the date of the Closing, in each case, subject to certain exceptions set forth in the Lockup Agreement. The Lockup Agreement will become effective upon the consummation of the Merger.
NOTABLE CONDITIONS TO CLOSING
- The Available Closing Date Total Cash shall be equal to or greater than $125,000,000 (the “Minimum Cash Condition”)
NOTABLE CONDITIONS TO TERMINATION
- If the Merger does not occur on or before October 14, 2021 (the “Outside Date”)
ADVISORS
- Goldman Sachs & Co. LLC is acting as financial advisor to Reservoir.
- Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal advisor to Reservoir.
- Loeb & Loeb LLP is acting as legal advisor to Roth CH II.
- Roth Capital Partners, LLC and Craig-Hallum Capital Group LLC are acting as placement agents for the PIPE transaction.
ROTH CH ACQUISITION CO. II MANAGEMENT & BOARD
Executive Officers
Byron Roth, 58
Chief Executive Officer and Chairman of the Board
Mr. Roth has been the Chairman and Chief Executive Officer of Roth since 1998. Under his management the firm has helped raise over $50 billion for small-cap companies, as well as advising on many merger and acquisition transactions. Mr. Roth is a co-founder and General Partner of three private investment firms; Rx3, LLC, a $50 million influencer fund focused on consumer brands, Rivi Capital, LLC, a $35 million fund concentrated in the mining sector, and Aceras Life Sciences, LLC, an in-house incubator focused on funding the development of novel medical innovations. He also co-founded two long only asset management firms: Cortina Asset Management, LLC, which was recently acquired by Silvercrest Asset Management (NASDAQ: SAMG), and EAM Investors, LLC, with assets under management of approximately $1.5 billion. Mr. Roth is the Chief Executive Officer and Chairman of the Board of Roth CH Acquisition I Co. (NASDAQ: ROCH), a special purpose acquisition company that has entered into an agreement and plan of merger with PureCycle Technologies LLC pursuant to which Roth CH Acquisition I Co. will acquire PureCycle Technologies LLC. Mr. Roth is a member of the Advisory Council, Executive Committee, and serves as the Chairman on the Nominating Committee for the Cornell SC Johnson College of Business. He is a founding member of the University of San Diego Executive Cabinet for the Athletic Department, and former member of the Board of Trustees where he served on the Investment Committee for the university’s endowment and athletic department for nine years. Mr. Roth also sits on the Executive Board of SMU’s Cox School of Business. Mr. Roth serves as a National Trustee for the Boys and Girls Club of America, and served as the Co-Chair for the 2019 Boys and Girls Club Pacific Youth of the Year Competition. He also sits on the Board of Directors for the Lott IMPACT Foundation, whose Lott IMPACT Trophy is presented annually to the college football defensive IMPACT player of the year for their contribution on and off the field. Mr. Roth was the honoree at the Challenged Athletes Foundation (CAF) 2015 Celebration of Heroes, Heart and Hope Gala and the 2018 Athletes First Classic Golden Heart Award benefitting the Orangewood Foundation. Mr. Roth earned his B.B.A, from the University of San Diego in 1985 and his MBA from the Cornell SC Johnson College of Business in 1987. Mr. Byron Roth is the brother of Mr. Gordon Roth.
Gordon Roth, 66
Chief Financial Officer
Mr. Roth has been the Chief Financial Officer and Chief Operating Officer of Roth since 2000. From 1990 to 2000, Mr. Roth was the Chairman and Founder of Roth and Company, P.C., a thirty-five person public accounting firm in Des Moines, Iowa. Prior to that Mr. Roth spent thirteen years with Deloitte & Touche, most recently serving as a Tax Partner and the Partner-in-Charge of the Des Moines office Tax Department. Mr. Roth is a CPA and a member of the American Institute of CPA’s. Mr. Roth is the Chief Financial Officer of Roth CH Acquisition I Co. (NASDAQ: ROCH), a special purpose acquisition company that has entered into an agreement and plan of merger with PureCycle Technologies LLC pursuant to which Roth CH Acquisition I Co. will acquire PureCycle Technologies LLC. Mr. Roth currently serves on the Board of Trustees of JSerra Catholic High School, and is the Chair of the Budget & Finance Committee. Mr. Roth has served on several other non-profit boards in the past including Boys & Girls Club, Special Olympics, Camp Fire and St Anne School. Mr. Roth was also a founding partner of the Iowa Barnstormers of the Arena Football League. Mr. Roth earned his B.A. from William Penn University in 1976, where he also served as a member of their Board of Trustees and was inducted into their Athletic Hall of Fame. Mr. Roth also earned a Master of Science in Accounting from Drake University in 1977. Mr. Gordon Roth is the brother of Mr. Byron Roth.
Rick Hartfiel, 56
Co-President
Mr. Hartfiel is a Managing Partner and has been the Head of Investment Banking at Craig-Hallum since 2005. Mr. Hartfiel brings over 30 years of investment banking experience focused on emerging growth companies. Since joining Craig-Hallum in 2005, Mr. Hartfiel has managed over 300 equity offerings (IPOs, follow-on offerings, registered direct offerings and PIPEs) and M&A transactions. Prior to joining Craig-Hallum, Mr. Hartfiel has been an investment banker at Dain, Rauscher, Wessels and Credit Suisse First Boston. Mr. Hartfiel is the Co-President of Roth CH Acquisition I Co. (NASDAQ: ROCH), a special purpose acquisition company that has entered into an agreement and plan of merger with PureCycle Technologies LLC pursuant to which Roth CH Acquisition I Co. will acquire PureCycle Technologies LLC. Mr. Hartfiel has a B.A. from Amherst College, and an MBA from Harvard Business School.
John Lipman, 43
Chief Operating Officer and Director
Mr. Lipman is a Partner and Managing Director of Investment Banking at Craig-Hallum. Mr. Lipman joined Craig-Hallum in 2012 and has more than 15 years of investment banking experience advising growth companies in the healthcare, industrial, and technology sectors. Mr. Lipman has completed over 125 equity, convertible, and debt offerings and advisory assignments for growth companies – including over 75 since joining Craig-Hallum. Prior to joining Craig-Hallum, Mr. Lipman was a Managing Director at Rodman & Renshaw LLC from 2011 to 2012, a Managing Director at Hudson Securities, Inc. from 2010 to 2011, and Carter Securities LLC, a firm he founded that specialized in raising equity, equity-linked, and debt capital for growth companies, from 2005 to 2009. Mr. Lipman is the Chief Operating Officer and director of Roth CH Acquisition I Co. (NASDAQ: ROCH), a special purpose acquisition company that has entered into an agreement and plan of merger with PureCycle Technologies LLC pursuant to which Roth CH Acquisition I Co. will acquire PureCycle Technologies LLC. Mr. Lipman earned his B.A. in Economics in 1999 from Rollins College in Winter Park, FL.
Aaron Gurewitz, 52
Co-President
Mr. Gurewitz has been a Managing Director and the Head of Roth’s Equity Capital Markets Department since January 2001. Mr. Gurewitz brings over 25 years of investment banking experience focused on growth companies. Since joining Roth in 1999, Mr. Gurewitz has managed over 1,000 public offerings including, but not limited to, IPOs and follow-on offerings. Prior to joining Roth in 1999, Mr. Gurewitz was a Senior Vice President in the Investment Banking Group at Friedman Billings Ramsey from May 1998 to August 1999. From 1995 to April 1998, Mr. Gurewitz was a Vice President in the Corporate Finance Department at Roth, and from 1999 to 2001, Mr. Gurewitz served as a Managing Director in Roth’s Investment Banking Department. Mr. Gurewitz is the Co-President of Roth CH Acquisition I Co. (NASDAQ: ROCH), a special purpose acquisition company that has entered into an agreement and plan of merger with PureCycle Technologies LLC pursuant to which Roth CH Acquisition I Co. will acquire PureCycle Technologies LLC. Mr. Gurewitz graduated summa cum laude from San Diego State University with a B.S. in Finance.
Board of Directors
Molly Hemmeter, 53
Director Nominee
Ms. Hemmeter has served as a member of the board of directors of Roth CH Acquisition I Co. (NASDAQ: ROCH), a special purpose acquisition company that has entered into an agreement and plan of merger with PureCycle Technologies LLC pursuant to which Roth CH Acquisition I Co. will acquire PureCycle Technologies LLC, since February 2020. Since January of 2020, Ms. Hemmeter has been a member of the Board of Directors at Wilbur-Ellis Company Inc., a privately-owned family business based in San Francisco with a rich history spanning nearly 100 years. With revenues over $3.0 billion, Wilbur-Ellis is a leading international marketer, distributor and manufacturer of agricultural products, animal nutrients and specialty ingredients and chemicals. Also since January 2020, Ms. Hemmeter has served as Board Director for Flower One, a publicly traded company that specializes in large-scale cultivation and production of high-quality, low-cost cannabis with operations located in Nevada. Since October 2020, Ms. Hemmeter has served as Board Director of The Wine Group. The Wine Group is a privately-held, management-owned company that is the second largest wine producer in the US and third largest in the world. From 2009 to 2019, Ms. Hemmeter served as an Executive of Landec Corporation, a publicly-traded company in the health & wellness space with revenues of approximately $550M, and served as Chief Executive Officer, President & Director of Landec Corporation from 2015 to 2019. Ms. Hemmeter has also served on the Board of Directors for Windset Farms, one of the largest and most technologically advanced hydroponic growers in North America, from 2018 to 2019. Prior to Landec, from 2006 to 2009, Ms. Hemmeter served as VP of Global Marketing and Business Development at Ashland Chemical. Ms. Hemmeter has also been an executive in two software companies and held additional positions in strategy, marketing, engineering and operations in a number of other chemical, pharmaceutical and consumer product companies. Ms. Hemmeter holds a BES and MEng in Chemical Engineering from the University of Louisville and an MBA from Harvard Business School.
Daniel M. Friedberg, 59
Director Nominee
Mr. Friedberg has served as a member of the board of directors of Roth CH Acquisition I Co. (NASDAQ: ROCH), a special purpose acquisition company that has entered into an agreement and plan of merger with PureCycle Technologies LLC pursuant to which Roth CH Acquisition I Co. will acquire PureCycle Technologies LLC, since February 2020. Mr. Friedberg has served as Chairman of the Board of Quest Resource Holding Corp. (NASDAQ: QRHC) since April 2019. Mr. Friedberg has served as the Chief Executive Officer of Hampstead Park Capital Management LLC, a private equity investment firm, since its founding in May 2016. Mr. Friedberg was Chief Executive Officer and Managing Partner of Sagard Capital Partners L.P., a private equity investment firm, from its founding in January 2005 until May 2016. In addition, from January 2005 to May 2016, Mr. Friedberg was also a Vice President of Power Corporation of Canada, a diversified international management holding company. Mr. Friedberg was with global strategy management consultants Bain & Company, as a consultant from 1987 to 1991 and then again as a Partner from 1997 to 2005. Mr. Friedberg started with Bain & Company in the London office in 1987, was a founder of the Toronto office in 1991, and a founder of the New York office in 2000, leading the Canadian and New York private equity businesses. From 1991 to 1997, Mr. Friedberg worked as Vice President of Strategy and Development for a U.S.-based global conglomerate and as an investment professional in a Connecticut-based boutique private equity firm. Mr. Friedberg currently serves on the Board at Buttonwood Networks and USA Field Hockey. Mr. Friedberg serves on the Board of Directors of Point Pickup Technologies and Triphammer Ventures LLC and has previously served on the Board of Directors at GP Strategies Corp. (GPX), InnerWorkings, Inc. (INWK), Performance Sports Group Ltd. (PSG) and X-Rite, Inc. (XRIT). Mr. Friedberg has a Master’s in Business Administration degree from the Johnson School at Cornell University’s College of Business, and a Bachelor of Science (Hons.) degree from the University of Manchester Institute of Science & Technology.
Adam Rothstein, 49
Director Nominee
Mr. Rothstein has served as a member of the board of directors of Roth CH Acquisition I Co. (NASDAQ: ROCH), a special purpose acquisition company that has entered into an agreement and plan of merger with PureCycle Technologies LLC pursuant to which Roth CH Acquisition I Co. will acquire PureCycle Technologies LLC, since February 2020. Mr. Rothstein is a Co-Founder and General Partner in Disruptive Technology Partners, an Israeli technology-focused early-stage investment fund, and Disruptive Growth, a collection of late-stage investment vehicles focused on Israeli technology, which he co-founded in 2013 and 2014, respectively. Since 2014, Mr. Rothstein has been a Venture Partner in Subversive Capital, and the Managing Member of 1007 Mountain Drive Partners, LLC, which are both consulting and investment vehicles. Mr. Rothstein is also a sponsor and director of Subversive Capital Acquisition Corp., which is a special purpose acquisition company. Mr. Rothstein has over 20 years of investment experience, and currently sits on the boards of directors of several early- and mid-stage technology and media companies both in the US and in Israel and is on the Advisory Board for the Leeds School of Business at the University of Colorado, Boulder. Mr. Rothstein graduated summa cum laude with a Bachelor of Science in Economics from the Wharton School of Business at the University of Pennsylvania and has an (MPhil) in Finance from the University of Cambridge.