Shopping Cart

SilverBox Engaged Merger Corp I

SilverBox Engaged Merger Corp I

Feb 8, 2021 by Kristi Marvin

PROPOSED BUSINESS COMBINATION: Black Rifle Coffee Company (BRC Inc.)

ENTERPRISE VALUE: $1.711 billion
ANTICIPATED SYMBOL: BRCC

SilverBox Engaged Merger Corp I proposes to combine with Black Rifle Coffee Company, a rapidly growing and mission-driven premium coffee company founded to support Veterans, active-duty military, first responders and serve a broad customer base by connecting consumers with great coffee and a unique brand experience.

Black Rifle Coffee Company (BRCC) is a Veteran-founded coffee company serving premium coffee to people who love America. Founded in 2014 by Green Beret Evan Hafer, Black Rifle develops their explosive roast profiles with the same mission focus they learned while serving in the military. BRCC is committed to supporting Veterans, active-duty military, first responders and the American way of life. With every purchase made, they give back.

This transaction is expected to provide up to $225 million in cash to support BRCC’s continued growth, including: driving brand awareness to grow the direct-to-consumer business; expanding the ready-to-drink product line and broadening distribution; extending the Outpost footprint from the seven current locations as of June 30, 2021, to a target of 78 in 2023; investing to enhance the Company’s technology infrastructure, including its e-commerce platform and mobile app capabilities

Additional Highlights

  • Digitally Native Omnichannel Growth Strategy.
    • Direct-to-consumer
      • The subscription business has grown at a 218% CAGR since inception and includes 270,000+ active coffee club subscribers as of June 30, 2021.
    • Outposts
      • Outposts provide an immersive retail experience to BRCC customers, including showcasing its brand and premium products and building a community around the commitment to the active military, Veterans, first responders and those who love America.
    • Wholesale
      • BRCC’s wholesale business includes sales of coffee products, including the rapidly growing ready-to-drink coffee beverage product, available through major national outlets

SUBSEQUENT EVENT – 4/19/22 – 8-K LINK

  • On April 4, 2022, the Company announced that it will redeem all of its outstanding warrants to purchase shares of Class A Common Stock that remain outstanding on May 4th, 2022 (the “Redemption Date”) for a redemption price of $0.10 per Warrant (the “Redemption Price”).
  • On April 19, 2022, BRC Inc. announced the “Redemption Fair Market Value” will be used to determine the number of shares of the Company’s Class A common stock that will be issued on a “cashless” exercise of a Warrant.
  • The Warrant Agent previously delivered a redemption notice (the “Redemption Notice”) to the registered holders of the outstanding Warrants, on the Company’s behalf, informing them that:
    • The Redemption Fair Market Value is $26.48.
    • As a result, holders who elect to exercise their Warrants on a “cashless basis” will be entitled to receive 0.361 shares of Class A Common Stock per Warrant.

TRANSACTION

  • The transaction is expected to place up to $225 million on Black Rifle Coffee’s balance sheet to accelerate the Company’s growth and will be funded by a combination of up to $345 million of cash held in the trust account of SBEA (assuming no redemptions of SBEA’s Class A common stock), and equity commitments totaling $300 million (the “Equity Commitments”) at $10 per common share from various accredited investors, including a $100 million commitment from Engaged Capital.
  • The actual amount funded at closing from the investor group will be between $200 million and $300 million based on the amount of cash retained from SBEA’s trust account such that the total amount of capital available from SBEA at closing will be up to $545 million but no less than $300 million, which will satisfy the minimum cash condition in the business combination agreement.
  • Black Rifle Coffee’s founders, management team and existing equityholders have agreed to align their interests with new shareholders, including by subjecting 20 million shares to forfeiture with 10 million shares to be forfeited if the combined company’s stock price performance does not appreciate at least 50% within five years and an additional 10 million shares to be forfeited if the stock price does not appreciate at least 100% within seven years.
  • SBEA’s sponsor has also agreed to forfeit approximately 1.2 million founder shares, subject approximately 1.2 million founder shares to forfeiture based on the aforementioned stock performance hurdles, and additionally subject approximately 2.1 million founder shares to a downward adjustment in the event that the gross proceeds available at closing, including cash retained from SBEA’s trust account, and proceeds from the Equity Commitments (before deductions) is less than $445 million.

brcc trans overview

PIPE

  • On November 2, 2021, concurrently with the execution of the Business Combination Agreement, SilverBox entered into subscription and backstop agreements with various accredited investors (collectively, the “PIPE Investors”), pursuant to, and on the terms and subject to the conditions of which, the PIPE Investors have collectively subscribed for up to 20,000,000 shares of SilverBox Class C Common Stock at a price of $10.00 per share or an aggregate purchase price of up to $200 million (the “PIPE Investment”), consisting of
    • (i) 10,000,000 shares to be purchased and issued prior to the Closing
    • (ii) up to an additional 10,000,000 shares to be purchased and issued prior to the Closing to the extent that the SilverBox Shareholder Redemptions exceed $100,000,000.
  • The obligation of the parties to consummate the purchase and sale of the shares covered by the PIPE Subscription Agreements is conditioned upon, among other things
    • (i) there not being in force any judgment, order, law, rule or regulation which is then in effect and has the effect of making the consummation of the transactions contemplated thereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated thereby and no such court or governmental authority having instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition
    • (ii) the conditions precedent to the closing of the Business Combination shall have been satisfied or waived.
  • Additionally, pursuant to the PIPE Subscription Agreements, the PIPE Investors agreed to waive any claims that they may have at the closing of the PIPE Investment or in the future as a result of, or arising out of, the PIPE Subscription Agreements against SilverBox, including with respect to the trust account. The PIPE Subscription Agreements will terminate, and be of no further force and effect, upon the earliest to occur of
    • (i) such date and time as the Business Combination Agreement is terminated in accordance with its terms without being consummated
    • (ii) upon the mutual written agreement of SilverBox and the applicable PIPE Investor
    • (iii) by the applicable Subscriber if the closing of the PIPE Investment has not occurred by the Termination Date, provided such PIPE Investor’s breach was not the proximate cause for such closing to fail to occur by such date.

EARNOUT

  • 50% of shares subject to earn-out will vest if VWAP for 20 days during a 30-day period is $15 or above within a 5 year period, and remaining 50% of shares will vest if VWAP for 20 days during a 30-day period is $20 or above within a 7 year period.

LOCK-UP

  • Under the Investor Rights Agreement, the stockholders party thereto will agree to a six-month lock-up from the Closing, subject to certain exceptions.

SUPPORT AGREEMENT

  • On November 2, 2021, concurrently with the execution and delivery of the Business Combination Agreement, SilverBox entered into a Sponsor Letter Agreement (the “Sponsor Letter Agreement”), with SilverBox Engaged Sponsor LLC (the “Sponsor”), PubCo and Authentic Brands, pursuant to which the Sponsor has unconditionally and irrevocably agreed to, among other things:
    • (a) vote at any meeting of the stockholders of SilverBox, and in any action by written resolution of the stockholders of SilverBox, all of the SilverBox Class B Common Stock held by the Sponsor to approve the Business Combination and all related transactions and proposals
    • (b) withhold consent with respect to any matter, action or proposal that would reasonably be expected to result in a material breach of any of SilverBox’s covenants, agreements or obligations under the Business Combination Agreement, or any of the Closing conditions not being satisfied
    • (c) waive any rights to adjustment or other anti-dilution or similar protections with respect to the rate that the SilverBox Class B Common Stock held by the Sponsor will convert into SilverBox Class A Common Stock in connection with the Business Combination and related transactions, including the PIPE Investment
    • (d) forfeit 1,158,500 shares of PubCo Class A Common Stock at the Closing, and that after the Closing an aggregate of 1,241,250 shares of PubCo Class C Common Stock will be non-transferrable and remain subject to forfeiture and cancellation
    • (e) donate 332,500 shares of PubCo Class A Common Stock to the BRCC Fund, a 501(c)(3) nonprofit organization (the “BRCC Fund”), and, subject to certain current Authentic Brands equityholders concurrently collectively donating at least 100,000 shares of Pubco Class A Common Stock to the BRCC Fund, donate an additional 100,000 shares of PubCo Class A Common Stock (or, at their election, Company Units) to the BRCC Fund
    • (f) forfeit up to 2,068,750 shares of SilverBox Class B Common Stock to the extent the aggregate cash proceeds available for release to SilverBox from SilverBox’s trust account (after giving effect to all redemptions of shares of SilverBox Class A Common Stock), plus gross proceeds from the PIPE Investment and the Forward Purchase Investment, is less than $445,000,000, with
      • (x) a corresponding decrease in the number of Company Units held by PubCo
      • (y) a corresponding increase in the number of Company Units held by the Continuing Unitholders
    • (g) certain provisions with respect to restricted PubCo shares to be held by Sponsor, including with respect to conversion, dividends and potential cancellation and forfeiture; in each case, on the terms and subject to the conditions set forth in the Sponsor Letter Agreement.

NOTABLE CONDITIONS TO CLOSING

  • That the aggregate cash proceeds available for release to SilverBox from SilverBox’s trust account (after giving effect to all redemptions of shares of SilverBox Class A Common Stock), plus gross proceeds from the PIPE Investment and the Forward Purchase Investment, shall be equal to or greater than $300,000,000, before deduction of any transaction expenses or other uses contemplated by the Business Combination Agreement

NOTABLE CONDITIONS TO TERMINATION

  • If the Closing has not occurred on or before seven (7) months after the date of the Business Combination Agreement.

ADVISORS

  • William Blair is serving as Lead Financial Advisor, and BDT & Company, LLC is serving as Financial Advisor to Black Rifle Coffee Company.
  • Citigroup and Deutsche Bank Securities Inc. are serving as Lead Capital Markets Advisors, and Guggenheim Securities, LLC, Raymond James & Associates, Inc., Truist Securities, Inc., D.A. Davidson & Co. and Telsey Advisory Group are serving as Capital Markets Advisors to SBEA.
  • Kirkland and Ellis LLP is serving as legal counsel to Black Rifle Coffee Company. Paul Hastings is serving as legal counsel to SBEA.

MANAGEMENT & BOARD

Executive Officers

Stephen Kadenacy, 52
Chief Executive Officer

Stephen M. Kadenacy is the Chief Executive Officer of Boxwood Capital, a private equity firm he founded in 2018 and a Co-Founder and Managing Member of SilverBox Capital. He has been serving as the Chairman of Centerline Logistics Corp, a leading marine oil transportation services firm and ship assist company, since July 2019. Mr. Kadenacy served as Chairman and CEO of Boxwood Merger Corp until its business combination and remained on the board of directors of the combined company, Atlas Technical Consultants, Inc. Between May 2008 and July 2017, Mr. Kadenacy served in a number of senior leadership roles at AECOM, a large engineering and technical services business, including its President and Chief Operating Officer from September 2015 to July 2017, President and Chief Financial Officer from 2014 to 2015 and Chief Financial Officer from 2011 to 2014. During his tenure at AECOM, the company grew from approximately $5 billion of revenues in 2008 to approximately $18 billion in 2017. Previously, Mr. Kadenacy was a Partner at KPMG in Economic Consulting and served as a member of the board of directors of ABM Industries, a provider of facility management services, YMCA of Greater Los Angeles and the Board of Trustees for the UCLA’s Anderson School of Business. Mr. Kadenacy holds a Bachelor of Arts in Economics from University of California Los Angeles and a Master of Business Administration from University of Southern California.

Duncan Murdoch, 49
Chief Investment Officer

Duncan Murdoch has over 20 years of private equity and investment banking experience. Mr. Murdoch is currently Managing Partner and Chief Investment Officer of Boxwood Capital, a position he has served since April 2020. Mr. Murdoch is also Chief Investment Officer of SilverBox Capital. Previously, Mr. Murdoch served as Chief Investment Officer of Boxwood Merger Corp. until its business combination with Atlas Technical Consultants, from November 2018 to February 2020. Prior to that Mr. Murdoch spent approximately 17 years at Macquarie Capital in New York where he was a Senior Managing Director, from 2006 to October 2018, and also served as Co-Head of the Principal Transactions Group U.S. from 2010 to 2018, and as Co-Head of the Industrials Group U.S. from 2006 to 2010. Mr. Murdoch also served on numerous committees at Macquarie Capital including the U.S. Capital Commitments Committee and the US Operating Committee. While at Macquarie Capital, Mr. Murdoch led numerous investments and acquisitions on behalf of Macquarie Capital and funds managed by affiliates of Macquarie Capital across multiple sectors, including infrastructure, business services, environmental services, aerospace, and consumer. Mr. Murdoch served on the board of directors of numerous private companies, including Brek Manufacturing Company, Utility Service Partners, Inc., Puralube, Inc., Icon Parking Systems, Smarte Carte, Inc., DNEG, Anaergia Inc., MST Global, and Skis Rossignol S.A. Previously, Mr. Murdoch worked for BMO Nesbitt Burns Inc. in Toronto, for Macquarie in Sydney in their Corporate Advisory Group, and for justices in the Commercial Division of the Supreme Court of New South Wales, Australia. Mr. Murdoch holds a Master of Business Administration from Stanford University, a Bachelor of Laws (First Class Honors) from the University of Sydney and a Bachelor of Economics from the University of Sydney.

Jin Chun, 41
Chief Operating Officer

Jin Chun has 20 years of private equity and investment banking experience. Mr. Chun is also Chief Operating Officer of SilverBox Capital, and a Partner of Boxwood Capital. From November 2005 to December 2020, Mr. Chun was a Managing Director of Macquarie Capital, based in New York where he was responsible for sourcing, executing and managing investments on behalf of Macquarie Capital and funds managed by affiliates of Macquarie Capital, and has been serving as a consultant to Macquarie Capital since January 2021. Past investments have included debt, preferred equity and common equity investments across technology, financial services, infrastructure, travel and leisure, and gaming sectors. Prior to that, Mr. Chun worked for Dresdner Kleinwort Wasserstein in its Industrial M&A team from 2001 to 2005. Mr. Chun serves on the board of directors of Read Ahead, Inc. Mr. Chun holds a Master of Finance (with Distinction) from INSEAD and a Bachelor of Science from Columbia University.

Daniel E. Esters, 55
Chief Financial Officer

Daniel E. Esters is Chief Financial Officer of SilverBox Capital and a Partner of Boxwood Capital since April 2020. He formerly served as the Chief Financial Officer of Boxwood Merger Corp. from November 2018 to February 2020. Mr. Esters spent 24 years serving in a variety of capacities at several investment banking firms where he accumulated extensive transaction experience including origination, due diligence assessment, structuring, negotiation and marketing of a wide range of merger and acquisitions, debt financings, restructurings and public equity offerings. From August 2014 to September 2018, Mr. Esters served as a managing director of M&A Capital LLC, a boutique investment banking firm and independent sponsor. From May 1996 to August 2014, he served in the Investment Banking department of Jefferies LLC, where his last role was as Managing Director within the firm’s financial sponsor group. Previously, Mr. Esters served with the Investment Banking department of PaineWebber, Inc. and with the audit practice of accounting firm Price Waterhouse LLC, where he earned his C.P.A. license. Mr. Esters holds a Bachelor’s degree in economics from the University of California at Los Angeles and a Master of Business Administration from the UCLA Anderson School of Management.

Board of Directors

Joseph Reece, 59
Executive Chairman of the Board

Joseph E. Reece is a Co-Founder and Managing Member of SilverBox Capital. He founded Helena Capital, a merchant bank, in April 2015 and served as Chief Executive Officer until January 2017, and then again since October 2018. Mr. Reece has also been serving as a Consultant to BDT & Company, LLC since October 2019. He previously served as Executive Vice Chairman and Head of UBS Securities, LLC’s Investment Bank for the Americas from February 2017 to September 2018. Prior to that, he was at Credit Suisse from 1997 to 2015, in roles of increasing responsibility, including eventually serving as Global Head of Equity Capital Markets and Co-Head of Credit Risk. His prior experience includes practicing as an attorney for ten years, including at the law firm of Skadden, Arps, Slate, Meagher & Flom LLP and at the SEC. Mr. Reece has been a member of the board of directors of Compass Minerals, Inc. since 2019, and previously served as a member of the board of directors of UBS Securities, LLC, of Atlas Technical Consultants, Inc. and its predecessor company, Boxwood Merger Corp., of Del Frisco’s Restaurant Group, Inc., of RumbleOn, Inc, of CST Brands, Inc., and of LSB Industries, Inc. Mr. Reece also currently serves on the board of the Foundation for the University of Akron and Chair-ity, Inc. and has previously served on the boards of directors of the Georgetown Law Center, KIPP, The Fulfillment Fund, and the New York Foundation for the Arts. Mr. Reece holds a Bachelor of Science, a Master’s of Business Administration and a Juris Doctor from the University of Akron and a LL.M from the Georgetown University Law Center.

Joseph K. Hurd III, 51
Director 

Mr. Hurd has been the Global Managing Director, Corporate Development at SOSV LLC, a multi-stage venture capital fund since October 2019 and the founder and managing partner of The Katama Group LLC, a strategic advisory consultancy based in Los Altos, California since September 2004. He is also a Venture Partner with Good Growth Capital, an early-stage technology venture fund, a position he has held since July 2019. Since February 2018, he has served as a Non-Executive Director of GoCo Group plc, a UK-based financial services comparison website, where he serves on the remuneration and nomination committees. Previously, Mr. Hurd was the Director, Emerging Businesses at Facebook from January 2016 until June 2017 and the Vice President, Strategy & Business Development at Gannett from October 2013 until October 2015. From 2009 to 2012, he served as a political appointee in the United States Department of Commerce, where he was on the White House Business Council. Prior to that, Mr. Hurd held senior executive roles at VideoEgg, Friendster and AOL, and started his professional career as a corporate securities lawyer at Linklaters LLP. Mr. Hurd is an elected Trustee of Menlo College in Atherton, California and The Computer History Museum in Mountain View, California. Mr. Hurd holds a Juris Doctor from Harvard Law School, a Master of International Affairs from Columbia University, and an A.B. cum laude from Harvard College.

Peter Richards, 50
Director 

Mr. Richards has been Founder and General Partner of Dune Road Capital, an investment fund focused on technology and financial services sectors, since January 2016. He has also been Executive Chairman of Gridics, a real estate development software company, since January 2017, and a member of the board of directors of StorCentric, a data management software company, since June 2015. Mr. Richards previously co-founded and served as a General Partner of Empire Capital Management, a technology-focused hedge fund from 1996 to 2015. Mr. Richards has a BA from Harvard University.

Laura Sachar, 58
Director 

Ms. Sachar has been co-founder and Manging Partner of StarVest Partners, a venture capital firm, since 1998, having been a part of investing nearly half a billion dollars in over 50 technology companies. Prior to StarVest, Ms. Sachar was responsible for direct private equity investments at Gabelli Securities, and was a Financial Analyst in investment banking at Prudential Securities. Ms. Sachar has served on 12 corporate boards, including as Audit Chair. Ms. Sachar currently serves on the boards of directors of three companies where StarVest is an investor: RetailNext, Persado and SEP Rhino Holdings, Inc. (d/b/a Ceros). Ms. Sachar has a BA from Barnard College, Columbia University and an MBA from the Columbia University Graduate School of Business. She serves on the board of the Berkshire Hills Eisenberg Camp; on the board of governors of the New York Academy of Sciences as Treasurer, and served for nine years on the boards of Ballet Hispanico and TrailBlazers Camp.

Glenn Welling, 50
Director

Mr. Welling has been the founder and Chief Investment Officer of Engaged Capital, LLC since its founding in 2012. Prior to founding Engaged Capital, Mr. Welling was a Principal and Managing Director at Relational Investors, LLC, an investment fund, which he joined in July 2008, where he was responsible for managing the fund’s consumer, healthcare and utility investments. From February 2002 to May 2008, Mr. Welling was a Managing Director of Credit Suisse Group AG, an investment bank, where he also served as the Head of the Investment Banking Department’s Advisory Business. Mr. Welling has been a member of the board of directors of The Hain Celestial Group since September 2017. From May 2015 to June 2020, Mr. Welling served as a member of the board of directors of TiVo Corporation, a provider of digital entertainment technology solutions, where he was chairperson of TiVo’s compensation committee and a member of the corporate governance and nominating committee and the strategy committee. Mr. Welling served as a member of the board of directors of Jamba, Inc., a leading restaurant retailer of better-for-you food and beverage offerings, from January 2015 to September 2018, where he also served as the chairperson of its compensation committee and as a member of its finance committee. From 2015 to 2018, Mr. Welling served on the board of directors of Medifast, Inc., a manufacturer of medically based, proprietary healthy living and meal replacement products, where he was a member of the audit, compensation and mergers & acquisitions committees. Mr. Welling serves as Chairman of the Board for the University of Pennsylvania’s tennis program and as a member of the Wharton Executive Education Board.

 

ByKristi Marvin