Stable Road Acquisition Corporation *
PROPOSED BUSINESS COMBINATION: Momentus Inc.
ENTERPRISE VALUE: $1.2 billion
ANTICIPATED SYMBOL: MNTS
SUBSEQUENT EVENTS – 8/K -July 16, 2021
On July 16, 2021, Stable Road Acquisition Corp. announced that it has entered into an amended or new Subscription Agreement with the PIPE investors.
- PIPE Investors agreed to purchase an aggregate of 11,000,000 shares of Stable Road Class A common stock following the consummation of the proposed business combination with Momentus Inc. at a price of $10.00 per share, representing aggregate gross proceeds of $110.0 million.
- Stable Road agreed to issue to each PIPE Investor, at the closing of the PIPE Investment, warrants to purchase one share of Combined Company Class A common stock at a price of $11.50 per share for each share of Combined Company Class A common stock purchased pursuant to such PIPE Investor’s Subscription Agreement.
- In total, PIPE Investors representing $118.0 million of the original PIPE Investment terminated their Subscription Agreements.
- The remaining PIPE Investors elected to continue with their Subscription Agreements, with certain PIPE Investors increasing or decreasing their commitment amounts pursuant to amendments to the Subscription Agreements, with such changes representing a net $5.3 million increase in commitments by the remaining PIPE Investors.
- 6 new PIPE Investors entered into Subscription Agreements, representing approximately $47.75 million of new commitments. Affiliates of SRC-NI Holdings, LLC, the sponsor of Stable Road, which had committed $15.0 million in the aggregate to the PIPE Investment, reaffirmed their commitment.
SUBSEQUENT EVENTS – 8/K -June 29, 2021
On June 29, 2021, Stable Road Acquisition Corp. announced that it has further amended its business combination agreement with Momentus Inc.
- Reduced the enterprise valuation of Momentus from $1.131 billion to $566.6 million
- Extended the outside date under the Merger Agreement from June 7, 2021 to August 13, 2021
- Amended the list of individuals who will serve on the combined company’s board of directors as of Closing (as defined in the Merger Agreement) or the manner in which they will be selected
- Terminated the previously contemplated repurchase agreement pursuant to which Parent had agreed to repurchase shares from Prime Movers Lab Fund I, L.P. immediately following the Closing
- Provides that Momentus will reimburse certain third party expenses of Parent
- Provides that, in the event the Closing does not occur for any reason, Momentus will indemnify Parent, Sponsor (as defined in the Merger Agreement) and their respective directors and officers with respect to any untrue statement of a material fact contained in (or material omission from) the registration statement or other Securities and Exchange Commission filings, which statement was provided by or based upon information provided by Momentus or its representatives, subject to certain exceptions.
Stable Road Acquisition Corp. proposes to combine with Momentus Inc., a commercial space company offering in-space transportation and infrastructure services.
Utilizing a multi-pronged approach, Momentus is developing capabilities to provide critical infrastructure services: in-space transportation, satellite as a service, and in-orbit services. The Company has strong momentum from the rapidly expanding small satellite market, which is seeking low-cost and regular launch access to orbit. Momentus’ customers include satellite operators, satellite manufacturers, launch providers, defense primes such as Lockheed Martin and government agencies such as NASA. As of September 30, 2020, the Company had customer contracts which represent approximately $90 million in potential revenue over the next several years.
Momentus is creating the first hub and spoke model in space by offering last-mile delivery in partnership with key launch operators, including SpaceX. Momentus offers its customers significantly more affordable access to space by combining the capabilities of low-cost launch vehicles and Momentus’ transport and service vehicles, powered by water plasma propulsion technology. Momentus plans to expand its offerings by providing a satellite as a service model for hosted payloads and an in-orbit service model for satellite deorbiting, life extension, refueling, and repositioning. In 2019, the Company successfully tested its water plasma propulsion technology in space.
Momentus has developed its first transport and service vehicle, Vigoride, to serve the needs of customers in Low Earth Orbit by delivering small satellites up to 750kg to precise destinations, and expects to provide hosted payload services, and in-orbit services. The Company plans to launch its first Vigoride vehicle in December 2020 with commercial customers and four to five Vigorides in 2021. The Company is developing two larger, more capable vehicles in its development plans: Ardoride in 2022 and Fervoride in 2024 with the goal of serving all orbits up to Geosynchronous Orbit and even Lunar Orbit and handling payloads of up to 4,000 kg. To extend the capabilities of gigantic rockets like SpaceX’s Starship and Blue Origin’s New Glenn, the Company is building its largest vehicle to date – Fervoride, which the Company expects to be capable of delivering up to 20 tons of cargo anywhere from Low Earth Orbit to Geosynchronous Orbit and into deep space. Fervoride is expected to be a pathfinder for the prospecting and use of space resources such as water from the Moon and asteroids and a technology enabler for the largest moonshot opportunities like solar energy generation in space.
Pro forma for the transaction, Momentus will have approximately $310 million in cash on the balance sheet, to be funded by Stable Road’s $172.5 million of cash held in trust (assuming no redemptions) and $175.0 million from a fully committed common stock PIPE at $10.00 per share, including investments from private equity growth investors, family offices and select top tier public institutional investors.
SUBSEQUENT EVENTS May 24, 2021
Stable Road filed an 8-K on May 24, 2021:
On May 23, 2021, Momentus informed Stable Road that it does not expect to fly any missions in 2021 and that this determination was based on information from SpaceX that it was suspending its Momentus-related efforts while Momentus works to secure approvals from the U.S. government As previously disclosed, Momentus is seeking these approvals from the U.S. government that are required for its missions. Momentus is in the process of updating its financial projections and backlog.
Pursuant to the transaction, Stable Road, which currently holds approximately $172.5 million of cash in trust, will combine with Momentus, which is estimated to result in a pro forma enterprise value of approximately $1.2 billion.
Momentus’ existing equity security holders will hold approximately 75% of the issued and outstanding shares of Class A common stock immediately following the consummation of the merger, assuming no redemptions by Stable Road’s existing public stockholders.
Cash proceeds in connection with the transaction will be funded through a combination of Stable Road’s cash in trust and through a $175.0 million fully committed common stock PIPE at $10.00 per share, including investments from private equity growth investors, family offices and select top tier public institutional investors.
The transaction is expected to be completed in early 2021.
- An aggregate of 11,000,000 shares of Parent Class A Common Stock in a private placement for $10.00 per share (the “Private Placement”)
- Including 1,000,000 shares which were agreed to be purchased by SRAC PIPE Partners LLC, a Delaware limited liability company (“SRAC Partners”).
- The proceeds from the Private Placement will be partially used to fund the Repurchase and for general working capital purposes following the closing.
- Each Subscription Agreement will terminate upon the earlier to occur of:
- (a) the termination of the Merger Agreement in accordance with its terms,
- (b) the mutual written agreement of the parties to such Subscription Agreement,
- (c) 30 days after the Outside Date (as defined in the Merger Agreement), if the Closing has not occurred by such date, or
- (d) by written notice of the investor to Parent in the event the Merger Agreement is amended, supplemented or otherwise modified after the date such Subscription Agreement was entered into in a manner that materially adversely affects the investor.
SRC-NI Holdings, LLC, Parent’s sponsor (“Sponsor”), SRAC Partners, the Company and Parent entered into a letter agreement (the “Sponsor Agreement”), pursuant to which, among other things, Sponsor agreed to:
- (a) waive certain anti-dilution rights set forth in Section 4.3(b)(ii) of Parent’s Amended and Restated Certificate of Incorporation,
- (b) surrender to Parent, immediately prior to the consummation of the Mergers and for no consideration, up to 1,437,500 shares of Parent’s Class B common stock, par value $0.0001 per share, in the event that the amount in the Parent’s trust account (for the avoidance of doubt, prior to giving effect to the any redemptions by Parent’s stockholders and the payment of any transaction costs by Parent), minus the aggregate amount of cash proceeds that will be required to satisfy any redemptions by Parent’s stockholders, is less than $100,000,000,
- (c) subject to potential forfeiture 1,437,000 shares of Parent Class A Common Stock (the “Sponsor Earnout Shares”) in accordance with the terms of the Merger Agreement, such that one-third of such Sponsor Earnout Shares will be respectively forfeited in the event that the Parent Class A Common Stock does not achieve trading prices of at least $12.50, $15.000 and $17.50 prior to the fifth (5th) anniversary of the closing (and provided that, in connection with any change of control of Parent prior to such five-year anniversary, such Sponsor Earnout Shares shall become no longer subject to forfeiture based upon the value received by holders of Parent Class A Common Stock being at least such trading prices in connection with such change of control),
- (d) support the transactions contemplated by the Merger Agreement, including agreeing to vote in favor of the adoption of the Merger Agreement at the Special Meeting (as defined below) and
- (e) not to transfer any shares of Parent Class A Common Stock for a period of six months following the Closing (or, if earlier, the date that the Parent Class A Common Stock trades at or above $12.00 per share for any 20 trading days in a 30 trading day period after Closing).
PML, the Company and Parent entered into a repurchase agreement (the “Repurchase Agreement”) pursuant to which, amongst other things, Parent has agreed to repurchase a certain number of shares of Parent Class A Common Stock from PML, at a purchase price of $10.00 per share, immediately following the Closing (the “Repurchase”).
The Repurchase is contingent on the amount of available cash Parent has at the Closing from:
- (a) the Private Placement (and any alternative financing arranged by Parent and the Company in the event the Private Placement becomes unavailable) and
- (b) the funds in Parent’s trust account (after taking into account payments required to satisfy Parent’s stockholder redemptions), after further deducting the amount of Parent’s transaction expenses and the Company’s transaction expenses (“Net Proceeds”) being in excess of $265 million.
- If Net Proceeds exceed $265,000,000 but are less than $280,000,000, the number of shares of Parent Class A Common Stock subject to the Repurchase will be equal to the amount by which Net Proceeds exceed $250 million, divided by $10.00.
- In the event Net Proceeds are in excess of $280,000,000, the number of shares of Parent Class A Common Stock subject to the Repurchase will be equal to $30,000,000, divided by $10.00.
- At the closing of the Repurchase, Parent will be entitled to deduct from such cash payment an amount equal to 3.3% of such cash payment (representing PML’s obligation to pay the Company a portion of its transaction expenses).
NOTABLE CONDITIONS TO CLOSING
- Parent having at least $250,000,000 in available cash (including proceeds in connection with the Private Placement (and any alternative financing arranged by Parent and the Company in the event the Private Placement becomes unavailable) and the funds in Parent’s trust account) immediately prior to the effective time of the consummation of the Mergers (after taking into account payments required to satisfy Parent’s stockholder redemptions) (the “Minimum Cash Condition”)
NOTABLE CONDITIONS TO TERMINATION
- By either Parent or the Company, if the consummation of the Mergers has not occurred on or prior to the date that is six (6) months following the date of the Merger Agreement (the “Outside Date”)
- Evercore is serving as the exclusive financial advisor and capital markets advisor to Momentus.
- Cantor Fitzgerald & Co. is serving as capital markets advisor to Stable Road.
- Orrick, Herrington & Sutcliffe LLP is serving as legal advisor to Momentus.
- Kirkland & Ellis LLP is serving as legal advisor to Stable Road.
- ICR is serving as investor relations and communications advisor to Momentus.
- Evercore and Cantor Fitzgerald & Co. are the private placement agents.
STABLE ROAD ACQUISITION CORP. MANAGEMENT & BOARD
Brian Kabot, 41
Chairman & Chief Executive Officer (Class III)
Mr. Kabot has over 19 years of principal investing experience and has served as Chief Investment Officer of Stable Road Capital, a single-family office investment vehicle based in Los Angeles, California, since July 2017. In July 2019, Mr. Kabot was named a Strategic Advisor to The Cannabis ETF (NYSE: THCX), a newly-launched cannabis-oriented exchange-traded fund managed by Innovation Shares LLC. Since December 2018, Mr. Kabot has been a director of the Treehouse Real Estate Investment Trust, a private real estate investment trust, where he currently serves as the Chairman of the Investment Committee. Mr. Kabot has also served on the board of directors of Old Pal, LLC, a private cannabis brand company, since June 2018, and on the board of directors of Grenco Science LLC, a private developer of vape pens and portable vaporizers, since July 2019. From May 2016 to July 2017, Mr. Kabot was the Director of Research at Eschaton Opportunities Fund Management LP, a management company for two global value hedge funds. From January 2011 to April 2016, Mr. Kabot served as a partner and Deputy Portfolio Manager of Riverloft Capital Management L.P., or Riverloft Capital, a management company for an event-driven hedge fund. From March 2009 to December 2010, he served as a managing director at Gulf Coast Capital, a single-family office investment vehicle. From August 2006 to January 2009, Mr. Kabot ran the industrials, materials, and energy vertical for Sun Capital Partners’ cross cap structure/activist hedge fund. From February 2005 to July 2006, he served as a senior analyst at Reservoir Capital Group. Mr. Kabot also worked as an associate at Questor Management Company from May 2003 to February 2005, where he focused on acquiring distressed and bankrupt companies in the industrials, materials and energy sectors. From June 2000 to April 2003, Mr. Kabot served as an analyst in the merchant banking partners group at Donaldson, Lufkin & Jenrette. Mr. Kabot received a Bachelor of Science in Hotel and Restaurant Administration from Cornell University.
James Norris, 39
Chief Financial Officer and Director Nominee (Class II)
Mr. Norris has more than 18 years of experience in the investment management industry. Since November 2018, Mr. Norris has served as the Chief Financial Officer of Stable Road Capital, LLC. From October 2017 to September 2018, Mr. Norris served as the Chief Financial Officer of Cycad Management LLC, a single family investment office. From April 2013 to October 2017, Mr. Norris served as the Chief Financial Officer and Chief Compliance Officer of Blue Jay Capital Management LLC, a SEC-registered investment management firm focused on equity investments in the healthcare sector. From September 2012 to April 2013, Mr. Norris served as the Controller of Kennedy-Wilson Holdings Inc. (NYSE:KW), a global real estate company. From January 2010 to July 2012, Mr. Norris served as the Controller and Chief Compliance Officer of Expo Capital Management LLC, a SEC-registered investment management firm. From September 2004 to July 2009, Mr. Norris served as Manager at PriceWaterhouseCoopers in the United Kingdom and the United States, specializing in investment management. From September 2001 to August 2004, Mr. Norris served as an accountant at Ainsworth’s Chartered Accountants in the United Kingdom. Mr. Norris received a Bachelor of Arts in Accounting and Finance from the University of Glamorgan in the United Kingdom. He is a certified public accountant and is a fellow member of the Association of Chartered Certified Accountants.
Juan Manuel Quiroga, 44
Chief Investment Officer and Secretary
Mr. Quiroga has over 20 years of experience in the financial sector, including 14 years of principal investing experience. Since August 2015, Mr. Quiroga has served as Chief Investment Officer of Nala Investments. From September 2007 to August 2015, Mr. Quiroga served as Senior Vice President of Darby Private Equity. From August 2005 to August 2007, Mr. Quiroga served as a Vice President of Market Intelligence at General Electric Capital Solutions. Prior to that, from 1996 to 1998 and from 2000 to 2003, Mr. Quiroga worked for Grupo Financiero Banorte in Mexico City and New York City, where he collaborated on the creation of an asset management and financial derivatives division. Mr. Quiroga currently serves on the board of directors of Acrecent Financial Corporation, Cobiscopr and Good Media Company. Mr. Quiroga received a Bachelor of Arts in Management, Finance and International Business from the Universidad Panamericana in Mexico, a Graduate Diploma in Finance from Universis Pompeu Fabra in Spain and a Master of Business Administration from the University of Chicago Booth School of Business.
Board of Directors
Marc Lehmann, 47
Director Nominee (Class II)
Mr. Lehman has served as the Managing Member of Flamingo Drive Partners, LLC and its predecessor, an investment firm involved in public markets, real estate and start-up investing, since July 2016. Since November 2018, Mr. Lehmann has served as a director of Green Growth Brands Inc. (CSE:GGB; OTCQB:GGBXF), a producer and seller of cannabis and CBD products. Mr. Lehmann served as the General Partner of Riverloft Capital from January 2011 to June 2016. From May 2002 to June 2010, Mr. Lehmann served as a Partner and Director of Research at JANA Partners LLC, a hedge fund. From July 1999 to May 2002, he served as an analyst at Appaloosa Management LP, an opportunistic hedge fund portfolio. He began his career as an analyst at Morgan Stanley (February 1995-September 2005) and Lehman Brothers Holdings Inc. (February 1994-February 1995). He then served as a lead analyst at SAC Capital, LP from September 1995 to June 1997. Mr. Lehmann received a Bachelor of Science in Finance and International Business from New York University and a Master of Business Administration from The Wharton School at the University of Pennsylvania.
Kellen O’Keefe, 37 [Left board 3/25/21]
Director Nominee (Class I)
Since July 2019, Mr. O’Keefe has served as the Chief Strategy Officer of Flower One Holdings Inc. (CSE:FONE; OTCQX:FLOOF), a cannabis cultivation, production, processing and custom packaging company. Since January 2013, he has served as an advisor to MedPOINT Management, Inc., which provides managed care management services to independent physician associations and hospitals. From January 2016 to June 2019, Mr. O’Keefe served as a partner and Senior Vice President of Business Development at MedMen Enterprises, which owns and operates cannabis facilities in the greater Los Angeles area. Between March 2015 and November 2015, he served as Director of Business Development at Engage BDR, an advertising company. From September 2011 to September 2012, Mr. O’Keefe served as the Director of Business Development of Rocket Frog Games LLC, a B2B social casino provider. From May 2008 to September 2011, Mr. O’Keefe was the West Coast Account Director for Voice Media Group, a media and technology company. Mr. O’Keefe is a co-Founder of Learn to Ride, which develops experiences for celebrities and children suffering from chronic and/or life threatening conditions. Mr. O’Keefe received a Bachelor of Science in Business Administration and Management from University of Arizona.
James Hofmockel, 53
Director nominee (Class I)
Mr. Hofmockel has over 30 years of experience in the financial sector as an entrepreneur, investor and advisor, including nearly 20 years of principal investing and completion of numerous capital-raising and M&A transactions in the public and private markets. Since July 2007, Mr. Hofmockel has been the managing partner of Hofmockel Investments, LLC, and since September 2018, (312) Investments, LLC, both private investment and financial advisory firms. From September 2000 to June 2009, Mr. Hofmockel served as a Principal in the private equity firm Cardinal Growth, L.P., where he led a number of investments and was a board member of several portfolio companies, and co-founded Diamond Communication Solutions, Inc. From 1998 to 2000, he served as a Vice President at Resource Financial Corporation, an investment banking and merchant banking firm, and Mr. Hofmockel worked in investment banking in the financial institutions groups of Salomon Brothers (1996–1998) and Bear Stearns (1994–1996). Between December 1988 and July 1992, Mr. Hofmockel was a certified public accountant working in KPMG’s financial services group in tax and consulting. Mr. Hofmockel received a Bachelor of Science in Accounting from Purdue University and a Master of Business Administration from the University of Chicago Booth School of Business.