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Stratim Cloud Acquisition Corp. *

Stratim Cloud Acquisition Corp. *

Feb 17, 2021 by Kristi Marvin

LIQUIDATION – 6/29/23 – LINK

  • The Company anticipates that the last day of trading in the Class A ordinary shares will be approximately July 16, 2023.
    • The per-share redemption price was not mentioned

PROPOSED BUSINESS COMBINATION: Force Pressure Control Corp. [Terminated on 6/29/23]

ENTERPRISE VALUE: $287.5 million
ANTICIPATED SYMBOL: tbd

Stratim Cloud Acquisition Corp proposes to combine with Force Pressure Control Corp.

Force Pressure Control is a vertically integrated provider of pressure control-related rental tools and services to the energy industry.  The Company, formed in 2019 and originally servicing the Eagle Ford basin in Texas, has expanded its customer base, geographic areas served and equipment rental offerings rapidly over the past several years. It now includes facilities and operations serving the Permian Basin in West Texas and the Haynesville Shale in East Texas and surrounding regions. The Company designs and assembles proprietary equipment that allows operators to bring a well online more quickly, more safely and with consistent quality to improve efficiencies and profits. Force’s equipment rental services are used by customers in oil and natural gas production, as well as in geothermal “clean energy” power generation applications.

TRANSACTION

  • The proposed transaction, assuming no SCAC stockholders exercise their redemption rights and PIPE financing of $120 million, is expected to raise approximately $183 million, resulting in the combined company having approximately $78 million on the balance sheet and no debt following the closing.
    • Under the scenario outlined above, current Force equity holders are expected to own at least 32.9% of the combined company.
    • SCAC’s public stockholders will own approximately 17.1% and SCAC’s sponsor and related parties will collectively own approximately 17.1%.
    • The remaining shares of the company will be owned by third-party financing parties and any existing Force selling stockholders that elect to receive additional equity instead of cash.
  • The proposed transaction is expected to close in the second half of 2023.

stratim

SPAC FUNDING

  • Purchase Agreement
    • The Company will purchase an aggregate of up to 12,000,000 Common Units from Force Members for $120,000,000 prior to any Net Working Capital Adjustment and the Force Members will retain at least 50% of the total Common Units issued and outstanding immediately after the Recapitalization (the “Retained Units”)
      • The Company will subscribe for a number of Common Units equal to the total shares of Class B Common Stock of the Company issued and outstanding immediately prior to the Transaction, in exchange for the number of shares of Company Class C Common Stock equal to the number of Retained Units, which will be subsequently distributed to Force Members.
      • The Force Members may cause the Company to redeem their Common Units, which redemption may be effected as an exchange of Common Units for shares of Class A Common Stock of the Company on a one-for-one basis, accompanied by the corresponding cancellation of shares of Company Class C Common Stock held by such Members.

EARNOUT

  • Company
    • Following the Closing, and as additional consideration for the Transaction, within five Business Days after the determination of the 2023 EBITDA Force and the Company shall issue or cause to be issued to each Force Member the following number of Common Units and shares of Company Class C Common Stock (the “Earnout Equity”), if the 2023 EBITDA is greater than $60,000,000 (the “Minimum EBITDA Target”), a one-time issuance of 200,000 units and shares, as applicable, of Earnout Equity,
      • For each $1,000,000 of EBITDA (rounded down to the nearest $1,000,000) in excess of the Minimum EBITDA Target, up to a maximum of 3,000,000 units and shares, as applicable, of Earnout Equity.
    • Notwithstanding the foregoing, the Company shall be permitted to satisfy its obligation to deliver Earnout Equity pursuant to the Minimum EBITDA Target by:
      • (i) delivering $12.50 cash per unit and share, as applicable, of Earnout Equity within thirty calendar days of the determination of the 2023 EBITDA or
      • (ii) if the VWAP closing sale price of the Company Class A Common Stock for the five trading days following the public announcement of the 2023 EBITDA exceeds $14.00 per share, by delivering the number of shares of Company Class A Common Stock equal to
        • (x) the aggregate number of units and shares, as applicable, of Earnout Equity multiplied by $12.50, divided by
        • (y) the Company Trading Price, subject to the adjustment provided in the Purchase Agreement.

LOCK-UP

  • Company and Sponsor
    • 180 day from the Closing Date or if the share price equals or exceeds $12.00 for any 20/30 trading days at least 150 days from the Closing Date

NOTABLE CONDITIONS TO CLOSING

  • The key financial results in the Audited Financial Statements (as defined in the Purchase Agreement) and 2022 Audited Financial Statements (as defined in the Purchase Agreement) to be delivered by Force to the Company are substantially consistent with the financial results provided in Exhibit F of the Purchase Agreement

NOTABLE CONDITIONS TO TERMINATION

  • If any of the closing conditions have not been satisfied or waived by September 16, 2023, subject to certain limitations as provided in the Purchase Agreement

ADVISORS

  • EF Hutton, a division of Benchmark Investments, LLC is acting as capital markets advisors to SCAC
  • Johnson Rice & Company L.L.C. is acting as capital markets advisors to SCAC.
  • Legal counsel to SCAC is Skadden, Arps, Slate, Meagher & Flom LLP.
  • Legal counsel to Force is Egan Nelson LLP.

EXTENSION – 3/13/23 – LINK

  • The SPAC approved the extension from March 16, 2023, to September 16, 2023.
    • 18,744,981 shares were redeemed.
    • $0.04/share per month will be deposited into the trust account.

LETTER OF INTENT – 2/15/23 – LINK

  • The SPAC signed a letter-of-intent with Force Pressure Control, LLC
    • SCAC would acquire 100% of the equity interests of Force from its existing equity holders in exchange for 12 million shares of SCAC Class A Common Stock, $120 million in cash or notes, and includes an earnout of up to 3 million additional shares of SCAC Class A Common Stock based on the combined company’s 2023 EBITDA exceeding levels specified in the Term Sheet.
    • SCAC intends to announce additional details regarding the proposed business combination upon execution of a definitive purchase agreement.
    • The business combination agreement (“BCA’) is expected to be completed by the end of the first quarter of 2023.
  • ADVISORS
    • EF Hutton, division of Benchmark Investments, LLC is acting as capital markets advisor to SCAC.
    • Johnson Rice & Company L.L.C. is acting as capital markets advisor to SCAC.
    • Legal counsel to SCAC is Skadden, Arps, Slate, Meagher & Flom LLP.

MANAGEMENT & BOARD

Executive Officers

Sreekanth Ravi, 54
Chief Executive Officer and Chairman

From 2002 until present, Mr. Ravi has been investing in technology companies, as well as in public and private companies in other sectors. Mr. Ravi is currently the Executive Chairman of RSquared AI, an artificial intelligence enabled workforce analytics software company, which he founded in 2018. From 2010 to 2015, Mr. Ravi was the Co-Founder, Chairman and Chief Executive Officer of Tely, a developer of video conferencing equipment for the consumer and business market, which later filed for an assignment for the benefit of creditors in 2016. From 2004 to 2009, Mr. Ravi was a Co-Founder and Chief Executive Officer of Code Green Networks, a maker of data-loss prevention and content security solutions for enterprises. Prior to that, for over 10 years Mr. Ravi was the Co-Founder, Chairman, and Chief Executive Officer of SonicWALL, a firewall company which Mr. Ravi and other investors ultimately took public in 1999. Mr. Ravi earned a B.S. in Electrical Engineering from the University of Illinois in Urbana-Champaign.

Zachary Abrams, 54
Chief Financial Officer, Chief Strategy Officer, Secretary and Director

Mr. Abrams has been the managing partner of Stratim Capital, a late stage venture firm focused on acquiring concentrated positions in technology companies via the secondary market, since he founded the firm in 2006. During this period, he was also the Chief Financial Officer at Rio SEO, a local content management SaaS software provider and a Stratim Capital portfolio company, from October 2014 to July 2018. From June 2006 to December 2008, Mr. Abrams was the Chief Operating Officer and Chief Financial Officer of Applied Financial Technology, a SaaS provider of mortgage analytics solutions, where he managed the Company’s financial and administrative operations and led an M&A process leading to it being acquired by Fidelity National Information Services. Prior to founding Stratim Capital, Mr. Abrams was one of two founding partners of Lake Street Capital, a private equity firm focused on acquiring direct equity interests in the secondary market from 2003 to 2006. From 2000 to 2002, Mr. Abrams was Vice President of Corporate and Business Development at SonicWALL, Inc., where he served on the Operating Committee and led the company’s OEM and licensing division while managing the business development and M&A efforts. Mr. Abrams previously worked at Bear, Stearns & Co., a leading full service investment bank, where he was a Vice President of Investment Banking focused on clients in the technology industry from 1997 to 2000. He also served as a professional in the Technology Investment Banking Group at Merrill Lynch. Mr. Abrams started his career in the Financial Management Program at GE, then served on the Corporate Audit Staff at GE Capital where he focused on financial audits and M&A due diligence. Mr. Abrams has a Bachelors of Economics from Colby College and an MBA from the Wharton School at the University of Pennsylvania.

Board of Directors

Laurence Katz, 51
Director

Mr. Katz has more than 25 years of financial and operating experience in the enterprise software, financial services and entertainment industries. Mr. Katz is currently an independent consultant to technology companies. Mr. Katz served as Executive Vice President and Chief Financial Officer of Genesys, a global enterprise software company, from 2017 to 2019. During his tenure, Genesys evolved from its founding as an on-premise software company into a leading global provider of customer experience software-as-a -service. Prior to Genesys, Mr. Katz spent over 15 years as a Managing Director at JPMorgan Chase and its predecessor companies (2001-2016). During his years at JPMorgan Chase, he held a diverse range of senior operating and financial management roles, including Chief Administrative Officer for the Chase Merchant Services division, Chief Financial Officer for the JP Morgan Treasury Services division, and co-head of Corporate Financial Planning and Analysis. Earlier in his career, Mr. Katz served in the strategic planning group at The Walt Disney Company (1991-1994) and as a strategy consultant at Bain and Company (1990). Mr. Katz has a B.A. in Political Science from Yale University and an M.B.A. from Harvard Business School.

Scott Wagner, 50 [Resigned 6/18/21]
Director

Mr. Wagner served as Chief Executive Officer of GoDaddy (NYSE: GDDY) from 2017 to 2019, and prior to that, as President/Chief Operations Officer/Chief Financial Officer from 2012 to 2017. During Mr. Wagner’s tenure, GoDaddy evolved from its successful founding as the leading domain name registrar in the United States into a global software-as-a-service (SaaS) company, capable of helping everyday entrepreneurs start, create, grow and manage their ideas successfully. Mr. Wagner also served as a director of GoDaddy from 2017 to 2019. Prior to GoDaddy, Mr. Wagner was with KKR, a global investment manager, from 2000 to 2012. At KKR, Mr. Wagner was a founding member and helped lead the Capstone value creation team, which worked with KKR investment companies to grow and improve. Prior to joining KKR, Mr. Wagner worked with the Boston Consulting Group in Chicago and Madrid from 1992 to 1995. Mr. Wagner currently serves on the board of TWC Tech Holdings II Corporation, a SPAC affiliated with True Wind Capital. He holds a B.A. in Economics with distinction, magna cum laude, from Yale University and an M.B.A. from Harvard Business School.

Doug Bergeron, 60
Director

Mr. Bergeron is the current Chief Executive Officer of the Hudson Executive Investment Corp., a SPAC affiliated with Hudson Executive Capital (“HEC”), a hedge fund focused on improving value and performance in small and mid-cap public and private companies, and is the Co-Managing Partner of HEC. Prior to joining HEC, Mr. Bergeron founded DGB Investments, a diversified holding company of technology investments, in 2013. Mr. Bergeron’s experience in technology spans over 35 years, including 12 years as the Chief Executive Officer of Verifone Systems, Inc., or Verifone, a provider of technology for electronic payment transactions and value-added services at the point-of-sale. In 2001, Mr. Bergeron led the acquisition of Verifone, in partnership with the private equity firm The Gores Group, and was named Verifone’s Chief Executive Officer. The following year, Mr. Bergeron partnered with GTCR, another private equity firm, to acquire Verifone from The Gores Group, and continued to lead the company. Over this time, Verifone went from sales of under $300 million in 2002 to over $2 billion in 2013 and enterprise value grew to exceed $5 billion. Mr. Bergeron grew Verifone organically as well as through accretive, value-enhancing acquisitions and strategic partnerships. Prior to leading Verifone, Mr. Bergeron held many senior roles at SunGard Data Systems and rose to become Chief Executive Officer of SunGard Brokerage Systems Group and President of SunGard Futures Systems, which provided software and services to a variety of trading institutions, banks, futures brokerages, derivatives exchanges and clearing and settlement services providers. Mr. Bergeron has a Master of Science from University of Southern California, and a Bachelor of Arts in Computer Science from York University.

Kabir Misra, TBD [Appointed 6/18/21]
Independent Director

TBD

ByKristi Marvin