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Trebia Acquisition Corporation

Trebia Acquisition Corporation

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: System1

ENTERPRISE VALUE: $1.426 billion
ANTICIPATED SYMBOL: SST

Trebia Acquisition Corporation proposes to combine with System1, a leading omnichannel customer acquisition platform.

Founded in 2013, System1 has developed a proprietary end-to-end responsive acquisition marketing platform (RAMP) which the Company uses to acquire intent-driven customers on behalf of its advertising partners and its own products. The Company operates a portfolio of over 40 digital properties that help over 120mm monthly visitors navigate their everyday lives and include, among others, MapQuest, Startpage, HowStuffWorks, info.com and CarsGenius.

Concurrent with this transaction, System1 will be combining with Protected.net, a leading developer of security and privacy subscription products with over 2 million paying subscribers. The acquisition enables System1 to grow its privacy-focused products and further diversify its business model. The combined business is ideally positioned for the privacy-centric future of digital marketing.

The Company’s RAMP platform has enabled it to scale its business to a projected $120 million of billings-based Adjusted EBITDA this year. Between 2018 and 2022, System1 expects to grow its billings-based revenue at a 31% compound annual growth rate, with billings-based EBITDA growth slightly faster at 32% over the same time period. The business grew during the pandemic despite the significant disruption in the online advertising industry as a whole.

SUBSEQUENT EVENT -1/27/22  (8-K LINK)

  • On January 27, 2022, in connection with the consummation of the Business Combination, Trebia and Cannae entered into that certain Backstop Facility Agreement (as amended, the “Backstop Agreement”) whereby Cannae agreed at the BPS Closing, to subscribe for Trebia Class A Common Stock in order to fund redemptions by shareholders of Trebia in connection with the Business Combination, in an amount of up to $250,000,000 (the “Cannae Subscription”).
  • In connection with Cannae’s entry into the Backstop Agreement, the Sponsors agreed, among other things, to forfeit up to 3,628,451 shares of Trebia common stock (and Trebia has agreed to issue to Cannae up to 2,628,451 shares of Trebia Class A Common Stock and up to 1,000,000 shares of Trebia Class A Common Stock to certain equityholders of the target entities, in an aggregate amount equal to such forfeiture) as consideration in the event that the backstop amounts set forth in the Backstop Agreement are drawn due to redemptions.

SUBSEQUENT EVENT -1/10/22  (8-K LINK)

  • On January 10, 2022, Trebia Acquisition Corp. entered into Amendment No. 2 to the Business Combination Agreement (the “BCA Amendment”) by and among S1 Holdco, LLC, System1 SS Protect Holdings, Inc. (“Protected” and, together with S1 Holdco, collectively, “System1” or the “Companies”) and the other parties signatory thereto, which amends the Business Combination Agreement, dated June 28, 2021 as amended by that certain Amendment No. 1 to the Business Combination Agreement, dated November 30, 2021, by and among such parties in order to
    • (i) replace the Additional Seller Backstop Election with certain modifications resulting in an increase to
      • (x) the aggregate maximum Seller Backstop Amount from $45.0 million to $50.0 million and
      • (y) the Cannae Backstop Amount from $200.0 million to $250.0 million,
    • (ii) modify the lockup provision in the form of Bylaws to be adopted at the Closing of the business combination and
    • (iii) give effect to the amended and restated terms of each of the A&R Cannae Backstop Agreement and the A&R Sponsor Agreement.
  • OpenMail, LLC (“Open Mail”), Protected and certain members of OpenMail (collectively, the “Backstop Sellers”), agreed to reduce the Closing Cash Consideration, which reduction (if necessary to cover redemptions by Trebia’s public shareholders) corresponded to an increase in the Closing Seller Equity Consideration (the “Seller Backstop”).
  • The Seller Backstop Amount was based on the total value of the aggregate Trebia Class A Ordinary Shares that are redeemed in connection with the special meeting of Trebia’s shareholders calculated at a price per share of $10.00 (the “Trebia Shareholder Redemption Value”), which Seller Backstop Amount could not be less than $0 or greater than $45,000,000, unless the Backstop Sellers agreed to exercise the Additional Seller Backstop Election.
  • Under the Additional Seller Backstop Election, the Backstop Sellers could elect, but were not required, to increase the Seller Backstop Amount to the extent the Trebia Shareholder Redemption Value exceeded $462,500,000.
  • As a result, if the Trebia Shareholder Redemption Value exceeded $462,500,000 and the Backstop Sellers did not exercise the Additional Seller Backstop Election, the minimum Closing Cash Condition necessary to consummate the business combination under the terms of the Original Business Combination Agreement would not have been satisfied.
  • The parties agreed to remove the right of the Backstop Sellers to exercise the Additional Seller Backstop Election in exchange for the Backstop Sellers’ agreement to an increase in the Seller Backstop Amount in an amount equal to 50% of the Trebia Shareholder Redemption Value in excess of $417,500,000 (if any), which Seller Backstop Amount could not be less than $0 or greater than $50,000,000.
  • As a result of the BCA Amendment, consummation of the transactions contemplated by the Business Combination Agreement is no longer conditioned on the Backstop Sellers exercising the Additional Seller Backstop Election if the Trebia Shareholder Redemption Value exceeds $417,500,000.
  • The transaction now includes up to $650 million of fully committed financing, comprised of a syndicated term loan of $400 million led by BofA Securities and the $250 million Cannae backstop that, together with a portion of the debt commitment, will be utilized as a backstop to cover potential redemptions by Trebia’s public shareholders.

TRANSACTION

  • The transaction is anticipated to provide approximately $175 million of cash, assuming no redemptions by TREB’s public stockholders.
    • The $518 million of cash held in Trebia’s trust account is backstopped by the $200 million equity commitment from Cannae, together with $218 million of the BofA Securities debt commitment, which will be utilized as a backstop for potential future redemptions by Trebia public stockholders. This in conjunction with the potential for management to roll additional equity creates a 100% backstop for potential future redemptions.
    • Holders of a significant majority of equity of System1 and Protected.net have committed to roll their equity into the combined company.

Trebia Transaction Overview

EARNOUT

  •  At the Closing, certain Sponsor Persons will:
    • 1,450,000 Founder Shares held by such Sponsor Persons for 1,450,000 shares of Class D Common Stock, on a one-for-one basis (such shares as exchanged, the “Sponsor Earnout Shares”)
    • To the extent that, on or prior to the fifth (5th) anniversary of the Closing Date, a Class D Conversion Event shall not have occurred in accordance with the Trebia Organizational Documents, all outstanding Sponsor Earnout Shares that shall not have been converted into shares of Trebia Class A Common Stock shall automatically be forfeited and surrendered to Trebia for no consideration. Following such forfeiture, the Sponsor Earnout Shares shall be cancelled, no longer outstanding and become void and of no further effect

LOCK-UP

  • For the period beginning on the Closing until the earlier of
    • (i) 180 days thereafter
    • (ii) if the VWAP of the Trebia Class A Common Stock equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any twenty (20) trading days within a period of thirty (30) consecutive trading days, 150 days thereafter (such applicable period, the “Lock-Up Period”)

SPONSOR AGREEMENT

  • Subsequent Event – On January 10, 2022, Trebia entered into the Amended and Restated Sponsor Agreement (the “A&R Sponsor Agreement”) by and among BGPT Trebia LP (the “BGPT Sponsor”), Trasimene Trebia, LP (the “Trasimene Sponsor” and, together with the BGPT Sponsor, the “Sponsors”) and the other parties signatory thereto, which amends and restates the Letter Agreement, dated June 28, 2021 and as amended on November 30, 2021 by and among such parties (the “Original Sponsor Agreement”), in order to provide that the Sponsors will forfeit up to
    • (a) 1,275,510 Founder Shares (as defined in the Business Combination Agreement) (the “Initial Cannae Founder Shares”) to Trebia, and Trebia will issue to Cannae an equal number of shares of Trebia Class A Common Stock in connection with, and based upon the extent of, Cannae’s existing backstop obligations under the Original Backstop Agreement.
    • (b) 1,000,000 Founder Shares to Trebia, and Trebia will issue to members of management of the Companies an equal number of shares of Trebia Class A Common Stock in connection with, and based upon the extent of, their backstop obligations under the Business Combination Agreement.
    • (c) an additional 1,352,941 Founder Shares (the “Additional Cannae Founder Shares”) to Trebia, and Trebia will issue to Cannae an equal number of shares of Trebia Class A Common Stock in connection with, and based upon the extent of, Cannae’s obligation with respect to the Additional Cannae Backstop Amount. The A&R Sponsor Agreement also provides that the Additional Backstop Purchase Shares, the Additional Cannae Founder Shares, and 50% of the Initial Cannae Founder Shares will not be subject to the lockup provisions thereof.
  • BGPT Sponsor and Trasimene Sponsor have each also agreed to forfeit 1,450,000 Trebia Class B Ordinary Shares (the “Class B Forfeiture”) (2,900,000 in the aggregate).
    • (x) the Sponsors have agreed to forfeit up to 1,734,694 (in the aggregate) Trebia Class B Ordinary Shares (the “Backstop Forfeiture”) in connection with the equity backstop commitments by Cannae and certain System1 and Protected equityholders and
    • (y) Trebia has agreed to issue to Cannae or such System1 and Protected equityholders a number of Class A Common Stock equal to such forfeiture, in the event and to the extent that Cannae and/or such System1 and Protected equityholders provide such backstop in connection with any valid shareholder redemptions.
  • Subject to the Class B Forfeiture, Trebia will issue
    • (x) 725,000 shares of Trebia Class D Common Stock to Trasimene Trebia, LP, a Delaware limited partnership (the “Trasimene Sponsor”) and 725,000 shares of Trebia Class D Common Stock to BGPT Trebia LP, a Cayman Island limited partnership (the “BGPT Sponsor”, collectively with the Trasimene Sponsor, the “Sponsors”), and
    • (y) 725,000 Trebia restricted stock units (the “Post-Closing RSUs”) to each of Michael Blend and Just Develop It Limited (“JDI”), a Protected shareholder. The Post-Closing RSUs will be subject to the same vesting and other terms as the Trebia Class D Common Stock described above.
  • The BGPT Sponsor will sell 500,000 Trebia warrants to Michael Blend and 500,000 Trebia warrants to JDI for a purchase price of $1.50 per warrant.

FORWARD PURCHASE CANCELLATION

  • Trebia and Cannae entered into a mutual termination agreement to terminate that certain forward purchase agreement dated as of June 5, 2020, pursuant to which Cannae agreed to purchase, immediately prior to the Closing, an aggregate of 7,500,000 Trebia Class A Ordinary Shares and 2,500,000 Trebia public warrants.

BACKSTOP AGREEMENT

  • Subsequent Event – On January 27, 2022, in connection with the consummation of the Business Combination, Trebia and Cannae entered into that certain Backstop Facility Agreement (as amended, the “Backstop Agreement”) whereby Cannae agreed at the BPS Closing, to subscribe for Trebia Class A Common Stock in order to fund redemptions by shareholders of Trebia in connection with the Business Combination, in an amount of up to $250,000,000 (the “Cannae Subscription”).
  • In connection with Cannae’s entry into the Backstop Agreement, the Sponsors agreed, among other things, to forfeit up to 3,628,451 shares of Trebia common stock (and Trebia has agreed to issue to Cannae up to 2,628,451 shares of Trebia Class A Common Stock and up to 1,000,000 shares of Trebia Class A Common Stock to certain equityholders of the target entities, in an aggregate amount equal to such forfeiture) as consideration in the event that the backstop amounts set forth in the Backstop Agreement are drawn due to redemptions.
  • Subsequent Event – On January 10, 2022, Trebia entered into the Amended and Restated Backstop Facility Agreement (the “A&R Backstop Agreement”), which amends and restates the Backstop Facility Agreement, dated June 28, 2021 by and between Cannae Holdings, Inc. and Trebia (the “Original Backstop Agreement”), in order to increase Cannae’s aggregate backstop commitment by $50,000,000 (the “Additional Cannae Backstop Commitment”) from $200,000,000 to $250,000,000.
  • The Additional Cannae Backstop Commitment now obligates Cannae, to the extent that the total Trebia Shareholder Redemption Value is in excess of $417,500,000, to backstop up to 50% of the Trebia Shareholder Redemption Value in excess of $417,500,000 (the “Additional Cannae Backstop Amount”) by purchasing a number of shares of Trebia Class A Common Stock equal to the actual Additional Cannae Backstop Amount divided by $10 (the “Additional Backstop Purchase Shares”).
  • Cannae has agreed at the BPS Closing, to subscribe for Trebia Class A Common Stock in order to fund redemptions by shareholders of Trebia in connection with the Business Combination, in an amount of up to $200,000,000 (the “Cannae Subscription”).
  • Bank of America has committed to provide Finco, as the borrower, a $400 million first lien term loan facility (the “Term Loan”) and a $50 million revolving facility (the “Revolving Facility” and, together with the Term Facility, the “New Facility”).
    • The Term Loan will mature seven years after the Closing and will amortize in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount of the Term Loan. The Revolving Facility will mature five years after the Closing.
  • The $518 million of cash currently held in Trebia’s trust account will be backstopped by the $200 million Cannae Subscription, together with $218 million of the Bank of America Term Loan, which will be utilized as a backstop for potential future redemptions by Trebia public shareholders.
  • This in conjunction with the Seller Backstop Amount and the Additional Seller Backstop Election provides for a potential 100% backstop for potential future redemptions by Trebia public shareholders.

NOTABLE CONDITIONS TO CLOSING

  • Trebia having at least $469,250,00 of cash or cash equivalents, or
  • at least $417,500,00 in the case that an Additional Seller Backstop Election has been made

NOTABLE CONDITIONS TO TERMINATION

  • Business Combination Agreement may be terminated by any party to the Business Combination Agreement if the Closing has not occurred by March 28, 2022.

ADVISORS

  • Evercore is acting as exclusive financial advisor to System1.
  • Latham & Watkins LLP and Willkie Farr & Gallagher LLP are acting as legal advisors to System1.
  • Trethowans and Greenberg Glusker are acting as legal advisors to Protected.net.
  • BofA Securities is acting as lead financial and capital markets advisor to Trebia
  • Credit Suisse and Moelis & Company are also acting as capital markets advisors to Trebia.
  • Weil, Gotshal & Manges LLP is acting as legal advisor to Trebia.

MANAGEMENT & BOARD

Executive Officers

Paul Danola, 68
President

Mr. Danola has been a Partner of Bridgeport Partners since February 2020. Mr. Danola served as President and Chief Executive Officer of Threshold Consulting LLC from February 2017 until February 2020 and served as an independent contractor for Catalyst Consulting Group and Advent International Corporation from 2013 until February 2020. Mr. Danola has over 40 years of experience in strategy, sales and operations with vast M&A experience spanning three decades at FIS, Metavante, Fiserv and Citicorp. In his prior roles, he has been a leader of business segments including wealth management, core banking, business analytics, delivery channel optimization, enterprise risk management and consulting. Mr. Danola has also served as a director of Junior Achievement of Wisconsin since May 2006 and as a director of Friendship Circle of Wisconsin since March 2019.

Tanmay Kumar, 31
Chief Financial Officer

Mr. Kumar has served as a Partner of Bridgeport Partners since November 2019. Mr. Kumar was a Principal at Motive from July 2019 to November 2019 and prior to that was a Vice President at Wafra, Inc. in the Alternative Investments Division from August 2014 to April 2019. Mr. Kumar has over 10 years of transaction experience across private and public markets with a particular focus on financial services and technology companies. Mr. Kumar has also served as a director of Newest York Arts Press, Inc. since June 2017.

 

Board of Directors

William P. Foley, II, 75 [Resigned 4-22-21]
Co-Founder & Director

Mr. Foley has served as the Chairman of Cannae Holdings since July 2017. Mr. Foley is a founder of FNF, and has served as the Chairman of the board of directors of FNF since 1984. Mr. Foley serves as a Senior Managing Director of Trasimene Capital. He served as Chief Executive Officer of FNF until May 2007 and as President of FNF until December 1994. Mr. Foley also has served as the Chairman of Black Knight since December 2019, as the Executive Chairman of Black Knight and its predecessors from January 2014 to December 2019 and as the co-Executive Chairman of FGL Holdings since April 2016. Mr. Foley also previously served as a director of Ceridian from September 2013 to August 2019. Mr. Foley also serves as the Chairman of Dun & Bradstreet, which is a Cannae Holdings portfolio company. Mr. Foley also serves as the Chairman, Chief Executive Officer and President of Foley Family Wines Holdings, Inc., a private holding company for numerous vineyards and wineries, and the Executive Chairman and Chief Executive Officer of Black Knight Sports and Entertainment LLC, which is the private company that owns the Vegas Golden Knights, a National Hockey League team. Within the past five-years, Mr. Foley served as the Vice Chairman of FIS and as the Chairman of Remy. After receiving his B.S. degree in engineering from the United States Military Academy at West Point, Mr. Foley served in the U.S. Air Force, where he attained the rank of captain. Mr. Foley’s qualifications to serve on our board include more than 30 years as a director and executive officer of FNF, his long and deep knowledge of our business and industry, his strategic vision, his experience as a board member and executive officer of public and private companies in a wide variety of industries, and his strong track record of building and maintaining stockholder value and successfully negotiating and implementing mergers and acquisitions.

Frank Martire, 72
Co-Founder & Director

Mr. Martire has served as a director of Foley Trasimene since May 2020. In addition, he has served as a director of Cannae Holdings since November 2017. Mr. Martire has served as the Executive Chairman of NCR since May 2018. Mr. Martire served as Chairman of FIS from January 2017 until May 2018, and as Executive Chairman of FIS from January 2015 through December 2016. Mr. Martire served as Chairman of the Board and Chief Executive Officer of FIS from April 2012 until January 2015. Mr. Martire joined FIS as President and Chief Executive Officer after its acquisition of Metavante in October 2009, where he had served as Chairman of the Board and Chief Executive Officer since January 2003. Mr. Martire served as President and Chief Operating Officer of Call Solutions, Inc. from 2001 to 2003 and President and Chief Operating Officer, Financial Institution Systems and Services Group of Fiserv from 1991 to 2001.

Lance Levy, 53
Director

Mr. Levy has served as Chief Executive Officer of Capco, a specialized global management consultancy, focused exclusively on the financial services industry, since 2015. Prior to joining Capco, Mr. Levy served on the Executive Team of FIS as Head of Consulting Services and spent more than 15 years at Accenture, where he was a member of the Financial Services Leadership Team and the Accenture Leadership Council. At Accenture Lance held the position of Accenture’s Senior Managing Director of Financial Services in Europe, Africa, and Latin America. Prior to this role, he served for many years as Accenture’s Global Head of Sales in Financial Services.

Mark D. Linehan, 57
Director

Mr. Linehan has served as a director of Cannae Holdings since September 2019. Mr. Linehan has served as President and Chief Executive Officer of Wynmark, a private real estate investment and development company, since he founded the company in 1993. Prior to founding Wynmark, he served as a Senior Vice President with Trammell in Los Angeles, California. Prior to working for Trammell, Mr. Linehan worked for Kenneth Leventhal, a Los Angeles-based public accounting firm specializing in the real estate industry which is now part of Ernst & Young LLP. Mr. Linehan serves on the board of directors of Hudson Pacific since 2010, and previously served on the board of directors of Condor Hospitality from March 2016 to December 2017. Mr. Linehan has a Bachelor of Arts degree in Business Economics from UCSB and is a Certified Public Accountant.

James B. Stallings, 64
Director

Mr. Stallings has served as a director of Cannae Holdings since January 2018. Since 2013, Mr. Stallings has been a Managing Partner of PS27 Ventures, a private investment fund focused on technology companies. From 2009 until his retirement in January 2013, Mr. Stallings served as General Manager of Global Markets in IBM’s Systems and Technology Group. From 2002 to 2009, Mr. Stallings served in a variety of roles at IBM, including General Manager, Enterprise Systems, IBM Systems and Technology Group. From 2000 to 2002, Mr. Stallings founded and ran E House, a consumer technology company, and prior to that, Mr. Stallings worked for Physician Sales & Services, a medical supplier. From 1984 to 1996, Mr. Stallings worked in various capacities for IBM.

ByRoman Developer