ROTH CH ACQUISITION I CO. Item 1.01. Entry into a Material Definitive Agreement
On
The Merger Agreement
Structure of the Transaction
The acquisition is structured as a "double dummy" transaction, resulting in the following:
(a) Each ofParentCo, Merger Sub Corp andMerger Sub LLC are newly formed entities that were formed for the sole purpose of entering into and consummating the transactions set forth in the Merger Agreement. ParentCo is a wholly-owned direct subsidiary of ROCH and bothMerger Sub LLC and Merger Sub Corp are wholly-owned direct subsidiaries of ParentCo. (b) Upon Closing: (i)Merger Sub Corp will merge with and into ROCH (the "RH Merger"), with ROCH surviving the RH Merger as a wholly owned subsidiary of ParentCo (the "ROCH Surviving Company "); (ii) simultaneously with the RH Merger,Merger Sub LLC will merge with and into PCT (the "PCT Merger"), with PCT surviving the PCT Merger as a wholly-owned subsidiary of ParentCo (the "PCT Surviving Company "); and (iii) following the PCT Merger, ParentCo will contribute to thePCT Surviving Company the proceeds of the PIPE Placement (as defined below), other than the par value of the ROCH Common Stock, which will have been disbursed to ROCH, within two days following the Closing.ROCH Surviving Company will acquire, and ParentCo will contribute toROCH Surviving Company (the "ParentCo Contribution") all units of thePCT Surviving Company directly held by ParentCo after the PCT Merger, such that, following the ParentCo Contribution, thePCT Surviving Company will be a wholly-owned subsidiary of theROCH Surviving Company (together with the RH Merger, the PCT Merger and the other transactions related thereto, the "Proposed Transactions"). (c) Prior to or contemporaneously with the execution of the Merger Agreement, several investors entered into certain subscription or unit purchase agreements (collectively, the "Subscription Agreements"), pursuant to which such investors purchased (in the case of membership units of PCT) and agreed to purchase (in the case of ROCH Common Stock) (i) membership units of PCT at an effective price per ParentCo Common Share (as defined below) of approximately$8.35 per share for an aggregate cash amount of approximately$60 million , and (ii) at Closing, ROCH Common Stock at a purchase price of$10.00 per share, for an aggregate cash amount of$250 million , in each case to be exchanged for shares of ParentCo common stock, par value$0.001 per share ("ParentCo Common Shares") in the Proposed Transactions. (d) In addition, contemporaneously with the execution of the Merger Agreement, (i) certain holders of PCT's membership units ("PCT Securityholders") representing at least 70% of PCT's outstanding membership interests entered into a Company Support Agreement (the "Company Support Agreement"), pursuant to which such PCT Securityholders agreed, among other things, to approve the Merger Agreement and the Proposed Transactions, and (ii) certain holders of ROCH's common stock, par value$0.0001 per share ("ROCH Common Stock"), entered into a Founder Support Agreement (the "Founder Support Agreement"), pursuant to which, among other things, such holders of ROCH Common Stock agreed to approve the Merger Agreement and the Proposed Transactions.
At the Closing of the transactions contemplated by the Merger Agreement, certain PCT Securityholders representing at least 70% of PCT's outstanding membership interests and certain holders of ROCH Common Stock will also enter into an Investor Rights Agreement (the "Investor Rights Agreement"), which is a closing condition of the parties to consummate the Proposed Transactions. Pursuant to the Investor Rights Agreement, such PCT Securityholders have agreed to vote in favor of two board designees nominated by a majority of such holders of ROCH Common Stock for a period of two years following the Closing Date (the "IRA Designees"), provided that in the event a majority of the holders of the Pre-PIPE Shares (as defined below) choose to select one of the IRA Designees, the majority of such holders of ROCH Common Stock will select one of the IRA Designees and such holders of the Pre-PIPE Shares will select the other. The holders of the Pre-PIPE Shares may continue to select an IRA Designee until they no longer hold 10% or more of the outstanding ParentCo Common Shares. Such PCT Securityholders have also agreed, subject to certain exceptions, not to transfer ParentCo Common Shares received as PCT Merger Consideration (as defined below) except as follows:
· From and after the six-month anniversary of the Closing Date, each Founder (as
defined in the Merger Agreement) may sell up to 20% of such Founder's ParentCo Common Shares and each PCT Securityholder that is not a Founder may sell up to 33.34% of such PCT Securityholder's ParentCo Common Shares.
· From and after the one-year anniversary of the Closing Date, each Founder may
sell up to an additional 30% of such Founder's ParentCo Common Shares and each PCT Securityholder that is not a Founder may sell up to an additional 33.33% of such PCT Securityholder's ParentCo Common Shares.
· From and after the
independent engineering firm, each Founder may sell up to an additional 50% of such Founder's ParentCo Common Shares and each PCT Securityholder that is not a Founder may sell up to an additional 33.33% of such PCT Securityholder's shares of ParentCo Common Shares. Consideration
The aggregate consideration payable to the PCT Securityholders for the Proposed
Transactions (the "PCT Merger Consideration") consists of ParentCo Common Shares
issued on the Closing Date (the "Share Consideration"), up to 4,000,000
additional ParentCo Common Shares upon the achievement of certain targets (the
"Earnout Shares") and the assumption of all indebtedness related to (a) the
Limited Offering Memorandum, dated
Item 3.02. Unregistered Sales of
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K under the heading "Subscription Agreements and PIPE Registration Rights Agreements" is incorporated by reference herein. The PIPE Shares that may be issued in connection with the applicable Subscription Agreements will not be registered under the Securities Act in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
Item 7.01. Regulation FD Disclosure.
On
Attached as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference is the form of presentation to be used by ROCH in presentations for certain of ROCH's securityholders and other persons. Such exhibits and the information set forth therein shall not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise be subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act.
Additional Information
In connection with the Proposed Transactions, ParentCo intends to file with the
Participants in the Solicitation
ROCH, ParentCo, PCT and their respective directors and executive officers may be
considered participants in the solicitation of proxies with respect to the
Proposed Transactions under the rules of the
Non-Solicitation
This Current Report on Form 8-K is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Proposed Transactions and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of ROCH, ParentCo or PCT, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. No offer of securities shall be made except by means of a definitive prospectus meeting the requirements of the Securities Act.
Forward-Looking Statements
This Current Report on Form 8-K and the attachments hereto contain forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995, including statements about the parties' ability to close the Proposed Transactions, the anticipated benefits of the Proposed Transactions, and the financial condition, results of operations, earnings outlook and prospects of ROCH and/or PCT and may include statements for the period following the consummation of the Proposed Transactions. In addition, any statements that refer to projections (including EBITDA, EBITDA margin and revenue projections), forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as "plan," "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project," "continue," "could," "may," "might," "possible," "potential," "predict," "should," "would" and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements are based on the current expectations of the
management of ROCH and PCT as applicable and are inherently subject to
uncertainties and changes in circumstances and their potential effects and speak
only as of the date of such statement. There can be no assurance that future
developments will be those that have been anticipated. These forward-looking
statements involve a number of risks, uncertainties or other assumptions that
may cause actual results or performance to be materially different from those
expressed or implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to those discussed and identified in
public filings made with the
· PCT's ability to meet, and to continue to meet, applicable regulatory
requirements for the use of PCT's UPRP in food grade applications;
· PCT's ability to comply on an ongoing basis with the numerous
regulatory requirements applicable to the UPRP and PCT's facilities;
· expectations regarding PCT's strategies and future financial
performance, including its future business plans or objectives,
prospective performance and opportunities and competitors, revenues,
products and services, pricing, operating expenses, market trends,
liquidity, cash flows and uses of cash, capital expenditures, and PCT's
ability to invest in growth initiatives and pursue acquisition
opportunities;
· PCT's ability to scale and build Plant 1 in a timely and cost-effective
manner;
· the implementation, market acceptance and success of PCT's business
model and growth strategy;
· the success or profitability of PCT's offtake arrangements;
· PCT's future capital requirements and sources and uses of cash;
· PCT's ability to obtain funding for its operations and future growth;
· developments and projections relating to PCT's competitors and
industry;
· the occurrence of any event, change or other circumstances that could
give rise to the termination of the Merger Agreement;
· the outcome of any legal proceedings that may be instituted against
ROCH or PCT following announcement of the Merger Agreement and the
transactions contemplated therein;
· the inability to complete the Proposed Transactions due to, among other
things, the failure to obtain ROCH stockholder approval or ROCH's
inability to obtain the financing necessary to consummate the Proposed
Transactions;
· the risk that the announcement and consummation of the Proposed
Transactions disrupts PCT's current plans;
· the ability to recognize the anticipated benefits of the Proposed
Transactions;
· unexpected costs related to the Proposed Transactions;
· the amount of any redemptions by existing holders of ROCH Common Stock
being greater than expected;
· limited liquidity and trading of ROCH's securities;
· geopolitical risk and changes in applicable laws or regulations;
· the possibility that ROCH and/or PCT may be adversely affected by other
economic, business, and/or competitive factors;
· operational risk;
· risk that the COVID-19 pandemic, and local, state, and federal
responses to addressing the pandemic may have an adverse effect on our
business operations, as well as our financial condition and results of
operations; and
· the risks that the consummation of the Proposed Transactions is
substantially delayed or does not occur.
Should one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of ROCH and PCT prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
All subsequent written and oral forward-looking statements concerning the Proposed Transactions or other matters addressed in this Current Report on Form 8-K and attributable to ROCH, PCT or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Current Report on Form 8-K. Except to the extent required by applicable law or regulation, ROCH and PCT undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of Current Report on Form 8-K to reflect the occurrence of unanticipated events.
Non-GAAP Financial Measure and Related Information
This Current Report on Form 8-K references EBITDA and EBITDA margin, which are
financial measures that are not prepared in accordance with
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description 2.1 Agreement and Plan of Merger, dated as ofNovember 16, 2020 , by and amongRoth CH Acquisition I Co. ,Roth CH Acquisition I Co. Parent Corp. ,Roth CH Merger Sub Corp. ,Roth CH Merger Sub, LLC andPureCycle Technologies, LLC 10.1 Founder Support Agreement, dated as ofNovember 16, 2020 , by and amongRoth CH Acquisition I Co. ,PureCycle Technologies, LLC and founding stockholders ofRoth CH Acquisition I Co. 10.2 Company Support Agreement, dated as ofNovember 16, 2020 , by and amongPureCycle Technologies, LLC ,Roth CH Acquisition I Co. and founding members ofPureCycle Technologies, LLC 10.3 Form of Subscription Agreement for the PIPE Placement 10.4 Form of PIPE Registration Rights Agreement 99.1 Press Release, datedNovember 16, 2020 99.2 Investor Presentation datedNovember 2020
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