Freedom Acquisition Holdings Inc.
As filed with the Securities and Exchange Commission on
September 29, 2006
Registration
No. 333-136248
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Amendment No. 1
to
Form S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
Freedom Acquisition Holdings,
Inc.
(Exact name of registrant as
specified in its charter)
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Delaware
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6770
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20-5009693
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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1114 Avenue of the Americas, 41st Floor
New York, New York 10036
(212) 380-2230
(Address, including zip code,
and telephone number,
including area code, of
registrants principal executive offices)
Nicolas Berggruen
President and Chief Executive Officer
1114 Avenue of the Americas, 41st Floor
New York, New York 10036
(212) 380-2230
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
Copies to:
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Alan I. Annex, Esq.
Greenberg Traurig, LLP
MetLife Building
200 Park Avenue
New York, New York 10166
(212)
801-9200
Fax:
(212) 801-6400
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Raymond B. Check, Esq.
Cleary Gottlieb Steen & Hamilton LLP
1 Liberty Plaza
New York, New York 10006
(212) 225-2000
Fax: (212) 225-3999
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Approximate date of commencement of proposed sale to the
public: As soon as practicable after the
effective date of this registration statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933 check the
following box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
CALCULATION
OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Title of each Class of
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Amount being
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Offering Price Per
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Aggregate Offering
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Amount of
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Security being Registered
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Registered
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Security(1)
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Price(1)
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Registration Fee
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Units, each consisting of one share
of Common Stock, $0.0001 par value, and one Warrant(2)
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41,250,000 Units
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$8.00
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$330,000,000
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$35,310(3)
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Common Stock included in the
Units(2)
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41,250,000 Shares
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(4)
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Warrants included in Units(2)
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41,250,000 Warrants
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(4)
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(1)
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Estimated solely for the purpose of
calculating the registration fee.
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(2)
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Includes 3,750,000 Units,
consisting of 3,750,000 shares of Common Stock and
3,750,000 Warrants, which may be issued upon exercise of a
30-day
option granted to the underwriters to cover over-allotments, if
any.
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(4)
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No fee pursuant to Rule 457(g).
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
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SUBJECT TO COMPLETION, DATED
SEPTEMBER 29, 2006
PROSPECTUS
$300,000,000
Freedom Acquisition Holdings, Inc.
37,500,000 Units
Freedom Acquisition Holdings, Inc. is a blank check company
recently formed to acquire one or more operating businesses
through a merger, stock exchange, asset acquisition,
reorganization or similar business combination. Our efforts in
identifying a prospective target business will not be limited to
a particular industry. We do not have any specific merger, stock
exchange, asset acquisition, reorganization or similar business
combination under consideration or contemplation. We have not,
nor has anyone on our behalf, contacted, or been contacted by,
any potential target business or had any substantive
discussions, formal or otherwise, with respect to such a
transaction.
This is the initial public offering of our units. Each unit
consists of one share of common stock and one warrant. We are
offering 37,500,000 units. We expect that the public
offering price will be $8.00 per unit. Each warrant
entitles the holder to purchase one share of our common stock at
a price of $6.00 commencing on the later of our consummation of
a business combination or one year from the date of this
prospectus. The warrants will expire five years from the date of
this prospectus, unless earlier redeemed.
Our principal stockholders and sponsors, Berggruen Holdings
North America Ltd. and Marlin Equities II, LLC, have agreed
to purchase in equal amounts an aggregate of 4,500,000 warrants
at a price of $1.00 per warrant ($4.5 million in the
aggregate) in a private placement that will occur immediately
prior to this offering. The proceeds from the sale of the
warrants in the private placement will be deposited into a trust
account and subject to a trust agreement, described below, and
will be part of the funds distributed to our public stockholders
in the event we are unable to complete a business combination.
The sponsors warrants will be substantially similar to the
warrants included in the units sold in this offering. Each of
Berggruen Holdings and Marlin Equities has agreed not to
transfer, assign or sell any of these warrants (including the
common stock to be issued upon exercise of these warrants) until
one year after we consummate a business combination.
In addition, Berggruen Holdings and Marlin Equities have agreed
to purchase in equal amounts an aggregate of
6,250,000 units at a price of $8.00 per unit
($50.0 million in the aggregate) in a private placement
that will occur immediately prior to our consummation of a
business combination. These private placement units will be
identical to the units sold in this offering. Each of Berggruen
Holdings and Marlin Equities has agreed not to transfer, assign
or sell any of these units or the common stock or warrants
included in these units (including the common stock to be issued
upon exercise of these warrants), until one year after we
consummate a business combination.
Currently, no public market exists for our units, common stock
or warrants. We intend to apply to have our units that we are
offering listed on the American Stock Exchange under the symbol
FRH.U. The common stock and warrants comprising the
units will begin separate trading five business days (or as soon
as practicable thereafter) following the earlier to occur of the
expiration of the underwriters over-allotment option or
their exercise in full, subject to our filing a Current Report
on
Form 8-K
with the SEC containing an audited balance sheet reflecting our
receipt of the gross proceeds of this offering and issuing a
press release announcing when such separate trading will begin.
We expect that once the securities comprising the units begin
separate trading, the common stock and warrants will be traded
on the American Stock Exchange under the symbols FRH
and FRH.WS, respectively. We cannot assure you,
however, that our securities will be listed or will continue to
be listed on the American Stock Exchange.
The underwriters may also purchase up to an additional
3,750,000 units from us, at the public offering price less
the underwriting discounts and commissions, within 30 days
from the date of this prospectus to cover over-allotments, if
any.
Investing in our securities involves a high degree of risk.
See Risk Factors beginning on page 17 for a
discussion of information that should be considered in
connection with investing in our securities.
Neither the Securities and Exchange Commission nor any state
securities regulator has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
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Per Unit
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Total
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Public offering price
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$
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8.00
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$
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300,000,000
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Underwriting discounts and
commissions(1)
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0.56
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21,000,000
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Proceeds, before expenses, to us
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7.44
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279,000,000
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(1)
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Includes $6.0 million, or
$0.16 per unit, payable to the underwriters for deferred
underwriting discounts and commissions from the funds to be
placed in the trust account described below. Such funds will be
released to the underwriters only on consummation of an initial
business combination, as described in this prospectus.
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The underwriters are offering the units on a firm commitment
basis. The underwriters expect to deliver the units to
purchasers on or
about ,
2006. Of the proceeds we receive from this offering and the sale
of the sponsors warrants to our sponsors described in this
prospectus, $288,750,000, or approximately $7.70 per unit,
will be deposited into the trust account, of which
$6.0 million is attributable to the deferred
underwriters discounts and commissions, at Continental
Stock Transfer & Trust Company, as trustee.
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Ladenburg Thalmann &
Co. Inc.
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The date of this prospectus
is ,
2006
PROSPECTUS
SUMMARY
This summary only highlights the more detailed information
appearing elsewhere in this prospectus. As this is a summary, it
does not contain all of the information that you should consider
in making an investment decision. References in this prospectus
to we, us or our company
refer to Freedom Acquisition Holdings, Inc. References to
public stockholders refer to purchasers in this
offering. Unless we tell you otherwise, the information in this
prospectus assumes that the underwriters will not exercise their
over-allotment option.
We are a blank check company formed under the laws of the State
of Delaware on June 8, 2006. We were formed to acquire a
currently unidentified operating business or several operating
businesses through a merger, stock exchange, asset acquisition,
reorganization or similar business combination, which we refer
to throughout this prospectus as a business combination. To
date, our efforts have been limited to organizational
activities. We have not, nor has anyone on our behalf,
contacted, or been contacted by, any potential target business
or had any substantive discussions, formal or otherwise, with
respect to such a transaction.
Our efforts in identifying prospective target businesses will
not be limited to a particular industry. Instead, we intend to
focus on various industries and target businesses in the United
States and Western Europe that may provide significant
opportunities for growth. However, we may decide to pursue an
acquisition outside of these geographies if we believe it is an
attractive opportunity.
We will seek to capitalize on the significant private equity
investing experience and contacts of our principal stockholders
and sponsors, Berggruen Holdings North America Ltd., which we
refer to in this prospectus as Berggruen Holdings, and Marlin
Equities II, LLC, which we refer to in this prospectus as
Marlin Equities. We sometimes collectively refer to Berggruen
Holdings and Marlin Equities as our sponsors in this prospectus.
Berggruen Holdings and Marlin Equities share a similar
investment philosophy focused on businesses with sustainable
competitive advantages, a strong market position and strong free
cash flow characteristics. Targeted businesses have a history of
profitability and cash flow generation. The principals of
Berggruen Holdings and Marlin Equities have invested together in
the past and have a complementary long-term perspective on their
investment holdings.
Founded in June of 1984 and advised by Nicolas Berggruen, our
president and chief executive officer, Berggruen Holdings (which
includes its predecessor companies) is a private investment
company investing internationally in an extensive range of asset
classes on an opportunistic basis, including direct private
equity, stocks and bonds, hedge funds, private equity funds, and
real estate. Having managed capital that is entirely from
internal resources, Berggruen Holdings has developed a flexible
attitude towards structures and timing. The decision-making
process is very dynamic, allowing quick decisions with regard to
committing to an investment and patience once an investment is
made. Berggruen Holdings has extensive experience in private
equity investing and owning businesses. Berggruen Holdings and
related entities have made over 50 control and non-control
private equity investments over the last 20 years. Those
have mostly been in branded consumer goods businesses, services,
light manufacturing, distribution, telecom and media, both in
the United States and Europe.
We believe Berggruen Holdings is well positioned to source a
business combination as a result of its extensive infrastructure
which includes eight offices and 12 senior investment
professionals worldwide. Six senior investment professionals
located at the Berggruen Holdings offices in New York, Los
Angeles and London will be actively involved in sourcing an
acquisition for Freedom Acquisition Holdings. Berggruen Holdings
is industry opportunistic and has a bias towards positive cash
flow with respect to the investment opportunities that it
sources. In addition, Berggruen Holdings has over 20 years
experience sourcing and executing investment opportunities in
businesses through leveraged buyouts, public market securities,
distressed situations and balance sheet restructurings. We
expect the strength of Berggruen Holdings sourcing network
to create unique opportunities for non-auction sourced deals.
Marlin Equities is an investment vehicle majority owned by its
managing member, Martin E. Franklin, the chairman of our
board of directors, and Ian G.H. Ashken the other principal
member who has been
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Mr. Franklins business partner for over
15 years. Mr. Franklin has over 20 years of
experience in numerous businesses and has been involved in
originating, structuring, negotiating, managing and consummating
more than 75 transactions.
We believe that the extensive network of private equity sponsor
relationships as well as relationships with management teams of
public and private companies, investment bankers, attorneys and
accountants developed by the principals of Berggruen Holdings
and Marlin Equities should provide us with significant business
combination opportunities. We will not acquire an entity that is
either a portfolio company of, or has otherwise received a
financial investment from, our sponsors or their affiliates.
Neither we nor our officers or directors have given, or will
give, any consideration to entering into a business combination
with companies affiliated with our founders, officers or
directors.
We have identified the following criteria and guidelines that we
believe are important in evaluating prospective target
businesses. We will use these criteria and guidelines in
evaluating business combination opportunities. However, we may
decide to enter into a business combination with a target
business or businesses that do not meet all of these criteria
and guidelines.
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Established companies with proven track
records. We will seek to acquire established
companies with sound historical financial performance. We will
typically focus on companies with a history of strong operating
and financial results and we do not intend to acquire
start-up
companies.
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Companies with strong free cash flow
characteristics. We will seek to acquire
companies that have a history of strong, stable free cash flow
generation. We will focus on companies that have predictable,
recurring revenue streams and an emphasis on low working capital
and capital expenditure requirements.
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Strong competitive industry position. We will
seek to acquire businesses that operate within industries that
have strong fundamentals. The factors we will consider include
growth prospects, competitive dynamics, level of consolidation,
need for capital investment and barriers to entry. Within these
industries, we will focus on companies that have a leading
market position. We will analyze the strengths and weaknesses of
target businesses relative to their competitors, focusing on
product quality, customer loyalty, cost impediments associated
with customers switching to competitors, patent protection and
brand positioning. We will seek to acquire businesses that
demonstrate advantages when compared to their competitors, which
may help to protect their market position and profitability and
deliver strong free cash flow.
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Experienced management team. We will seek to
acquire businesses that have strong, experienced management
teams. We will focus on management teams with a proven track
record of driving revenue growth, enhancing profitability and
generating strong free cash flow. We believe that the operating
expertise of our founding shareholders will complement, not
replace the targets management team.
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Diversified customer and supplier base. We
will seek to acquire businesses that have a diversified customer
and supplier base. Companies with a diversified customer and
supplier base are generally better able to endure economic
downturns, industry consolidation, changing business preferences
and other factors that may negatively impact their customers,
suppliers and competitors.
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We believe target businesses with these characteristics may
allow us to drive sales and free cash flow growth. Assuming we
complete our initial acquisition, we may pursue additional
business combinations that we believe will advance these
objectives.
On July 20, 2006, each of Berggruen Holdings, an entity
controlled by Mr. Berggruen, and Marlin Equities, an entity
controlled by Mr. Franklin, entered into an agreement with
us to purchase in equal amounts (i) an aggregate of
4,500,000 warrants at a price of $1.00 per warrant
($4.5 million in the aggregate) in a private placement that
will occur immediately prior to this offering, and (ii) an
aggregate of 6,250,000 units at a price of $8.00 per
unit ($50.0 million in the aggregate) in a private
placement that will occur immediately prior to our consummation
of a business combination, which will not occur until after the
signing of a
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definitive business combination agreement and the approval of
that business combination by a majority of our public
stockholders.
The proceeds from the sale of the co-investment units will
provide us with additional equity capital to fund a business
combination. We believe that the net proceeds of this offering
and the private placement offerings will enable us to pursue
either spin off transactions with larger, well
established companies or acquisitions of mid-cap companies with
valuations between approximately $500 million and
$1.5 billion. In addition, we believe that the
co-investment demonstrates our management teams commitment
of significant capital on the same terms as our public
stockholders, which helps differentiate our management team from
the management teams of other similar companies.
Our sponsors have agreed to act together for the purpose of
acquiring, holding, voting or disposing of our shares and will
be deemed to be a group for reporting purposes under
the Securities Exchange Act of 1934. The $4.5 million of
proceeds from the sale of the sponsors warrants will be
added to the proceeds of this offering and will be held in the
trust account pending our consummation of a business combination
on the terms described in this prospectus. If we do not complete
such a business combination, then the $4.5 million proceeds
from the sale of the sponsors warrants will be part of the
liquidating distribution to our public stockholders, and the
warrants will expire worthless. As the proceeds from the sale of
the co-investment units will not be received by us until
immediately prior to our consummation of a business combination,
these proceeds will not be deposited into the trust account and
will not be available for distribution to our public
stockholders in the event of a liquidating distribution. Each of
our sponsors has agreed to provide our audit committee, on a
quarterly basis, with evidence that such sponsor has sufficient
net liquid assets available to consummate the co-investment. In
the event that a sponsor is unable to consummate the
co-investment when required to do so, such sponsor has agreed to
surrender and forfeit its founders units to us.
Our initial business combination must be with one or more target
businesses whose fair market value, individually or
collectively, is equal to at least 80% of the sum of the balance
in the trust account (excluding deferred underwriting discounts
and commissions of $6.0 million or $6.6 million if the
underwriters over-allotment option is exercised in full)
at Continental Stock Transfer & Trust Company
referenced on the cover of this prospectus at the time of such
business combination plus the proceeds of the co-investment.
This may be accomplished by identifying and acquiring a single
business or multiple operating businesses, which may or may not
be related, contemporaneously. Although there is no limitation
on our ability to raise funds privately or through loans that
would allow us to acquire a company with a fair market value
greater than 80% of the sum of the balance in the trust account
plus the proceeds of the co-investment, no such financing
arrangements have been entered into or contemplated with any
third parties to raise such additional funds through the sale of
securities or otherwise.
Each of Berggruen Holdings and Marlin Equities has advanced
$125,000 to us ($250,000 in the aggregate) as of the date of
this prospectus to cover expenses related to this offering.
These advances are non-interest bearing, unsecured and are due
within 60 days following the consummation of this offering.
The loans will be repaid out of the proceeds of this offering
not placed in trust.
Our officers and directors have advised us that they do not
intend to participate in this offering. However, our officers
and directors may purchase our units, common stock and/or
warrants in the open market following this offering.
Our executive offices are located at 1114 Avenue of the
Americas, 41st Floor, New York, New York 10036, and our
telephone number is
(212) 380-2230.
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THE
OFFERING
In making your decision on whether to invest in our
securities, you should take into account not only the
backgrounds of the members of our management team, but also the
special risks we face as a blank check company and the fact that
this offering is not being conducted in compliance with
Rule 419 promulgated under the Securities Act of 1933. You
will not be entitled to protections normally afforded to
investors in Rule 419 blank check offerings.
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Securities offered: |
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37,500,000 units, each unit consisting of: |
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one share of common
stock; and
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one warrant.
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Trading commencement and separation of common stock
and warrants: |
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The units will begin trading on or promptly after the date of
this prospectus. The common stock and warrants comprising the
units will begin separate trading five business days (or as soon
as practicable thereafter) following the earlier to occur of
expiration of the underwriters over-allotment option or
their exercise in full, subject to our having filed the Current
Report on
Form 8-K
described below and having issued a press release announcing
when such separate trading will begin. |
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Separate trading of the common stock and warrants is
prohibited until we have filed a Current Report on
Form 8-K: |
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In no event will the common stock and warrants be traded
separately until we have filed a Current Report on
Form 8-K
with the SEC containing an audited balance sheet reflecting our
receipt of the gross proceeds of this offering. We will file the
Current Report on
Form 8-K
upon the consummation of this offering, which is anticipated to
take place three business days from the date of this prospectus.
If the over-allotment option is exercised following the initial
filing of such Current Report on
Form 8-K,
a second or amended Current Report on
Form 8-K
will be filed to provide updated financial information to
reflect the exercise of the over-allotment option. |
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Number of securities to be outstanding: |
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Prior to
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After this
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After the
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this Offering
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Offering
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Co-Investment
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Units
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9,375,000
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46,875,000
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53,125,000
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Common Stock
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9,375,000
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46,875,000
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53,125,000
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Warrants
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9,375,000
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51,375,000
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(1)
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57,625,000
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(1)
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(1) Includes
4,500,000 sponsors warrants described below. |
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Warrants: |
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Exercisability: |
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Each warrant is exercisable to purchase one share of our common
stock. |
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Exercise price: |
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$6.00 |
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Exercise period: |
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The warrants will become exercisable on the later of: |
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the consummation of
our initial business combination with one or more target
businesses; or
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one year from the date
of this prospectus.
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The warrants will expire at 5:00 p.m., New York time,
on ,
2011 or earlier upon redemption. |
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Redemption: |
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Once the warrants become exercisable and except as described
below with respect to the warrants attached to the
founders units and the sponsors warrants, we may
redeem the outstanding warrants: |
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in whole but not in
part;
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at a price of
$.01 per warrant;
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upon a minimum of
30 days prior written notice of redemption; and
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if, and only if, the
last sale price of our common stock equals or exceeds
$11.50 per share for any 20 trading days within a 30
trading day period ending three business days before we send the
notice of redemption.
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Reasons for redemption
limitations: |
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We have established the above conditions to our exercise of
redemption rights to provide:
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warrant holders with
adequate notice of exercise only after the then-prevailing
common stock price is substantially above the warrant exercise
price; and
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a sufficient
differential between the then-prevailing common stock price and
the warrant exercise price so there is a buffer to absorb the
market reaction, if any, to our redemption of the warrants.
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If the foregoing conditions are satisfied and we issue a notice
of redemption, each warrant holder can exercise his, her or its
warrant prior to the scheduled redemption date. The price of the
common stock may not exceed the $11.50 trigger price or the
warrant exercise price after the redemption notice is issued. |
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Founders Units: |
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On July 20, 2006, Berggruen Holdings, Marlin Equities and
our three independent directors purchased an aggregate of
9,375,000 of our units for an aggregate purchase price of
$25,000 in a private placement. We sometimes collectively refer
to Berggruen Holdings, Marlin Equities and our three independent
directors as our founders. |
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Each unit consisted of one share of common stock and one
warrant. We refer to these units, shares of common stock and
warrants included in the units as the founders units,
founders common stock and founders warrants
throughout this prospectus. |
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The founders units are identical to those sold in this
offering, except that: |
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each of our founders
has agreed to vote its founders common stock in the same
manner as a majority of the public stockholders who vote at the
special or annual meeting called for the purpose of approving
our initial business combination. As a result, they will not be
able to exercise redemption rights (as described below) with
respect to the founders common stock if our initial
business combination is approved by a majority of our public
stockholders;
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each of our founders
has agreed that the founders common stock included therein
will not participate with the common stock included in the units
sold in this offering in any liquidating distribution; and
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the founders
warrants included therein will:
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become
exercisable after our consummation of a business combination if
and when the last sales price of our common stock exceeds
$11.50 per share for any 20 trading days within a 30
trading day period beginning 90 days after such business
combination; and
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be
non-redeemable so long as they are held by our founders or their
permitted transferees.
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Pursuant to a registration rights agreement between us and our
founders, the holders of our founders units and
founders common stock will be entitled to certain
registration rights one year after the consummation of a
business combination and the holders of our founders
warrants and the underlying common stock will be entitled to
certain registration rights 90 days after the consummation
of a business combination. |
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Each of our founders has agreed, subject to certain exceptions
described below, not to sell or otherwise transfer any of its
founders units, founders common stock or
founders warrants (including the common stock to be issued
upon exercise of the founders warrants) for a period of
one year from the date of the consummation of a business
combination. |
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Each of our founders is permitted to transfer its founders
units, founders common stock or founders warrants
(including the common stock to be issued upon exercise of the
founders warrants) to our officers, directors and
employees, and other persons or entities associated with such
founder, but the transferees receiving such securities will be
subject to the same agreement as our founders. |
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Sponsors warrants purchased through private
placement: |
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On July 20, 2006, our sponsors entered into an agreement to
purchase in equal amounts an aggregate of 4,500,000 warrants at
a |
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price of $1.00 per warrant ($4.5 million in the
aggregate) from us in a private placement that will occur
immediately prior to the consummation of this offering. We refer
to these warrants as the sponsors warrants throughout this
prospectus. The sponsors warrants will be purchased
separately and not in combination with common stock in the form
of units. |
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The proceeds from the sale of the sponsors warrants will
be added to the proceeds from this offering to be held in the
trust account pending our consummation of a business
combination. If we do not complete a business combination that
meets the criteria described in this prospectus, then the
$4.5 million purchase price of the sponsors warrants
will become part of any liquidating distribution to our public
stockholders following our liquidation and dissolution and the
sponsors warrants will expire worthless. |
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The sponsors warrants will be non-redeemable so long as
they are held by our sponsors or their permitted transferees. In
addition, pursuant to the registration rights agreement, the
holders of our sponsors warrants and the underlying common
stock will be entitled to certain registration rights upon the
consummation of a business combination. With those exceptions,
the sponsors warrants have terms and provisions that are
otherwise identical to those of the warrants being sold as part
of the units in this offering. |
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Each of our sponsors has agreed, subject to certain exceptions
described below, not to transfer, assign or sell any of its
sponsors warrants (including the common stock to be issued
upon exercise of the sponsors warrants) until one year
after we consummate a business combination. |
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Each of our sponsors will be permitted to transfer its
sponsors warrants (including the common stock to be issued
upon exercise of the sponsors warrants) in certain limited
circumstances, such as to our officers, directors and employees,
and other persons or entities associated with such sponsor, but
the transferees receiving such sponsors warrants will be
subject to the same sale restrictions imposed on such entity. |
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Co-Investment units purchased through private placement: |
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On July 20, 2006, our sponsors entered into an agreement to
purchase in equal amounts an aggregate of 6,250,000 of our units
at a price of $8.00 per unit for an aggregate purchase
price of $50.0 million from us in a private placement that
will occur immediately prior to our consummation of a business
combination, which will not occur until after the signing of a
definitive business combination agreement and the approval of
that business combination by a majority of our public
stockholders. Each unit will consist of one share of common
stock and one warrant. We refer to this private placement as the
co-investment and these private placement units, shares of
common stock and warrants as the co-investment units,
co-investment common stock and co-investment warrants,
respectively, throughout this prospectus. |
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The co-investment units will be identical to the units sold in
this offering. However, as the proceeds from the sale of the co- |
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investment units will not be received by us until immediately
prior to our consummation of a business combination, these
proceeds will not be deposited into the trust account and will
not be available for distribution to our public stockholders in
the event of a liquidating distribution. Our sponsors will not
receive any additional carried interest (in the form of
additional units, common stock, warrants or otherwise) in
connection with the co-investment. |
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Pursuant to the registration rights agreement, the holders of
our co-investment units and co-investment common stock will be
entitled to certain registration rights one year after the
consummation of a business combination and the holders of our
co-investment warrants and the underlying common stock will be
entitled to certain registration rights upon the consummation of
a business combination. |
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Each of our sponsors has agreed, subject to certain exceptions
described below, not to transfer, assign or sell any of its
co-investment units, the co-investment common stock or
co-investment warrants (including the common stock to be issued
upon exercise of the co-investment warrants) until one year
after we consummate a business combination. |
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Each of our sponsors will be permitted to transfer its
co-investment units, co-investment common stock or co-investment
warrants (including the common stock to be issued upon exercise
of the co-investment warrants) to our officers, directors and
employees, and other persons or entities associated with such
sponsor, but the transferees receiving such securities will be
subject to the same agreement as our sponsors. |
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Each of our sponsors has agreed to provide our audit committee,
on a quarterly basis, with evidence that such sponsor has
sufficient net liquid assets available to consummate the
co-investment. In the event that a sponsor is unable to
consummate the co-investment when required to do so, such
sponsor has agreed to surrender and forfeit its founders
units to us. |
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Right of first review; potential conflict of interests
with affiliates of our sponsors and our
independent directors: |
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We have entered into an agreement with Berggruen Holdings that
from the date of this prospectus until the earlier of the
consummation of our initial business combination or our
dissolution, we will have a right of first review that provides
that if Berggruen Holdings, or one of its senior investment
professionals, becomes aware of, or involved with, business
combination opportunities with an enterprise value of
$500.0 million or more, Berggruen Holdings will first offer
the business opportunity to us and will only pursue such
business opportunity if our board of directors determines that
we will not do so. |
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Messrs. Franklin and Ashken are executive officers of
Jarden Corporation. We have entered into an agreement with
Mr. Franklin whereby we have acknowledged that
Mr. Franklin has committed to Jardens Board of
Directors that we will not consider transactions that fit within
Jardens publicly announced acquisition criteria |
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unless Jarden has determined not to pursue the transaction. In
the event there is any uncertainty regarding a specific
transaction, an independent committee of Jardens Board of
Directors will determine whether Jarden intends to pursue the
transaction. We do not believe that the potential conflict of
interest with Jarden, or other companies with which they are
affiliated, will cause undue difficulty in finding acquisition
opportunities for us given the focused, niche consumer product
company nature of Jardens acquisition criteria and the
many opportunities available outside these fields. |
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We will not acquire an entity that is either a portfolio company
of, or has otherwise received a financial investment from, our
sponsors or their affiliates. Neither we nor our officers or
directors have given, or will give, any consideration to
entering into a business combination with companies affiliated
with our founders, officers or directors. |
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In addition, although we do not expect our independent directors
to present investment and business opportunities to us, they may
become aware of business opportunities that may be appropriate
for presentation to us. In such instances they may determine to
present these business opportunities to other entities with
which they are or may be affiliated, in addition to, or instead
of, presenting them to us. |
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Proposed American Stock Exchange symbols for our: |
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Units: |
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FRH.U |
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Common stock: |
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FRH |
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Warrants: |
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FRH.WS |
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Offering and sponsors warrants private placement
proceeds to be held in trust account and amounts payable prior
to trust account distribution or liquidation: |
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$288,750,000, or approximately $7.70 per unit
($317,250,000, or approximately $7.69 per unit, if the
over-allotment option is exercised in full) of the proceeds of
this offering will be placed in a trust account at Continental
Stock Transfer & Trust Company, pursuant to an
agreement to be signed on the date of this prospectus. These
proceeds include the $4.5 million purchase price of the
sponsors warrants and $6.0 million in deferred
underwriting discounts and commissions (or $6.6 million if
the underwriters over-allotment option is exercised in
full). We believe that the inclusion in the trust account of the
purchase price of the sponsors warrants and the deferred
underwriting discounts and commissions is a benefit to our
public stockholders because additional proceeds will be
available for distribution to investors if a liquidation of our
company occurs prior to our completing an initial business
combination. Proceeds in the trust account will not be released
until the earlier of consummation of a business combination or a
liquidating distribution. Unless and until a business
combination is consummated, proceeds held in the trust account
will not be available for our use for |
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any purpose, including the payment of expenses related to
(i) this offering and (ii) investigation, selection
and negotiation of an agreement with one or more target
businesses, except there can be released to us from the trust
account (a) interest income earned on the trust account
balance to pay any income taxes on such interest and
(b) interest income earned of up to $4.5 million on
the trust account balance to fund our working capital
requirements. With these exceptions, expenses incurred by us
while seeking a business combination may be paid prior to a
business combination only from the net proceeds of this offering
not held in the trust account (initially, approximately
$50,000). During the
30-day
period immediately following the consummation of this offering,
interest income on the trust account may be released to us on a
weekly basis to fund our working capital requirements. |
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There will be no fees, reimbursements or cash payments made to
our officers, directors or their affiliates other than: |
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repayment of an
initial $250,000 loan that is non-interest bearing made to us by
our sponsors to cover offering expenses;
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repayment of the
advances made to us by our sponsors to cover offering expenses;
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a payment of an
aggregate of $10,000 per month to Berggruen Holdings, Inc.,
an affiliate of Mr. Berggruen, for office space,
administrative services and secretarial support until the
earlier of our consummation of a business combination or our
liquidation; and
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reimbursement for any
expenses incident to this offering and identifying,
investigating and consummating a business combination with one
or more target businesses.
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Our audit committee will review and approve all expense
reimbursements made to our officers and directors. |
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Any expense reimbursements payable to members of our audit
committee will be reviewed and approved by our board of
directors, with any interested director abstaining from such
review and approval. |
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All amounts held in the trust account that are not paid
to redeem common stock, released to us in the form
of interest income or payable to the underwriters for
deferred discounts and commissions will be released to
us on closing of our initial business
combination: |
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All amounts held in the trust account that are not distributed
to public stockholders who exercise redemption rights (as
described below), released to us as interest income or payable
to the underwriters for deferred discounts and commissions will
be released to us on closing of our initial business combination
with one or more target businesses which have a fair market
value of at least 80% of the sum of the balance in the trust
account plus the proceeds of the co-investment (excluding
deferred underwriting discounts and |
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commissions of $6.0 million or $6.6 million if the
underwriters over-allotment option is exercised in full)
at the time of such business combination, subject to compliance
with the conditions to consummating a business combination that
are described below. |
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At the time we complete an initial business combination,
following our payment of amounts due to any public stockholders
who exercise their redemption rights, there will be released to
the underwriters from the trust account their deferred
underwriting discounts and commissions that are equal to 2% of
the gross proceeds of this offering, or $6.0 million (or
$6.6 million if the underwriters over-allotment
option is exercised in full). Funds released from the trust
account to us can be used to pay all or a portion of the
purchase price of the business or businesses with which our
initial combination occurs. If the business combination is paid
for using stock or debt securities, we may apply the cash
released to us from the trust account to general corporate
purposes, including for maintenance or expansion of operations
of the acquired businesses, the payment of principal or interest
due on indebtedness incurred in consummating our initial
business combination or to fund the purchase of other companies,
or for working capital. |
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Stockholders must approve our initial business
combination: |
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We are required to seek stockholder approval before effecting
our initial business combination, even if the business
combination would not ordinarily require stockholder approval
under applicable state law. If a majority of the public
stockholders do not vote in favor of a proposed initial business
combination but 18 months has not yet passed since the
consummation of this offering, we may seek other target
businesses with which to effect our initial business combination
that meet the criteria set forth in this prospectus. If at the
end of such 18 month period (or 24 months if a letter
of intent, agreement in principle or definitive agreement has
been executed within such 18 month period but as to which a
combination is not yet complete) we have not obtained
stockholder approval for an alternate initial business
combination, we will dissolve as promptly as practicable and
liquidate and release only to our public stockholders, as part
of our plan of distribution, the proceeds of the trust account,
including accrued interest, net of income taxes payable on such
interest and net of interest income of up to $4.5 million
previously released to us to fund our working capital
requirements. The requirement that we seek stockholder approval
before effecting our initial business combination is set forth
in Article FIFTH of our amended and restated certificate of
incorporation, which requires, in addition to the vote of our
board of directors required by Delaware law, the affirmative
vote of at least 80% of the voting power of our outstanding
voting stock to amend. The requirement that we seek stockholder
approval before effecting our initial business combination
therefore may be eliminated only by a vote of our board and the
vote of at least 80% of the voting power of our outstanding
voting stock. Management does not intend to request that the
board consider such a proposal to eliminate or amend this
provision. |
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In connection with the stockholder vote required to approve our
initial business combination, each of our founders has agreed to
vote its founders common stock in the same manner as a
majority of the public stockholders who vote at the special or
annual meeting called for the purpose of approving our initial
business combination. Each of our founders has agreed that if it
acquires shares of common stock in or following this offering,
it will vote all such acquired shares in favor of our initial
business combination. As a result, our founders will not be able
to exercise the redemption rights (as described below) with
respect to any of our shares that they may acquire prior to, in
or after this offering if our initial business combination is
approved by a majority of our public stockholders. In addition,
if we seek approval from our stockholders to consummate a
business combination within 90 days of the expiration of
24 months (assuming that the period in which to consummate
a business combination has been extended, as provided in our
amended and restated certificate of incorporation) from the
consummation of this offering, the proxy statement related to
such business combination will also seek stockholder approval
for our boards recommended plan of distribution in the
event our stockholders do not approve such business combination. |
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Conditions to consummating our initial business
combination: |
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Our initial business combination must occur with one or more
target businesses that have a fair market value of at least 80%
of the sum of the balance in the trust account plus the proceeds
of the co-investment (excluding deferred underwriting discounts
and commissions of $6.0 million or $6.6 million if the
underwriters over-allotment option is exercised in full)
at the time of such business combination. Management does not
intend to request that the board consider such a proposal to
eliminate or amend this provision. |
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We will consummate our initial business combination only if a
majority of the shares of common stock voted by the public
stockholders are voted in favor of our initial business
combination and public stockholders owning 20% or more of the
shares sold in this offering do not exercise their redemption
rights described below. Each of our founders has agreed that it
will vote its founders common stock in the same manner as
a majority of the public stockholders. The requirement that we
not consummate our initial business combination if public
stockholders owning 20% or more of the shares sold in this
offering exercise their redemption rights described below is set
forth in Article FIFTH of our amended and restated certificate
of incorporation and may only be eliminated by a vote of our
board and the vote of at least 80% of the voting power of our
outstanding voting stock. It is important to note that voting
against our initial business combination alone will not result
in redemption of a stockholders shares for a pro rata
share of the trust account, which only occurs when the
stockholder exercises the redemption rights described below. |
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Redemption rights for stockholders voting to reject our
initial business combination: |
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Public stockholders voting against our initial business
combination will be entitled to cause us to redeem their shares
of common stock for a pro rata share of the aggregate
amount then on deposit in the trust account, before payment of
deferred underwriting discounts and commissions and including
interest earned on their pro rata portion of the trust
account, net of income taxes payable on such interest and net of
interest income of up to $4.5 million on the trust account
balance previously released to us to fund our working capital
requirements, if our initial business combination is approved
and completed. Public stockholders who cause us to redeem their
common stock for a pro rata share of the trust account
will be paid their redemption price as promptly as practicable
after consummation of a business combination and will continue
to have the right to exercise any warrants they own. This
redemption could have the effect of reducing the amount
distributed to us from the trust account by up to approximately
$57.7 million (assuming redemption of the maximum of 19.99%
of the eligible shares of common stock). We intend to structure
and consummate any potential business combination in a manner
such that 19.99% of our public stockholders voting against our
initial business combination could cause us to redeem their
shares of common stock for a pro rata share of the
aggregate amount then on deposit in the trust account, and the
business combination could still go forward. |
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The initial per share redemption price is approximately
$7.70 per share. Since this amount is less than the
$8.00 per unit price in this offering and may be lower than
the market price of the common stock on the date of redemption,
there may be a disincentive on the part of public stockholders
to exercise their redemption rights. Because stockholders who
exercise their redemption rights will receive their
proportionate share of deferred underwriting compensation and
the underwriters will be paid the full amount of the deferred
underwriting compensation at the time of closing of our initial
business combination, the non-redeeming stockholders will bear
the financial effect of such payments to both the redeeming
stockholders and the underwriters. |
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Dissolution and liquidation if no business combination: |
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Pursuant to the terms of the trust agreement by and between us
and Continental Stock Transfer & Trust Company, our
amended and restated certificate of incorporation and applicable
provisions of the Delaware General Corporation Law, we will
dissolve as promptly as practicable and liquidate and release
only to our public stockholders, as part of our plan of
distribution, the amount in our trust account, including
(i) all accrued interest, net of income taxes payable on
such interest and net of interest of up to $4.5 million on
the trust account balance previously released to us to fund our
working capital requirements and (ii) all deferred
underwriting discounts and commissions plus any remaining assets
if we do not effect our initial business combination within
18 months after consummation of this offering (or within
24 months from the consummation of this offering if a
letter of intent, agreement in principle |
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or definitive agreement has been executed within 18 months
after consummation of this offering and the business combination
has not yet been consummated within such 18 month period). |
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We cannot provide investors with assurances of a specific
timeframe for our dissolution and liquidation. Pursuant to our
amended and restated certificate of incorporation, upon the
expiration of such 18- or 24-month time period, as applicable,
our purposes and powers will be limited to dissolving,
liquidating and winding up. Also contained in our amended and
restated certificate of incorporation is the requirement that
our board of directors, to the fullest extent permitted by law,
consider a resolution to dissolve our company at that time.
Consistent with such obligations, our board of directors will
seek stockholder approval for any such plan of distribution, and
our founders have agreed to vote in favor of such dissolution
and liquidation. As promptly as practicable upon the later to
occur of (i) the approval by our stockholders of our plan
of distribution or (ii) the effective date of such approved
plan of distribution, we will liquidate our trust account to our
public stockholders. |
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Each of our founders has agreed to waive its right to
participate in any liquidating distribution as part of our plan
of distribution with respect to the shares of founders
common stock acquired by it before this offering if we fail to
consummate a business combination and to vote in favor of any
such plan of distribution. There will be no distribution from
the trust account with respect to our warrants, and all rights
of our warrants will terminate on our liquidation. |
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We estimate that our total costs and expenses for implementing
and completing our stockholder-approved dissolution and plan of
distribution will be between $50,000 and $75,000. This amount
includes all costs and expenses relating to filing our
dissolution in the State of Delaware, the winding up of our
company and the costs of a proxy statement and meeting relating
to the approval by our stockholders of our plan of distribution.
We believe that there should be sufficient funds available
either outside of the trust account or made available to us out
of the net interest earned on the trust account and released to
us as working capital, to fund the $50,000 to $75,000 in costs
and expenses. |
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In the event we seek stockholder approval for our dissolution
and plan of distribution and do not obtain such approval, we
will nonetheless continue to pursue stockholder approval for our
dissolution. Pursuant to the terms of our amended and restated
certificate of incorporation, our powers following the
expiration of the permitted time periods for consummating a
business combination will automatically thereafter be limited to
acts and activities relating to dissolving and winding up our
affairs, including liquidation. If no proxy statement seeking
the approval of our stockholders for a business combination has
been filed 60 days prior to the date which is
18 months from the consummation of this offering (or
60 days prior to the date which is 24 months from the
consummation of this offering if a letter of intent, agreement
in principle or definitive agreement has been executed within
18 months after consummation |
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of this offering and the business combination has not yet been
consummated within such 18 month period), our board will,
prior to such date, convene, adopt and recommend to our
stockholders our dissolution and plan of distribution, and on
such date file a proxy statement with the SEC seeking
stockholder approval for such plan. Pursuant to the trust
agreement governing such funds, the funds held in our trust
account may not be distributed except upon our dissolution and,
unless and until such approval is obtained from our
stockholders, the funds held in our trust account will not be
released (other than in connection with the funding of working
capital, a redemption or a business combination as described
elsewhere in this prospectus). Consequently, holders of a
majority of our outstanding stock must approve our dissolution
and plan of distribution in order to receive the funds held in
our trust account and, other than in connection with a
redemption or a business combination, the funds will not be
available for any other corporate purpose. |
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Audit committee to monitor compliance: |
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We will establish and maintain an audit committee to, among
other things, monitor compliance on a quarterly basis with the
terms described above and the other terms relating to this
offering. If any noncompliance is identified, then the audit
committee will be charged with the responsibility to immediately
take all action necessary to rectify such noncompliance or
otherwise cause compliance with the terms of this offering. |
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Determination of offering amount: |
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We determined the size of this offering based on our estimate of
the capital required to facilitate our combination with one or
more viable target businesses with sufficient scale to operate
as a stand-alone public entity. We believe that raising the
amount described in this offering will offer us a broad range of
potential target businesses possessing some or all of the
characteristics we believe are important in evaluating target
businesses. |
Risks
We are a newly formed company that has conducted no operations
and has generated no revenues. Until we complete a business
combination, we will have no operations and will generate no
operating revenues. In making your decision on whether to invest
in our securities, you should take into account not only the
background of our chairman of the board, president and chief
executive officer and our other directors, but also the special
risks we face as a blank check company. This offering is not
being conducted in compliance with Rule 419 promulgated
under the Securities Act. Accordingly, you will not be entitled
to protections normally afforded to investors in Rule 419
blank check offerings. You should carefully consider these and
the other risks set forth in the section entitled Risk
Factors beginning on page 17 of this prospectus.
15
SUMMARY
FINANCIAL DATA
The following table summarizes the relevant financial data for
our business and should be read with our financial statements,
which are included in this prospectus. We have not had any
significant operations to date, so only balance sheet data is
presented.
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July 24, 2006
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Balance Sheet Data:
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Actual
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As Adjusted
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Working capital (deficiency)
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$
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(189,060
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)
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$
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282,824,750
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Total assets
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438,810
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288,824,750
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Total liabilities
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414,060
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6,000,000
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Value of common stock which may be
redeemed for cash ($7.70 per share)
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57,721,125
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Stockholders equity
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24,750
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225,103,625
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The as adjusted information gives effect to the sale
of the units we are offering including the application of the
related gross proceeds, the receipt of $4.5 million from
the sale of the sponsors warrants and the payment of the
estimated remaining expenses of this offering. The as
adjusted working capital and as adjusted total
assets include $6.0 million being held in the trust account
representing deferred underwriting discounts and commissions.
The as adjusted working capital and total assets
amounts include approximately $288,750,000 to be held in the
trust account, which will be distributed on consummation of our
initial business combination (i) to any public stockholders
who exercise their redemption rights, (ii) to the
underwriters in the amount of $6.0 million in payment of
their deferred underwriting discounts and commissions and
(iii) to us in the amount remaining in the trust account
following the payment to any public stockholders who exercise
their redemption rights and payment of deferred discounts and
commissions to the underwriters. All such proceeds will be
distributed from the trust account only upon the consummation of
a business combination within the time period described in this
prospectus. If a business combination is not so consummated, we
will dissolve and the proceeds held in the trust account,
including the deferred underwriting discounts and commission and
all interest thereon, net of income taxes on such interest and
net of interest income of up to $4.5 million on the trust
account balance previously released to us to fund our working
capital requirements, will be distributed to our public
stockholders as part of a plan of distribution.
We will not consummate a business combination if public
stockholders owning 20% or more of the shares sold in this
offering vote against the business combination and exercise
their redemption rights. Accordingly, we may effect a business
combination if public stockholders owning up to approximately
19.99% of the 37,500,000 shares sold in this offering
exercise their redemption rights. If this occurred, we would be
required to redeem for cash up to approximately 19.99% of the
shares of common stock sold in this offering, or
7,496,250 shares of common stock (8,245,875 if the
underwriters exercise their over-allotment option in full) at an
initial per-share redemption price of approximately $7.70 for
approximately $57,721,125 in the aggregate (approximately
$63,493,237 in the aggregate if the underwriters exercise their
over-allotment option in full). The actual per-share redemption
price will be equal to the aggregate amount then on deposit in
the trust account, before payment of deferred underwriting
discounts and commissions and including accrued interest, net of
income taxes on such interest and net of interest income on the
trust account balance previously released to us as described
above, as of two business days prior to the proposed
consummation of the business combination, divided by the number
of shares of common stock included in the units sold in this
offering. We intend to structure and consummate any potential
business combination in a manner such that 19.99% of our public
stockholders voting against our initial business combination
could cause us to redeem their shares of common stock for a
pro rata share of the aggregate amount then on deposit in
the trust account, and the business combination could still go
forward.
16
RISK
FACTORS
An investment in our securities involves a high degree of
risk. You should consider carefully all of the material risks
described below, together with the other information contained
in this prospectus before making a decision to invest in our
units. If any of the following events occur, our business,
financial condition and operating results may be materially
adversely affected. In that event, the trading price of our
securities could decline, and you could lose all or part of your
investment.
We are a
newly formed, development stage company with no operating
history and no revenues, and you have no basis on which to
evaluate our ability to achieve our business
objective.
We are a recently formed development stage company with no
operating results, and we will not commence operations until
obtaining funding through this offering. Because we lack an
operating history, you have no basis on which to evaluate our
ability to achieve our business objective of completing a
business combination with one or more target businesses. We have
no plans, arrangements or understandings with any prospective
target businesses concerning a business combination and may be
unable to complete a business combination. We will not generate
any revenues from operations until after completing a business
combination. If we expend all of the $50,000 in proceeds from
this offering not held in trust and interest income earned of up
to $4.5 million (net of income taxes on such interest) on
the balance of the trust account that may be released to us to
fund our working capital requirements in seeking a business
combination but fail to complete such a combination, we will
never generate any operating revenues.
We may
not be able to consummate a business combination within the
required time frame, in which case, we would dissolve and
liquidate our assets.
Pursuant to our amended and restated certificate of
incorporation, among other things, we must complete a business
combination with a fair market value of at least 80% of the sum
of the balance of the trust account plus the proceeds of the
co-investment at the time of the business combination (excluding
deferred underwriting discounts and commissions of
$6.0 million or $6.6 million if the underwriters
over-allotment option is exercised in full) within
18 months after the consummation of this offering (or
within 24 months after the consummation of this offering if
a letter of intent, agreement in principle or a definitive
agreement has been executed within 18 months after the
consummation of this offering and the business combination
relating thereto has not yet been consummated within such
18-month
period). If we fail to consummate a business combination within
the required time frame, we will, in accordance with our amended
and restated certificate of incorporation dissolve, liquidate
and wind up. The foregoing requirements are set forth in
Article FIFTH of our amended and restated certificate of
incorporation and may not be eliminated without the vote of our
board and the vote of at least 80% of the voting power of our
outstanding voting stock. We may not be able to find suitable
target businesses within the required time frame. In addition,
our negotiating position and our ability to conduct adequate due
diligence on any potential target may be reduced as we approach
the deadline for the consummation of a business combination. We
do not have any specific business combination under
consideration, and neither we, nor any representative acting on
our behalf, has had any contacts with any target businesses
regarding a business combination, nor taken any direct or
indirect actions to locate or search for a target business.
If we
dissolve and liquidate before concluding a business combination,
our public stockholders will receive less than $8.00 per
share on distribution of trust account funds and our warrants
will expire worthless.
If we are unable to complete a business combination and must
dissolve and liquidate our assets, the per-share liquidating
distribution will be less than $8.00 because of the expenses of
this offering, our general and administrative expenses and the
planned costs of seeking a business combination. Furthermore,
our outstanding warrants are not entitled to participate in a
liquidating distribution and the warrants will therefore expire
worthless if we dissolve and liquidate before completing a
business combination.
You will
not receive protections normally afforded to investors in blank
check companies.
Since the net proceeds of this offering are designated for
completing a business combination with a target business that
has not been identified, we may be deemed a blank
check company under the United States
17
securities laws. However, because on consummation of this
offering we will have net tangible assets in excess of
$5,000,000 and will at that time file a Current Report on
Form 8-K
with the SEC that includes an audited balance sheet
demonstrating this fact, we are exempt from SEC rules such as
Rule 419 that are designed to protect investors in blank
check companies. Accordingly, investors in this offering will
not receive the benefits or protections of that rule. Among
other things, this means our units will be immediately tradable
and we will have a longer period of time to complete a business
combination in some circumstances than do companies subject to
Rule 419.
If third
parties bring claims against us, the proceeds held in trust may
be reduced and the per share liquidation price received by you
will be less than $7.70 per share.
Our placing of funds in trust may not protect those funds from
third party claims against us. Although we will seek to have all
vendors that we engage after the consummation of this offering,
prospective target businesses or other entities we engage
execute agreements with us waiving any right, title, interest or
claim of any kind in or to any monies held in the trust account,
there is no guarantee that they will execute such agreements, or
if executed, that this will prevent potential contracted parties
from making claims against the trust account. Nor is there any
guarantee that such entities will agree to waive any claims they
may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with us and will not seek
recourse against the trust account for any reason. Accordingly,
the proceeds held in trust may be subject to claims which would
take priority over the claims of our public stockholders and, as
a result, the per-share liquidation price could be less than
$7.70 due to claims of such creditors. If we are unable to
complete a business combination and are forced to dissolve and
liquidate, each of Mr. Berggruen and Mr. Franklin
will, by agreement, be personally liable to ensure that the
proceeds in the trust account are not reduced by the claims of
prospective target businesses, vendors or other entities that
are owed money by us for services rendered or products sold to
us. Mr. Berggruen and Mr. Franklin have provided us
with documentation showing sufficient liquid assets with which
they could meet their respective obligations.
Additionally, if we are forced to file a bankruptcy case or an
involuntary bankruptcy case is filed against us which is not
dismissed, the funds held in our trust account will be subject
to applicable bankruptcy law, and may be included in our
bankruptcy estate and subject to claims of third parties with
priority over the claims of our public stockholders. To the
extent bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return to our public stockholders
the liquidation amounts due them.
Our
stockholders may be held liable for claims by third parties
against us to the extent of distributions received by
them.
We will dissolve and liquidate if we do not complete a business
combination within 18 months after the consummation of this
offering (or within 24 months after the consummation of
this offering if a letter of intent, agreement in principle or a
definitive agreement has been executed within 18 months
after the consummation of this offering and the business
combination relating thereto has not yet been consummated within
such
18-month
period). Under the Delaware General Corporation Law,
stockholders may be held liable for claims by third parties
against a corporation to the extent of distributions received by
them in a dissolution conducted in accordance with the Delaware
General Corporation Law. If the corporation complies with
certain procedures set forth in Section 280 of the Delaware
General Corporation Law intended to ensure that it makes
reasonable provision for all claims against it, including a
60-day
notice period during which any third-party claims can be brought
against the corporation, a
90-day
period during which the corporation may reject any claims
brought, and an additional
150-day
waiting period before any liquidating distributions are made to
stockholders, and we apply to the Court of Chancery for approval
of such reasonable provisions of claims, any liability of
stockholders with respect to a liquidating distribution is
limited to the lesser of such stockholders pro rata
share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be
barred if a proceeding with respect to such claim is not brought
by the third anniversary of the dissolution (or such longer
period directed by the Delaware Court of Chancery). Although we
will seek stockholder approval for our dissolution and plan of
distribution providing for the liquidation of the trust account
to our public stockholders, we do not intend to comply with the
procedures set forth in Section 280 of
18
the Delaware General Corporation Law. Because we will not be
complying with Section 280, we will seek stockholder
approval to comply with Section 281(b) of the Delaware
General Corporation Law, requiring us to adopt a plan of
dissolution that will reasonably provide for our payment, based
on facts known to us at such time, of (i) all existing
claims, including those that are contingent, (ii) all
pending proceedings to which we are a party and (iii) all
claims that may be potentially brought against us within the
subsequent 10 years. However, because we are a blank check
company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses
to acquire, the only likely claims to arise would be from our
vendors that we engage after the consummation of this offering
(such as accountants, lawyers, investment bankers, etc.) and
potential target businesses. We intend to have all vendors that
we engage after the consummation of this offering and
prospective target businesses execute agreements with us waiving
any right, title, interest or claim of any kind in or to any
monies held in the trust account. Although we have not received
any such agreements, the claims that could be made against us
should be significantly limited and the likelihood that any
claim that would result in any liability extending to the trust
is minimal. If our plan of distribution complies with
Section 281(b) of the Delaware General Corporation Law, any
liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholders
pro rata share or the amount distributed to the
stockholder. Unlike in the case of compliance with
Section 280 of the Delaware General Corporation Law, our
plan of distribution compliance with Section 281(b) of the
Delaware General Corporation Law does not bar stockholder
liability for claims not brought in a proceeding before the
third anniversary of the dissolution (or such longer period
directed by the Delaware Court of Chancery). Accordingly, we
cannot assure you that third parties will not seek to recover
from our public stockholders amounts owed to them by us.
We will
dissolve and liquidate if we do not consummate a business
combination, in which case our public stockholders will receive
less than $8.00 per share on distribution.
Pursuant to our amended and restated certificate of
incorporation, among other things, we must complete a business
combination within 18 months after the consummation of this
offering (or within 24 months after the consummation of
this offering if a letter of intent, agreement in principle or a
definitive agreement has been executed within 18 months
after the consummation of this offering and the business
combination relating thereto has not yet been consummated within
such
18-month
period). If we do not comply with this requirement, we will
dissolve. The foregoing requirements are set forth in
Article FIFTH of our amended and restated certificate of
incorporation and may not be eliminated without the vote of our
board and the vote of at least 80% of the voting power of our
outstanding voting stock. Upon dissolution, we will distribute
to all of our public stockholders, in proportion to their
respective equity interest, an aggregate sum equal to the amount
in the trust account (net of taxes payable and that portion of
the interest earned previously released to us). Each of our
founders has waived their rights to participate in any
liquidating distribution with respect to its founders
common stock and has agreed to vote in favor of any dissolution
and plan of distribution which we will present to our
stockholders for vote. There will be no distribution from the
trust account with respect to our warrants which will expire
worthless. We will pay the costs of our dissolution and
liquidation of the trust account from our remaining assets
outside of the trust fund, and we estimate such costs to be
between $50,000 and $75,000. Upon notice from us, the trustee of
the trust account will liquidate the investments constituting
the trust account and will turn over the proceeds to our
transfer agent for distribution to our public stockholders as
part of our stockholder-approved dissolution and plan of
distribution. Concurrently, we shall pay, or reserve for
payment, from interest released to us from the trust account if
available, our liabilities and obligations, although we cannot
give you assurances that there will be sufficient funds for such
purpose. The amounts held in the trust account may be subject to
claims by third parties, such as vendors, prospective target
business or other entities, if we do not obtain waivers in
advance from such third parties prior to such parties providing
us with services or entering into arrangements with them. We
have not received any waiver agreements at this time and we
cannot assure you that such waivers will be obtained or will be
enforceable by operation of law. Accordingly, upon dissolution
and liquidation, the per-share liquidating distribution will be
less than $8.00 per share because of the expenses of
this offering, our general and administrative expenses and the
planned costs of seeking a business combination.
19
If we do
not consummate a business combination and dissolve, payments
from the trust account to our public stockholders may be
delayed.
We currently believe that any dissolution and plan of
distribution subsequent to the expiration of the 18 and
24 month deadlines would proceed in approximately the
following manner:
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our board of directors will, consistent with its obligations
described in our amended and restated certificate of
incorporation and Delaware law, consider a resolution for us to
dissolve and consider a plan of distribution which it may then
vote to recommend to our stockholders; at such time it will also
cause to be prepared a preliminary proxy statement setting out
such plan of distribution as well as the boards
recommendation of such plan;
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upon such deadline, we would file our preliminary proxy
statement with the SEC;
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if the SEC does not review the preliminary proxy statement,
then, 10 days following the passing of such deadline, we
will mail the proxy statements to our stockholders, and
30 days following the passing of such deadline we will
convene a meeting of our stockholders, at which they will either
approve or reject our dissolution and plan of distribution; and
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if the SEC does review the preliminary proxy statement, we
currently estimate that we will receive their comments
30 days following the passing of such deadline. We will
mail the proxy statements to our stockholders following the
conclusion of the comment and review process (the length of
which we cannot predict with any certainty, and which may be
substantial) and we will convene a meeting of our stockholders
at which they will either approve or reject our dissolution and
plan of distribution.
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In the event we seek stockholder approval for our dissolution
and plan of distribution and do not obtain such approval, we
will nonetheless continue to pursue stockholder approval for our
dissolution. Pursuant to the terms of our amended and restated
certificate of incorporation, our powers following the
expiration of the permitted time periods for consummating a
business combination will automatically thereafter be limited to
acts and activities relating to dissolving and winding up our
affairs, including liquidation. Pursuant to the trust agreement
governing such funds, the funds held in our trust account may
not be distributed except upon our dissolution and, unless and
until such approval is obtained from our stockholders, the funds
held in our trust account will not be released (other than in
connection with the funding of working capital, a redemption or
a business combination as described elsewhere in this
prospectus). Consequently, holders of a majority of our
outstanding stock must approve our dissolution in order to
receive the funds held in our trust account and the funds will
not be available for any other corporate purpose.
These procedures, or a vote to reject any dissolution and plan
of distribution by our stockholders, may result in substantial
delays in the liquidation of our trust account to our public
stockholders as part of our plan of distribution.
Since we
have not yet selected a particular industry or any target
business with which to complete a business combination, you will
be unable to currently ascertain the merits or risks of the
industry or business in which we may ultimately
operate.
We intend to consummate a business combination with a company in
the United States or Western Europe in any industry we choose
that we believe will provide significant opportunities for
growth (although we may decide to pursue an acquisition outside
of these geographies if we believe it is an attractive
opportunity) and we are not limited to any particular industry
or type of business. Accordingly, there is no current basis for
you to evaluate the possible merits or risks of the particular
industry in which we may ultimately operate or the target
business or businesses with which we may ultimately enter a
business combination. Although our management will evaluate the
risks inherent in a particular target business, we cannot assure
you that we will properly ascertain or assess all of the
significant risks present in that target business. Even if we
properly assess those risks, some of them may be outside of our
control or ability to affect. We also cannot assure you that an
investment in our units will not ultimately prove to be less
favorable to investors in this offering than a direct
investment, if an opportunity were available, in a target
business.
20
We will
not be required to obtain a fairness opinion from an independent
investment banking firm as to the fair market value of the
target business unless the Board of Directors is unable to
independently determine the fair market value.
The fair market value of a target business or businesses will be
determined by our board of directors based upon standards
generally accepted by the financial community, such as actual
and potential sales, the values of comparable businesses,
earnings and cash flow, and book value. If our board is not able
to independently determine that the target business has a
sufficient fair market value to meet the threshold criterion, we
will obtain an opinion from an unaffiliated, independent
investment banking firm which is a member of the NASD with
respect to the satisfaction of such criterion. In all other
instances, we will have no obligation to obtain or provide you
with a fairness opinion.
If we
issue capital stock or redeemable debt securities to complete a
business combination, your equity interest in us could be
reduced or there may be a change in control of our
company.
Our amended and restated certificate of incorporation authorizes
the issuance of up to 200,000,000 shares of common stock,
par value $0.0001 per share, and 1,000,000 shares of
preferred stock, par value $0.0001 per share. Immediately
after this offering (assuming no exercise of the
underwriters over-allotment option and not including the
co-investment), there will be 101,750,000 authorized but
unissued shares of our common stock available for issuance
(after appropriate reservation for the issuance of shares upon
full exercise of our outstanding warrants, including the
founders warrants and sponsors warrants) and all of
the 1,000,000 shares of preferred stock available for
issuance. Upon consummation of the co-investment, there will be
89,250,000 authorized but unissued shares of our common stock
available for issuance (after appropriate reservation for the
issuance of shares upon full exercise of our outstanding
warrants, including the founders warrants, the
sponsors warrants and the co-investment warrants). We have
no other commitments as of the date of this offering to issue
any additional securities. We may issue a substantial number of
additional shares of our common stock or may issue preferred
stock, or a combination of both, including through redeemable
debt securities, to complete a business combination. Our
issuance of additional shares of common stock or any preferred
stock:
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may significantly reduce your equity interest in us;
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may cause a change in control if a substantial number of our
shares of common stock are issued, which may among other things
limit our ability to use any net operating loss carry forwards
we have, and result in the resignation of our officers and
directors;
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may, in certain circumstances, have the effect of delaying or
preventing a change in control of us; and
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may adversely affect the then-prevailing market price for our
common stock.
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The value of your investment in us may decline if any of these
events occur.
If we
acquire a company by issuing debt securities, our
post-combination operating results may decline due to increased
interest expense or our liquidity may be adversely affected by
an acceleration of our indebtedness.
We may elect to enter into a business combination that requires
us to issue debt securities as part of the purchase price for a
target business. If we issue debt securities, such issuances may
result in:
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default and foreclosure on our assets if our operating cash flow
after a business combination were insufficient to pay our debt
obligations;
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acceleration, even if we are then current in our debt service
obligations, if the debt securities have covenants that require
us to meet certain financial ratios or maintain designated
reserves, and any such covenants are breached without a waiver
or renegotiation;
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a required immediate payment of all principal and accrued
interest, if any, if the debt security was payable on
demand; and
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21
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our inability to obtain additional financing, if necessary, if
the debt securities contain covenants restricting our ability to
obtain additional financing.
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Our
sponsors, Berggruen Holdings and Marlin Equities, currently
control us and may influence certain actions requiring a
stockholder vote.
Our sponsors, Berggruen Holdings and Marlin Equities, have
agreed to act together for the purpose of acquiring, holding,
voting or disposing of our shares and will be deemed to be a
group for reporting purposes under the Exchange Act.
Assuming neither of our sponsors purchases units in this
offering or in the open market, they will beneficially own 19.7%
of our issued and outstanding shares of common stock when this
offering is completed (29.2% upon consummation of the
co-investment). Other than as described in this prospectus,
neither of our sponsors has indicated to us that they intend to
purchase units in this offering. Our sponsors have agreed that
any common stock they acquire in or after this offering will be
voted in favor of a business combination that is presented to
our public stockholders. Accordingly, shares of common stock
acquired by our sponsors in or after this offering will not have
the same voting or redemption rights as our public stockholders
with respect to a potential business combination, and our
sponsors will not be eligible to exercise redemption rights for
those shares if a business combination is approved by a majority
of our public stockholders.
Because our sponsors will hold warrants to purchase
13,755,000 shares of our common stock immediately prior to
our consummation of a business combination (warrants to purchase
20,005,000 shares of our common stock including the
co-investment warrants), the exercise of those warrants may
increase their ownership in us. This increase could allow our
sponsors to influence the outcome of matters requiring
stockholder approval, including the election of directors and
approval of significant corporate transactions after
consummation of our initial business combination. In addition,
neither our sponsors nor their affiliates are prohibited from
purchasing units in this offering or our common stock in the
aftermarket. If they do so, our sponsors will have a greater
influence on the vote taken in connection with a business
combination.
Our
officers and directors are or may in the future become
affiliated with entities engaged in business activities similar
to those intended to be conducted by us, and may have conflicts
of interest in allocating their time and business
opportunities.
Our officers and directors are or may in the future become
affiliated with entities, including other blank
check companies, engaged in business activities similar to
those intended to be conducted by us. There is no assurance that
Mr. Berggruen, Mr. Franklin or any of our other
officers or directors will not become involved in one or more
other business opportunities that would present conflicts of
interest in the time they allocate to us. Mr. Franklin
previously served as a director of another blank check company,
but resigned as a director of that company prior to the
effectiveness of its registration statement in connection with
his discussions to participate in this offering. None of our
officers or directors is obligated to expend a specific number
of hours per week or month on our affairs.
In addition, although we do not expect our independent directors
to present investment and business opportunities to us, they may
become aware of business opportunities that may be appropriate
for presentation to us. In such instances they may determine to
present these business opportunities to other entities with
which they are or may be affiliated, in addition to, or instead
of, presenting them to us. Due to these existing or future
affiliations, our officers and directors may have fiduciary
obligations to present potential business opportunities to those
entities prior to presenting them to us which could cause
additional conflicts of interest.
We have entered into an agreement with Berggruen Holdings that
from the date of this prospectus until the earlier of the
consummation of our initial business combination or our
liquidation, we will have a right of first review that provides
that if Berggruen Holdings, or one of its senior investment
professionals, becomes aware of, or involved with, business
combination opportunities with an enterprise value of
$500.0 million or more, Berggruen Holdings will first offer
the business opportunity to us and will only pursue such
business opportunity if our board of directors determines that
we will not do so.
22
In addition, Messrs. Franklin and Ashken are executive
officers of Jarden Corporation. We have entered into an
agreement with Mr. Franklin whereby we have acknowledged
that Mr. Franklin has committed to Jardens Board of
Directors that we will not consider transactions that fit within
Jardens publicly announced acquisition criteria unless
Jarden has determined not to pursue the transaction. In the
event there is any uncertainty regarding a specific transaction,
an independent committee of Jardens Board of Directors
will determine whether Jarden intends to pursue the transaction.
Although we do not believe that the potential conflict of
interest with Jarden, or other companies with which they are
affiliated, will cause undue difficulty in finding acquisition
opportunities for us given the focused, niche consumer product
company nature of Jardens acquisition criteria and the
many opportunities available outside these fields, Jarden may
change its publicly announced acquisition criteria at any time
without notice and additional conflicts of interest may arise.
We cannot assure you that these conflicts will be resolved in
our favor.
Resources
could be wasted in researching acquisitions that are not
consummated, which could materially adversely affect subsequent
attempts to locate and acquire or merge with another
business.
It is anticipated that the investigation of each specific target
business and the negotiation, drafting, and execution of
relevant agreements, disclosure documents, and other instruments
will require substantial management time and attention and
substantial costs for accountants, attorneys and others. If a
decision is made not to complete a specific business
combination, the costs incurred up to that point for the
proposed transaction likely would not be recoverable.
Furthermore, even if an agreement is reached relating to a
specific target business, we may fail to consummate the business
combination for any number of reasons including those beyond our
control such as that more than 19.99% of our public stockholders
vote against the business combination and opt to have us redeem
their stock for a pro rata share of the trust account
even if a majority of our stockholders approve the business
combination. Any such event will result in a loss to us of the
related costs incurred which could materially adversely affect
subsequent attempts to locate and acquire or merge with another
business.
Each of
our founders may have a conflict of interest in deciding if a
particular target business is a good candidate for a business
combination.
Each of our founders has agreed to waive its right to receive
distributions with respect to its founders common stock
purchased by it before this offering if we dissolve and
liquidate because we fail to complete a business combination.
Berggruen Holdings and Marlin Equities will purchase an
aggregate of 4,500,000 sponsors warrants immediately
prior to the consummation of this offering, and will also agree
to purchase an aggregate of 6,250,000 co-investment units
immediately prior to our consummation of a business combination.
Each of our founders who are also directors owns 40,000
founders units. The shares of common stock and warrants
owned by our founders will be worthless if we do not consummate
a business combination. Furthermore, the $4.5 million
purchase price of the sponsors warrants will be included
in the working capital that is distributed to our public
stockholders in the event of our dissolution and liquidation.
Therefore, each of our founders may have a conflict of interest
in deciding if a particular target business is a good candidate
for a business combination.
Unless we
complete a business combination, our officers and directors will
not receive reimbursement for any
out-of-pocket
expenses they incur if such expenses exceed the amount not in
the trust account. Therefore, they may have a conflict of
interest in determining whether a particular target business is
appropriate for a business combination and in the public
stockholders best interest.
Our officers and directors will not receive reimbursement for
any
out-of-pocket
expenses incurred by them to the extent that such expenses
exceed the amount not required to be retained in the trust
account unless the business combination is consummated. Our
officers and directors may, as part of any such combination,
negotiate the repayment of some or all of any such expenses. If
the target business owners do not agree to such repayment,
this could cause our management to view such potential business
combination unfavorably, thereby resulting in a conflict of
interest. The financial interest of our officers and directors
could influence their motivation in selecting a target business
and thus, there may be a conflict of interest when determining
whether a particular business combination is in the
stockholders best interest.
23
We will
probably complete only one business combination with the
proceeds of this offering, meaning our operations will depend on
a single business that is likely to operate in a non-diverse
industry or segment of an industry.
The net proceeds from this offering and the offering of the
sponsors warrants will provide us with approximately
$288.8 million (approximately $317.3 million if the
underwriters over-allotment option is exercised in full)
that we may use to complete a business combination
($338.8 million after the consummation of the co-investment
(approximately $367.3 million if the underwriters
over-allotment option is exercised in full)). Our initial
business combination must be with a target business or
businesses with a fair market value of at least 80% of the sum
of the balance in the trust account plus the proceeds of the
co-investment at the time of such business combination
(excluding deferred underwriting discounts and commissions of
$6.0 million or $6.6 million if the underwriters
over-allotment option is exercised in full). We may not be able
to acquire more than one target business because of various
factors, including the existence of complex accounting issues
and the requirement that we prepare and file pro forma financial
statements with the SEC that present operating results and the
financial condition of several target businesses as if they had
been operated on a combined basis. Additionally, we may
encounter numerous logistical issues if we pursue multiple
target businesses, including the difficulty of coordinating the
timing of negotiations, proxy statement disclosure and closings.
We may also be exposed to the risk that our inability to satisfy
conditions to closing with one or more target businesses would
reduce the fair market value of the remaining target businesses
in the combination below the required threshold of 80% of the
sum of the balance in the trust account plus the proceeds of the
co-investment (excluding deferred underwriting discounts and
commissions of $6.0 million or $6.6 million if the
underwriters over-allotment option is exercised in full).
Due to these added risks, we are more likely to choose a single
target business with which to pursue a business combination than
multiple target businesses. Unless we combine with a target
business in a transaction in which the purchase price consists
substantially of common stock
and/or
preferred stock, it is likely we will complete only our initial
business combination with the proceeds of this offering.
Accordingly, the prospects for our success may depend solely on
the performance of a single business. If this occurs, our
operations will be highly concentrated and we will be exposed to
higher risk than other entities that have the resources to
complete several business combinations, or that operate in,
diversified industries or industry segments.
If we do
not conduct an adequate due diligence investigation of a target
business with which we combine, we may be required to
subsequently take write-downs or write-offs, restructuring, and
impairment or other charges that could have a significant
negative effect on our financial condition, results of
operations and our stock price, which could cause you to lose
some or all of your investment.
In order to meet our disclosure and financial reporting
obligations under the federal securities laws, and in order to
develop and seek to execute strategic plans for how we can
increase the revenues
and/or
profitability of a target business, realize operating synergies
or capitalize on market opportunities, we must conduct a due
diligence investigation of one or more target businesses.
Intensive due diligence is time consuming and expensive due to
the operations, accounting, finance and legal professionals who
must be involved in the due diligence process. Even if we
conduct extensive due diligence on a target business with which
we combine, we cannot assure you that this diligence will
surface all material issues that may be present inside a
particular target business, or that factors outside of the
target business and outside of our control will not later arise.
If our diligence fails to identify issues specific to a target
business, industry or the environment in which the target
business operates, we may be forced to later write-down or
write-off assets, restructure our operations, or incur
impairment or other charges that could result in our reporting
losses. Even though these charges may be non-cash items and not
have an immediate impact on our liquidity, the fact that we
report charges of this nature could contribute to negative
market perceptions about us or our common stock. In addition,
charges of this nature may cause us to violate net worth or
other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by
virtue of our obtaining post-combination debt financing.
24
We will
depend on the limited funds available outside of the trust
account and a portion of the interest earned on the trust
account balance to fund our search for a target business or
businesses and to complete our initial business
combination.
Of the net proceeds of this offering, $50,000 will be available
to us initially outside the trust account to fund our working
capital requirements. We will depend on sufficient interest
being earned on the proceeds held in the trust account to
provide us with the additional working capital we will need to
identify one or more target businesses and to complete our
initial business combination. While we are entitled to have
released to us for such purposes interest income of up to a
maximum of $4.5 million, net of income taxes on such
interest, a substantial decline in interest rates may result in
our having insufficient funds available with which to structure,
negotiate or close an initial business combination. In such
event, we would need to borrow additional funds from our
officers and directors to operate or we may dissolve and
liquidate.
We may be
unable to obtain additional financing if necessary to complete a
business combination or to fund the operations and growth of a
target business, which could compel us to restructure or abandon
a particular business combination.
We may consider a business combination that will require
additional financing (in addition to the co-investment).
However, we cannot assure you that we will be able to complete a
business combination or that we will have sufficient capital
with which to complete a combination with a particular target
business. If the net proceeds of this offering and the
co-investment are not sufficient to facilitate a particular
business combination because:
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of the size of the target business;
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of the depletion of offering proceeds not in trust or available
to us from interest earned on the trust account balance that is
expended in search of a target business; or
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we must redeem for cash a significant number of shares of common
stock owned by stockholders who elect to exercise their
redemption rights,
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we will be required to seek additional financing. We cannot
assure you that such financing would be available on acceptable
terms, if at all. If additional financing is unavailable to
consummate a particular business combination, we would be
compelled to restructure or abandon the combination and seek an
alternative target business. Even if we do not need additional
financing to consummate a business combination, we may require
such financing to operate or grow the target business. If we
fail to secure such financing, this failure could have a
material adverse effect on the operations or growth of the
target business. Other than the co-investment, none of our
officers or directors or any other party is required to provide
any financing to us in connection with, or following, a business
combination.
Our
founders paid approximately $0.00267 per share for their
shares and, accordingly, you will experience immediate and
substantial dilution from the purchase of our common
stock.
The difference between the public offering price per share of
our common stock (allocating all of the unit purchase price to
the common stock and none to the warrant included in the unit)
and the pro forma net tangible book value per share of our
common stock after this offering constitutes the dilution to you
and other investors in this offering. The fact that our founders
acquired their founders shares of common stock at a
nominal price significantly contributed to this dilution.
Assuming this offering is completed and no value is ascribed to
the warrants included in the units, you and the other new
investors will incur an immediate and substantial dilution of
approximately 71.4% or $2.28 per share (the difference
between the pro forma net tangible book value per share after
this offering of $5.72, and the initial offering price of
$8.00 per unit).
Our
outstanding warrants may adversely affect the market price of
our common stock and make it more difficult to effect a business
combination.
The units being sold in this offering include warrants to
purchase 37,500,000 shares of common stock (or
41,250,000 shares of common stock if the over-allotment
option is exercised in full). We also have sold or will sell
warrants to our founders (including the sponsors warrants)
to purchase an aggregate 13,875,000 shares of
25
our common stock (20,125,000 including the co-investment
warrants). The warrants which have been sold or will be sold to
our founders are identical to those warrants sold as part of the
units in this offering except that the warrants sold to our
founders become exercisable after our consummation of a business
combination if and when the last sales price of our common stock
exceeds $11.50 per share for any 20 trading days within a
30 trading day period beginning 90 days after such
business combination, will be non-redeemable so long as they are
held by our founders or their permitted transferees and are
entitled to registration rights beginning 90 days after our
consummation of a business combination. The warrants which have
been sold or will be sold to our sponsors are identical to those
warrants sold as part of the units in this offering except that
our sponsors warrants will be non-redeemable so long as they are
held by our sponsors or their permitted transferees and pursuant
to the registration rights agreement, the holders of our
sponsors warrants and the underlying common stock will be
entitled to certain registration rights upon the consummation of
a business combination. If we issue common stock to conclude a
business combination, the potential issuance of additional
shares of common stock on exercise of these warrants could make
us a less attractive acquisition vehicle to some target
businesses. This is because exercise of the warrants will
increase the number of issued and outstanding shares of our
common stock and reduce the value of the shares issued to
complete the business combination. Our warrants may make it more
difficult to complete a business combination or increase the
purchase price sought by one or more target businesses.
Additionally, the sale or possibility of sale of the shares
underlying the warrants could have an adverse effect on the
market price for our common stock or our units, or on our
ability to obtain other financing. If and to the extent these
warrants are exercised, you may experience dilution to your
holdings.
The grant
of registration rights to our founders may make it more
difficult to complete a business combination, and the future
exercise of such rights may adversely affect the market price of
our common stock.
Our founders will have certain registration rights with respect
to the resale of their shares of common stock at any time after
one year from the date we complete a business combination. In
addition, our founders will have certain registration rights
with respect to the warrants and the underlying shares of common
stock that they hold at any time after such warrants become
exercisable by their terms. We will bear the cost of registering
these securities. If our founders exercise their registration
rights in full, there will then be an additional
9,375,000 shares of common stock and 20,125,000 warrants
(including 6,250,000 co-investment warrants)
and/or up to
22,187,500 shares of common stock issued on exercise of the
warrants that are eligible for trading in the public market. The
registration and availability of such a significant number of
securities for trading in the public market may have an adverse
effect on the market price of our common stock. In addition, the
existence of the registration rights may make a business
combination more costly or difficult to conclude. This is
because the stockholders of the target business may increase the
equity stake they seek in the combined entity or ask for more
cash consideration to offset the negative impact on the market
price of our common stock that is expected when the securities
owned by our founders are registered.
You will
not be able to exercise your warrants if we dont have an
effective registration statement in place when you desire to do
so.
No warrants will be exercisable, and we will not be obligated to
issue shares of common stock upon exercise of warrants by a
holder unless, at the time of such exercise, we have a
registration statement under the Securities Act of 1933, as
amended, in effect covering the shares of common stock issuable
upon the exercise of the warrants and a current prospectus
relating to that common stock. We have agreed to use our best
efforts to have a registration statement in effect covering
shares of common stock issuable upon exercise of the warrants
from the date the warrants become exercisable and to maintain a
current prospectus relating to that common stock until the
warrants expire or are redeemed. However, we cannot assure you
that we will be able to do so. In addition, we may determine to
exercise our right to redeem the outstanding warrants while a
current prospectus relating to the common stock issuable upon
exercise of the warrants is not available, in which case the
warrants will not be exercisable prior to their redemption.
Additionally, we have no obligation to settle the warrants for
cash in the absence of an effective registration statement or
under any other circumstances. The warrants may be deprived of
any value, the market for the warrants may be limited and the
26
holders of warrants may not be able to exercise their warrants
if there is no registration statement in effect covering the
shares of common stock issuable upon the exercise of the
warrants or the prospectus relating to the common stock issuable
upon the exercise of the warrants is not current.
There is
currently no market for our securities and a market for our
securities may not develop, which would adversely affect the
liquidity and price of our securities.
There is currently no market for our securities. Stockholders
therefore have no access to information about prior market
history on which to base their investment decision. Following
this offering, the price of our securities may vary
significantly due to our reports of operating losses, one or
more potential business combinations, the filing of periodic
reports with the SEC, and general market or economic conditions.
Furthermore, an active trading market for our securities may
never develop or, if developed, it may not be sustained. You may
be unable to sell your securities unless a market can be
established and sustained.
If we are
deemed to be an investment company, we may be required to
institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to
complete a business combination.
We may be deemed to be an investment company, as defined under
Sections 3(a)(1)(A) and (C) of the Investment Company
Act of 1940, if, following the offering and prior to the
consummation of a business combination, we are viewed as
engaging in the business of investing in securities or we own
investment securities having a value exceeding 40% of our total
assets. If we are deemed to be an investment company under the
Investment Company Act of 1940, we may be subject to certain
restrictions that may make it difficult for us to complete a
business combination, including:
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restrictions on the nature of our investments; and
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restrictions on our issuance of securities.
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In addition, we may have imposed upon us burdensome
requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure
requirements and other rules and regulations.
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We do not believe that our anticipated activities will subject
us to the Investment Company Act of 1940 as the net proceeds of
this offering and sale of warrants in our private placement
offering that are to be held in trust may only be invested by
the trust agent in government securities with
specific maturity dates. By restricting the investment of the
trust account to these instruments, we intend to meet the
requirements for the exemption provided in
Rule 3a-1
promulgated under the Investment Company Act of 1940. If we were
deemed to be subject to the Investment Company Act of 1940,
compliance with these additional regulatory burdens would
require additional expense that we have not allotted for.
Companies
with similar business plans to ours have had limited success in
completing a business transaction. There can be no assurance
that we will successfully identify a potential target business,
or complete a business combination.
Since August 2003, based upon publicly available information,
approximately 64 similarly structured blank check companies have
completed initial public offerings and approximately 49
companies are currently in registration with the Securities and
Exchange Commission. Of these companies, only 11 companies have
consummated a business combination, while 15 other companies
have announced they have entered into a definitive agreement for
a business combination, but have not consummated such business
combination. Accordingly, there are approximately 38 blank check
companies with more than approximately $2.8 billion in
trust that are seeking to carry out a business plan similar to
our business plan. While some of those companies have specific
industries or geographies that they must complete a business
combination in, a number of them may consummate a business
combination in any industry they choose. We may therefore be
subject to
27
competition from these and other companies seeking to
consummate a business plan similar to ours, which will, as a
result, increase demand for privately-held companies to combine
with companies structured similarly to ours. Further, the fact
that only one of such companies has completed a business
combination and three of such companies have entered into a
definitive agreement for a business combination may be an
indication that there are only a limited number of attractive
target businesses available to such entities or that many
privately-held target businesses may not be inclined to enter
into business combinations with publicly held blank check
companies like us. We cannot assure you that we will be able to
successfully compete for an attractive business combination.
Additionally, because of this competition, we cannot assure you
that we will be able to effectuate a business combination within
the required time periods. If we are unable to find a suitable
target business within such time periods, we will be forced to
liquidate.
The loss
of key officers and directors could adversely affect our ability
to operate.
Our operations are dependent upon a relatively small group of
key officers and directors and, in particular, upon
Mr. Berggruen and Mr. Franklin. We believe that our
success depends on the continued service of our key officers and
directors, at least until we have consummated a business
combination. We cannot assure you that such individuals will
remain with us for the immediate or foreseeable future. We do
not have employment agreements with, or key-man insurance on the
life of, any of our current officers. The unexpected loss of the
services of one or more of these officers and directors could
have a detrimental effect on us.
The
American Stock Exchange may delist our securities which could
limit investors ability to make transactions in our
securities and subject us to additional trading
restrictions.
We will seek to have our securities approved for listing on the
American Stock Exchange upon consummation of this offering. We
cannot assure you that our securities will be listed and, if
listed, will continue to be listed on the American Stock
Exchange. Additionally, in connection with our business
combination, it is likely that the American Stock Exchange may
require us to file a new initial listing application and meet
its initial listing requirements as opposed to its more lenient
continued listing requirements. We cannot assure you that we
will be able to meet those initial listing requirements at that
time.
If the American Stock Exchange delists our securities from
trading, we could face significant consequences including:
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a limited availability for market quotations for our securities;
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reduced liquidity with respect to our securities;
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a determination that our common stock is a penny
stock which will require brokers trading in our common
stock to adhere to more stringent rules and possibly result in a
reduced level of trading activity in the secondary trading
market for our common stock;
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limited amount of news and analyst coverage for our
company; and
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a decreased ability to issue additional securities or obtain
additional financing in the future.
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The
determination of the offering price of our units is more
arbitrary than the pricing of securities of an operating company
in a particular industry.
Prior to this offering there has been no public market for any
of our securities. The public offering price of the units and
the terms of the warrants were negotiated between us and the
underwriters. In determining the size of this offering,
management held customary organizational meetings with
representatives of the underwriters, both prior to our inception
and thereafter, with respect to the state of capital markets,
generally, and the amount the representatives believed they
reasonably could raise on our behalf. Factors considered in
determining the prices and terms of the units, including the
common stock and warrants underlying the units, include:
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the history and prospects of companies whose principal business
is the acquisition of other companies;
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28
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prior offerings of those companies;
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our prospects for acquiring an operating business at attractive
values;
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our desire to acquire an operating business having a valuation
between approximately $500 million and $1.5 billion;
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our capital structure;
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an assessment of our management and their experience in
identifying operating companies;
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general conditions of the securities markets at the time of this
offering; and
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other factors as were deemed relevant.
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However, although these factors were considered, the
determination of our offering price is more arbitrary than the
pricing of securities of an operating company in a particular
industry since we have no historical operations or financial
results to compare them to.
Since we
may acquire a target business that is located outside the United
States, we may encounter risks specific to one or more countries
in which we ultimately operate.
As described above, we plan to acquire a business or businesses
located in the United States or Western Europe. If we acquire a
company that has operations outside the United States, we will
be exposed to risks that could negatively impact our future
results of operations following a business combination. The
additional risks we may be exposed to in these cases include but
are not limited to:
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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tax issues, such as tax law changes and variations in tax laws
as compared to the U.S.;
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cultural and language differences;
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foreign exchange controls;
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crime, strikes, riots, civil disturbances, terrorist attacks and
wars; and
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deterioration of political relations with the United States.
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Because
we must furnish our stockholders with target business financial
statements prepared in accordance with or reconciled to
U.S. generally accepted accounting principles, we may not
be able to complete a business combination with some prospective
target businesses unless their financial statements are first
reconciled to U.S. generally accepted accounting
principles.
The federal securities laws require that a business combination
meeting certain financial significance tests include historical
and pro forma financial statement disclosure in periodic reports
and proxy materials submitted to stockholders. Because our
initial business combination must be with a target business that
has a fair market value of at least 80% of the sum of the
balance in the trust account plus the proceeds of the
co-investment (excluding deferred underwriting discounts and
commissions of $6.0 million or $6.6 million if the
underwriters over-allotment option is exercised in full)
at the time of our initial business combination, we will be
required to provide historical and pro forma financial
information to our stockholders when seeking approval of a
business combination with one or more target businesses. These
financial statements must be prepared in accordance with, or be
reconciled to, U.S. generally accepted accounting
principles, or GAAP, and the historical financial statements
must be audited in accordance with the standards of the Public
Company Accounting Oversight Board (United States), or PCAOB. If
a proposed target business, including one located outside of the
U.S., does not have financial statements that have been prepared
in accordance with, or that can be reconciled to, U.S. GAAP
and audited in accordance with the standards of the PCAOB, we
will not be able to acquire that proposed target business. These
financial statement requirements may limit the pool of potential
target businesses with which we may combine.
29
Compliance
with the Sarbanes-Oxley Act of 2002 will require substantial
financial and management resources and may increase the time and
costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act of 2002 requires that
we evaluate and report on our system of internal controls
beginning with our Annual Report on
Form 10-K
for the year ending December 31, 2007. If we fail to
maintain the adequacy of our internal controls, we could be
subject to regulatory scrutiny, civil or criminal penalties
and/or
stockholder litigation. Any inability to provide reliable
financial reports could harm our business. Section 404 of
the Sarbanes-Oxley Act also requires that our independent
registered public accounting firm report on managements
evaluation of our system of internal controls. A target company
may not be in compliance with the provisions of the
Sarbanes-Oxley Act regarding adequacy of their internal
controls. The development of the internal controls of any such
entity to achieve compliance with the Sarbanes-Oxley Act may
increase the time and costs necessary to complete any such
acquisition. Furthermore, any failure to implement required new
or improved controls, or difficulties encountered in the
implementation of adequate controls over our financial processes
and reporting in the future, could harm our operating results or
cause us to fail to meet our reporting obligations. Inferior
internal controls could also cause investors to lose confidence
in our reported financial information, which could have a
negative effect on the trading price of our stock.
Because
our founders initial equity investment was only $25,000,
our offering may be disallowed by state administrators that
follow North American Securities Administrators Association,
Inc. Statement of Policy on development stage
companies.
Pursuant to the Statement of Policy Regarding Promoters
Equity Investment promulgated by The North American Securities
Administrators Association, Inc., an international organization
devoted to investor protection, any state administrator may
disallow an offering of a development stage company if the
initial equity investment by a companys promoters does not
equal a certain percentage of the aggregate public offering
price. Our promoters initial investment of $25,000 is less
than the required $4,610,000 minimum amount pursuant to this
policy. Accordingly, a state administrator would have the
discretion to disallow our offering if it wanted to. We cannot
assure you that our offering would not be disallowed pursuant to
this policy. If this offering were disallowed, it would further
restrict your ability to engage in resale transactions with
respect to our securities. Additionally, the initial equity
investment made by our founders may not adequately protect
investors.
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CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this prospectus that are not purely
historical are forward-looking statements. Our forward-looking
statements include, but are not limited to, statements regarding
our or our managements expectations, hopes, beliefs,
intentions or strategies regarding the future. In addition, any
statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including
any underlying assumptions, are forward-looking statements. The
words anticipates, believe,
continue, could, estimate,
expect, intend, may,
might, plan, possible,
potential, predict, project,
should, would and similar expressions
may identify forward-looking statements, but the absence of
these words does not mean that a statement is not
forward-looking. Forward-looking statements in this prospectus
may include, for example, statements about our:
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ability to complete a combination with one or more target
businesses;
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success in retaining or recruiting, or changes required in, our
officers, key employees or directors following a business
combination;
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officers and directors allocating their time to other businesses
and potentially having conflicts of interest with our business
or in approving a business combination, as a result of which
they would then receive expense reimbursements;
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potential inability to obtain additional financing to complete a
business combination;
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limited pool of prospective target businesses;
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potential change in control if we acquire one or more target
businesses for stock;
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public securities limited liquidity and trading;
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failure to list or delisting of our securities from the American
Stock Exchange or an inability to have our securities listed on
the American Stock Exchange following a business combination;
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use of proceeds not in trust or available to us from interest
income on the trust account balance; or
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financial performance following this offering.
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The forward-looking statements contained in this prospectus are
based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no
assurance that future developments affecting us will be those
that we have anticipated. These forward-looking statements
involve a number of risks, uncertainties (some of which are
beyond our control) 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
factors described under the heading Risk Factors.
Should one or more of these risks or uncertainties materialize,
or should any of our assumptions prove incorrect, actual results
may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be
required under applicable securities laws
and/or if
and when management knows or has a reasonable basis on which to
conclude that previously disclosed projections are no longer
reasonably attainable.
31
USE OF
PROCEEDS
We estimate that the net proceeds of this offering and the
private placement of the sponsors warrants will be as set
forth in the following table:
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Without Over-Allotment
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With Over-Allotment
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Option Exercised
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Option Exercised
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Offering gross proceeds
|
|
$
|
300,000,000
|
|
|
$
|
330,000,000
|
|
Sponsors warrants purchased
by sponsors
|
|
|
4,500,000
|
|
|
|
4,500,000
|
|
|
|
|
|
|
|
|
|
|
Total gross
proceeds(1)
|
|
$
|
304,500,000
|
|
|
$
|
334,500,000
|
|
|
|
|
|
|
|
|
|
|
Offering expenses:(2)(3)
Underwriting discount (7% of Gross proceeds)
|
|
$
|
21,000,000
|
|
|
$
|
23,100,000
|
|
Legal fees and expenses
|
|
|
300,000
|
|
|
|
300,000
|
|
Printing and engraving expenses
|
|
|
100,000
|
|
|
|
100,000
|
|
Accounting fees and expenses
|
|
|
60,000
|
|
|
|
60,000
|
|
SEC registration fee
|
|
|
35,310
|
|
|
|
35,310
|
|
NASD registration fee
|
|
|
33,500
|
|
|
|
33,500
|
|
American Stock Exchange fees
|
|
|
70,000
|
|
|
|
70,000
|
|
Miscellaneous expenses
|
|
|
101,190
|
|
|
|
101,190
|
|
|
|
|
|
|
|
|
|
|
Total offering
expenses
|
|
$
|
21,700,000
|
|
|
$
|
23,800,000
|
|
|
|
|
|
|
|
|
|
|
Proceeds after offering
expenses
|
|
$
|
282,800,000
|
|
|
$
|
310,700,000
|
|
|
|
|
|
|
|
|
|
|
Net offering proceeds held in trust
|
|
$
|
282,750,000
|
|
|
$
|
310,650,000
|
|
Deferred underwriting discounts
and commissions held in trust
|
|
|
6,000,000
|
|
|
|
6,600,000
|
|
|
|
|
|
|
|
|
|
|
Total held in trust
|
|
$
|
288,750,000
|
|
|
$
|
317,250,000
|
|
|
|
|
|
|
|
|
|
|
Net offering proceeds not held
in trust(3)
|
|
$
|
50,000
|
|
|
$
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Excludes $50.0 million of additional proceeds from the sale
of 6,250,000 co-investment units to our sponsors to be paid to
us immediately prior to our consummation of a business
combination. |
|
|
|
(2) |
|
The offering expenses will be primarily funded from the proceeds
of this offering. All of the offering expenses to date have been
paid from advances we received from our founders described
below. These advances will be repaid within 60 days from
the consummation of this offering. During the
30-day
period immediately following the consummation of this offering,
interest income on the trust account may be released to us on a
weekly basis to fund our working capital requirements. |
|
|
|
(3) |
|
Following consummation of this offering, we believe the funds
available to us outside of the trust account, together with
interest income of up to $4.5 million on the balance of the
trust account to be released to us to fund our working capital
requirements, will be sufficient to allow us to operate for at
least the next 24 months, assuming a business combination
is not completed during that time. We expect our primary
liquidity requirements to include approximately $2,136,000 for
expenses for the due diligence and investigation of a target
business or businesses; approximately $2,000,000 for legal,
accounting and other expenses associated with structuring,
negotiating and documenting an initial business combination; an
aggregate of $240,000 for administrative services and support
payable to Berggruen Holdings, Inc., an affiliate of
Mr. Berggruen, representing $10,000 per month for up
to 24 months; $34,000 for legal and accounting fees
relating to our SEC reporting obligations; and approximately
$90,000 for general working capital that will be used for
miscellaneous expenses and reserves. These expenses are
estimates only. Our actual expenditures for some or all of these
items may differ from the estimates set forth herein. For
example, we may incur greater legal and accounting expenses than
our current estimates in connection with negotiating and
structuring a business combination based upon the level of
complexity of that business combination. We do not anticipate
any change in our intended use of proceeds, other than
fluctuations |
32
|
|
|
|
|
among the current categories of allocated expenses, which
fluctuations, to the extent they exceed current estimates for
any specific category of expenses, would be deducted from our
excess working capital. Any such interest income not used to
fund our working capital requirements or repay advances from our
founders or for due diligence or legal, accounting and non-due
diligence expenses will be usable by us to pay other expenses
that may exceed our current estimates. |
A total of approximately $288.8 million (or approximately
$317.3 million if the underwriters over-allotment
option is exercised in full) of the net proceeds from this
offering and the sale of the sponsors warrants described
in this prospectus, and $6.0 million (or $6.6 million
if the underwriters over-allotment option is exercised in
full) of deferred underwriting discounts and commissions, will
be placed in a trust account at Continental Stock
Transfer & Trust Company with Continental Stock
Transfer & Trust Company, as trustee. Except for a
portion of the interest income released to us, the proceeds held
in trust will not be released from the trust account until the
earlier of the consummation of a business combination or our
liquidation. All amounts held in the trust account that are not
distributed to public stockholders who exercise redemption
rights, released to us as interest income or payable to the
underwriters for deferred discounts and commissions will be
released to us on closing of our initial business combination
with one or more target businesses which have a fair market
value of at least 80% of the sum of the balance in the trust
account plus the proceeds of the co-investment (excluding
deferred underwriting discounts and commissions of
$6.0 million or $6.6 million if the underwriters
over-allotment option is exercised in full) at the time of such
business combination, subject to a majority of our public
stockholders voting in favor of the business combination and
less than 20% of the public stockholders electing to exercise
their redemption rights and subject to such deferred
underwriting discount and commission having been paid to the
underwriters. On release of funds from the trust account and
after payment of the redemption price to any public stockholders
who exercise their redemption rights, the underwriters will
receive their deferred underwriting discounts and commissions,
and the remaining funds will be released to us and can be used
to pay all or a portion of the purchase price of the business or
businesses with which our initial combination occurs. If the
business combination is paid for using stock or debt securities,
we may apply the cash released to us from the trust account for
general corporate purposes, including for maintenance or
expansion of operations of the acquired business or businesses,
the payment of principal or interest due on indebtedness
incurred in consummating our initial business combination, to
fund the purchase of other companies, or for working capital.
Upon the consummation of this offering, we have agreed to pay
Berggruen Holdings, Inc., an affiliate of Mr. Berggruen, a
total of $10,000 per month for office space, administrative
services and secretarial support until the earlier of our
consummation of a business combination or our liquidation. This
arrangement is being agreed to by Berggruen Holdings, Inc. for
our benefit and is not intended to provide Berggruen Holdings,
Inc. compensation in lieu of a management fee or other
remuneration because it is anticipated that the expenses to be
paid by Berggruen Holdings, Inc. will approximate the monthly
reimbursement. We believe that such fees are at least as
favorable as we could have obtained from an unaffiliated person.
Upon consummation of a business combination or our liquidation,
we will cease paying these monthly fees.
We expect that due diligence of prospective target businesses
will be performed by some or all of our officers and may include
engaging market research firms
and/or third
party consultants. Our officers, or their affiliates or
associates, will not receive any compensation for their due
diligence of prospective target businesses, but would be
reimbursed for any
out-of-pocket
expenses (such as travel expenses) incurred in connection with
such due diligence activities. Our audit committee will review
and approve all expense reimbursements made to our officers and
any expense reimbursements payable to members of our audit
committee will be reviewed and approved by our board of
directors, with the interested director or directors abstaining
from such review and approval.
We believe that amounts not held in trust and the interest
income of up to $4.5 million earned on the trust account
balance that may be released to us (as described in more detail
below) will be sufficient to pay the costs and expenses to which
such proceeds are allocated. This belief is based on the fact
that in-depth due diligence will be undertaken only after we
have negotiated and signed a letter of intent or other
preliminary agreement that addresses the terms of a business
combination. However, if our estimate of the costs of
undertaking in-depth due diligence and negotiating a business
combination is less than the actual amount
33
necessary to do so, we may be required to raise additional
capital, the amount, availability and cost of which is currently
unascertainable. In this event, we could seek such additional
capital through loans or additional investments from our
founders, officers or directors, but, except for the
co-investment, none of such founders, officers or directors is
under any obligation to advance funds to, or invest in, us.
If we complete a business combination, the
out-of-pocket
expenses incurred by our officers and directors prior to the
business combinations closing will become an obligation of
the post-combination business, assuming these
out-of-pocket
expenses have not been reimbursed prior to the closing. These
expenses would be a liability of the post-combination business
and would be treated in a manner similar to any other account
payable of the combined business. Our officers and directors
may, as part of any such combination, negotiate the repayment of
some or all of any such expenses. If the target business
owners do not agree to such repayment, this could cause our
officers and directors to view such potential business
combination unfavorably and result in a conflict of interest.
As of the date of this prospectus, our sponsors have advanced to
us a total of $250,000 which was used to pay a portion of the
expenses of this offering referenced in the line items above for
the SEC registration fee, NASD registration fee, American Stock
Exchange fee and accounting and legal fees and expenses. These
advances are non-interest bearing, unsecured and are due within
60 days following the consummation of this offering. The
loan will be repaid out of the interest we receive on the
balance of the trust account.
The net proceeds of this offering not held in the trust account
and not immediately required for the purposes set forth above
will be invested only in United States government
securities (as such term is defined in the Investment
Company Act of 1940) and one or more money market funds,
selected by us, which invest principally in either short-term
securities issued or guaranteed by the United States having a
rating in the highest investment category granted thereby by a
recognized credit rating agency at the time of acquisition or
short-term tax exempt municipal bonds issued by governmental
entities located within the United States, so that we are not
deemed to be an investment company under the Investment Company
Act. Interest income of up to $4.5 million on the trust
account balance is releasable to us from the trust account to
fund a portion of our working capital requirements.
Other than the fee for office space and administrative and
secretarial services described above, no compensation of any
kind (including finders and consulting fees) will be paid
to any of our officers or directors, or any of their affiliates,
for services rendered to us prior to or in connection with the
consummation of the business combination. However, our officers
and directors will receive reimbursement for any
out-of-pocket
expenses incurred by them in connection with activities on our
behalf, such as identifying potential target businesses and
performing due diligence on suitable business combinations. To
the extent that such expenses exceed the available proceeds not
deposited in the trust account and interest income of up to
$4.5 million that is released to us from the trust account,
such
out-of-pocket
expenses would not be reimbursed by us unless we consummate a
business combination. Since the role of present management after
a business combination is uncertain, we have no current ability
to determine what remuneration, if any, will be paid to those
persons after a business combination.
A stockholder will be entitled to receive funds from the trust
account (including interest earned on his, her or its portion of
the trust account, net of taxes payable with respect to such
interest, and less interest income released to us from the trust
account in the manner described above) only in the event of our
liquidation if we fail to complete a business combination within
the allotted time or if the public stockholder seeks to have us
redeem such shares for cash in connection with a business
combination that the public stockholder voted against and that
we actually complete. In no other circumstances will a
stockholder have any right or interest of any kind in or to
funds in the trust account.
34
On consummation of an initial business combination, the
underwriters will receive the deferred underwriters
discounts and commissions held in the trust account. If we do
not complete an initial business combination and the trustee
must therefore distribute the balance in the trust account on
our liquidation, the underwriters have agreed (i) to
forfeit any rights or claims to the deferred underwriting
discounts and commissions, together with any accrued interest
thereon, in the trust account and (ii) that the trustee is
authorized to distribute the deferred underwriting discounts and
commissions, together with any accrued interest thereon, net of
income taxes payable on such interest, to the public
stockholders on a pro rata basis.
DIVIDEND
POLICY
We have not paid any dividends on our common stock to date and
we do not intend to pay cash dividends prior to the consummation
of a business combination. After we complete a business
combination, the payment of dividends will depend on our
revenues and earnings, if any, capital requirements and general
financial condition. The payment of dividends after a business
combination will be within the discretion of our then-board of
directors. Our board of directors currently intends to retain
any earnings for use in our business operations and,
accordingly, we do not anticipate the board declaring any
dividends in the foreseeable future.
35
DILUTION
The difference between the public offering price per share of
common stock, assuming no value is attributed to the warrants
included in the units, and the pro forma net tangible book value
per share of our common stock after this offering constitutes
the dilution to investors in this offering. Net tangible book
value per share is determined by dividing our net tangible book
value, which is our total tangible assets less total liabilities
(including the value of common stock which may be redeemed for
cash), by the number of outstanding shares of our common stock.
The information below assumes the payment in full of the
underwriters discounts and commissions, including amounts
held in the trust account, and no exercise of the over-allotment
option.
At July 24, 2006, our net tangible book value was a
deficiency of $189,060, or approximately $(0.02) per share of
common stock. After giving effect to the sale of
37,500,000 shares of common stock included in the units and
the sale of 4,500,000 sponsors warrants, and the deduction
of underwriting discounts and estimated expenses of this
offering, our pro forma net tangible book value (as decreased by
the value of 7,496,250 shares of common stock which may be
redeemed for cash) at July 24, 2006 would have been
$225,103,625 or $5.72 per share, representing an immediate
increase in net tangible book value of $5.74 per share to
our founders and an immediate dilution of $2.28 per share
or 28.50% to new investors not exercising their redemption
rights. After giving effect to the sale of 6,250,000
co-investment shares of common stock included in the
co-investment units, our pro forma net tangible book value (as
decreased by the value of 7,496,250 shares of common stock
which may be redeemed for cash) upon consummation of our
business combination will be $275,103,625 or $5.98 per
share, representing an increase in net tangible book value of
$6.20 per share to our founders and an immediate dilution
of $1.80 per share or 22.50% to new investors not
exercising their redemption rights. For purposes of
presentation, our pro forma net tangible book value after this
offering is approximately $57,721,125 less than it otherwise
would have been because if we effect a business combination, the
redemption rights of the public stockholders may result in the
redemption for cash of up to approximately 19.99% of the
aggregate number of the shares sold in this offering at a
per-share redemption price equal to the amount in the trust
account as of two business days prior to the proposed
consummation of a business combination, inclusive of any
interest, net of any taxes due on such interest and net of up to
$4.5 million in interest income on the trust account
balance previously released to us to fund working capital
requirements, divided by the number of shares sold in this
offering.
The following table illustrates the dilution to the new
investors on a per-share basis, assuming no value is attributed
to the warrants included in the units:
|
|
|
|
|
|
|
|
|
Public offering price
|
|
|
|
|
|
$
|
8.00
|
|
Net tangible book value before
this offering
|
|
$
|
(0.02
|
)
|
|
|
|
|
Increase attributable to new
investors
|
|
|
5.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net tangible book value
after this offering
|
|
|
|
|
|
|
5.72
|
|
|
|
|
|
|
|
|
|
|
Dilution to new investors
|
|
|
|
|
|
$
|
2.28
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth information with respect to our
founders and the new investors, following the co-investment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Purchased
|
|
|
Total Consideration
|
|
|
Average Price
|
|
|
|
Number
|
|
|
Percentage
|
|
|
Amount
|
|
|
Percentage
|
|
|
Per Share
|
|
|
Founders shares(1)
|
|
|
9,375,000
|
|
|
|
20.0
|
|
|
$
|
25,000
|
|
|
|
.01
|
%
|
|
|
.00267
|
|
New investors
|
|
|
37,500,000
|
|
|
|
80.0
|
|
|
|
300,000,000
|
|
|
|
99.99
|
|
|
|
8.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
46,875,000
|
|
|
|
100.0
|
%
|
|
$
|
300,025,000
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Following the co-investment, our founders will (i) own
15,625,000 shares of our common stock, comprising 29.2% of
our common stock purchased and (ii) have paid aggregate
consideration of $50,025,000, comprising 12.5% of the total
consideration that we received for our outstanding common stock. |
36
The pro forma net tangible book value after this offering is
calculated as follows:
|
|
|
|
|
Numerator:
|
|
|
|
|
Net tangible book value before
this offering and sale of sponsors warrants
|
|
$
|
(189,060
|
)
|
Proceeds from this offering
|
|
|
288,800,000
|
|
Plus: Offering costs accrued for
and paid in advance, excluded from tangible book value before
this offering
|
|
|
213,810
|
|
Less: Deferred underwriters
fee paid upon consummation of a business combination
|
|
|
(6,000,000
|
)
|
Less: proceeds held in trust
subject to redemption to cash ($287,750,000 × 19.99%)
|
|
|
(57,721,125
|
)
|
|
|
|
|
|
|
|
$
|
225,103,625
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
Shares of common stock outstanding
prior to this offering
|
|
|
9,375,000
|
|
Shares of common stock included in
the units offered
|
|
|
37,500,000
|
|
Less: shares subject to redemption
(37,500,000 × 19.99%)
|
|
|
(7,496,250
|
)
|
|
|
|
|
|
|
|
|
39,378,750
|
|
|
|
|
|
|
37
CAPITALIZATION
The following table sets forth our capitalization on:
|
|
|
|
|
an actual basis at July 24, 2006;
|
|
|
|
an as adjusted basis to give effect to the sale of our units and
the sponsors warrants, and the application of the
estimated net proceeds derived from the sale of such
securities; and
|
|
|
|
a pro forma as adjusted basis to give effect to the sale of our
units, the sponsors warrants and the co-investment units,
and the application of the estimated net proceeds derived from
the sale of such securities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of July 24, 2006
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
Actual
|
|
|
As Adjusted
|
|
|
as Adjusted
|
|
|
Notes payable to affiliates(1)
|
|
$
|
250,000
|
|
|
$
|
|
|
|
$
|
|
|
Deferred underwriting discounts
and commissions
|
|
$
|
|
|
|
$
|
6,000,000
|
|
|
$
|
6,000,000
|
|
Common stock, 0, 7,496,250 and
7,496,250 shares which are subject to possible redemption,
shares at redemption value(2)
|
|
|
0
|
|
|
$
|
57,721,125
|
|
|
$
|
57,721,125
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par
value, 1,000,000 shares authorized; none issued or
outstanding
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Common stock, $0.0001 par
value, 200,000,000 shares authorized; 9,375,000 shares
issued and outstanding; 39,378,750 shares issued and
outstanding (excluding 7,496,250 shares subject to possible
redemption), as adjusted; 45,628,750 shares issued and
outstanding (excluding 7,496,250 shares subject to possible
redemption), pro forma as adjusted
|
|
|
937
|
|
|
|
4,688
|
|
|
|
5,313
|
|
Additional paid-in capital
|
|
|
24,063
|
|
|
|
225,099,187
|
|
|
|
275,098,562
|
|
Deficit accumulated during the
development stage
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
24,750
|
|
|
|
225,103,625
|
|
|
|
275,103,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
|
274,750
|
|
|
|
288,824,750
|
|
|
|
338,824,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Notes payable to affiliates are comprised of promissory notes
issued in the amount of $125,000 to Berggruen Holdings and
$125,000 to Marlin Equities. The notes are due within
60 days following the consummation of this offering. |
|
(2) |
|
If we consummate a business combination, the redemption rights
afforded to our public stockholders may result in the redemption
for cash of up to approximately 19.99% of the aggregate number
of shares sold in this offering at a per-share redemption price
equal to the aggregate amount then on deposit in the trust
account (initially approximately $7.70 per share), before
payment of deferred underwriting discounts and commissions and
including accrued interest, net of any income taxes due on such
interest, which income taxes, if any, shall be paid from the
trust account, and net of interest income previously released to
us for working capital requirements, as of two business days
prior to the proposed consummation of a business combination
divided by the number of shares sold in this offering. |
38
MANAGEMENTS
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We were formed on June 8, 2006, to effect a merger, stock
exchange, asset acquisition, reorganization or similar business
combination with an operating business or businesses which we
believe have significant growth potential. We do not have any
specific business combination under current consideration, and
neither we, nor any representative acting on our behalf, has had
any contacts with any target businesses regarding a business
combination. We intend to effect a business combination using
cash from the proceeds of this offering, our capital stock, debt
or a combination of cash, stock and debt. The issuance of
additional shares of our stock in a business combination:
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may significantly reduce the equity interest of our stockholders;
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may cause a change in control if a substantial number of shares
of our stock are issued, which may affect, among other things,
our ability to use our net operating loss carry-forwards, if
any, and may also result in the resignation or removal of one or
more of our present officers and directors; and
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may adversely affect prevailing market prices for our common
stock.
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Similarly, debt securities issued by us in a business
combination may result in:
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default and foreclosure on our assets if our operating revenues
after a business combination were insufficient to pay our debt
obligations;
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acceleration of our obligations to repay the indebtedness even
if we have made all principal and interest payments when due if
the debt security contained covenants requiring the maintenance
of certain financial ratios or reserves and any such covenant
was breached without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if
any, if the debt security was payable on demand; and
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our inability to obtain additional financing, if necessary, if
the debt security contained covenants restricting our ability to
obtain additional financing while such debt security was
outstanding.
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We have neither engaged in any operations nor generated any
revenues to date. Our only activities since inception have been
organizational activities and those necessary to prepare for
this offering. Following this offering, we will not generate any
operating revenues until consummation of a business combination.
We will generate non-operating income in the form of interest
income on cash and cash equivalents after this offering.
Liquidity
and Capital Resources
Our liquidity needs have been satisfied to date through receipt
of $25,000 from the sale of 9,375,000 units to our
founders, and advances from our founders that are more fully
described below. Please see Description of
Securities for additional information concerning such
units. We estimate that the net proceeds from (i) the sale
of the units in this offering, after deducting approximately
$15,700,000 to be applied to underwriting discounts, offering
expenses and working capital and $6.0 million of deferred
underwriting discounts (or $6.6 million if the
underwriters over-allotment option is exercised in full)
and (ii) the sale of the sponsors warrants for a
purchase price of $4.5 million, will be approximately
$282.8 million (or $310.7 million if the
underwriters over-allotment option is exercised in full).
Approximately $288.8 million (or approximately
$317.3 million if the underwriters over-allotment
option is exercised in full), will be held in trust, which
includes $6.0 million (or $6.6 million if the
underwriters over-allotment option is exercised in full)
of deferred underwriting discounts and commissions. The
remaining $50,000 will not be held in trust.
We will use substantially all of the net proceeds of this
offering to acquire one or more target businesses, including
identifying and evaluating prospective target businesses,
selecting one or more target businesses, and structuring,
negotiating and consummating the business combination. If the
business combination is paid for
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using stock or debt securities, we may apply the cash released
to us from the trust account for general corporate purposes,
including for maintenance or expansion of operations of the
acquired business or businesses, the payment of principal or
interest due on indebtedness incurred in consummating our
initial business combination, to fund the purchase of other
companies, or for working capital.
Following consummation of this offering, we believe the funds
available to us outside of the trust account, together with
interest income of up to $4.5 million on the balance of the
trust account to be released to us for working capital
requirements, will be sufficient to allow us to operate for at
least the next 24 months, assuming a business combination
is not completed during that time. We expect our primary
liquidity requirements to include approximately $2,136,000 for
expenses for the due diligence and investigation of a target
business or businesses; approximately $2,000,000 for legal,
accounting and other expenses associated with structuring,
negotiating and documenting an initial business combination; an
aggregate of $240,000 for office space, administrative services
and secretarial support payable to Berggruen Holdings, Inc., an
affiliate of Mr. Berggruen, representing $10,000 per month
for up to 24 months; $34,000 for legal and accounting fees
relating to our SEC reporting obligations; and approximately
$90,000 for general working capital that will be used for
miscellaneous expenses and reserves. These expenses are
estimates only. Our actual expenditures for some or all of these
items may differ from the estimates set forth herein. If our
estimate of the costs of undertaking in-depth due diligence and
negotiating a business combination is less than the actual
amount necessary to do so, we may be required to raise
additional capital, the amount, availability and cost of which
is currently unascertainable. In this event, we could seek such
additional capital through loans or additional investments from
our founders, officers or directors, but, except for the
co-investment, none of such founders, officers or directors is
under any obligation to advance funds to, or invest in, us. Any
such interest income not used to fund our working capital
requirements or repay advances from our founders or for due
diligence or legal, accounting and non-due diligence expenses
will be usable by us to pay other expenses that may exceed our
current estimates.
We do not believe we will need to raise additional funds
following this offering in order to meet the expenditures
required for operating our business. However, we may need to
raise additional funds, in addition to the co-investment,
through a private offering of debt or equity securities if such
funds were required to consummate a business combination.
Subject to compliance with applicable securities laws, we would
only consummate such financing simultaneously with the
consummation of a business combination.
Related
Party Transaction
As of the date of this prospectus, each of Berggruen Holdings
and Marlin Equities has advanced on our behalf a total of
$125,000 and $125,000, respectively, for payment of offering
expenses. These advances are non-interest bearing, unsecured and
are due within 60 days following the consummation of this
offering. The loans will be repaid out of the proceeds of this
offering not placed in trust. Please see Certain
Transactions for further information concerning such
advances.
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PROPOSED
BUSINESS
Introduction
We are a Delaware blank check company formed on June 8,
2006 to complete a business combination with one or more
operating businesses. Our efforts in identifying a prospective
target business will not be limited to a particular industry. We
do not have any specific merger, stock exchange, asset
acquisition, reorganization or other business combination under
consideration or contemplation and we have not, nor has anyone
on our behalf, contacted, or been contacted by, any potential
target business or had any discussions, formal or otherwise,
with respect to such a transaction. To date our efforts have
been limited to organizational activities as well as activities
related to this offering.
Business
Strategy
We have identified the following criteria and guidelines that we
believe are important in evaluating prospective target
businesses. We will use these criteria and guidelines in
evaluating acquisition opportunities. However, we may decide to
enter into a business combination with a target business that do
not meet these criteria and guidelines.
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Established Companies with Proven Track
Records. We will seek to acquire established
companies with sound historical financial performance. We will
typically focus on companies with a history of strong operating
and financial results and we do not intend to acquire
start-up
companies.
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Companies with Strong Free Cash Flow
Characteristics. We will seek to acquire
companies that have a history of strong, stable free cash flow
generation. We will focus on companies that have predictable,
recurring revenue streams and an emphasis on low working capital
and capital expenditure requirements.
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Strong Competitive Industry
Position. We will seek to acquire businesses
that operate within industries that have strong fundamentals.
The factors we will consider include growth prospects,
competitive dynamics, level of consolidation, need for capital
investment and barriers to entry. Within these industries, we
will focus on companies that have a leading market position. We
will analyze the strengths and weaknesses of target businesses
relative to their competitors, focusing on product quality,
customer loyalty, cost impediments associated with customers
switching to competitors, patent protection and brand
positioning. We will seek to acquire businesses that demonstrate
advantages when compared to their competitors, which may help to
protect their market position and profitability and deliver
strong free cash flow.
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Experienced Management Team. We will
seek to acquire businesses that have strong, experienced
management teams. We will focus on management teams with a
proven track record of driving revenue growth, enhancing
profitability and generating strong free cash flow. We believe
that the operating expertise of our founding shareholders will
complement, not replace the targets management team.
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Diversified Customer and Supplier
Base. We will seek to acquire businesses that
have a diversified customer and supplier base. Companies with a
diversified customer and supplier base are generally better able
to endure economic downturns, industry consolidation, changing
business preferences and other factors that may negatively
impact their customers, suppliers and competitors.
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Competitive
Advantages
We believe that we have the following competitive advantages
over other entities with business objectives similar to ours:
Management
Expertise
We believe Berggruen Holdings is well positioned to source a
business combination as a result of its extensive infrastructure
which includes eight offices and 12 senior investment
professionals worldwide. Six senior investment professionals
located at the Berggruen Holdings offices in New York, Los
Angeles and
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London will be actively involved in sourcing an acquisition for
Freedom Acquisition Holdings. Berggruen Holdings is industry
opportunistic and has a bias towards positive cash flow with
respect to the investment opportunities that it sources. In
addition, Berggruen Holdings has over 20 years experience
sourcing and executing investment opportunities in businesses
through leveraged buyouts, public market securities, distressed
situations and balance sheet restructurings. We expect the
strength of Berggruen Holdings sourcing network to create
unique opportunities for non-auction sourced deals.
Marlin Equities is an investment vehicle majority owned by its
managing member, Martin E. Franklin, the chairman of our board
of directors, and Ian G.H. Ashken the other principal member who
has been Mr. Franklins business partner for over
15 years. Mr. Franklin has over 20 years of
experience in numerous businesses and has been involved in
originating, structuring, negotiating, managing and consummating
more than 75 transactions. Mr. Franklin is the chairman and
chief executive officer of Jarden Corporation, a broad based
consumer products company. Under his leadership, Jardens
annualized revenues have increased from approximately
$300 million in 2001 to over $3.5 billion in 2005
through a combination of organic operating initiatives and
acquisitions. At Jarden, Mr. Franklin has overseen more
than 10 acquisitions, ranging in size from less than
$10 million to approximately $850 million, with
combined revenues as of December 31, 2005 of over
$3 billion. During the same period, Jardens equity
market capitalization has increased from less than
$100 million to over $1.8 billion. The Wall Street
Journal recognized Jarden as the best performing consumer
products stock over the five-year period ended December 31,
2005 with a compounded growth rate of 58% per year during
this period. We cannot assure you that we will be able to
achieve similar revenue or market capitalization growth rates.
We have entered into an agreement with Mr. Franklin whereby
we have acknowledged that Mr. Franklin has committed to
Jardens Board of Directors that we will not consider
transactions that fit within Jardens publicly announced
acquisition criteria unless Jarden has determined not to pursue
the transaction.
Prior to their involvement with Jarden, Messrs. Franklin
and Ashken had extensive executive experience in running public
companies. Mr. Franklin held the positions of Chairman and
CEO of Lumen Technologies, Inc. (formerly BEC Group, Inc.), an
NYSE listed company, from May 1996 to March 1998, and of its
predecessor, Benson Eyecare Corporation, from October 1992 to
May 1996, of which he was also President from November 1993 to
May 1996. In 1992, Benson Eyecare Corporation was the highest
performing stock on the American Stock Exchange and posted
positive returns every year prior to its sale in 1996.
Mr. Franklin was also Executive Chairman of Lumen
Technologies from March 1998 until its sale in December 1998.
Mr. Franklin served as executive chairman of Bollé
Inc., an American Stock Exchange listed company, from July 1997
until its sale in February 2000. Both Lumen Technologies and
Bollé were spin-offs from Benson Eyecare. In addition,
during the last five years Mr. Franklin served as a
non-executive director of Specialty Catalog Corp., from 1994 to
2004, of Bally Total Fitness from March 2003 to April 2004, and
of Guideline, Inc. from November 2001 to December 2005.
Mr. Franklin currently serves on the boards of Apollo
Investment Corp. and Kenneth Cole Productions, Inc.
Established
deal sourcing network
We believe that the extensive network of private equity sponsor
relationships as well as relationships with management teams of
public and private companies, investment bankers, attorneys and
accountants developed by the principals of Berggruen Holdings
and Marlin Equities, and their respective investment
professionals or members described below, should provide us with
significant business combination opportunities.
Disciplined
Acquisition Approach
Our sponsors will use the same disciplined approach in acquiring
target businesses on our behalf as they use in connection with
their private equity investing. Accordingly, we will seek to
reduce the risks posed by the acquisition of a target business
by:
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focusing on companies with leading market positions and strong
cash flow;
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engaging in extensive due diligence from the perspective of a
long-term investor; and
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investing at low price to cash flow multiples.
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Strong
Berggruen/Marlin management team
In addition to Mr. Berggruen and Mr. Franklin, we
expect the following individuals, who are affiliated with our
sponsors, to actively source target businesses for us:
Jared S. Bluestein has served as the Chief
Operating Officer of Berggruen Holdings since June 1996 and has
been involved in the execution and oversight of over
40 direct investments in the United States and Europe. He
plays a key role in Berggruens buyout activities,
investment sourcing, portfolio oversight and firm
administration. Mr. Bluestein also serves on the board of
directors of Bonded Services Inc., Desa International, Hoover
Treated Wood Products, Inc., FGX International Holdings Limited
and Apex Design Technology. Mr. Bluestein holds degrees in
Finance and International Business from Pennsylvania State
University.
William Hallisey joined Berggruen Holdings in
March 2004. He previously managed private equity and
venture investments for companies in the ING Group based in
New York including ING Capital and ING Direct. These
investments encompass a broad range of industries including
financial services, health care, technology, media and telecom.
Prior to that, Mr. Hallisey was a senior executive with
investment banking and management responsibilities at both
Furman Selz and ING Barings. Earlier he had private
equity, real estate and fixed income asset management
responsibilities for companies in the Xerox Financial Services
group (Xerox Life, Van Kampen mutual funds and Xerox Credit).
Mr. Hallisey led acquisitions for the GE Capital Services
consumer area. He also has strategic consulting experience with
the LEK partnership in Boston. He graduated from Stanford
University and holds an MBA from Harvard Business School.
Eric Hanson joined Hanson PLC (no relation) where
he was the VP of acquisitions in the USA until 1986. After
leaving Hanson, he became President of International Proteins
Corporation, a company which he built through acquisitions
before selling off the various parts. In 1992 he joined
MacAndrews & Forbes where he was involved in a number
of M & A transactions. He led the management buyout of
the MasterCraft Boat Company, and joined Berggruen Holdings in
May 2000. He is a director of Hoover Treated Wood Products,
Inc., Bonded Services Ltd and Global Supply Chain Finance AG.
Mr. Hanson holds a MA from Cambridge University and a
Masters in Business Administration from INSEAD.
Jennifer D. Stewart joined Berggruen Holdings in
2005. She was previously a founding partner of The 180 Group
where she invested $110 million of equity capital in a
diverse range of industries, including health care practice
management, aerospace, specialty retail, and both branded and
unbranded consumer goods. Prior to The 180 Group,
Ms. Stewart worked at Bear Stearns Merchant Banking and was
involved in the groups investment, portfolio oversight,
and institutional fundraising activities. Prior to Bear Stearns
Merchant Banking, Ms. Stewart held several operating
positions at Exxon. Ms. Stewart earned her BS Chemical
Engineering degree, with Honors and High Distinction, from The
Pennsylvania State University and MBA from Harvard Business
School. She is currently a director of The Mexmil Company, Lee
Cooper, and Apex Design Technology.
Ian G. H. Ashken has been Mr. Franklins
business partner since 1989. Since that time, Mr. Ashken
has actively participated in all the transactions outlined above
for Mr. Franklin. Mr. Ashken is currently the
Vice-Chairman, Chief Financial Officer and Secretary of Jarden
as well as a principal of the Marlin Group of companies. Prior
to the sale of Bollé Inc. in February 2000, Mr. Ashken
served as its Vice Chairman from December 1998, and Executive
Vice President, Chief Financial Officer, Assistant Secretary and
Director from July 1997 to December 1998. Mr. Ashken was
Executive Vice President, Chief Financial Officer and a Director
of Lumen Technologies, Inc. from December 1995 to December 1998
and Chief Financial Officer and a Director of Benson Eyecare
from October 1992 to May 1996. Having worked in tandem with
Mr. Franklin for many years, Mr. Ashken is experienced
in the day to day management of companies as well as the mergers
and acquisitions process and in dealing with regulatory and tax
authorities. Mr. Ashken received his BA (Hons) in Economics
and Accounting from the University of Newcastle in England and
is a qualified Chartered Accountant.
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Effecting
a Business Combination
General
We are not presently engaged in, and we will not engage in, any
operations for an indefinite period of time following this
offering. We intend to utilize the cash proceeds of this
offering, our capital stock, debt or a combination of these as
the consideration to be paid in a business combination. While
substantially all of the net proceeds of this offering are
allocated to completing a business combination, the proceeds are
not otherwise designated for more specific purposes.
Accordingly, prospective investors will at the time of their
investment in us not be provided an opportunity to evaluate the
specific merits or risks of one or more target businesses. If
the business combination is paid for using stock or debt
securities, we may apply the cash released to us from the trust
account for general corporate purposes, including for
maintenance or expansion of operations of the acquired business
or businesses, the payment of principal or interest due on
indebtedness incurred in consummating our initial business
combination, to fund the purchase of other companies, or for
working capital. We may engage in a business combination with a
company that does not require significant additional capital but
is seeking a public trading market for its shares, and which
wants to merge with an already public company to avoid the
uncertainties associated with undertaking its own public
offering. These uncertainties include time delays, compliance
and governance issues, significant expense, a possible loss of
voting control, and the risk that market conditions will not be
favorable for an initial public offering at the time this
offering is ready to be sold. We may seek to effect a business
combination with more than one target business, although our
limited resources may serve as a practical limitation on our
ability to do so.
We do not have any specific business combination under
consideration and we have not, nor has anyone on our behalf,
contacted, or been contacted by, any potential target business
or had any substantive discussions, formal or otherwise, with
respect to such a transaction. Additionally, we have not engaged
or retained any agent or other representative to identify or
locate any suitable acquisition candidate, to conduct any
research or take any measures, directly or indirectly, to locate
or contact a target business.
Prior to consummation of a business combination, we will seek to
have all vendors, prospective target businesses or other
entities that we may engage, which we refer to as potential
contracted parties or a potential contracted party, execute
agreements with us waiving any right, title, interest or claim
of any kind in or to any monies held in the trust account for
the benefit of our public stockholders. There is no assurance
that we will be able to get waivers from our vendors and there
is no assurance that such waivers will be enforceable by
operation of law or that creditors would be prevented from
bringing claims against the trust. In the event that a potential
contracted party were to refuse to execute such a waiver, we
will execute an agreement with that entity only if our
management first determines that we would be unable to obtain,
on a reasonable basis, substantially similar services or
opportunities from another entity willing to execute such a
waiver. Examples of instances where we may engage a third party
that refused to execute a waiver would be the engagement of a
third party consultant whose particular expertise or skills are
believed by management to be superior to those of other
consultants that would agree to execute a waiver or a situation
where management does not believe it would be able to find a
provider of required services willing to provide the waiver. If
a potential contracted party refuses to execute such a waiver,
Mr. Berggruen and Mr. Franklin have agreed that they
will be personally liable to cover the potential claims made by
such party but only if, and to the extent, that the claims would
otherwise reduce the trust account proceeds payable to our
public stockholders in the event of a liquidation.
Subject to the requirement that a target business or businesses
have a fair market value of at least 80% of the sum of the
balance in the trust account plus the proceeds of the
co-investment (excluding deferred underwriting discounts and
commissions of $6.0 million or $6.6 million if the
underwriters over-allotment option is exercised in full)
at the time of our initial business combination, we have
virtually unrestricted flexibility in identifying and selecting
one or more prospective target businesses. Accordingly, there is
no current basis for investors in this offering to evaluate the
possible merits or risks of the target business with which we
may ultimately complete a business combination. Although our
management will assess the risks inherent in a particular target
business with which we may combine, we cannot assure you that
this assessment will result in our identifying all risks that a
target business may encounter. Furthermore, some of those risks
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may be outside of our control, meaning that we can do nothing to
control or reduce the chances that those risks will adversely
impact a target business.
Sources
of target businesses
We anticipate that target businesses may be brought to our
attention from various unaffiliated parties such as investment
banking firms, venture capital funds, private equity funds,
leveraged buyout funds, management buyout funds and similar
sources. We may also identify a target business through
managements contacts within the private equity industry.
We will not acquire an entity that is either a portfolio company
of, or has otherwise received a financial investment from, our
sponsors or their affiliates. Neither we nor our officers or
directors have given, or will give, any consideration to
entering into a business combination with companies affiliated
with our founders, officers or directors. While our officers are
not committed to spending full-time on our business and our
directors have no commitment to spend any time in identifying or
performing due diligence on potential target businesses, our
officers and directors believe that the relationships they have
developed over their careers in the private equity industry may
generate a number of potential target businesses that will
warrant further investigation.
We may pay fees or compensation to third parties for their
efforts in introducing us to potential target businesses. Such
payments are typically, although not always, calculated as a
percentage of the dollar value of the transaction. We have not
anticipated use of a particular percentage fee, but instead will
seek to negotiate the smallest reasonable percentage fee
consistent with the attractiveness of the opportunity and the
alternatives, if any, that are then available to us. We may make
such payments to entities we engage for this purpose or entities
that approach us on an unsolicited basis. Payment of
finders fees is customarily tied to consummation of a
transaction and certainly would be tied to a completed
transaction in the case of an unsolicited proposal. Although it
is possible that we may pay finders fees in the case of an
uncompleted transaction, we consider this possibility to be
extremely remote. In no event will we pay any of our officers or
directors or any entity with which they are affiliated any
finders fee or other compensation for services rendered to
us prior to or in connection with the consummation of a business
combination. Any such fees or compensation would be paid out of
interest earned on the trust account balance. In addition, none
of our officers or directors will receive any finders fee,
consulting fees or any similar fees from any person or entity in
connection with any business combination involving us. Following
such business combination, however, our officers and directors
may receive compensation or fees including compensation approved
by the board of directors for our officers that remain officers
following such business combination or customary directors
fees for our directors that remain following such business
combination. Our officers and directors have advised us that
they will not take an offer regarding their compensation or fees
following a business combination into consideration when
determining which target businesses to pursue.
Selection
of a target business and structuring of a business
combination
Subject to the requirement that our initial business combination
must be with a target business with a fair market value that is
at least 80% of the sum of the balance in the trust account plus
the proceeds of the co-investment (excluding deferred
underwriting discounts and commissions of $6.0 million or
$6.6 million if the underwriters over-allotment
option is exercised in full) at the time of such business
combination, our management will have virtually unrestricted
flexibility in identifying and selecting a prospective target
business.
In evaluating a prospective target business, our management will
primarily consider the criteria and guidelines set forth above
under the caption Proposed Business Business
Strategy. In addition, our management will consider, among
other factors, the following:
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financial condition and results of operations;
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growth potential;
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brand recognition and potential;
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experience and skill of management and availability of
additional personnel;
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capital requirements;
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competitive position;
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barriers to entry by competitors;
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stage of development of the business and its products or
services;
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existing distribution arrangements and the potential for
expansion;
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degree of current or potential market acceptance of the products
or services;
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proprietary aspects of products and the extent of intellectual
property or other protection for products or formulas;
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impact of regulation on the business;
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regulatory environment of the industry;
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seasonal sales fluctuations and the ability to offset these
fluctuations through other business combinations, introduction
of new products, or product line extensions; and
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costs associated with effecting the business combination.
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These criteria are not intended to be exhaustive. Any evaluation
relating to the merits of a particular business combination will
be based, to the extent relevant, on the above factors as well
as other considerations deemed relevant by our management to our
business objective. In evaluating a prospective target business,
we expect to conduct an extensive due diligence review which
will encompass, among other things, meetings with incumbent
management and employees, document reviews, interviews of
customers and suppliers, inspection of facilities, as well as
review of financial and other information which will be made
available to us.
The time required to select and evaluate a target business and
to structure and complete the business combination, and the
costs associated with this process, are not currently
ascertainable with any degree of certainty. Any costs incurred
with respect to the identification and evaluation of a
prospective target business with which a business combination is
not ultimately completed will result in our incurring losses and
will reduce the funds we can use to complete another business
combination. We will not pay any finders or consulting fees to
our officers or directors, or any of their respective
affiliates, for services rendered to or in connection with a
business combination.
Fair
market value of target business or businesses
The initial target business or businesses with which we combine
must have a collective fair market value equal to at least 80%
of the sum of the balance in the trust account plus the proceeds
of the co-investment (excluding deferred underwriting discounts
and commissions of $6.0 million or $6.6 million if the
underwriters over-allotment option is exercised in full)
at the time of such business combination.
In contrast to many other companies with business plans similar
to ours that must combine with one or more target businesses
that have a fair market value equal to 80% or more of the
acquirors net assets, we will not combine with a target
business or businesses unless the fair market value of such
entity or entities meets a minimum valuation threshold of 80% of
the sum of the balance in the trust account plus the proceeds of
the co-investment (excluding deferred underwriting discounts and
commissions of $6.0 million or $6.6 million if the
underwriters over-allotment option is exercised in full).
We have used this criterion to provide investors and our
management team with greater certainty as to the fair market
value that a target business or businesses must have in order to
qualify for a business combination with us. The determination of
net assets requires an acquiror to have deducted all liabilities
from total assets to arrive at the balance of net assets. Given
the on-going nature of legal, accounting, stockholder meeting
and other expenses that will be incurred immediately before and
at the time of a business combination, the balance of an
acquirors total liabilities may be difficult to ascertain
at a particular point in time with a high degree of certainty.
Accordingly, we have determined to use the valuation threshold
of 80% of the sum of the balance in the trust account plus the
proceeds of the co-investment (excluding deferred underwriting
discounts and commissions of $6.0 million or $6.6 million
if the
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underwriters over-allotment option is exercised in full)
for the fair market value of the target business or businesses
with which we combine so that our management team will have
greater certainty when selecting, and our investors will have
greater certainty when voting to approve or disapprove a
proposed combination with, a target business or businesses that
will meet the minimum valuation criterion for our initial
business combination.
The fair market value of a target business or businesses will be
determined by our board of directors based upon standards
generally accepted by the financial community, such as actual
and potential sales, the values of comparable businesses,
earnings and cash flow, and book value. If our board is not able
to independently determine that the target business has a
sufficient fair market value to meet the threshold criterion, we
will obtain an opinion from an unaffiliated, independent
investment banking firm which is a member of the NASD with
respect to the satisfaction of such criterion. Any such opinion
will be included in our proxy soliciting materials furnished to
our stockholders in connection with a business combination, and
that such independent investment banking firm will be a
consenting expert. We will not be required to obtain an opinion
from an investment banking firm as to the fair market value of
the business if our board of directors independently determines
that the target business or businesses has sufficient fair
market value to meet the threshold criterion.
Although there is no limitation on our ability to raise funds
privately or through loans that would allow us to acquire a
company with a fair market value greater than 80% of the sum of
the balance in the trust account plus the proceeds of the
co-investment, no such financing arrangements have been entered
into or contemplated with any third parties to raise such
additional funds through the sale of securities or otherwise.
Lack
of business diversification
While we may seek to effect business combinations with more than
one target business, our initial business combination must be
with one or more target businesses whose collective fair market
value is at least equal to 80% of the sum of the balance in the
trust account plus the proceeds of the co-investment (excluding
deferred underwriting discounts and commissions of
$6.0 million or $6.6 million if the underwriters
over-allotment option is exercised in full) at the time of such
business combination, as discussed above. Consequently, we
expect to complete only a single business combination, although
this may entail a simultaneous combination with several
operating businesses at the same time. At the time of our
initial business combination, we may not be able to acquire more
than one target business because of various factors, including
complex accounting or financial reporting issues. For example,
we may need to present pro forma financial statements reflecting
the operations of several target businesses as if they had been
combined historically.
A simultaneous combination with several target businesses also
presents logistical issues such as the need to coordinate the
timing of negotiations, proxy statement disclosure and closings.
In addition, if conditions to closings with respect to one or
more of the target businesses are not satisfied, the fair market
value of the business could fall below the required fair market
value threshold of 80% of the sum of the balance in the trust
account plus the proceeds of the co-investment (excluding
deferred underwriting discounts and commissions of
$6.0 million or $6.6 million if the underwriters
over-allotment option is exercised in full).
Accordingly, while it is possible that we may attempt to effect
our initial business combination with more than one target
business, we are more likely to choose a single target business
if all other factors appear equal. This means that for an
indefinite period of time, the prospects for our success may
depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete
business combinations with multiple entities in one or several
industries, it is probable that we will not have the resources
to diversify our operations and mitigate the risks of being in a
single line of business. By consummating a business combination
with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory
developments, any or all of which may have a substantial adverse
impact on the particular industry in which we operate after a
business combination, and
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cause us to depend on the marketing and sale of a single product
or limited number of products or services.
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If we complete a business combination structured as a merger in
which the consideration is our stock, we would have a
significant amount of cash available to make add-on acquisitions
following our initial business combination.
Limited
ability to evaluate the target business
management
Although we intend to closely scrutinize the management of a
prospective target business when evaluating the desirability of
effecting a business combination with that business, we cannot
assure you that our assessment of the target business
management will prove to be correct. In addition, we cannot
assure you that the future management will have the necessary
skills, qualifications or abilities to manage a public company.
Furthermore, the future role of our officers and directors, if
any, in the target business cannot presently be stated with any
certainty. While it is possible that one or more of our
directors will remain associated in some capacity with us
following a business combination, it is unlikely that any of
them will devote their full efforts to our affairs subsequent to
a business combination. Moreover, we cannot assure you that our
officers and directors will have significant experience or
knowledge relating to the operations of the particular target
business.
Following a business combination, we may seek to recruit
additional managers to supplement the incumbent management of
the target business. We cannot assure you that we will have the
ability to recruit additional managers, or that additional
managers will have the requisite skills, knowledge or experience
necessary to enhance the incumbent management.
Limited
available information for privately-held target
companies
In accordance with our acquisition strategy, we will likely seek
a business combination with one or more privately-held
companies. Generally, very little public information exists
about these companies, and we will be required to rely on the
ability of our officers and directors to obtain adequate
information to evaluate the potential returns from investing in
these companies. If we are unable to uncover all material
information about these companies, then we may not make a fully
informed investment decision, and we may lose money on our
investments.
Limited
resources and significant competition for business
combinations
We will encounter intense competition from entities having a
business objective similar to ours, including private equity
groups and leveraged buyout funds, as well as operating
businesses seeking strategic acquisitions. Many of these
entities are well established and have extensive experience in
identifying and completing business combinations. A number of
these competitors possess greater technical, financial, human
and other resources than we do. Our limited financial resources
may have a negative effect on our ability to compete in
acquiring certain sizable target businesses. Further, because we
must obtain stockholder approval of a business combination, this
may delay the consummation of a transaction, while our
obligation to redeem for cash the shares of common stock held by
public stockholders who elect redemption may reduce the
financial resources available for a business combination. Our
outstanding warrants and the future dilution they potentially
represent may not be viewed favorably by certain target
businesses. In addition, if our initial business combination
entails a simultaneous purchase of several operating businesses
owned by different sellers, we may be unable to coordinate a
simultaneous closing of the purchases. This may result in a
target business seeking a different buyer and our being unable
to meet the threshold requirement that the target business has,
or target businesses collectively have, a fair market value
equal to at least 80% of the sum of the balance in the trust
account plus the proceeds of the co-investment (excluding
deferred underwriting discounts and commissions of $6.0 million
or $6.6 million if the underwriters over-allotment option
is exercised in full) at the time of such combination.
Any of these factors may place us at a competitive disadvantage
in successfully negotiating a business combination. We cannot
assure you that we will be able to successfully compete for an
attractive business
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combination. Additionally, because of these factors, we cannot
assure you that we will be able to effectuate a business
combination within the required time periods. If we are unable
to find a suitable target business within such time periods, we
will dissolve and liquidate.
Opportunity
for stockholder approval of business combination
Prior to the consummation of our initial business combination,
we will submit the transaction to our stockholders for approval,
even if the nature of the acquisition is such as would not
ordinarily require stockholder approval under applicable state
law. If a majority of the shares of our common stock are not
voted in favor of a proposed initial business combination, we
may continue to seek other target businesses with which to
effect our initial business combination that meet the criteria
set forth in this prospectus until the expiration of
18 months from consummation of this offering (or
24 months if a letter of intent, agreement in principle or
definitive agreement has been executed within such 18 month
period but as to which a combination is not yet complete). In
connection with seeking stockholder approval of a business
combination, we will furnish our stockholders with proxy
solicitation materials prepared in accordance with the Exchange
Act, which, among other matters, will include a description of
the operations of the target business and audited historical
financial statements of the target business based on United
States generally accepted accounting principles.
In connection with the vote required for any business
combination, each of our founders has agreed to vote its
respective shares of common stock acquired by it prior to this
offering in accordance with the majority of the shares of common
stock voted by the public stockholders. As a result, if a
majority of the shares of stock voted by the public stockholders
are voted for the business combination, our founders may not
exercise their redemption rights with respect to common stock
acquired before this offering. Each of our founders has also
agreed that it will vote any shares it purchases in the open
market in or after this offering in favor of a business
combination. As a result, if our founders acquire shares in or
after this offering, they must vote those shares in favor of the
proposed initial business combination with respect to those
shares, and will therefore not be eligible to exercise
redemption rights for those shares. We will proceed with the
business combination only if a majority of the shares of our
common stock are voted in favor of the business combination and
public stockholders owning less than 20% of the shares sold in
this offering exercise their redemption rights. Voting against
the business combination alone will not result in redemption of
a stockholders shares for a pro rata share of the
trust account. To do so, a stockholder must have also exercised
the redemption rights described below. In addition, if we seek
approval from our stockholders to consummate a business
combination within 90 days of the expiration of
24 months (assuming that the period in which to consummate
a business combination has been extended, as provided in our
amended and restated certificate of incorporation) from the
consummation of this offering, the proxy statement related to
such business combination will also seek stockholder approval
for our boards recommended dissolution and plan of
distribution in the event our stockholders do not approve such
business combination. The requirements that we seek stockholder
approval before effecting our initial business combination and
not consummate our initial business combination if public
stockholders owning 20% or more of the shares sold in this
offering exercise their redemption rights below, are set forth
in Article FIFTH of our amended and restated certificate of
incorporation, which requires, in addition to the vote of our
board of directors required by Delaware law, the affirmative
vote of at least 80% of the voting power of our outstanding
voting stock to amend.
Redemption
rights
Each public stockholder has the right to have such
stockholders shares of common stock redeemed for cash if
the stockholder votes against the business combination and the
business combination is approved and completed. The actual
per-share redemption price will be equal to the aggregate amount
then on deposit in the trust account, before payment of deferred
underwriting discounts and commissions and including accrued
interest, net of any income taxes on such interest, which shall
be paid from the trust account, and net of interest income of up
to $4.5 million previously released to us to fund our
working capital requirements (calculated as of two business days
prior to the consummation of the proposed business combination),
divided by the number of shares sold in this offering. The
initial per-share redemption price would be approximately
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$7.70, or $0.30 less than the per-unit offering price of $8.00.
If our founders acquire shares in or after this offering, each
of our founders has agreed that it must vote such shares in
favor of a business combination, meaning that our officers and
directors cannot exercise redemption rights that are exercisable
by our public stockholders. An eligible stockholder may request
redemption at any time after the mailing to our stockholders of
the proxy statement and prior to the vote taken with respect to
a proposed business combination at a meeting held for that
purpose, but the request will not be granted unless the
stockholder votes against the business combination and the
business combination is approved and completed. If a stockholder
votes against the business combination but fails to properly
exercise its redemption rights, such stockholder will not have
its shares of common stock redeemed for its pro rata
distribution of the trust account. Any request for
redemption, once made, may be withdrawn at any time up to the
date of the meeting. The funds to be distributed to stockholders
who elect redemption will be distributed as promptly as
practicable after consummation of a business combination. Public
stockholders who cause us to redeem their stock into their share
of the trust account will still have the right to exercise the
warrants that they received as part of the units. We will not
complete our proposed initial business combination if public
stockholders owning 20% or more of the shares sold in this
offering exercise their redemption rights. We intend to
structure and consummate any potential business combination in a
manner such that 19.99% of our public stockholders voting
against our initial business combination could cause us to
redeem their shares of common stock for a pro rata share
of the aggregate amount then on deposit in the trust account,
and the business combination could still go forward.
The initial redemption price will be approximately
$7.70 per share. As this amount is lower than the
$8.00 per unit offering price and it may be less than the
market price of the common stock on the date of redemption,
there may be a disincentive on the part of public stockholders
to exercise their redemption rights.
Dissolution
and liquidation if no business combination
Pursuant to the terms of the trust agreement between us and
Continental Stock Transfer & Trust Company, if we do
not complete a business combination within 18 months after
the consummation of this offering, or within 24 months if
the extension criteria described below have been satisfied, we
will dissolve and as promptly as practicable return and
liquidate all funds from our trust account only to our public
stockholders, as part of our dissolution and plan of
distribution and in accordance with the applicable provisions of
the Delaware General Corporation Law. The liquidating
distribution to public stockholders will consist of an aggregate
sum equal to the amount in the trust fund, inclusive of any
interest not previously released to us less the amount of taxes
paid, if any, on interest earned and will be made in proportion
to our public stockholders respective equity interests. In
the event we seek stockholder approval for our dissolution and
plan of distribution and do not obtain such approval, we will
nonetheless continue to pursue stockholder approval for our
dissolution. Pursuant to the terms of our amended and restated
certificate of incorporation, our powers following the
expiration of the permitted time periods for consummating a
business combination will automatically thereafter be limited to
acts and activities relating to dissolving and winding up our
affairs, including liquidation. Pursuant to the trust agreement
governing such funds, the funds held in our trust account may
not be distributed except upon our dissolution and, unless and
until such approval is obtained from our stockholders, the funds
held in our trust account will not be released (other than in
connection with the funding of working capital, a redemption or
a business combination as described elsewhere in this
prospectus). Consequently, holders of a majority of our
outstanding stock must approve our dissolution in order to
receive the funds held in our trust account and, other than in
connection with a redemption or a business combination, the
funds will not be available for any other corporate purpose. As
promptly as practicable upon the later to occur of (i) the
approval by our stockholders of our plan of distribution or
(ii) the effective date of such approved plan of
distribution, we will liquidate our trust account to our public
stockholders. Concurrently, we shall pay, or reserve for
payment, from interest released to us from the trust account if
available, our liabilities and obligations.
Each of our founders has agreed to waive its rights to
participate in any liquidation of our trust account or other
assets with respect to its founders common stock and to
vote their founders common stock in favor of any
dissolution and plan of distribution which we submit to a vote
of stockholders. There will be no
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distribution from the trust account with respect to our
warrants, which will expire worthless if we are liquidated. As
the proceeds from the sale of the co-investment units will not
be received by us until immediately prior to our consummation of
a business combination, these proceeds will not be deposited
into the trust account and will not be available for
distribution to our public stockholders in the event of a
dissolution and liquidation.
We estimate that our total costs and expenses for implementing
and completing a stockholder-approved dissolution and plan of
distribution will be between $50,000 and $75,000. This amount
includes all costs and expenses relating to filing our
dissolution in the State of Delaware, the winding up of our
company and the costs of a proxy statement and meeting relating
to the approval by our stockholders of our dissolution and plan
of distribution. We believe that there should be sufficient
funds available from the interest earned on the trust account
and released to us as working capital, to fund the $50,000 to
$75,000 in costs and expenses.
If we were unable to conclude an initial business combination
and expended all of the net proceeds of this offering, other
than the proceeds deposited in the trust account, and without
taking into account interest, if any, earned on the trust
account, net of income taxes payable on such interest and net of
up to $4.5 million in interest income on the trust account
balance previously released to us to fund working capital
requirements, the initial per-share liquidation price would be
$7.70, or $0.30 less than the per-unit offering price of $8.00.
The per share liquidation price includes approximately
$6.0 million in deferred underwriting discounts and
commissions (or $6.6 million if the underwriters
over-allotment option is exercised in full) that would also be
distributable to our public stockholders.
The proceeds deposited in the trust account could, however,
become subject to the claims of our creditors which could be
prior to the claims of our public stockholders. Although we will
seek to have all vendors, prospective target businesses or other
entities we engage execute agreements with us waiving any right,
title, interest or claim of any kind in or to any monies held in
the trust account for the benefit of our public stockholders,
there is no guarantee that they will execute such agreements or
even if they execute such agreements that they would be
prevented from bringing claims against the trust account,
including but not limited to, fraudulent inducement, breach of
fiduciary responsibility or other similar claims, as well as
claims challenging the enforceability of the waiver, in each
case in order to gain an advantage with a claim against our
assets, including the funds held in the trust account. If any
third party refused to execute an agreement waiving such claims
to the monies held in the trust account, we would perform an
analysis of the alternatives available to us if we chose not to
engage such third party and evaluate if such engagement would be
in the best interest of our stockholders if such third party
refused to waive such claims. Examples of possible instances
where we may engage a third party that refused to execute a
waiver include the engagement of a third party consultant whose
particular expertise or skills are believed by management to be
significantly superior to those of other consultants that would
agree to execute a waiver or in cases where management is unable
to find a provider of required services willing to provide the
waiver. In any event, our management would perform an analysis
of the alternatives available to it and would only enter into an
agreement with a third party that did not execute a waiver if
management believed that such third partys engagement
would be significantly more beneficial to us than any
alternative. In addition, there is no guarantee that such
entities will agree to waive any claims they may have in the
future as a result of, or arising out of, any negotiations,
contracts or agreements with us and will not seek recourse
against the trust account for any reason.
Each of Mr. Berggruen and Mr. Franklin has agreed
that, if we dissolve prior to the consummation of a business
combination, they will be personally liable to ensure that the
proceeds in the trust account are not reduced by the claims of
various vendors that are owed money by us for services rendered
or contracted for or products sold to us, or claims of other
parties with which we have contracted, including the claims of
any prospective target that has not executed a waiver and with
which we have entered into a written letter of
intent,confidentiality or non-disclosure agreement with respect
to a failed business combination with such prospective target.
However, we cannot assure you that either Mr. Berggruen or
Mr. Franklin will be able to satisfy those obligations.
Neither Mr. Berggruen nor Mr. Franklin will be
personally liable to pay any of our debts and obligations except
as provided above. Accordingly, we cannot assure you that due to
claims of creditors the actual per-share liquidation price will
not be less than $7.70, plus interest, net of income taxes
payable on such interest and net of interest income of up to
$4.5 million on the trust account balance
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previously released to us to fund working capital requirements.
Additionally, if we do not complete an initial business
combination and the trustee must distribute the balance of the
trust account, the underwriters have agreed that (i) on our
liquidation they will forfeit any rights or claims to their
deferred underwriting discounts and commissions, including any
accrued interest thereon, then in the trust account and
(ii) the deferred underwriting discounts and commission
will be distributed on a pro rata basis among the public
stockholders, together with any accrued interest thereon and net
of income taxes payable on such interest.
If we enter into either a letter of intent, an agreement in
principle or a definitive agreement to complete a business
combination prior to the expiration of 18 months after the
consummation of this offering, but are unable to complete the
business combination within the
18-month
period, then we will have an additional six months in which
to complete the business combination contemplated by the letter
of intent, agreement in principle or definitive agreement. If we
are unable to do so by the expiration of the
24-month
period from the consummation of this offering, we will be
dissolved and liquidated as described in the first paragraph of
this subsection. Upon notice from us, the trustee of the trust
account will commence liquidating the investments constituting
the trust account and will turn over the proceeds to our
transfer agent for distribution to our public stockholders. Our
instruction to the trustee will be given promptly after the
later to occur of (i) the approval by our stockholders of
our dissolution and plan of distribution or (ii) the
effective date of such approved dissolution and plan of
distribution.
Our public stockholders shall be entitled to receive funds from
the trust account only in the event of our dissolution or if the
stockholders seek to have us redeem their respective shares for
cash upon a business combination which the stockholder voted
against and which is actually completed by us. In no other
circumstances shall a stockholder have any right or interest of
any kind to or in the trust account. Prior to our completing an
initial business combination or liquidating, we are permitted
only to have released from the trust account interest income to
pay taxes and of up to $4.5 million to fund our working
capital requirements.
If the corporation complies with certain procedures set forth in
Section 280 of the Delaware General Corporation Law
intended to ensure that it makes reasonable provision for all
claims against it, including a
60-day
notice period during which any third-party claims can be brought
against the corporation, a
90-day
period during which the corporation may reject any claims
brought, and an additional
150-day
waiting period before any liquidating distributions are made to
stockholders, and we apply to the Court of Chancery for approval
of such reasonable provisions of claims, any liability of
stockholders with respect to a liquidating distribution is
limited to the lesser of such stockholders pro rata
share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be
barred if a proceeding with respect to such claim is not brought
by the third anniversary of the dissolution (or such longer
period directed by the Delaware Court of Chancery). Although we
will seek stockholder approval for our dissolution and plan of
distribution providing for the liquidation of the trust account
to our public stockholders, we do not intend to comply with the
procedures set forth in Section 280 of the Delaware General
Corporation Law. Because we will not be complying with
Section 280, we will seek stockholder approval of a plan of
distribution complying with Section 281(b) of the Delaware
General Corporation Law that will reasonably provide for our
payment, based on facts known to us at such time, of
(i) all existing claims, including those that are
contingent, (ii) all pending proceedings to which we are a
party and (iii) all claims that may be potentially brought
against us within the subsequent 10 years. However, because
we are a blank check company, rather than an operating company,
and our operations will be limited to searching for prospective
target businesses to acquire, the only likely claims to arise
would be from our vendors that we engage after the consummation
of this offering (such as accountants, lawyers, investment
bankers, etc.) or potential target businesses. As described
above, we intend to have all vendors that we engage after the
consummation of this offering, prospective target businesses and
other entities execute agreements with us waiving any right,
title, interest or claim of any kind in or to any monies held in
the trust account. As a result, the claims that could be made
against us should be significantly limited and the likelihood
that any claim that would result in any liability extending to
the trust is minimal.
Additionally, if we are forced to file a bankruptcy case or an
involuntary bankruptcy case is filed against us which is not
dismissed, the funds held in our trust account will be subject
to applicable bankruptcy law, and may be included in our
bankruptcy estate and subject to claims of third parties with
priority over the
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claims of our public stockholders. To the extent bankruptcy
claims deplete the trust account, we cannot assure you we will
be able to return to our public stockholders the liquidation
amounts due them.
We expect that all costs associated with the implementation and
completion of our dissolution and plan of distribution
(currently estimated to be between $50,000 and $75,000) as well
as funds for payments to creditors, if any, will be funded by
the interest earned on the trust account released to us,
although we cannot give you assurances that there will be
sufficient funds for such purposes.
We currently believe that any dissolution and plan of
distribution subsequent to the expiration of the 18 and
24 month deadlines would proceed in approximately the
following manner:
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our board of directors will, consistent with its obligations
described in our amended and restated certificate of
incorporation and Delaware law, consider a resolution for us to
dissolve and consider a plan of distribution which it may then
vote to recommend to our stockholders; at such time it will also
cause to be prepared a preliminary proxy statement setting out
such plan of distribution as well as the boards
recommendation of such plan;
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upon such deadline, we would file our preliminary proxy
statement with the SEC;
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if the SEC does not review the preliminary proxy statement,
then, 10 days following the passing of such deadline, we
will mail the proxy statements to our stockholders, and
30 days following the passing of such deadline we will
convene a meeting of our stockholders, at which they will either
approve or reject our dissolution and plan of
distribution; and
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if the SEC does review the preliminary proxy statement, we
currently estimate that we will receive their comments
30 days following the passing of such deadline. We will
mail the proxy statements to our stockholders following the
conclusion of the comment and review process (the length of
which we cannot predict with any certainty, and which may be
substantial) and we will convene a meeting of our stockholders
at which they will either approve or reject our dissolution and
plan of distribution.
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In the event we seek stockholder approval for a plan of
distribution and do not obtain such approval, we will
nonetheless continue to pursue stockholder approval for our
dissolution. Pursuant to the terms of our amended and restated
certificate of incorporation, our powers following the
expiration of the permitted time periods for consummating a
business combination will automatically thereafter be limited to
acts and activities relating to dissolving and winding up our
affairs, including liquidation. If no proxy statement seeking
the approval of our stockholders for a business combination has
been filed 60 days prior to the date which is
18 months from the consummation of this offering (or
60 days prior to the date which is 24 months from the
consummation of this offering if a letter of intent, agreement
in principle or definitive agreement has been executed within
18 months after consummation of this offering and the
business combination has not yet been consummated within such
18 month period), our board will, prior to such date,
convene, adopt and recommend to our stockholders a plan of
dissolution and distribution, and on such date file a proxy
statement with the SEC seeking stockholder approval for such
plan. Pursuant to the trust agreement governing such funds, the
funds held in our trust account may not be distributed except
upon our dissolution and, unless and until such approval is
obtained from our stockholders, the funds held in our trust
account will not be released (other than in connection with the
funding of working capital, a redemption or a business
combination as described elsewhere in this prospectus).
Consequently, holders of a majority of our outstanding stock
must approve our dissolution in order to receive the funds held
in our trust account and the funds will not be available for any
other corporate purpose other than with respect to redemption
and a business combination.
Amended
and Restated Certificate of Incorporation
Our amended and restated certificate of incorporation sets forth
certain requirements and restrictions relating to this offering
that apply to us until the consummation of a business
combination. Specifically, our amended and restated certificate
of incorporation provides, among other things, that:
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prior to the consummation of a business combination, we shall
submit such business combination to our stockholders for
approval;
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we may consummate the business combination if approved and
public stockholders owning less than 20% of the shares sold in
this offering exercise their redemption rights;
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if a business combination is approved and consummated, public
stockholders who voted against the business combination may
exercise their redemption rights and receive their pro rata
share of the trust account;
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if a business combination is not consummated or a letter of
intent, an agreement in principle or a definitive agreement is
not signed within the time periods specified in this prospectus,
then our purpose and powers will be limited to dissolving,
liquidating and winding up; provided, however, that we will
reserve our rights under Section 278 of the Delaware
General Corporation Law to bring or defend any action, suit or
proceeding brought by or against us;
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our management take all actions necessary to liquidate our trust
account to our public stockholders as part of our plan of
distribution if a business combination is not consummated or a
letter of intent, an agreement in principle or a definitive
agreement is not signed within the time periods specified in
this prospectus; and
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our stockholders rights to receive a portion of the trust
fund are limited such that they may only receive a portion of
the trust fund upon liquidation of our trust account to our
public stockholders as part of our plan of distribution or upon
the exercise of their redemption rights.
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The above-referenced requirements and restrictions included in
our amended and restated certificate of incorporation may only
be amended prior to consummation of a business combination with
the vote of our board of directors and the affirmative vote of
at least 80% of the voting power of our outstanding voting
stock. In light of the requirement that we obtain the approval
of at least 80% of the voting power of our stockholders, we do
not anticipate any changes to such requirements and restrictions
prior to our consummation of a business combination, if any.
Comparison
of This Offering to Those of Blank Check Companies Subject to
Rule 419
The following table compares the terms of this offering to the
terms of an offering by a blank check company subject to the
provisions of Rule 419. This comparison assumes that the
gross proceeds, underwriting discounts and underwriting expenses
of our offering would be identical to those of an offering
undertaken by a company subject to Rule 419, and that the
underwriters will not exercise their over-allotment option. None
of the provisions of Rule 419 apply to our offering.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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Escrow of offering
proceeds
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Approximately $288.8 million
of the net offering proceeds, including $6.0 million in
deferred underwriting discounts and commissions, will be
deposited into a trust account at Continental Stock Transfer
& Trust Company maintained by Continental Stock
Transfer & Trust Company, as trustee.
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$303.8 million of the
offering proceeds would be required to be deposited into either
an escrow account with an insured depositary institution or in a
separate bank account established by a broker-dealer in which
the broker- dealer acts as trustee for persons having the
beneficial interests in the account.
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Investment of net
proceeds
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The $288.8 million of net
offering proceeds held in trust will only be invested in U.S.
government securities, as defined under the
Investment Company Act of 1940, and one or more money market
funds, selected by us, which invest principally in either
short-term securities issued or guaranteed by the United States
having a rating in the highest investment category granted
thereby by a recognized credit rating agency at the time of
acquisition or short-term tax exempt municipal
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Proceeds could be invested only in
specified securities such as a money market fund meeting
conditions of the Investment Company Act of 1940 or in
securities that are direct obligations of, or obligations
guaranteed as to principal or interest by, the United States.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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bonds issued by governmental
entities located within the United States.
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Limitation on Fair Value or Net
Assets of Target
Business
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The initial target business that
we acquire must have a fair market value equal to at least 80%
of the sum of the balance in the trust account plus the proceeds
of the co-investment (excluding deferred underwriting discounts
and commissions of $6.0 million) at the time of such
acquisition.
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The fair value or net assets of a
target business must represent at least 80% of the maximum
offering proceeds.
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Trading of securities
issued
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The units will begin trading on or
promptly after the date of this prospectus. The common stock and
warrants comprising the units will begin separate trading five
business days (or as soon as practicable thereafter) following
the earlier to occur of expiration of the underwriters
over- allotment option or their exercise in full, subject to our
having filed the Current Report on Form
8-K
described below and having issued a press release announcing
when such separate trading will begin.
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No trading of the units or the
underlying common stock and warrants would be permitted until
the consummation of a business combination. During this period,
the securities would be held in the escrow or trust account.
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In no event will the common stock
and warrants be traded separately until we have filed a Current
Report on Form
8-K
with the SEC containing an audited balance sheet reflecting our
receipt of the gross proceeds of this offering. We will file the
Current Report on Form
8-K
upon the consummation of this offering, which is anticipated to
take place three business days from the date of this prospectus.
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Exercise of the
warrants
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The warrants cannot be exercised
until the later of the consummation of a business combination or
one year from the date of this prospectus and, accordingly, will
only be exercised after the trust account has been terminated
and distributed.
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The warrants could be exercised
prior to the consummation of a business combination, but
securities received and cash paid in connection with the
exercise would be deposited in the escrow or trust account.
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Election to remain an
investor
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Stockholders will have the
opportunity to vote on the initial business combination. Each
stockholder will be sent a proxy statement containing
information required by the SEC. A stockholder following the
procedures described in this prospectus is given the right to
cause us to redeem his, her or its shares for a pro rata
share of the trust account, before payment of deferred
underwriting discounts and commissions and including accrued
interest, net of income taxes on such interest and net of
interest income of up to $4.5 million previously released
to us to fund our working capital requirements. However, a
stockholder who does not follow these procedures or a
stockholder who does not take any action would not be entitled
to the return of any funds from the trust account. If a majority
of the shares of common stock voted
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A prospectus containing
information required by the SEC would be sent to each investor.
Each investor would be given the opportunity to notify the
company in writing, within a period of no less than 20 business
days and no more than 45 business days from the effective date
of a post-effective amendment to the companys registration
statement, to decide if he, she or it elects to remain a
stockholder of the company or require the return of his, her or
its investment. If the company has not received the notification
by the end of the 45th business day, funds and interest or
dividends, if any, held in the trust or escrow account are
automatically returned to the
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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by the public stockholders are
not voted in favor of a proposed initial business combination
but 18 months has not yet passed since the consummation of
this offering, we may seek other target businesses with which to
effect our initial business combination that meet the criteria
set forth in this prospectus. If at the end of such 18
month period (or 24 months if a letter of intent,
agreement in principle or definitive agreement has been executed
within such 18 month period but as to which a combination
is not yet complete) we have not obtained stockholder approval
for an alternate initial business combination, we will dissolve
and liquidate and promptly distribute the proceeds of the trust
account, including accrued interest, net of income taxes on such
interest and net of interest income of up to $4.5 million
previously released to us to fund our working capital
requirements.
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stockholder. Unless a sufficient
number of investors elect to remain investors, all funds on
deposit in the escrow account must be returned to all of the
investors and none of the securities are issued.
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Business combination
deadline
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Our initial business combination
must occur within 18 months after the consummation of this
offering or within 24 months after the consummation of
this offering if a letter of intent or definitive agreement
relating to a prospective business combination is executed
before the
18-month
period ends; if our initial business combination does not occur
within these time frames and we are dissolved as described
herein, funds held in the trust account, including deferred
underwriting discounts and commissions, will be returned to
investors as promptly as practicable, including accrued
interest, net of income taxes on such interest and net of
interest income of up to $4.5 million previously released
to us to fund our working capital requirements.
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If an acquisition has not been
consummated within 18 months after the effective date of
the companys registration statement, funds held in the
trust or escrow account are returned to investors.
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Release of
funds
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Except with respect to interest
income released to you, as described elsewhere in this
prospectus, the proceeds held in the trust account are not
released until the earlier of the consummation of our initial
business combination or the failure to complete our initial
business combination within the allotted time.
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The proceeds held in the escrow
account are not released until the earlier of the consummation
of a business combination or the failure to effect a business
combination within the allotted time.
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Interest earned on funds in
trust account
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Up to $4.5 million of
interest earned on the trust account will be released to us to
fund our working capital requirements. Stockholders who redeem
their common stock for cash in connection with a business
combination will not receive any portion of that amount that has
been previously released to us; upon our liquidation,
stockholders shall be entitled to a portion of the interest
earned on funds held in trust, if any, not previously
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The interest earned on proceeds
held in trust (net of taxes payable) would be held for the sole
benefit of investors, and we would be unable to access such
interest for working capital purposes.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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released to us to fund our
working capital requirements, net of taxes payable on such funds
held in trust.
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Competition
In identifying, evaluating and selecting a target business for a
business combination, we may encounter intense competition from
other entities having a business objective similar to ours
including other blank check companies, private equity groups and
leveraged buyout funds, and operating businesses seeking
acquisitions. Many of these entities are well established and
have extensive experience identifying and effecting business
combinations directly or through affiliates. Moreover, many of
these competitors possess greater financial, technical, human
and other resources than us. While we believe there are numerous
potential target businesses with which we could combine, our
ability to acquire larger target businesses will be limited by
our available financial resources. This inherent limitation
gives others an advantage in pursuing the acquisition of a
target business. Furthermore:
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our obligation to seek stockholder approval of our initial
business combination or obtain necessary financial information
may delay the consummation of a transaction;
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our obligation to redeem for cash shares of common stock held by
our public stockholders who vote against the business
combination and exercise their redemption rights may reduce the
resources available to us for a business combination;
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our outstanding warrants, and the future dilution they
potentially represent, may not be viewed favorably by certain
target businesses; and
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the requirement to acquire an operating business that has a fair
market value equal to at least 80% of the sum of the balance of
the trust account plus the proceeds of the co-investment at the
time of the acquisition (excluding deferred underwriting
discounts and commissions of $6.0 million or
$6.6 million if the underwriters over-allotment
option is exercised in full) could require us to acquire the
assets of several operating businesses at the same time, all of
which sales would be contingent on the closings of the other
sales, which could make it more difficult to consummate the
business combination.
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Any of these factors may place us at a competitive disadvantage
in successfully negotiating a business combination.
Facilities
We currently maintain our executive offices at 1114 Avenue of
the Americas, 41st Floor, New York, New York 10036. The
cost for this space is included in the $10,000 per-month fee
described above that Berggruen Holdings, Inc. charges us for
office space, administrative services and secretarial support.
We believe, based on rents and fees for similar services in the
New York City metropolitan area that the fee charged by
Berggruen Holdings, Inc. is at least as favorable as we could
have obtained from an unaffiliated person. We consider our
current office space adequate for our current operations.
Employees
We currently have only one officer. This individual is not
obligated to devote any specific number of hours to our business
and intends to devote only as much time as he deems necessary to
our business. We do not intend to have any full-time employees
prior to the consummation of a business combination.
Periodic
Reporting and Financial Information
We have registered our securities under the Exchange Act and
after this offering will have public reporting obligations,
including the filing of annual and quarterly reports with the
SEC. In accordance with the requirements of the Exchange Act,
our annual report will contain financial statements audited and
reported on by our independent registered public accounting firm
and our quarterly reports will contain financial statements
reviewed by our independent registered public accounting firm.
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We will not acquire a target business if we cannot obtain
audited financial statements based on United States generally
accepted accounting principles for such target business. We will
provide these financial statements in the proxy solicitation
materials sent to stockholders for the purpose of seeking
stockholder approval of our initial business combination. Our
management believes that the need for target businesses to have,
or be able to obtain, audited financial statements may limit the
pool of potential target businesses available for acquisition.
We may be required to comply with the internal control
requirements of the Sarbanes-Oxley Act for the fiscal year
ending December 31, 2007. A target company may not be in
compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve
compliance with the Sarbanes-Oxley Act may increase the time and
costs necessary to complete any such acquisition.
Legal
Proceedings
There is no material litigation currently pending against us or
any of our officers or directors in their capacity as such.
58
MANAGEMENT
Directors
and Executive Officers
Our directors and executive officers as of the date of this
prospectus are as follows:
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Name
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Age
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Position
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Nicolas Berggruen
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President and Chief Executive
Officer
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Martin E. Franklin
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Chairman of the Board
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James N. Hauslein
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Director
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William P. Lauder
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Director
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Herbert A. Morey
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Director
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Nicolas Berggruen has been our president and chief
executive officer since our inception in June 2006.
Mr. Berggruen founded what became Berggruen Holdings, Inc.
in 1984 to act as investment advisor to a Berggruen family trust
that has made over 50 control and non-control direct investments
in operating businesses over the last 20 years.
Mr. Berggruen has served as the president of Berggruen
Holdings, Inc. since its inception. In 1984 he also co-founded
Alpha Investment Management, a multi-billion dollar hedge fund
management company that was sold to Safra Bank in 2004. Prior to
co-founding Alpha Investment Management and Berggruen Holdings,
Inc., Mr. Berggruen served as an analyst on the real estate
side of the family-held investment firm Bass Brothers
Enterprises, and an associate of Jacobson and Co., Inc., a
leveraged buyout company. Mr. Berggruen obtained a Bachelor
of Science in Finance and International Business from New York
University.
Martin E. Franklin has been the chairman of our
board of directors since our inception in June 2006.
Mr. Franklin has served as chairman and chief executive
officer of Jarden Corporation, a broad based consumer products
company, since 2001. Prior to joining Jarden Corporation,
Mr. Franklin served as chairman and a director of
Bollé, Inc. from 1997 to 2000, chairman of Lumen
Technologies from 1996 to 1998, and as chairman and chief
executive officer of its predecessor, Benson Eyecare Corporation
from 1992 to 1996. Mr. Franklin also serves on the board of
directors of Apollo Investment Corporation and Kenneth Cole
Productions, Inc. Mr. Franklin also serves as a director
and trustee of a number of private companies and charitable
institutions.
James N. Hauslein has been a member of our board
of directors since July 2006. Mr. Hauslein has also served
as President of Hauslein & Company, Inc., a private
equity firm, since May 1991. From July 1991 until April 2001,
Mr. Hauslein served as Chairman of the Board of
Sunglass Hut International, Inc., the worlds largest
specialty retailer of non-prescription sunglasses.
Mr. Hauslein also served as Sunglass Huts Chief
Executive Officer from May 1997 to February 1998 and again from
January 2001 to May 2001. During Mr. Hausleins tenure
at Sunglass Hut International, he led the growth of its
revenues from approximately $35 million to approximately
$680 million for fiscal 2000 prior to its acquisition by
Luxottica Group (NYSE: LUX) in April 2001. At the time of
Luxottica Groups acquisition, Sunglass Hut
International (previously NASDAQ: RAYS) operated approximately
2,000 company-owned Sunglass Hut International, Watch
Station, Watch World and combination stores in the United
States, Canada, the Caribbean, Europe, Asia, Australia and New
Zealand. Mr. Hauslein is also currently a member of the
Board of Directors of two private growth companies.
Mr. Hauslein serves on several philanthropic boards and
foundations and is a member of several Alumni Advisory Boards at
Cornell University. Mr. Hauslein received his M.B.A., with
Distinction, from Cornell Universitys Johnson Graduate
School of Management and his B.S. in chemical engineering from
Cornell University.
William P. Lauder has been a member of our board
of directors since July 2006. Mr. Lauder has been the
President and Chief Executive Officer of The Estée Lauder
Companies Inc. since July 1, 2004. Mr. Lauder has also
served as Chief Operating Officer of The Estée Lauder
Companies Inc. from January 2003 through June 2004, and Group
President of The Estée Lauder Companies Inc. from July 2001
through 2002, where he was responsible for the worldwide
business of Clinique and Origins and the companys retail
store and online operations. From 1998 to 2001, Mr. Lauder
was President of Clinique Laboratories. Prior to then, he was
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President of Origins Natural Resources Inc.; he had been the
senior officer of the Origins brand since its creation in 1990.
He joined The Estée Lauder Companies in 1986 as Regional
Marketing Director of Clinique U.S.A. in the New York Metro
area. Mr. Lauder then spent two years at Prescriptives as
Field Sales Manager. Prior to joining The Estée Lauder
Companies, he completed Macys executive training program
in New York City and became Associate Merchandising Manager of
the New York Division/Dallas store at the time of its opening in
September 1985. Mr. Lauder graduated from the Wharton
School of the University of Pennsylvania in 1983 with a Bachelor
of Science degree in Economics. He is a member of the Board of
Trustees of The University of Pennsylvania and the Boards of
Directors of the Fresh Air Fund, the 92nd Street Y and the
Partnership for New York City. He is also a member of the Boards
of The Estée Lauder Companies Inc. and True Temper
Corporation.
Herbert A. Morey has been a member of our board of
directors since July 2006. Mr. Morey was a client-handling
senior partner of Ernst & Young LLP until his
retirement in 2000, at which time he became a consultant to that
firm in the M&A Due Diligence Group until December 2002.
During his forty year career with Ernst & Young LLP and
Arthur Young & Company, a predecessor firm,
Mr. Morey provided audit services to a broad range of
companies, including consumer products, manufacturing, and
publishing companies, many of which were owned by foreign
entities, and coordinated numerous other services provided to
his clients. Mr. Morey has significant experience with
acquisitions, restructurings and reorganizations, reconciliation
or conversion of foreign accounting principles to
U.S. generally accepted accounting principles, and SEC
accounting and reporting. Mr. Morey chairs the Audit
Committee of the board of directors of Fedders Corporation,
serves as Treasurer and a board member of the Harrison-Rye
Realty Corporation, and has similar responsibilities for a
not-for-profit
theatrical organization in New York City.
Number
and Terms of Office of Directors
Upon consummation of this offering, our board of directors will
consist of five directors. These individuals will play a key
role in evaluating prospective acquisition candidates, selecting
the target business, and structuring, negotiating and
consummating its acquisition. Collectively, through their
positions described above, our directors have extensive
experience in the private equity business. Other than
Mr. Franklin, none of these individuals has been a
principal of or affiliated with a public company or blank check
company that executed a business plan similar to our business
plan and none of these individuals is currently affiliated with
such an entity. However, we believe that the skills and
expertise of these individuals, their collective access to
target businesses, and their ideas, contacts, and acquisition
expertise should enable them to successfully assist us in
completing a business combination. However, there is no
assurance such individuals will, in fact, be successful in doing
so.
Executive
Officer Compensation
None of our executive officers or directors has received any
cash compensation for services rendered. Upon the consummation
of this offering, we have agreed to pay Berggruen Holdings,
Inc., an affiliate of Mr. Berggruen, a total of
$10,000 per month for office space, administrative services
and secretarial support until the earlier of our consummation of
a business combination or our liquidation. This arrangement is
being agreed to by Berggruen Holdings, Inc. for our benefit and
is not intended to provide Berggruen Holdings, Inc. compensation
in lieu of a management fee. We believe that such fees are at
least as favorable as we could have obtained from an
unaffiliated third party. Other than this $10,000 per-month fee,
no compensation of any kind, including finders and
consulting fees, will be paid to any of our officers and
directors, or any of their respective affiliates, for services
rendered prior to or in connection with a business combination.
However, these individuals and the sponsors will be reimbursed
for any
out-of-pocket
expenses incurred in connection with activities on our behalf
such as identifying potential target businesses and performing
due diligence on suitable business combinations. After a
business combination, our executive officers and directors who
remain with us may be paid consulting, management or other fees
from the combined company with any and all amounts being fully
disclosed to stockholders, to the extent then known, in the
proxy solicitation materials furnished to our stockholders. It
is unlikely the amount of such compensation will be known at the
time of a
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stockholder meeting held to consider a business combination, as
it will be up to the directors of the post-combination business
to determine executive and director compensation.
Director
Independence
Our board of directors has determined that each of
Mr. Hauslein, Mr. Lauder and Mr. Morey, and are
independent directors as such term is defined in
Rule 10A-3
of the Exchange Act and the rules of the American Stock Exchange.
Board
Committees
Prior to the consummation of this offering, our board of
directors will form an audit committee, a compensation committee
and a governance and nominating committee. Each committee will
be comprised of three directors.
Audit
Committee
On consummation of this offering, our audit committee will
consist of each of our three independent directors, all of whom
will be independent as defined in
Rule 10A-3
of the Exchange Act and the rules of the American Stock
Exchange. The responsibilities of our audit committee will
include:
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meeting with our management periodically to consider the
adequacy of our internal control over financial reporting and
the objectivity of our financial reporting;
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appointing the independent registered public accounting firm,
determining the compensation of the independent registered
public accounting firm and pre-approving the engagement of the
independent registered public accounting firm for audit and
non-audit services;
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overseeing the independent registered public accounting firm,
including reviewing independence and quality control procedures
and experience and qualifications of audit personnel that are
providing us audit services;
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meeting with the independent registered public accounting firm
and reviewing the scope and significant findings of the audits
performed by them, and meeting with management and internal
financial personnel regarding these matters;
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reviewing our financing plans, the adequacy and sufficiency of
our financial and accounting controls, practices and procedures,
the activities and recommendations of the auditors and our
reporting policies and practices, and reporting recommendations
to our full board of directors for approval;
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establishing procedures for the receipt, retention and treatment
of complaints regarding internal accounting controls or auditing
matters and the confidential, anonymous submissions by employees
of concerns regarding questionable accounting or auditing
matters;
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following the consummation of this offering, preparing the
report required by the rules of the SEC to be included in our
annual proxy statement; and
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reviewing and approving all expense reimbursements made to our
officers and directors, provided that any expense reimbursements
payable to members of our audit committee will be reviewed and
approved by our board of directors, with the interested director
or directors abstaining from such review and approval.
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Compensation
Committee
On consummation of this offering, our compensation committee
will consist of each of our three independent directors, all of
whom will be independent as defined in
Rule 10A-3
of the Exchange Act and the rules of the American Stock
Exchange. The functions of our compensation committee will
include:
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establishing overall employee compensation policies and
recommending to our board of directors major compensation
programs;
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subsequent to our consummation of a business combination,
reviewing and approving the compensation of our officers and
directors, including salary and bonus awards;
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administering our various employee benefit, pension and equity
incentive programs;
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reviewing officer and director indemnification and insurance
matters; and
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following the consummation of this offering, preparing an annual
report on executive compensation for inclusion in our proxy
statement.
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Governance
and Nominating Committee
On consummation of this offering, our governance and nominating
committee will consist of each of our three independent
directors, all of whom will be independent as
defined in
Rule 10A-3
of the Exchange Act and the rules of the American Stock
Exchange. The functions of our governance and nominating
committee will include:
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recommending qualified candidates for election to our board of
directors;
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evaluating and reviewing the performance of existing directors;
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making recommendations to our board of directors regarding
governance matters, including our certificate of incorporation,
bylaws and charters of our committees; and
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developing and recommending to our board of directors governance
and nominating guidelines and principles applicable to us.
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Code of
Ethics and Committee Charters
We will adopt a code of ethics that applies to our officers,
directors and employees. We have filed copies of our code of
ethics and our board committee charters as exhibits to the
registration statement of which this prospectus is a part. You
may review these documents by accessing our public filings at
the SECs web site at www.sec.gov. In addition, a copy of
the code of ethics will be provided without charge upon request
to us. We intend to disclose any amendments to or waivers of
certain provisions of our code of ethics in a Current Report on
Form 8-K.
Conflicts
of Interest
Potential investors should be aware of the following potential
conflicts of interest:
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None of our officers and directors are required to commit their
full time to our affairs and, accordingly, they will have
conflicts of interest in allocating management time among
various business activities.
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In the course of their other business activities, our officers
and directors may become aware of investment and business
opportunities which may be appropriate for presentation to our
company as well as the other entities with which they are
affiliated. They may have conflicts of interest in determining
to which entity a particular business opportunity should be
presented. Accordingly, we do not expect our independent
directors to present investment and business opportunities to
us. For a complete description of our managements other
affiliations, see the previous section entitled Directors
and Executive Officers.
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Our officers and directors may in the future become affiliated
with entities, including other blank check companies, engaged in
business activities similar to those intended to be conducted by
our company.
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Our directors may have a conflict of interest in determining
whether a particular target business is appropriate for us and
our stockholders since two of our directors,
Messrs. Berggruen and Franklin, are affiliated with our
sponsors. Each of our sponsors will be subject to the lock-up
agreement, which only terminates following our consummation of a
business combination. The personal and financial interests of
our directors may influence his/their motivation in identifying
and selecting a target business, completing a business
combination timely and securing the release of founders
common stock.
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In the event we elect to make a substantial down payment, or
otherwise incur significant expenses, in connection with a
potential business combination, our expenses could exceed the
remaining proceeds not held in trust. Our officers and directors
may have a conflict of interest with respect to evaluating a
particular business combination if we incur such excess
expenses. Specifically, our officers and directors may tend to
favor potential business combinations with target businesses
that offer to reimburse any expenses in excess of our available
proceeds not held in trust as well as the interest income of up
to $4.5 million earned on the trust account balance that
may be released to us.
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Our officers and directors may have a conflict of interest with
respect to evaluating a particular business combination if the
retention or resignation of any such officers and directors were
included by a target business as a condition to any agreement
with respect to a business combination.
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In general, officers and directors of a corporation incorporated
under the laws of the State of Delaware are required to present
business opportunities to a corporation if:
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the corporation could financially undertake the opportunity;
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the opportunity is within the corporations line of
business; and
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it would not be fair to the corporation and its stockholders for
the opportunity not to be brought to the attention of the
corporation.
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Accordingly, as a result of multiple business affiliations, our
officers and directors may have similar legal obligations
relating to presenting business opportunities meeting the
above-listed criteria to multiple entities and we do not expect
our independent directors to present investment and business
opportunities to us. In addition, conflicts of interest may
arise when our board of directors evaluates a particular
business opportunity with respect to the above-listed criteria.
We cannot assure you that any of the above mentioned conflicts
will be resolved in our favor.
Each of our officers and directors has, or may come to have, to
a certain degree, other fiduciary obligations. A majority of our
officers and directors have fiduciary obligations to other
companies on whose board of directors they presently sit, or may
have obligations to companies whose board of directors they may
join in the future. To the extent that they identify business
opportunities that may be suitable for us or other companies on
whose board of directors they may sit, our directors will honor
those fiduciary obligations. Accordingly, they may not present
opportunities to us that come to their attention in the
performance of their duties as directors of such other entities
unless the other companies have declined to accept such
opportunities or clearly lack the resources to take advantage of
such opportunities.
Additionally, our officers and directors may become aware of
business opportunities that may be appropriate for presentation
to us as well as the other entities with which they are or may
be affiliated. As set forth above, we do not expect our
independent directors to present investment and business
opportunities to us.
We have entered into an agreement with Berggruen Holdings that
from the date of this prospectus until the earlier of the
consummation of our initial business combination or our
liquidation, we will have a right of first review that provides
that if Berggruen Holdings, or one of its senior investment
professionals, becomes aware of, or involved with, business
combination opportunities with an enterprise value of
$500.0 million or more, Berggruen Holdings will first offer
the business opportunity to us and will only pursue such
business opportunity if our board of directors determines that
we will not do so.
63
Messrs. Franklin and Ashken are executive officers of
Jarden Corporation. We have entered into an agreement with
Mr. Franklin whereby we have acknowledged that
Mr. Franklin has committed to Jardens Board of
Directors that we will not consider transactions that fit within
Jardens publicly announced acquisition criteria unless
Jarden has determined not to pursue the transaction. In the
event there is any uncertainty regarding a specific transaction,
an independent committee of Jardens Board of Directors
will determine whether Jarden intends to pursue the transaction.
We do not believe that the potential conflict of interest with
Jarden, or other companies with which they are affiliated, will
cause undue difficulty in finding acquisition opportunities for
us given the focused, niche consumer product company nature of
Jardens acquisition criteria and the many opportunities
available outside these fields.
To further minimize potential conflicts of interest, we will not
acquire an entity that is either a portfolio company of, or has
otherwise received a financial investment from, our sponsors or
their affiliates. In addition, we will not enter into a business
combination with any underwriters or selling group members or
any of their affiliates, unless we obtain an opinion from an
unaffiliated, independent investment banking firm which is a
member of the National Association of Securities Dealers, Inc.
that a business combination with such target business is fair to
our stockholders from a financial point of view. Any such
opinion will be included in our proxy solicitation materials,
furnished to stockholders in connection with their vote on such
a business combination.
PRINCIPAL
STOCKHOLDERS
The following table sets forth information regarding the
beneficial ownership of our common stock as of the date of this
prospectus, and as adjusted to reflect the sale of our common
stock included in the units offered by this prospectus, and
assuming no purchase of units in this offering, by:
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each person known by us to be the beneficial owner of more than
5% of our outstanding shares of common stock;
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each of our officers and directors; and
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all our officers and directors as a group.
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Unless otherwise indicated, we believe that all persons named in
the table have sole voting and investment power with respect to
all shares of common stock beneficially owned by them. The
following table does not reflect record or beneficial ownership
of the co-investment common stock, or the founders
warrants, the sponsors warrants and the co-investment
warrants as these warrants are not exercisable within
60 days of the date of this prospectus.
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Number of Shares
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Approximate Percentage of
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of Common Stock
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Outstanding Common Stock
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Beneficially
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Before
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After
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Name and Address of Beneficial Owner(1)
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Owned
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Offering
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Offering
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Berggruen Holdings North America
Ltd.
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9,255,000
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98.7
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%
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19.7
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%(4)
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Marlin Equities
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9,255,000
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98.7
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19.7
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(4)
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Nicolas Berggruen(2)
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9,255,000
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98.7
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19.7
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(4)
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Martin E. Franklin(3)
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9,255,000
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98.7
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19.7
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(4)
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James N. Hauslein
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40,000
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*
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*
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William P. Lauder
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40,000
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*
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*
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Herbert A. Morey
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40,000
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*
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*
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All directors and executive
officer as a group (5 individuals)
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9,375,000
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100.0
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20.0
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* |
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Less than 1% |
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(1) |
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The business address of Marlin Equities and Mr. Franklin is
555 Theodore Fremd Avenue,
Suite B-302,
Rye, New York 10058. The business address of Berggruen Holdings,
Mr. Berggruen and each of the other |
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individuals is c/o Freedom Acquisition Holdings, Inc., 1114
Avenue of the Americas, 41st Floor, New York New York
10036. |
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(2) |
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Mr. Berggruen is the president of Berggruen Holdings and
may be considered to have beneficial ownership of Berggruen
Holdings interests in us. Mr. Berggruen disclaims
beneficial ownership of any shares in which he does not have a
pecuniary interest. |
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(3) |
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Mr. Franklin is the majority owner and managing member of
Marlin Equities and may be considered to have beneficial
ownership of Marlin Equities interests in us.
Mr. Franklin disclaims beneficial ownership of any shares
in which he does not have a pecuniary interest. |
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(4) |
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Upon consummation of the co-investment, such entity or
individual will beneficially own 29.2% of our outstanding shares. |
Our sponsors have agreed to act together for the purpose of
acquiring, holding, voting or disposing of our shares and will
be deemed to be a group for reporting purposes under
the Exchange Act. None of our officers and directors has
indicated to us that he or she intends to purchase units in this
offering. Immediately after this offering, Berggruen Holdings,
Marlin Equities, Mr. Berggruen and Mr. Franklin will
beneficially own 19.7% of the then issued and outstanding shares
of our common stock. Because of this ownership block, they may
be able to effectively influence the outcome of all matters
requiring approval by our stockholders, including the election
of directors and approval of significant corporate transactions
other than approval of a business combination.
On July 20, 2006, each of Berggruen Holdings, an entity
controlled by Mr. Berggruen, and Marlin Equities, an entity
controlled by Mr. Franklin, entered into an agreement with
us to purchase in equal amounts (i) an aggregate of
4,500,000 warrants at a price of $1.00 per warrant
($4.5 million in the aggregate) in a private placement that
will occur immediately prior to this offering, and (ii) an
aggregate of 6,250,000 units at a price of $8.00 per
unit ($50.0 million in the aggregate) in a private
placement that will occur immediately prior to our consummation
of a business combination, which will not occur until after the
signing of a definitive business combination agreement and the
approval of that business combination by a majority of our
public stockholders. The $4.5 million of proceeds from the
sale of the sponsors warrants will be added to the
proceeds of this offering and will be held in the trust account
pending our consummation of a business combination on the terms
described in this prospectus. If we do not complete such a
business combination, then the $4.5 million proceeds from
the sale of the sponsors warrants will be part of the
liquidating distribution to our public stockholders, and the
warrants will expire worthless. As the proceeds from the sale of
the co-investment units will not be received by us until
immediately prior to our consummation of a business combination,
these proceeds will not be deposited into the trust account and
will not be available for distribution to our public
stockholders in the event of a dissolution and liquidating
distribution. The sponsors warrants, the underlying shares
of common stock and the co-investment units are entitled to
registration rights as described under Description of
Securities.
In addition, in connection with the vote required for our
initial business combination, each of our founders has agreed to
vote the shares of common stock acquired by it before this
offering in accordance with the majority of the shares of common
stock voted by the public stockholders. Each of our founders has
also agreed to vote any shares acquired by it in or after this
offering in favor of our initial business combination.
Therefore, if such entity acquires shares in or after this
offering, it must vote such shares in favor of the proposed
business combination and has, as a result, waived the right to
exercise redemption rights for those shares in the event that
our initial business combination is approved by a majority of
our public stockholders.
CERTAIN
TRANSACTIONS
On July 20, 2006, Berggruen Holdings, an entity controlled
by Mr. Berggruen, purchased 4,627,500 of our units for an
aggregate purchase price of $12,340 and Marlin Equities, an
entity controlled by Mr. Franklin, purchased 4,627,500 of
our units for an aggregate purchase price of $12,340. In
addition, on July 20, 2006,
65
each of our directors purchased 40,000 units for an
aggregate purchase price of $320. The units are identical to
those sold in this offering, except that:
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each of our founders has agreed to vote its founders
common stock in the same manner as a majority of the public
stockholders who vote at the special or annual meeting called
for the purpose of approving our initial business combination.
As a result, they will not be able to exercise redemption rights
(as described below) with respect to the founders common
stock if our initial business combination is approved by a
majority of our public stockholders;
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the warrants underlying such units become exercisable after our
consummation of a business combination if and when the last
sales price of our common stock exceeds $11.50 per share
for any 20 trading days within a 30 trading day period
beginning 90 days after such business combination; and
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the warrants underlying such units are non-redeemable for so
long as they are held by our founders or their permitted
transferees.
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On July 20, 2006, Berggruen Holdings agreed to invest
$2.25 million in us in the form of sponsors warrants
to purchase 2,250,000 shares of our common stock at a price
of $1.00 per warrant. Berggruen Holdings is obligated to
purchase such sponsors warrants from us immediately prior
to the consummation of this offering.
On July 20, 2006, Berggruen Holdings agreed to invest
$25.0 million in us in the form of co-investment units at a
price of $8.00 per unit. Berggruen Holdings is obligated to
purchase such co-investment units from us immediately prior to
the consummation of a business combination.
On July 20, 2006, Marlin Equities agreed to invest
$2.25 million in us in the form of sponsors warrants
to purchase 2,250,000 shares of our common stock at a price
of $1.00 per warrant. Marlin Equities is obligated to
purchase such sponsors warrants from us immediately prior
to the consummation of this offering.
On July 20, 2006, Marlin Equities agreed to invest
$25.0 million in us in the form of co-investment units at a
price of $8.00 per unit. Marlin Equities is obligated to
purchase such co-investment units from us immediately prior to
the consummation of a business combination.
Pursuant to a registration rights agreement between us and our
founders, our founders will be entitled to certain registration
rights. Specifically, (i) the sponsors warrants and
the underlying common stock, and the co-investment warrants and
the underlying common stock, will be entitled to certain
registration rights upon the consummation of a business
combination; (ii) the founders warrants and the
underlying common stock will be entitled to certain registration
rights 90 days after the consummation of a business
combination; and (iii) the founders units,
founders common stock, co-investment units and
co-investment common stock will be entitled to certain
registration rights one year after the consummation of a
business combination. We are only required to use our best
efforts to cause a registration statement relating to the resale
of such securities to be declared effective and, once effective,
only to use our best efforts to maintain the effectiveness of
the registration statement. The holders of warrants do not have
the rights or privileges of holders of our common stock or any
voting rights until such holders exercise their respective
warrants and receive shares of our common stock. Certain persons
and entities that receive any of the above described securities
from our founders will, under certain circumstances, be entitled
to the registration rights described herein. We will bear the
expenses incurred in connection with the filing of any such
registration statements.
Upon the consummation of this offering, we have agreed to pay
Berggruen Holdings, Inc., an affiliate of Mr. Berggruen, a
total of $10,000 per month for office space, administrative
services and secretarial support until the earlier of our
consummation of a business combination or our liquidation. This
arrangement is being agreed to by Berggruen Holdings, Inc. for
our benefit and is not intended to provide Berggruen Holdings,
Inc. compensation in lieu of a management fee. We believe that
such fees are at least as favorable as we could have obtained
from an unaffiliated third party.
Each of our sponsors has advanced $125,000 to us ($250,000 in
the aggregate) as of the date of this prospectus to cover
expenses related to this offering. These advances are
non-interest bearing, unsecured and
66
are due within 60 days following the consummation of this
offering. The loans will be repaid out of the proceeds of this
offering not placed in trust.
We will reimburse our officers and directors for any reasonable
out-of-pocket
business expenses incurred by them in connection with certain
activities on our behalf such as identifying and investigating
possible target businesses and business combinations. Subject to
availability of proceeds not placed in the trust account and
interest income of up to $4.5 million on the balance in the
trust account, there is no limit on the amount of
out-of-pocket
expenses that could be incurred. Our audit committee will review
and approve all expense reimbursements made to our officers and
directors and any expense reimbursements payable to members of
our audit committee will be reviewed and approved by our board
of directors, with the interested director or directors
abstaining from such review and approval. To the extent such
out-of-pocket
expenses exceed the available proceeds not deposited in the
trust account, such
out-of-pocket
expenses would not be reimbursed by us unless we consummate a
business combination.
Other than the $10,000 per month administrative fees and
reimbursable
out-of-pocket
expenses payable to our officers and directors, no compensation
or fees of any kind, including finders and consulting fees, will
be paid to any of our officers or directors who owned our common
stock prior to this offering, or to any of their respective
affiliates for services rendered to us prior to or with respect
to the business combination.
After a business combination, our executive officers and
directors who remain with us may be paid consulting, management
or other fees from the combined company with any and all amounts
being fully disclosed to stockholders, to the extent then known,
in the proxy solicitation materials furnished to our
stockholders. It is unlikely the amount of such compensation
will be known at the time of a stockholder meeting held to
consider a business combination, as it will be up to the
directors of the post-combination business to determine
executive and director compensation. In this event, such
compensation will be publicly disclosed at the time of its
determination in a Current Report on
Form 8-K,
as required by the SEC.
All ongoing and future transactions between us and any of our
officers and directors or their respective affiliates, including
loans by our officers and directors, will be on terms believed
by us at that time, based upon other similar arrangements known
to us, to be no less favorable than are available from
unaffiliated third parties. Such transactions or loans,
including any forgiveness of loans, will require prior approval
in each instance by a majority of our uninterested
independent directors, to the extent we have
independent directors, or the members of our board who do not
have an interest in the transaction, in either case who had
access, at our expense, to our attorneys or independent legal
counsel. It is our intention to obtain estimates from
unaffiliated third parties for similar goods or services to
ascertain whether such transactions with affiliates are on terms
that are no less favorable to us than are otherwise available
from such unaffiliated third parties. If a transaction with an
affiliated third party were found to be on terms less favorable
to us than with an unaffiliated third party, we would not engage
in such transaction.
DESCRIPTION
OF SECURITIES
Our authorized capital stock consists of 200,000,000 shares
of common stock, $0.0001 par value, and
1,000,000 shares of undesignated preferred stock,
$0.0001 par value. Assuming no exercise of the
underwriters over-allotment option, 46,875,000 shares
of our common stock will be outstanding following this offering
(53,125,000 upon issuance of the co-investment common stock). No
shares of preferred stock are or will be outstanding immediately
following this offering. The following description summarizes
the material terms of our capital stock. Because it is only a
summary, it may not contain all the information that is
important to you. For a complete description you should refer to
our amended and restated certificate of incorporation and
bylaws, which are filed as exhibits to the registration
statement of which this prospectus is a part, and to the
applicable provisions of the Delaware General Corporation Law.
67
Units
Public
Stockholders Units
Each unit consists of one share of common stock and one warrant.
Each warrant entitles the holder to purchase one share of common
stock. The common stock and warrants comprising the units will
begin separate trading five business days (or as soon as
practicable thereafter) following the earlier to occur of
expiration of the underwriters over-allotment option or
their exercise in full, subject to our having filed the Current
Report on
Form 8-K
described below and having issued a press release announcing
when such separate trading will begin.
In no event will the common stock and warrants be traded
separately until we have filed with the SEC a Current Report on
Form 8-K
which includes an audited balance sheet reflecting our receipt
of the gross proceeds of this offering. We will file a Current
Report on
Form 8-K
which includes this audited balance sheet upon the consummation
of this offering.
Founders
Units
On July 20, 2006, Berggruen Holdings, Marlin Equities and
our three independent directors purchased an aggregate of
9,375,000 of our units for an aggregate purchase price of
$25,000 in a private placement. Each unit consisted of one share
of common stock and one warrant. The founders units are
identical to those sold in this offering, except that:
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each of our founders has agreed to vote its founders
common stock in the same manner as a majority of the public
stockholders who vote at the special or annual meeting called
for the purpose of approving our initial business combination.
As a result, they will not be able to exercise redemption rights
(as described below) with respect to the founders common
stock if our initial business combination is approved by a
majority of our public stockholders;
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the founders warrants will become exercisable after our
consummation of a business combination if and when the last
sales price of our common stock exceeds $11.50 per share
for any 20 trading days within a 30 trading day period
beginning 90 days after such business combination; and
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the founders warrants will be non-redeemable so long as
they are held by our founders or their permitted transferees.
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Pursuant to a registration rights agreement between us and our
founders, the holders of our founders units and
founders common stock will be entitled to certain
registration rights one year after the consummation of a
business combination and the holders of our founders
warrants and the underlying common stock will be entitled to
certain registration rights 90 days after the consummation
of a business combination.
Each of our founders has agreed, subject to certain exceptions
described below, not to sell or otherwise transfer any of its
founders units, founders common stock or
founders warrants (including the common stock to be issued
upon exercise of the founders warrants) for a period of
one year from the date of the consummation of a business
combination.
Each of our founders is permitted to transfer its founders
units, founders common stock or founders warrants
(including the common stock to be issued upon exercise of the
founders warrants) to our officers, directors and
employees, and other persons or entities associated with such
founder, but the transferees receiving such securities will be
subject to the same agreement as our founders.
Co-Investment
Units
Immediately prior to our consummation of a business combination,
our sponsors will purchase in equal amounts an aggregate of
6,250,000 of our units at a price of $8.00 per unit for an
aggregate purchase price of $50.0 million. Each unit will
consist of one share of common stock and one warrant.
The co-investment units will be identical to the units sold in
this offering. However, as the proceeds from the sale of the
co-investment units will not be received by us until immediately
prior to our consummation of
68
a business combination, these proceeds will not be deposited
into the trust account and will not be available for
distribution to our public stockholders in the event of a
dissolution and liquidating distribution. Our sponsors will not
receive any additional carried interest (in the form of
additional units, common stock, warrants or otherwise) in
connection with the co-investment.
Pursuant to the registration rights agreement, the holders of
our co-investment units and co-investment common stock will be
entitled to certain registration rights one year after the
consummation of a business combination.
Each of our sponsors has agreed, subject to certain exceptions
described below, not to sell or otherwise transfer any of its
co-investment units, co-investment common stock or co-investment
warrants (including the common stock to be issued upon exercise
of the co-investment warrants) for a period of one year from the
date of the consummation of a business combination.
Each of our sponsors will be permitted to transfer its
co-investment units, co-investment common stock or co-investment
warrants (including the common stock to be issued upon exercise
of the co-investment warrants) to our officers, directors and
employees, and other persons or entities associated with such
sponsor, but the transferees receiving such securities will be
subject to the same agreement as our sponsors.
Each of our sponsors has agreed to provide our audit committee,
on a quarterly basis, with evidence that such sponsor has
sufficient net liquid assets available to consummate the
co-investment. In the event that a sponsor is unable to
consummate the co-investment when required to do so, such
sponsor has agreed to surrender and forfeit its founders
units to us.
Common
Stock
As of the date of this prospectus, there were
9,375,000 shares of our common stock outstanding held by
five stockholders of record. Upon closing of this offering
(assuming no exercise of the underwriters over-allotment
option), there will be 46,875,000 shares of our common
stock outstanding (53,125,000 upon issuance of the co-investment
common stock). Except for such voting rights that may be given
to one or more series of preferred stock issued by the board of
directors pursuant to the blank check power granted by our
amended and restated certification of incorporation or required
by law, holders of common stock will have exclusive voting
rights for the election of our directors and all other matters
requiring stockholder action. Holders of common stock will be
entitled to one vote per share on matters to be voted on by
stockholders and also will be entitled to receive such
dividends, if any, as may be declared from time to time by our
board of directors in its discretion out of funds legally
available therefor. After a business combination is concluded,
if ever, and upon our dissolution, our public stockholders will
be entitled to receive pro rata all assets remaining
available for distribution to stockholders after payment of all
liabilities and provision for the liquidation of any shares of
preferred stock at the time outstanding. There is no cumulative
voting with respect to the election of directors, with the
result that the holders of more than 50% of the shares voted for
the election of directors can elect all of the directors.
In connection with the vote required for our initial business
combination, each of our founders has agreed to vote the shares
of common stock owned by it immediately before this offering in
accordance with the majority of the shares of common stock voted
by the public stockholders. Furthermore, each of our founders
has agreed that it will vote any shares of common stock acquired
by it in or after this offering in favor of a proposed business
combination. As a result, if our founders acquire shares in or
after this offering, they must vote in favor of the proposed
business combination with respect to those shares, and will
therefore waive the right to exercise the redemption rights
granted to public stockholders. In connection with the vote
required for our initial business combination, a majority of our
issued and outstanding common stock (whether or not held by
public stockholders) will constitute a quorum. Our founders have
agreed to act together for the purpose of voting our shares. If
any matters are voted on by our stockholders at an annual or
special meeting, our founders may vote all their shares,
whenever acquired, as they see fit. On consummation of our
initial business combination, the underwriters will be entitled
to receive the deferred underwriters discounts and
commissions then held in the trust account, exclusive of
interest thereon.
69
We will proceed with the business combination only if a majority
of the shares of our common stock voted are voted in favor of
the business combination and public stockholders owning less
than 20% of the shares sold in this offering exercise their
redemption rights discussed below. Voting against the business
combination alone will not result in redemption of a
stockholders shares for a pro rata share of the
trust account. A stockholder must have also exercised the
redemption rights described below for a redemption to be
effective.
If we liquidate prior to a business combination, we have agreed
in the trust agreement governing the trust account that our
public stockholders are entitled to share ratably in the trust
account, inclusive of any interest not previously released to us
to fund working capital requirements, and net of any income
taxes due on such interest, which income taxes, if any, shall be
paid from the trust fund, and any assets remaining available for
distribution to them after payment of liabilities. Liquidation
expenses will only be paid from funds held outside of the trust
account. If we do not complete an initial business combination
and the trustee must distribute the balance of the trust account
pursuant to the trust agreement, the underwriters have agreed
that: (i) they will forfeit any rights or claims to their
deferred underwriting discounts and commissions, including any
accrued interest thereon, then in the trust account and
(ii) the deferred underwriters discounts and
commission will be distributed on a pro rata basis among
the public stockholders, together with any accrued interest
thereon and net of income taxes payable on such interest. Each
of our founders has agreed to waive its respective rights to
participate in any liquidating distribution occurring upon our
failure to consummate a business combination with respect to all
shares of common stock owned by it before this offering.
Our stockholders have no conversion, preemptive or other
subscription rights and there are no sinking fund or redemption
provisions applicable to the common stock, except that public
stockholders have the right to have their shares of common stock
redeemed for cash equal to their pro rata share of the
trust account plus any interest if they vote against the
business combination and the business combination is approved
and completed. Public stockholders who cause us to redeem their
common stock for their pro rata share of the trust
account will retain the right to exercise any warrants they own
if they previously purchased units or warrants.
The payment of dividends, if ever, on the common stock will be
subject to the prior payment of dividends on any outstanding
preferred stock, of which there is currently none.
Preferred
Stock
Our amended and restated certificate of incorporation provides
that shares of preferred stock may be issued from time to time
in one or more series. Our board of directors will be authorized
to fix the voting rights, if any, designations, powers,
preferences, the relative, participating, optional or other
special rights and any qualifications, limitations and
restrictions thereof, applicable to the shares of each series.
Our board of directors will be able to, without stockholder
approval, issue preferred stock with voting and other rights
that could adversely affect the voting power and other rights of
the holders of the common stock and could have anti-takeover
effects. The ability of our board of directors to issue
preferred stock without stockholder approval could have the
effect of delaying, deferring or preventing a change of control
of us or the removal of existing management. We have no
preferred stock outstanding at the date hereof. Although we do
not currently intend to issue any shares of preferred stock, we
cannot assure you that we will not do so in the future. No
shares of preferred stock are being issued or registered in this
offering.
Warrants
Public
Stockholders Warrants
Each warrant entitles the registered holder to purchase one
share of our common stock at a price of $6.00 per share,
subject to adjustment as discussed below, at any time commencing
on the later of:
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the consummation of a business combination; or
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one year from the date of this prospectus.
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The warrants will expire five years from the date of this
prospectus at 5:00 p.m., New York time. Once the warrants
become exercisable, we may call the warrants for redemption:
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in whole but not in part,
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at a price of $0.01 per warrant,
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upon not less than 30 days prior written notice of
redemption to each warrant holder, and
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if, and only if, the reported last sale price of the common
stock equals or exceeds $11.50 per share for any 20 trading
days within a 30 trading day period ending on the third business
day prior to the notice of redemption to warrant holders.
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We have established these redemption criteria to provide warrant
holders with a significant premium to the initial warrant
exercise price as well as a sufficient degree of liquidity to
cushion the market reaction, if any, to our redemption call. If
the foregoing conditions are satisfied and we issue notice of
redemption of the warrants, each warrant holder shall be
entitled to exercise his or her warrant prior to the scheduled
redemption date. However, there can be no assurance that the
price of the common stock will exceed the redemption trigger
price or the warrant exercise price after the redemption notice
is issued.
The warrants will be issued in registered form under a warrant
agreement between Continental Stock Transfer & Trust
Company, as warrant agent, and us. You should review a copy of
the warrant agreement, which has been filed as an exhibit to the
registration statement of which this prospectus is a part, for a
complete description of the terms and conditions of the warrants.
The exercise price and number of shares of common stock issuable
on exercise of the warrants may be adjusted in certain
circumstances including in the event of a stock dividend, or our
recapitalization, reorganization, merger or consolidation.
However, the exercise price and number of shares of common stock
issuable on exercise of the warrants will not be adjusted for
issuances of common stock at a price below the warrant exercise
price.
The warrants may be exercised upon surrender of the warrant
certificate on or prior to the expiration date at the offices of
the warrant agent, with the exercise form on the reverse side of
the warrant certificate completed and executed as indicated,
accompanied by full payment of the exercise price, by certified
check payable to us, for the number of warrants being exercised.
Warrant holders do not have the rights or privileges of holders
of common stock, including voting rights, until they exercise
their warrants and receive shares of common stock. After the
issuance of shares of common stock upon exercise of the
warrants, each holder will be entitled to one vote for each
share held of record on all matters to be voted on by
stockholders.
No warrants will be exercisable unless at the time of exercise
we have a registration statement under the Securities Act in
effect covering the shares of common stock issuable upon the
exercise of the warrants and a current prospectus relating to
that common stock. Under the warrant agreement, we have agreed
that prior to the commencement of the exercise period, we will
file a registration statement with the SEC for the registration
of the common stock issuable upon exercise of the warrants, use
our best efforts to cause the registration statement to become
effective on or prior to the commencement of the exercise period
and to maintain a current prospectus relating to the common
stock issuable upon the exercise of the warrants until the
warrants expire or are redeemed. However, we cannot assure you
that we will be able to be able to keep the prospectus included
in such registration statement current. The warrants may be
deprived of any value and the market for the warrants may be
limited if there is no registration statement in effect covering
the shares of the common stock issuable upon the exercise of the
warrants or if the prospectus relating to the common stock
issuable on the exercise of the warrants is not current.
No fractional shares will be issued upon exercise of the
warrants. If a holder exercises warrants and would be entitled
to receive a fractional interest of a share, we will round up
the number of shares of common stock to be issued to the warrant
holder to the nearest whole number of shares.
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Founders
Warrants
The founders warrants are substantially similar to those
being issued in this offering, except that the founders
warrants will:
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become exercisable after our consummation of a business
combination if and when the last sales price of our common stock
exceeds $11.50 per share for any 20 trading days within a
30 trading day period beginning 90 days after such business
combination; and
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be non-redeemable so long as they are held by our founders or
their permitted transferees.
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Pursuant to the registration rights agreement, no later than
90 days after the consummation of a business combination,
we have agreed to file a registration statement with the SEC for
the registration of the common stock issuable upon exercise of
the founders warrants, use our best efforts to cause the
registration statement to become effective on or prior to the
commencement of the exercise period and to maintain a current
prospectus relating to the common stock issuable upon the
exercise of the founders warrants until these warrants
expire.
Each of our founders has agreed, subject to certain exceptions,
not to sell or otherwise transfer any of its founders
warrants (including the common stock to be issued upon exercise
of the founders warrants) for a period of one year from
the date of the consummation of a business combination.
Sponsors
Warrants
The sponsors warrants will have terms and provisions that
are substantially similar to the warrants included in the units
being sold in this offering, except that these warrants
(including the common stock to be issued upon exercise of these
warrants) (i) will not be transferable or salable by our
sponsors or their permitted transferees until one year after we
consummate a business combination, and (ii) will be
non-redeemable so long as our sponsors or their permitted
transferees hold such warrants. Our sponsors will be permitted
to transfer sponsors warrants (including the common stock
to be issued upon exercise of the sponsors warrants) in
certain limited circumstances, such as to our officers,
directors and employees, and other persons or entities
associated with such sponsor, but the transferees receiving such
sponsors warrants will be subject to the same sale
restrictions imposed on our sponsors. The proceeds from the sale
of the sponsors warrants will be part of the funds
distributed to our public stockholders in the event we are
unable to complete a business combination. Pursuant to the
registration rights agreement, as promptly as practicably after
the consummation of a business combination (but not earlier than
one year from the date of the consummation of the offering), we
have agreed to file a registration statement with the SEC for
the registration of the common stock issuable upon exercise of
the sponsors warrants, use our best efforts to cause the
registration statement to become effective on or prior to the
commencement of the exercise period and to maintain a current
prospectus relating to the common stock issuable upon the
exercise of the sponsors warrants until these warrants
expire.
Co-Investment
Warrants
The co-investment warrants will have terms and provisions that
are substantially similar to the warrants included in the units
being sold in this offering, except that these warrants
(including the common stock to be issued upon exercise of these
warrants) (i) will not be transferable or salable by our
sponsors or their permitted transferees until one year after we
complete a business combination and (ii) will be
non-redeemable so long as our sponsors or their permitted
transferees hold such warrants. Our sponsors will be permitted
to transfer co-investment warrants (including the common stock
to be issued upon exercise of the co-investment warrants) in
certain limited circumstances, such as to our officers,
directors and employees, and other persons or entities
associated with such sponsor, but the transferees receiving such
co-investment warrants will be subject to the same sale
restrictions imposed on our sponsors. Pursuant to the
registration rights agreement, as promptly as practicably after
the consummation of a business combination (but not earlier than
one year from the date of the consummation of the offering), we
have agreed to file a registration statement with the SEC for
the registration of the common stock issuable upon exercise of
the co-investment warrants, use our best efforts to cause the
registration statement to become effective on or prior to the
commencement of the exercise period
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and to maintain a current prospectus relating to the common
stock issuable upon the exercise of the co-investment warrants
until these warrants expire.
Dividends
We have not paid any dividends on our common stock to date and
we do not intend to pay cash dividends prior to the consummation
of a business combination. After we complete a business
combination, the payment of dividends will depend on our
revenues and earnings, if any, capital requirements and general
financial condition. The payment of dividends after a business
combination will be within the discretion of our then-board of
directors. Our board of directors currently intends to retain
any earnings for use in our business operations and,
accordingly, we do not anticipate the board declaring any
dividends in the foreseeable future.
Our
Transfer Agent and Warrant Agent
The transfer agent for our securities and warrant agent for our
warrants is Continental Stock Transfer & Trust Company,
17 Battery Place, New York, New York 10004.
Certain
Anti-takeover Provisions of Delaware Law and our Amended and
Restated Certificate of Incorporation and By-Laws
Upon the closing of this offering, we will be governed by the
provisions of Section 203 of the Delaware General
Corporation Law, which generally has an anti-takeover effect for
transactions not approved in advance by our board of directors.
This may discourage takeover attempts that might result in
payment of a premium over the market price for the shares of
common stock held by stockholders. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in
a business combination with an interested
stockholder for a three-year period following the time
that such stockholder becomes an interested stockholder, unless
the business combination is approved in a prescribed manner. A
business combination includes, among other things, a
merger, asset or stock sale or other transaction resulting in a
financial benefit to the interested stockholder. An
interested stockholder is a person who, together
with affiliates and associates, owns, or did own within three
years prior to the determination of interested stockholder
status, 15% or more of the corporations voting stock.
Under Section 203, a business combination between a
corporation and an interested stockholder is prohibited unless
it satisfies one of the following conditions:
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before the stockholder became interested, the board of directors
approved either the business combination or the transaction
which resulted in the stockholder becoming an interested
stockholder; or
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upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the voting stock
outstanding, shares owned by persons who are directors and also
officers, and employee stock plans, in some instances; or
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at or after the time the stockholder became interested, the
business combination was approved by the board of directors of
the corporation and authorized at an annual or special meeting
of the stockholders by the affirmative vote of at least
two-thirds of the outstanding voting stock which is not owned by
the interested stockholder.
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Stockholder
Action; Special Meeting of Stockholders
Our amended and restated certificate of incorporation provides
that our stockholders will not be able to take any action by
written consent subsequent to the consummation of this offering,
but will only be able to take action at duly called annual or
special meetings of stockholders. Our bylaws further provide
that special meetings of our stockholders may be only called by
our board of directors with a majority vote of our board of
directors, by our chief executive officer or our chairman.
73
Advance
Notice Requirements for Stockholder Proposals and Director
Nominations
Our bylaws provide that stockholders seeking to bring business
before our annual meeting of stockholders, or to nominate
candidates for election as directors at our annual meeting of
stockholders, must provide timely notice of their intent in
writing. To be timely, a stockholders notice will need to
be delivered to our principal executive offices not later than
the close of business on the 90th day nor earlier than the
close of business on the 120th day prior to the first
anniversary of the preceding years annual meeting of
stockholders. For the first annual meeting of stockholders after
the closing of this offering, a stockholders notice shall
be timely if delivered to our principal executive offices not
later than the 90th day prior to the scheduled date of the
annual meeting of stockholders or the 10th day following
the day on which public announcement of the date of our annual
meeting of stockholders is first made or sent by us. Our bylaws
also specify certain requirements as to the form and content of
a stockholders meeting. These provisions may preclude our
stockholders from bringing matters before our annual meeting of
stockholders or from making nominations for directors at our
annual meeting of stockholders.
Authorized
but Unissued Shares
Our authorized but unissued shares of common stock and preferred
stock are available for future issuances without stockholder
approval and could be utilized for a variety of corporate
purposes, including future offerings to raise additional
capital, acquisitions and employee benefit plans. The existence
of authorized but unissued and unreserved common stock and
preferred stock could render more difficult or discourage an
attempt to obtain control of us by means of a proxy contest,
tender offer, merger or otherwise.
Limitation
on Liability and Indemnification of Directors and
Officers
Our amended and restated certificate of incorporation provides
that our directors and officers will be indemnified by us to the
fullest extent authorized by Delaware law as it now exists or
may in the future be amended, against all expenses and
liabilities reasonably incurred in connection with their service
for or on our behalf. In addition, our amended and restated
certificate of incorporation provides that our directors will
not be personally liable for monetary damages to us for breaches
of their fiduciary duty as directors, unless they violated their
duty of loyalty to us or our stockholders, acted in bad faith,
knowingly or intentionally violated the law, authorized unlawful
payments of dividends, unlawful stock purchases or unlawful
redemptions, or derived an improper personal benefit from their
actions as directors.
We have entered into or will enter into agreements with our
officers and directors to provide contractual indemnification in
addition to the indemnification provided in our amended and
restated certificate of incorporation. We believe that these
provisions and agreements are necessary to attract qualified
directors. Our bylaws also will permit us to secure insurance on
behalf of any officer, director or employee for any liability
arising out of his or her actions, regardless of whether
Delaware law would permit indemnification. We intend to purchase
a policy of directors and officers liability
insurance that insures our directors and officers against the
cost of defense, settlement or payment of a judgment in some
circumstances and insures us against our obligations to
indemnify the directors and officers.
These provisions may discourage stockholders from bringing a
lawsuit against our directors for breach of their fiduciary
duty. These provisions also may have the effect of reducing the
likelihood of derivative litigation against directors and
officers, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a
stockholders investment may be adversely affected to the
extent we pay the costs of settlement and damage awards against
directors and officers pursuant to these indemnification
provisions. We believe that these provisions, the insurance and
the indemnity agreements are necessary to attract and retain
talented and experienced directors and officers.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
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Securities
Eligible for Future Sale
Upon consummation of this offering (assuming no exercise of the
underwriters over-allotment option) we will have
46,875,000 shares of our common stock outstanding
(53,125,000 upon issuance of the co-investment common stock). Of
these shares, the 37,500,000 shares sold in this offering
will be freely tradable without restriction or further
registration under the Securities Act, except for any shares
purchased by one of our affiliates within the meaning of
Rule 144 under the Securities Act. All of the remaining
9,375,000 shares are restricted securities under
Rule 144, in that they were issued in private transactions
not involving a public offering. None of those shares will be
eligible for sale under Rule 144 prior
to ,
2007.
Rule 144
In general, under Rule 144 as currently in effect, a person
who has beneficially owned restricted shares of our common stock
for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the
greater of either of the following:
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1% of the total number of shares of common stock then
outstanding, which will equal 568,750 shares immediately
after this offering; or
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the average weekly trading volume of the common stock during the
four calendar weeks preceding the filing of a notice on
Form 144 with respect to the sale.
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Sales under Rule 144 are also limited by manner of sale
provisions and notice requirements and to the availability of
current public information about us.
Rule 144(k)
Under Rule 144(k), a person who is not deemed to have been
one of our affiliates at the time of or at any time during the
three months preceding a sale, and who has beneficially owned
the restricted shares proposed to be sold for at least two
years, including the holding period of any prior owner other
than an affiliate, is entitled to sell their shares without
complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
SEC
position on Rule 144 sales
The SEC has taken the position that promoters or affiliates of a
blank check company and their transferees, both before and after
a business combination, would act as underwriters
under the Securities Act when reselling the securities of a
blank check company. Based on that position, Rule 144 would
not be available for resale transactions despite technical
compliance with the requirements of Rule 144, and such
securities can be resold only through a registered offering.
Registration
Rights
Upon consummation of this offering, our founders will hold
9,375,000 issued and outstanding shares of our common stock
(15,625,000 upon issuance of the co-investment common stock) and
the right to purchase 9,375,000, 4,500,000 and
6,250,000 shares of common stock underlying the
founders warrants, the sponsors warrants and the
co-investment warrants, respectively. Pursuant to a registration
rights agreement between us and our founders, our founders will
be entitled to certain registration rights. Specifically,
(i) the sponsors warrants and the underlying common
stock, and the co-investment warrants and the underlying common
stock, will be entitled to certain registration rights upon the
consummation of a business combination; (ii) the
founders warrants and the underlying common stock will be
entitled to certain registration rights 90 days after the
consummation of a business combination; and (iii) the
founders units, founders common stock, co-investment
units and co-investment common stock will be entitled to certain
registration rights one year after the consummation of a
business combination. We are only required to use our best
efforts to cause a registration statement relating to the resale
of such securities to be declared effective and, once effective,
only to use our best efforts to maintain the effectiveness of
the registration statement. The holders of warrants do not have
the rights or privileges of holders of our common stock or any
voting rights until such holders
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exercise their respective warrants and receive shares of our
common stock. Certain persons and entities that receive any of
the above described securities from our founders will, under
certain circumstances, be entitled to the registration rights
described herein. We will bear the expenses incurred in
connection with the filing of any such registration statements.
Listing
We intend to apply to have our units listed on the American
Stock Exchange under the symbol FRH.U and, once the
common stock and warrants begin separate trading, to have our
common stock and warrants listed on the American Stock Exchange
under the symbols FRH and FRH.WS,
respectively.
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MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES TO
NON-U.S. HOLDERS
This is a general summary of certain United States federal
income and estate tax considerations with respect to your
acquisition, ownership and disposition of our units if you are a
beneficial owner other than:
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a citizen or resident of the United States;
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a corporation, or other entity taxable as a corporation created
or organized in, or under the laws of, the United States or any
political subdivision of the United States;
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an estate, the income of which is subject to United States
federal income taxation regardless of its source;
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a trust, if either (i) a court within the United States is
able to exercise primary supervision over the administration of
the trust and one or more United States persons have the
authority to control all substantial decisions of the trust or
(ii) such trust has made a valid election under applicable
Treasury regulations to be treated as a United States person; or
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if you are otherwise subject to U.S. federal income taxation on
a net income tax basis in respect of the units.
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This summary does not address all of the United States federal
income and estate tax considerations that may be relevant to you
in light of your particular circumstances or if you are a
beneficial owner subject to special treatment under United
States federal income tax laws (such as a controlled
foreign corporation, passive foreign investment
company, or a company that accumulates earnings to avoid
United States federal income tax, foreign tax-exempt
organization, financial institution, broker or dealer in
securities or former United States citizen or resident). This
summary does not discuss any aspect of state, local or
non-United States taxation. This summary is based on current
provisions of the Internal Revenue Code of 1986, as amended (the
Code), Treasury regulations, judicial opinions,
published positions of the United States Internal Revenue
Service (IRS) and all other applicable authorities,
all of which are subject to change, possibly with retroactive
effect. This summary is not intended as tax advice.
If a partnership holds our units, the tax treatment of a partner
will generally depend on the status of the partner and the
activities of the partnership. If you are a partner of a
partnership holding our units, you should consult your tax
advisor.
WE URGE PROSPECTIVE NON-UNITED STATES HOLDERS TO CONSULT THEIR
TAX ADVISORS REGARDING THE UNITED STATES FEDERAL, STATE, LOCAL
AND NON-UNITED STATES INCOME, ESTATE AND OTHER TAX
CONSIDERATIONS OF ACQUIRING, HOLDING AND DISPOSING OF OUR
SECURITIES.
Dividends
In general, any distributions we make to you with respect to
your shares of common stock that constitute dividends for United
States federal income tax purposes will be subject to United
States withholding tax at a rate of 30% of the gross amount,
unless you are eligible for a reduced rate of withholding tax
under an applicable income tax treaty and you provide proper
certification of your eligibility for such reduced rate (usually
on an IRS
Form W-8BEN).
A distribution will constitute a dividend for United States
federal income tax purposes to the extent of our current or
accumulated earnings and profits as determined under the Code.
Any distribution not constituting a dividend will be treated
first as reducing your basis in your shares of common stock and,
to the extent it exceeds your basis, as gain from the
disposition of your shares of common stock.
Dividends we pay to you that are effectively connected with your
conduct of a trade or business within the United States (and, if
certain income tax treaties apply, are attributable to a United
States permanent establishment maintained by you) generally will
not be subject to United States withholding tax if you comply
with applicable certification and disclosure requirements.
Instead, such dividends generally will be subject to United
States federal income tax, net of certain deductions, at the
same graduated individual or corporate rates
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applicable to United States persons. If you are a corporation,
effectively connected income may also be subject to a
branch profits tax at a rate of 30% (or such lower
rate as may be specified by an applicable income tax treaty).
Sale or
Other Disposition of Securities
You generally will not be subject to United States federal
income tax on any gain realized upon the sale or other
disposition of your units or their component securities unless:
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the gain is effectively connected with your conduct of a trade
or business within the United States (and, under certain income
tax treaties, is attributable to a United States permanent
establishment you maintain);
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you are an individual, you hold your units, common stock or
warrants as capital assets, you are present in the United States
for 183 days or more in the taxable year of disposition and
you meet other conditions, and you are not eligible for relief
under an applicable income tax treaty; or
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we are or have been a United States real property holding
corporation for United States federal income tax purposes
(which we believe we are not and have never been, and do not
anticipate we will become) and you hold or have held, directly
or indirectly, at any time within the shorter of the five-year
period preceding disposition of your holding period for your
units, common stock or warrants, more than 5% of our common
stock.
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Gain that is effectively connected with your conduct of a trade
or business within the United States generally will be subject
to United States federal income tax, net of certain deductions,
at the same rates applicable to United States persons. If you
are a corporation, the branch profits tax also may apply to such
effectively connected gain. If the gain from the sale or
disposition of your shares is effectively connected with your
conduct of a trade or business in the United States but under an
applicable income tax treaty is not attributable to a permanent
establishment you maintain in the United States, your gain may
be exempt from United States tax under the treaty. If you are
described in the second bullet point above, you generally will
be subject to United States federal income tax at a rate of 30%
on the gain realized, although the gain may be offset by some
United States source capital losses realized during the same
taxable year.
Information
Reporting and Backup Withholding
We must report annually to the IRS the amount of dividends or
other distributions we pay to you on your shares of common stock
and the amount of tax we withhold on these distributions
regardless of whether withholding is required. The IRS may make
copies of the information returns reporting those dividends and
amounts withheld available to the tax authorities in the country
in which you reside pursuant to the provisions of an applicable
income tax treaty or exchange of information treaty.
The United States imposes a backup withholding tax on dividends
and certain other types of payments to United States persons.
You will not be subject to backup withholding tax on dividends
you receive on your shares of common stock if you provide proper
certification (usually on an IRS
Form W-8BEN)
of your status as a non-United States person or you are a
corporation or one of several types of entities and
organizations that qualify for exemption (an exempt
recipient).
Information reporting and backup withholding generally are not
required with respect to the amount of any proceeds from the
sale of your units, common stock or warrants outside the United
States through a foreign office of a foreign broker that does
not have certain specified connections to the United States.
However, if you sell your units, common stock or warrants
through a United States broker or the United States office of a
foreign broker, the broker will be required to report to the IRS
the amount of proceeds paid to you unless you provide
appropriate certification (usually on an IRS
Form W-8BEN)
to the broker of your status as a non-United States person or
you are an exempt recipient. Information reporting also would
apply if you sell your units, common stock or warrants through a
foreign broker deriving more than a specified percentage of its
income from United States sources or having certain other
connections to the United States.
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Any amounts withheld with respect to your securities under the
backup withholding rules will be refunded to you or credited
against your United States federal income tax liability, if any,
by the IRS if the required information is furnished in a timely
manner.
Estate
Tax
Securities owned or treated as owned by an individual who is not
a citizen or resident (as defined for United States federal
estate tax purposes) of the United States at the time of his or
her death will be included in the individuals gross estate
for United States federal estate tax purposes and therefore may
be subject to United States federal estate tax unless an
applicable estate tax treaty provides otherwise. Legislation
enacted in 2001 reduces the maximum federal estate tax rate over
an 8-year
period beginning in 2002 and eliminates the tax for estates of
decedents dying after December 31, 2009. In the absence of
renewal legislation, these amendments will expire and the
federal estate tax provisions in effect immediately prior to
2002 will be restored for estates of decedents dying after
December 31, 2010.
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UNDERWRITING
Citigroup Global Markets Inc. is acting as sole bookrunning
manager of the offering and representative of the underwriters
named below. Subject to the terms and conditions stated in the
underwriting agreement, each underwriter named below has agreed
to purchase and we have agreed to sell to that underwriter, the
number of units set forth opposite the underwriters name.
|
|
|
|
|
|
|
Number of
|
|
Underwriters
|
|
Units
|
|
|
Citigroup Global Markets Inc.
|
|
|
|
|
Ladenburg Thalmann & Co.
Inc.
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
37,500,000
|
|
|
|
|
|
|
The underwriting agreement provides that the obligations of the
underwriters to purchase the units included in this offering are
subject to the approval of legal matters by counsel and to other
conditions. The underwriters are obligated to purchase all of
the units if they purchase any of the units.
The underwriters propose to offer some of the units directly to
the public at the public offering price set forth on the cover
page of this prospectus and some of the units to dealers at the
public offering price less a concession not to exceed
$ per unit. The underwriters
may allow, and dealers may reallow, a concession not to exceed
$ per unit on sales to other
dealers. If all of the units are not sold at the initial
offering price, the representatives may change the public
offering price and the other selling terms. Citigroup Global
Markets Inc. has advised us that the underwriters do not intend
sales to discretionary accounts to exceed five percent of the
total number of units offered by them.
We have granted to the underwriters an option, exercisable for
30 days from the date of this prospectus, to purchase up to
3,750,000 additional units at the public offering price less the
underwriting discount. The underwriters may exercise this option
solely for the purpose of covering over-allotments, if any, in
connection with this offering. To the extent the option is
exercised, each underwriter must purchase a number of additional
units approximately proportionate to that of the
underwriters initial purchase commitment.
We, our officers and directors and the founders have agreed
that, for a period of 180 days from the date of this
prospectus, we and they will not, without the prior written
consent of Citigroup Global Markets Inc., dispose of or hedge
any units, shares of our common stock or any securities
convertible into or exchangeable for our common stock. Citigroup
Global Markets Inc. in its sole discretion may release any of
the securities subject to these
lock-up
agreements at any time without notice.
In addition, our founders and Messrs. Berggruen and
Franklin have agreed, subject to certain exceptions, not to sell
or otherwise transfer any of the their rights as stockholders of
ours for a period of one year from the date we complete a
business combination.
Notice to
Prospective Investors in the European Economic Area
In relation to each member state of the European Economic Area
that has implemented the Prospectus Directive (each, a relevant
member state), with effect from and including the date on which
the Prospectus Directive is implemented in that relevant member
state (the relevant implementation date), an offer of our units
described in this prospectus may not be made to the public in
that relevant member state prior to the publication of a
prospectus in relation to the units that has been approved by
the competent authority in that relevant member state or, where
appropriate, approved in another relevant member state and
notified to the competent authority in that relevant member
state, all in accordance with the Prospectus Directive, except
that, with effect from and including the relevant implementation
date, an offer of securities may be offered to the public in
that relevant member state at any time:
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|
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|
|
to any legal entity that is authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities or
|
|
|
|
|
|
to any legal entity that has two or more of (1) an average
of at least 250 employees during the last financial year;
(2) a total balance sheet of more than 43,000,000 and
(3) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts or
|
80
|
|
|
|
|
in any other circumstances that do not require the publication
of a prospectus pursuant to Article 3 of the Prospectus
Directive.
|
Each purchaser of units described in this prospectus located
within a relevant member state will be deemed to have
represented, acknowledged and agreed that it is a
qualified investor within the meaning of
Article 2(1)(e) of the Prospectus Directive.
For purposes of this provision, the expression an offer to
the public in any relevant member state means the
communication in any form and by any means of sufficient
information on the terms of the offer and the securities to be
offered so as to enable an investor to decide to purchase or
subscribe the securities, as the expression may be varied in
that member state by any measure implementing the Prospectus
Directive in that member state, and the expression
Prospectus Directive means Directive 2003/71/EC and
includes any relevant implementing measure in each relevant
member state.
We have not authorized and do not authorize the making of any
offer of units through any financial intermediary on our behalf,
other than offers made by the underwriters with a view to the
final placement of the units as contemplated in this prospectus.
Accordingly, no purchaser of the units, other than the
underwriters, is authorized to make any further offer of the
units on behalf of the underwriters or us.
Notice to
Prospective Investors in the United Kingdom
This prospectus is only being distributed to, and is only
directed at, persons in the United Kingdom that are qualified
investors within the meaning of Article 2(1)(e) of the
Prospectus Directive (Qualified Investors) that are
also (i) investment professionals falling within
Article 19(5) of the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005 (the Order) or
(ii) high net worth entities, and other persons to whom it
may lawfully be communicated, falling within
Article 49(2)(a) to (d) of the Order (all such persons
together being referred to as relevant persons).
This prospectus and its contents are confidential and should not
be distributed, published or reproduced (in whole or in part) or
disclosed by recipients to any other persons in the United
Kingdom. Any person in the United Kingdom that is not a relevant
persons should not act or rely on this document or any of its
contents.
Notice to
Prospective Investors in France
Neither this prospectus nor any other offering material relating
to the units described in this prospectus has been submitted to
the clearance procedures of the Autorité des Marchés
Financiers or by the competent authority of another member state
of the European Economic Area and notified to the Autorité
des Marchés Financiers. The units have not been offered or
sold and will not be offered or sold, directly or indirectly, to
the public in France. Neither this prospectus nor any other
offering material relating to the units has been or will be
|
|
|
|
|
released, issued, distributed or caused to be released, issued
or distributed to the public in France or
|
|
|
|
|
|
used in connection with any offer for subscription or sale of
the units to the public in France.
|
Such offers, sales and distributions will be made in France only
|
|
|
|
|
to qualified investors (investisseurs qualifiés)
and/or to a
restricted circle of investors (cercle restreint
dinvestisseurs), in each case investing for their own
account, all as defined in, and in accordance with,
Article L.411-2,
D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the
French Code monétaire et financier or
|
|
|
|
|
|
to investment services providers authorized to engage in
portfolio management on behalf of third parties or
|
|
|
|
|
|
in a transaction that, in accordance with
article L.411-2-II-1º-or-2º-or
3º of the French Code monétaire et financier
and
article 211-2
of the General Regulations (Règlement
Général) of the Autorité des Marchés
Financiers, does not constitute a public offer (appel public
à lépargne).
|
The units may be resold directly or indirectly, only in
compliance with
Articles L.411-1,
L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French
Code monétaire et financier.
81
Prior to this offering, there has been no public market for our
units. Consequently, the initial public offering price for the
units was determined by negotiations among us and the
underwriters. Among the factors considered in determining the
initial public offering price were our future prospects, our
markets, our management, and currently prevailing general
conditions in the equity securities markets, including current
market valuations of publicly traded companies considered
comparable to our company. We cannot assure you, however, that
the prices at which the units will sell in the public market
after this offering will not be lower than the initial public
offering price or that an active trading market in our units,
common stock or warrants will develop and continue after this
offering.
We intend to apply to have the units included for trading on the
American Stock Exchange under the symbol FRH.U.
The following table shows the underwriting discounts and
commissions that we are to pay to the underwriters in connection
with this offering. These amounts are shown assuming both no
exercise and full exercise of the underwriters option to
purchase additional units.
|
|
|
|
|
|
|
|
|
|
|
Paid by
|
|
|
|
Freedom Acquisition Holdings, Inc.
|
|
|
|
No Exercise
|
|
|
Full Exercise
|
|
|
Per Unit
|
|
$
|
|
|
|
$
|
|
|
Total
|
|
$
|
|
|
|
$
|
|
|
The amounts paid by us in the table above include
$6.0 million in deferred underwriting discounts and
commissions ($6.6 million if the underwriters
over-allotment option is exercised in full), an amount equal to
2% of the gross proceeds of this offering, which will be placed
in trust until our consummation of an initial business
combination as described in this prospectus. At that time, the
deferred underwriting discounts and commissions will be released
to the underwriters out of the balance held in the trust
account. If we do not complete an initial business combination
and the trustee must distribute the balance of the trust
account, the underwriters have agreed that (i) on our
liquidation they will forfeit any rights or claims to their
deferred underwriting discounts and commissions, including any
accrued interest thereon, then in the trust account and
(ii) the deferred underwriting discounts and commissions
will be distributed on a pro rata basis among the public
stockholders, together with any accrued interest thereon and net
of income taxes payable on such interest.
In connection with the offering, Citigroup Global Markets Inc.
on behalf of the underwriters, may purchase and sell units in
the open market. These transactions may include short sales,
syndicate covering transactions and stabilizing transactions.
Short sales involve syndicate sales of units in excess of the
number of units to be purchased by the underwriters in the
offering, which creates a syndicate short position.
Covered short sales are sales of units made in an
amount up to the number of units represented by the
underwriters over-allotment option. In determining the
source of units to close out the covered syndicate short
position, the underwriters will consider, among other things,
the price of units available for purchase in the open market as
compared to the price at which they may purchase units through
the over-allotment option. Transactions to close out the covered
syndicate short position involve either purchases of the units
in the open market after the distribution has been completed or
the exercise of the over-allotment option. The underwriters may
also make naked short sales of units in excess of
the over-allotment option. The underwriters must close out any
naked short position by purchasing units in the open market. A
naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure
on the price of the units in the open market after pricing that
could adversely affect investors who purchase in the offering.
Stabilizing transactions consist of bids for or purchases of
units in the open market while the offering is in progress.
The underwriters may impose a penalty bid. Penalty bids permit
the underwriters to reclaim a selling concession from a
syndicate member when Citigroup Global Markets Inc. repurchases
units originally sold by that syndicate member in order to cover
syndicate short positions or make stabilizing purchases.
Any of these activities may have the effect of preventing or
retarding a decline in the market price of the units. They may
also cause the price of the units to be higher than the price
that would otherwise exist in the open market in the absence of
these transactions. The underwriters may conduct these
transactions on the
82
American Stock Exchange or in the
over-the-counter
market, or otherwise. If the underwriters commence any of these
transactions, they may discontinue them at any time.
We estimate that our portion of the total expenses of this
offering payable by us will be $500,000, exclusive of
underwriting discounts and commissions.
The underwriters may, from time to time, engage in transactions
with and perform services for us in the ordinary course of their
business.
A prospectus in electronic format may be made available by one
or more of the underwriters on a website maintained by one or
more of the underwriters. Citigroup Global Markets Inc. may
agree to allocate a number of units to underwriters for sale to
their online brokerage account holders. Citigroup Global Markets
Inc. will allocate units to underwriters that may make Internet
distributions on the same basis as other allocations. In
addition, units may be sold by the underwriters to securities
dealers who resell units to online brokerage account holders.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act or
to contribute to payments the underwriters may be required to
make because of any of those liabilities.
Other
Terms
We are not under any contractual obligation to engage any of the
underwriters to provide any services for us after this offering,
and have no present intent to do so. However, we may pay the
underwriters of this offering or any entity with which they are
affiliated a finders fee or other compensation for
services rendered to us in connection with the consummation of a
business combination. In addition, any of the underwriters may
assist us in raising additional capital in the future for which
they will be entitled to receive customary fees.
83
LEGAL
MATTERS
The validity of the securities offered by this prospectus will
be passed upon by Greenberg Traurig, LLP, New York, New York. In
connection with this offering, Cleary Gottlieb Steen &
Hamilton LLP, New York, New York, is acting as counsel to the
underwriters.
EXPERTS
Our financial statements at July 24, 2006 and for the
period from June 8, 2006 (date of inception) through
July 24, 2006 appearing in this prospectus and in the
registration statement have been included herein in reliance
upon the report of Rothstein, Kass &
Company, P.C., independent registered public accounting
firm, given on the authority of such firm as experts in
accounting and auditing.
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on
Form S-1
under the Securities Act with respect to the securities we are
offering by this prospectus. This prospectus does not contain
all of the information included in the registration statement.
For further information about us and our securities, you should
refer to the registration statement and the exhibits and
schedules filed with the registration statement. Whenever we
make reference in this prospectus to any of our contracts,
agreements or other documents, the references are materially
complete but may not include a description of all aspects of
such contracts, agreements or other documents, and you should
refer to the exhibits attached to the registration statement for
copies of the actual contract, agreement or other document.
Upon consummation of this offering, we will be subject to the
information requirements of the Exchange Act and will file
annual, quarterly and current event reports, proxy statements
and other information with the SEC. You can read our SEC
filings, including the registration statement, over the Internet
at the SECs website at www.sec.gov. You may also read and
copy any document we file with the SEC at its public reference
facility at 100 F Street, N.E., Washington, D.C. 20549.
You may also obtain copies of the documents at prescribed rates
by writing to the Public Reference Section of the SEC at 100 F
Street, N.E., Washington, D.C. 20549. Please call the SEC
at
1-800-SEC-0330
for further information on the operation of the public reference
facilities.
84
Index to
Financial Statements
FREEDOM
ACQUISITION HOLDINGS, INC.
(a corporation in the development stage)
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|
|
|
|
|
|
F-1
|
|
Financial Statements:
|
|
|
|
|
|
|
|
F-2
|
|
|
|
|
F-3
|
|
|
|
|
F-4
|
|
|
|
|
F-5
|
|
|
|
|
F-6
|
|
Report of
Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Freedom Acquisition Holdings, Inc.
We have audited the accompanying balance sheet of Freedom
Acquisition Holdings, Inc. (a corporation in the development
stage) (the Company) as of July 24, 2006 and
the related statements of operations, stockholders equity
and cash flows for the period from June 8, 2006 (date of
inception) to July 24, 2006. These financial statements are
the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Freedom Acquisition Holdings, Inc. (a corporation in the
development stage) as of July 24, 2006, and the results of
its operations and its cash flows for the period from
June 8, 2006 (date of inception) to July 24, 2006, in
conformity with accounting principles generally accepted in the
United States of America.
/s/ ROTHSTEIN,
KASS & COMPANY, P.C.
Roseland, New Jersey
July 31, 2006
F-1
FREEDOM
ACQUISITION HOLDINGS, INC.
(a corporation in the development stage)
BALANCE
SHEET
July 24, 2006
|
|
|
|
|
ASSETS
|
Current
asset, cash
|
|
$
|
225,000
|
|
Other assets
deferred offering costs
|
|
|
213,810
|
|
|
|
|
|
|
|
|
$
|
438,810
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS EQUITY
|
Current liabilities
|
|
|
|
|
Accrued expenses
|
|
$
|
250
|
|
Accrued accounting fees payable
|
|
|
25,000
|
|
Accrued filing fees payable
|
|
|
138,810
|
|
Notes payable, stockholders
|
|
|
250,000
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
414,060
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
Stockholders
equity
|
|
|
|
|
Preferred stock, $.0001 par
value; 1,000,000 shares authorized; none issued
|
|
|
|
|
Common stock, $.0001 par
value, authorized 200,000,000 shares; 9,375,000 shares
issued and outstanding
|
|
|
937
|
|
Additional paid-in capital
|
|
|
24,063
|
|
Deficit accumulated during the
development stage
|
|
|
(250
|
)
|
|
|
|
|
|
Total stockholders equity
|
|
|
24,750
|
|
|
|
|
|
|
|
|
$
|
438,810
|
|
|
|
|
|
|
See accompanying notes to financial statements
F-2
FREEDOM
ACQUISITION HOLDINGS, INC.
(a corporation in the development stage)
STATEMENT
OF OPERATIONS
|
|
|
|
|
|
|
For the Period
|
|
|
|
from June 8, 2006
|
|
|
|
(Date of Inception)
|
|
|
|
to July 24, 2006
|
|
|
Formation and operating costs
|
|
$
|
250
|
|
|
|
|
|
|
Net loss
|
|
$
|
250
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding, basic and diluted
|
|
|
9,375,000
|
|
|
|
|
|
|
Net loss per common share, basic
and diluted
|
|
$
|
|
|
|
|
|
|
|
See accompanying notes to financial statements
F-3
FREEDOM
ACQUISITION HOLDINGS, INC.
(a corporation in the development stage)
STATEMENT
OF STOCKHOLDERS EQUITY
For the
period from June 8, 2006 (date of inception) to
July 24, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
Total
|
|
|
|
Common
|
|
|
|
|
|
Paid-in
|
|
|
Development
|
|
|
Stockholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Equity
|
|
|
Common shares issued
|
|
|
9,375,000
|
|
|
$
|
937
|
|
|
$
|
24,063
|
|
|
$
|
|
|
|
$
|
25,000
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, at July 24, 2006
|
|
|
9,375,000
|
|
|
$
|
937
|
|
|
$
|
24,063
|
|
|
$
|
(250
|
)
|
|
$
|
24,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements
F-4
FREEDOM
ACQUISITION HOLDINGS, INC.
(a corporation in the development stage)
STATEMENT
OF CASH FLOWS
|
|
|
|
|
|
|
For the Period
|
|
|
|
from June 8,
|
|
|
|
2006 (Date of
|
|
|
|
Inception) to
|
|
|
|
July 24, 2006
|
|
|
Cash flows from operating
activities
|
|
|
|
|
Net loss
|
|
$
|
(250
|
)
|
Adjustment to reconcile net loss
to net cash used in operating activities:
|
|
|
|
|
Change in operating assets and
liabilities:
|
|
|
|
|
Deferred offering costs
|
|
|
(50,000
|
)
|
Accrued expenses
|
|
|
250
|
|
|
|
|
|
|
Net cash used in operating
activities
|
|
|
(50,000
|
)
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
Proceeds from notes payable,
stockholders
|
|
|
250,000
|
|
Proceeds from issuance of common
stock
|
|
|
25,000
|
|
|
|
|
|
|
Net cash provided by financing
activities
|
|
|
275,000
|
|
|
|
|
|
|
Net increase in cash
|
|
|
225,000
|
|
Cash,
beginning of period
|
|
|
|
|
Cash,
end of period
|
|
$
|
225,000
|
|
|
|
|
|
|
Supplemental schedule of
non-cash financing activities:
|
|
|
|
|
Accrual of deferred offering costs
|
|
$
|
163,810
|
|
|
|
|
|
|
See accompanying notes to financial statements
F-5
NOTE A
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Freedom Acquisition Holdings, Inc. (a corporation in the
development stage) (the Company) was incorporated in
Delaware on June 8, 2006. The Company was formed to acquire
an operating business through a merger, capital stock exchange,
asset acquisition, stock purchase or other similar business
combination. The Company has neither engaged in any operations
nor generated revenue to date. The Company is considered to be
in the development stage as defined in Statement of Financial
Accounting Standards (SFAS) No. 7,
Accounting and Reporting By Development Stage
Enterprises, and is subject to the risks associated with
activities of development stage companies. The Company has
selected December 31st as its fiscal year end.
The Companys management has broad discretion with respect
to the specific application of the net proceeds of a proposed
offering of Units (as defined in Note C below) (the
Proposed Offering), although substantially all of
the net proceeds of the Proposed Offering are intended to be
generally applied toward consummating a business combination
with (or acquisition of) an operating business (Business
Combination). Furthermore, there is no assurance that the
Company will be able to successfully effect a Business
Combination. Upon the closing of the Proposed Offering, at least
96% of the gross proceeds, after payment of certain amounts to
the underwriters, will be held in a trust account
(Trust Account) and invested in either
short-term securities issued or guaranteed by the United States
having a rating in the highest investment category granted
thereby by a recognized credit rating agency at the time of
acquisition or short-term tax exempt municipal bonds issued by
governmental entities located within the United States and
otherwise meeting the condition under
Rule 2a-7
promulgated under the Investment Company Act of 1940, until the
earlier of (i) the consummation of its first Business
Combination or (ii) the distribution of the
Trust Account as described below. The remaining proceeds
may be used to pay for business, legal and accounting due
diligence on prospective acquisitions and continuing general and
administrative expenses. The Company, after signing a definitive
agreement for the acquisition of a target business, will submit
such transaction for stockholder approval. In the event that 20%
or more of the outstanding stock (excluding, for this purpose,
those shares of common stock issued prior to the Proposed
Offering) vote against the Business Combination and exercise
their conversion rights described below, the Business
Combination will not be consummated. Public stockholders voting
against a Business Combination will be entitled to convert their
stock into a pro rata share of the Trust Account (including
the additional 2% fee of the gross proceeds payable to the
underwriters upon the Companys consummation of a Business
Combination), including any interest earned (net of taxes
payable and the amount distributed to the Company to fund its
working capital requirements) on their pro rata share, if the
Business Combination is approved and consummated. However,
voting against the Business Combination alone will not result in
an election to exercise a stockholders conversion rights.
A stockholder must also affirmatively exercise such conversion
rights at or prior to the time the Business Combination is voted
upon by the stockholders. All of the Companys stockholders
prior to the Proposed Offering, including all of the directors
of the Company will agree to vote all of the shares of common
stock held by them in accordance with the vote of the majority
in interest of all other stockholders of the Company.
In the event that the Company does not consummate a Business
Combination within 18 months from the date of the
consummation of the Proposed Offering, or 24 months from
the consummation of the Proposed Offering if certain extension
criteria have been satisfied, the proceeds held in the
Trust Account will be distributed to the Companys
public stockholders, excluding the existing stockholders to the
extent of their initial stock holdings. In the event of such
distribution, it is likely that the per share value of the
residual assets remaining available for distribution (including
Trust Account assets) will be less than the initial public
offering price per Unit in the Proposed Offering (assuming no
value is attributed to the Warrants contained in the Units to be
offered in the Proposed Offering discussed in Note C).
F-6
NOTE B
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development
Stage Company:
The Company complies with the reporting requirements of
SFAS No. 7, Accounting and Reporting by
Development Stage Enterprises.
Net
loss per common share:
Loss per common share is based on the weighted average number of
common shares outstanding. The Company complies with
SFAS No. 128, Earnings Per Share, which
requires dual presentation of basic and diluted earnings per
share on the face of the statements of operations, which the
Company has adopted. Basic loss per share excludes dilution and
is computed by dividing income available to common stockholders
by the weighted-average common shares outstanding for the
period. Diluted loss per share reflects the potential dilution
that could occur if convertible debentures, options and warrants
were to be exercised or converted or otherwise resulted in the
issuance of common stock that then shared in the earnings of the
entity.
Since the effects of outstanding warrants are anti-dilutive, it
has been excluded from the computation of loss per common share.
Concentration
of credit risk:
Financial instruments that potentially subject the Company to
concentrations of credit risk consist of cash accounts in a
financial institution, which at times, exceeds the Federal
depository insurance coverage of $100,000. The Company has not
experienced losses on these accounts and management believes the
Company is not exposed to significant risks on such accounts.
Fair
value of financial instruments:
The fair value of the Companys assets and liabilities,
which qualify as financial instruments under
SFAS No. 107, Disclosure About Fair Value of
Financial Instruments, approximates the carrying amounts
represented in the balance sheet.
Use of
estimates:
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
Deferred
offering costs:
The Company complies with the requirements of the SEC Staff
Accounting Bulletin (SAB) Topic 5A Expenses of
Offering. Deferred offering costs consist principally of
legal costs of $50,000, accounting costs of $25,000, and other
offering costs of $138,810 incurred through the balance sheet
date that are related to the Proposed Offering and that will be
charged to capital upon the completion of the Proposed Offering
or charged to expense if the Proposed Offering is not completed.
Income
tax:
The Company complies with SFAS 109, Accounting for
Income Taxes, which requires an asset and liability
approach to financial accounting and reporting for income taxes.
Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax bases of
assets and liabilities that will result in future taxable or
deductible amounts, based on enacted tax laws and rates
applicable to the periods in which the differences are expected
to affect taxable income. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount
expected to be realized.
F-7
Recently
issued accounting standards:
In December 2004, the Financial Accounting Standards Board
(FASB) issued SFAS No. 123(R),
Accounting for Stock-Based Compensation (Revised).
SFAS No. 123(R) supersedes APB Opinion 25,
Accounting for Stock Issued to Employees
(APB 25) and its related implementation
guidance. SFAS No. 123(R) establishes standards for
the accounting for transactions in which an entity exchanges its
equity instruments for goods or services. It also addresses
transactions in which an entity incurs liabilities in exchange
for goods or services that are based on the fair value of the
entitys equity instruments or that may be settled by the
issuance of those equity instruments.
SFAS No. 123(R) focuses primarily on accounting for
transactions in which an entity obtains employee services in
share-based payment transactions. SFAS No. 123(R)
requires a public entity to measure the cost of employee
services received in exchange for an award of equity instruments
based on the grant-date fair value of the award (with limited
exceptions). That cost will be recognized over the period during
which an employee is required to provide service in exchange for
the award for the requisite service period (usually the vesting
period). No compensation costs are recognized for equity
instruments for which employees do not render the requisite
service. The grant-date fair value of employee share options and
similar instruments will be estimated using option-pricing
models adjusted for the unique characteristics of those
instruments (unless observable market prices for the same or
similar instruments are available). If an equity award is
modified after the grant date, incremental compensation cost
will be recognized in an amount equal to the excess of the fair
value of the modified award over the fair value of the original
award immediately before the modification.
NOTE C
PROPOSED OFFERING
The Proposed Offering calls for the Company to offer for public
sale up to 37,500,000 units (Units). Each Unit
consists of one share of the Companys common stock,
$0.0001 par value, and one redeemable common stock purchase
warrant (Warrant). The expected public offering
price will be $8.00 per unit. Each Warrant will entitle the
holder to purchase from the Company one share of common stock at
an exercise price of $6.00 commencing on the later of
(a) one year from the date of the final prospectus for the
Proposed Offering or (b) the completion of a Business
Combination with a target business, and will expire five years
from the date of the prospectus. The Warrants will be redeemable
at a price of $0.01 per Warrant upon 30 days prior
notice after the Warrants become exercisable, only in the event
that the last sale price of the common stock is at least
$11.50 per share for any 20 trading days within a 30
trading day period ending on the third business day prior to the
date on which notice of redemption is given. If the Company is
unable to deliver registered shares of common stock to the
holder upon exercise of the warrants during the exercise period,
there will be no cash settlement of the warrants and the
warrants will expire worthless.
NOTE D
RELATED PARTY TRANSACTIONS
Each of Berggruen Holdings North America Ltd. (Berggruen
Holdings), Marlin Equities II, LLC (Marlin
Equities) and three independent directors have purchased
an aggregate of 9,375,000 of the Companys founders
units for an aggregate price of $25,000 in a private placement.
The units are identical to those sold in the Proposed Offering,
except that each of the founders will agree to vote its
founders common stock in the same manner as a majority of
the public stockholders who vote at the special or annual
meeting called for the purpose of approving the Companys
initial business combination. As a result, they will not be able
to exercise conversion rights with respect to the founders
common stock if the Companys initial business combination
is approved by a majority of its public stockholders. The
founders common stock included therein will not
participate with the common stock included in the units sold in
the Proposed Offering in any liquidating distribution. The
founders warrants included therein will become exercisable
after the Companys consummation of a business
combination, if and when the last sales price of the
Companys common stock exceeds $11.50 per share for
any 20 trading days within a 30 trading day period beginning
90 days after such business combination and will be
non-redeemable so long as they are held by the Companys
founders or their permitted transferees.
F-8
The Company issued two $125,000 unsecured promissory notes, one
each, to Berggruen Holdings and Marlin Equities. These advances
are non-interest bearing, unsecured and are due within
60 days following the consummation of the Proposed
Offering. A portion of the loans will be repaid out of the
proceeds of the Proposed Offering not placed in trust and the
balance of the loans will be repaid out of the interest we
receive on the balance of the trust account.
The Company presently occupies office space provided by
Berggruen Holdings, Inc. Berggruen Holdings, Inc. has agreed
that, until the acquisition of a target business by the Company,
it will make such office space, as well as certain office and
secretarial services, available to the Company, as may be
required by the Company from time to time. The Company has
agreed to pay such affiliate $10,000 per month for such
services.
Berggruen Holdings and Marlin Equities collectively have agreed
to purchase directly from the Company, in a private placement,
4,500,000 warrants immediately prior to the Proposed Offering at
a price of $1 per warrant (an aggregate purchase price of
approximately $4,500,000) from the Company and not as part of
the Proposed Offering. They have also agreed that these warrants
purchased by them will not be sold or transferred until at least
one year after the completion of a Business Combination.
In addition, Berggruen Holdings and Marlin Equities,
collectively have agreed to purchase 6,250,000 units at a
price of $8 per unit (an aggregate price of $50,000,000)
from the Company in a private placement that will occur
immediately prior to the Companys consummation of a
business combination. These private placement units will be
identical to the units sold in the Proposed Offering. They have
also agreed that these units will not be sold, transferred, or
assigned until at least one year after the completion of the
Business Combination.
NOTE E
COMMITMENTS
The Company is committed to pay an underwriting discount of 5%
of the public unit offering price to the underwriters at the
closing of the Proposed Offering, with an additional 2% fee of
the gross offering proceeds payable upon the Companys
consummation of a Business Combination.
The Company expects to grant the underwriters a
30-day
option to purchase up to 3,750,000 additional units to cover the
over-allotment. The over-allotment option will be used only to
cover a net short position resulting from the initial
distribution.
NOTE F
PREFERRED STOCK
The Company is authorized to issue 1,000,000 shares of
preferred stock with such designations, voting and other rights
and preferences as may be determined from time to time by the
Board of Directors.
F-9
$300,000,000
Freedom Acquisition Holdings,
Inc.
37,500,000 Units
PROSPECTUS
,
2006
Citigroup
Ladenburg Thalmann &
Co. Inc.
Until ,
2006, (25 days after the date of this prospectus) federal
securities law may require all dealers selling our securities,
whether or not participating in this offering, to deliver a
prospectus. This delivery requirement is in addition to the
obligation of dealers to deliver a prospectus when acting as an
underwriter and with respect to unsold allotments or
subscriptions.
No dealer, salesperson or any other person is authorized to give
any information or make any representations in connection with
this offering other than those contained in this prospectus and,
if given or made, the information or representations must not be
relied upon as having been authorized by us. This prospectus
does not constitute an offer to sell or a solicitation of an
offer to buy any security other than the securities offered by
this prospectus, or an offer to sell or a solicitation of an
offer to buy any securities by anyone in any jurisdiction in
which the offer or solicitation is not authorized or is unlawful.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
References to the company, the
Registrant, we, us,
our and similar expressions in this Part II
refer to Freedom Acquisition Holdings, Inc.
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Item 13.
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Other
Expenses Of Issuance And Distribution
|
The following table sets forth the costs and expenses, other
than the underwriting discount, payable by us in connection with
this offering of the securities being registered. All amounts
are estimates except the Securities and Exchange Commission
registration fee, the National Association of Securities Dealers
Inc. filing fee and the American Stock Exchange fee.
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SEC registration fee
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$
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35,310
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NASD filing fee
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33,500
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Accounting fees and expenses
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60,000
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Legal fees and expenses
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300,000
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Printing and engraving expenses
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100,000
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American Stock Exchange Fees
|
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70,000
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Miscellaneous
|
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101,190
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|
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|
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Total
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$
|
700,000
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|
|
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|
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Item 14.
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Indemnification
of Directors and Officers
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As permitted by Section 102 of the Delaware General
Corporation Law, we have adopted provisions in our amended and
restated certificate of incorporation and bylaws that will be in
effect upon the consummation of this offering that limit or
eliminate the personal liability of our directors for a breach
of their fiduciary duty of care as a director. The duty of care
generally requires that, when acting on behalf of the
corporation, directors exercise an informed business judgment
based on all material information reasonably available to them.
Consequently, a director will not be personally liable to us or
our stockholders for monetary damages or breach of fiduciary
duty as a director, except for liability for:
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any breach of the directors duty of loyalty to us or our
stockholders;
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any act or omission not in good faith or that involves
intentional misconduct or a knowing violation of law;
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any act related to unlawful stock repurchases, redemptions or
other distributions or payments of dividends; or
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any transaction from which the director derived an improper
personal benefit.
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These limitations of liability do not affect the availability of
equitable remedies such as injunctive relief or rescission. Our
amended and restated certificate of incorporation also
authorizes us to indemnify our officers and directors to the
fullest extent permitted under Delaware law.
As permitted by Section 145 of the Delaware General
Corporation Law, our amended and restated certificate of
incorporation provides that:
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we must indemnify our directors and officers and may indemnify
our employees and agents to the fullest extent permitted by the
Delaware General Corporation Law, subject to limited exceptions;
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we must advance expenses to our directors and officers and may
advance to our employees and agents in connection with a legal
proceeding to the fullest extent permitted by the Delaware
General Corporation Law, subject to limited exceptions; and
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the rights provided in our bylaws are not exclusive.
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II-1
Our amended and restated certificate of incorporation and our
bylaws provide for the indemnification provisions described
above and elsewhere herein. In addition, we have entered or will
enter into contractual indemnity agreements with our directors
and officers which may be broader than the specific
indemnification provisions contained in the Delaware General
Corporation Law. These indemnity agreements generally require
us, among other things, to indemnify our officers and directors
against liabilities that may arise by reason of their status or
service as directors or officers, subject to certain exceptions
and limitations. These indemnity agreements also require us to
advance any expenses incurred by the directors or officers as a
result of any proceeding against them as to which they could be
indemnified. In addition, we have purchased a policy of
directors and officers liability insurance that
insures our directors and officers against the cost of defense,
settlement or payment of a judgment in some circumstances. These
indemnification provisions and the indemnity agreements may be
sufficiently broad to permit indemnification of our officers and
directors for liabilities arising under the Securities Act, and
reimbursement of expenses incurred in connection with such
liabilities.
We have agreed to indemnify the several underwriters against
specific liabilities, including liabilities under the Securities
Act of 1933.
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Item 15.
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Recent
Sales of Unregistered Securities
|
On July 20, 2006, Berggruen Holdings North America Ltd.
purchased 4,627,500 of our units for an aggregate purchase price
of $12,340 in a private placement.
On July 20, 2006, Marlin Equities II, LLC purchased
4,627,500 of our units for an aggregate purchase price of
$12,340 in a private placement.
On July 20, 2006, Herbert A. Morey purchased 40,000 of our
units for an aggregate purchase price of $106.66 in a private
placement.
On July 20, 2006, William P. Lauder purchased 40,000 of our
units for an aggregate purchase price of $106.66 in a private
placement.
On July 20, 2006, James N. Hauslein purchased 40,000 of our
units for an aggregate purchase price of $106.66 in a private
placement.
On July 20, 2006, Berggruen Holdings North America Ltd.
agreed to purchase 2,225,000 of our warrants to purchase one
share of our common stock at a price of $1.00 per warrant.
Berggruen Holdings North America Ltd. is obligated to purchase
such warrants from us immediately prior to the consummation of
the offering.
On July 20, 2006, Marlin Equities II, LLC agreed to
purchase 2,225,000 of our warrants to purchase one share of our
common stock at a price of $1.00 per warrant. Marlin
Equities is obligated to purchase such warrants from us
immediately prior to the consummation of the offering.
On July 20, 2006, Berggruen Holdings North America Ltd.
agreed to purchase 3,125,000 of our units for an aggregate
purchase price of $25,000,000 at a price of $8.00 per unit.
Berggruen Holdings North America Ltd. is obligated to purchase
such units from us immediately prior to our consummation of a
business combination.
On July 20, 2006, Marlin Equities II, LLC agreed to
purchase 3,125,000 of our units for an aggregate purchase price
of $25,000,000 at a price of $8.00 per unit. Marlin
Equities is obligated to purchase such units from us immediately
prior to our consummation of a business combination.
The sales of the above securities were deemed to be exempt from
the registration under the Securities Act of 1933 in reliance on
Section 4(2) of the Securities Act as transactions by an
issuer not involving a public offering. In each such
transaction, such entity represented its intention to acquire
the securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate
legends were affixed to the instruments representing such
securities issued in such transactions.
II-2
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Item 16.
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Exhibits
and Financial Statement Schedules.
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(a) The following exhibits are filed as part of this
Registration Statement:
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Exhibit
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No.
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Description
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1.1*
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Form of Underwriting Agreement
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3.1***
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Form of Amended and Restated
Certificate of Incorporation
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3.2**
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Bylaws
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4.1**
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Specimen Unit Certificate
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4.2**
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Specimen Common Stock Certificate
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4.3**
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Warrant Agreement dated
July 20, 2006 between Continental Stock Transfer &
Trust Company and the Registrant
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4.4**
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Specimen Public Warrant
Certificate (included in Exhibit 4.3)
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4.5**
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Specimen Private Warrant
Certificate (included in Exhibit 4.3)
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4.6*
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Amendment to Warrant Agreement
dated July 20, 2006 between Continental Stock Transfer
& Trust Company and the Registrant
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5.1*
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Opinion of Greenberg Traurig, LLP
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10.1**
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Form of Registration Rights
Agreement among the Registrant and the Founders
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10.2**
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Founders Units Subscription
Agreement dated as of July 20, 2006 among the Registrant
and Berggruen Holdings
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10.3**
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Founders Units Subscription
Agreement dated as of July 20, 2006 among the Registrant
and Marlin Equities
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10.4**
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Founders Units Subscription
Agreement dated as of July 20, 2006 among the Registrant
and James N. Hauslein
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10.5**
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Founders Units Subscription
Agreement dated as of July 20, 2006 among the Registrant
and William P. Lauder
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10.6**
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Founders Units Subscription
Agreement dated as of July 20, 2006 among the Registrant
and Herbert A. Morey
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10.7**
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Sponsors Warrant and
Co-Investment Units Subscription Agreement dated as of
July 20, 2006 among the Registrant and Berggruen Holdings
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10.8**
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Sponsors Warrant and
Co-Investment Units Subscription Agreement dated as of
July 20, 2006 among the Registrant and Marlin Equities
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10.9**
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Form of Investment Management
Trust Agreement by and between the Registrant and
Continental Stock Transfer & Trust Company
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10.10**
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Letter Agreement dated as of
July 20, 2006 among the Registrant, Citigroup Global
Markets Inc. and Berggruen Holdings
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10.11**
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Letter Agreement dated as of
July 20, 2006 among the Registrant, Citigroup Global
Markets Inc. and Marlin Equities
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10.12**
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Letter Agreement dated as of
July 20, 2006 among the Registrant, Citigroup Global
Markets Inc. and Nicolas Berggruen
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10.13**
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Letter Agreement dated as of
July 20, 2006 among the Registrant, Citigroup Global
Markets Inc. and Martin E. Franklin
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10.14**
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Letter Agreement dated as of
July 20, 2006 among the Registrant, Citigroup Global
Markets Inc. and James N. Hauslein
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10.15**
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Letter Agreement dated as of
July 20, 2006 among the Registrant, Citigroup Global
Markets Inc. and William P. Lauder
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10.16**
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Letter Agreement dated as of
July 20, 2006 among the Registrant, Citigroup Global
Markets Inc. and Herbert A. Morey
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10.17**
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Form of Letter Agreement among the
Registrant and Berggruen Holdings, Inc. providing office space
to the Registrant
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II-3
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Exhibit
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No.
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Description
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10.18**
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Promissory Note, dated
June 14, 2006, issued to Berggruen Holdings
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10.19**
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Promissory Note, dated
June 14, 2006, issued to Marlin Equities
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23.1
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Consent of Rothstein,
Kass & Company, P.C.
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23.2*
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Consent of Greenberg Traurig, LLP
(included in Exhibit 5.1)
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24.1**
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Power of Attorney (included in the
signature page to this registration statement)
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99.1**
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Form of Code of Ethics
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99.2**
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Form of Charter of Audit Committee
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99.3**
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Form of Charter of Governance and
Nominating Committee
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99.4**
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Form of Charter of Compensation
Committee
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* |
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To be filed by amendment. |
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*** |
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To be re-filed by amendment. |
(b) No financial statement schedules are required to be
filed with this Registration Statement.
(a) The undersigned hereby undertakes to provide to the
underwriter at the closing specified in the underwriting
agreements, certificates in such denominations and registered in
such names as required by the underwriter to permit prompt
delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and this offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-4
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the Registrant certifies that it has duly caused this
Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on the 29th day of
September, 2006.
FREEDOM ACQUISITION HOLDINGS, INC.
Nicolas Berggruen
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ NICOLAS
BERGGRUEN
Nicolas
Berggruen
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President and Chief Executive
Officer (principal executive officer, principal financial
officer and principal accounting officer)
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September 29, 2006
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*
Martin
E. Franklin
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Director
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September 29, 2006
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*
James
N. Hauslein
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Director
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September 29, 2006
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*
William
P. Lauder
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Director
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September 29, 2006
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*
Herbert
A. Morey
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Director
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September 29, 2006
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The undersigned, by signing his name, hereto, does sign and
execute this Amendment pursuant to the Power of Attorney
executed by the above named officer and directors of the
Registrant and previously filed with the Securities and Exchange
Commission on behalf of such officer and directors.
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*By:
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/s/ NICOLAS
BERGGRUEN
Nicolas
Berggruen
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Attorney-in-Fact
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September 29, 2006
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II-5